FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 2015 or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 814-00201

MVC CAPITAL, INC.

(Exact name of the registrant as specified in its charter)

DELAWARE
(State or other jurisdiction of
incorporation or organization)

94-3346760
(I.R.S. Employer
Identification No.)

287 Bowman Avenue
2nd Floor
Purchase, New York
(Address of principal
executive offices)

10577
(Zip Code)

Registrant’s telephone number, including area code: (914) 701-0310

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer x

Non-accelerated filer o		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

There were 22,702,821 shares of the registrant’s common stock, $.01 par value, outstanding as of January 29, 2016.

Table of Contents

MVC Capital, Inc.

(A Delaware Corporation)

Index

			Page
Part I. Consolidated Financial Information

	Item 1.	Consolidated Financial Statements
		Consolidated Balance Sheets
		- July 31, 2015 (Unaudited) and October 31, 2014	3
		Consolidated Statements of Operations
		- For the Nine Month Period November 1, 2014 to July 31, 2015 (Unaudited) and
		- For the Nine Month Period November 1, 2013 to July 31, 2014 (Unaudited)	4
		Consolidated Statements of Operations
		- For the Quarter May 1, 2015 to July 31, 2015 (Unaudited) and
		- For the Quarter May 1, 2014 to July 31, 2014 (Unaudited)	5
		Consolidated Statements of Cash Flows
		- For the Nine Month Period November 1, 2014 to July 31, 2015 (Unaudited) and
		- For the Nine Month Period November 1, 2013 to July 31, 2014 (Unaudited)	6
		Consolidated Statements of Changes in Net Assets
		- For the Nine Month Period November 1, 2014 to July 31, 2015 (Unaudited),
		- For the Nine Month Period November 1, 2013 to July 31, 2014 (Unaudited) and
		- For the Year ended October 31, 2014	7
		Consolidated Selected Per Share Data and Ratios
		- For the Nine Month Period November 1, 2014 to July 31, 2015 (Unaudited),
		- For the Nine Month Period November 1, 2013 to July 31, 2014 (Unaudited) and
		- For the Year ended October 31, 2014	8
		Consolidated Schedules of Investments
		- July 31, 2015 (Unaudited)
		- October 31, 2014	11
		Notes to Consolidated Financial Statements	13
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	44
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	77
	Item 4.	Controls and Procedures	91

Part II. Other Information			92

	Item 1.	Legal Proceedings	92
	Item 1A.	Risk Factors	92
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	92
	Item 3.	Defaults Upon Senior Securities	92
	Item 4.	Mine Safety Disclosures	92
	Item 5.	Other Information	92
	Item 6.	Exhibits	93

SIGNATURE			94

Exhibits

Table of Contents

Part I. Consolidated Financial Information

Item 1. Consolidated Financial Statements

CONSOLIDATED FINANCIAL STATEMENTS

MVC Capital, Inc.

Consolidated Balance Sheets

	July 31,			October 31,
	2015			2014
	(Unaudited)
ASSETS

Assets
Cash	$	9,448,940		$	8,781,375
Restricted cash equivalents (cost $5,493,000 and $6,265,500)	5,493,000			6,265,500
Cash equivalents (cost $12,644,045 and $8,391,089)	12,644,045			8,391,089
Investments at fair value
U.S. Treasury obligations (cost $0 and $99,999,629)	—			99,897,404
Non-control/Non-affiliated investments (cost $164,519,990 and $150,682,873)	126,518,260			126,303,048
Affiliate investments (cost $121,882,255 and $115,021,554)	172,524,022			173,682,927
Control investments (cost $163,854,388 and $174,266,037)	101,313,674			147,644,189
Total investments at fair value (cost $450,256,633 and $539,970,093)	400,355,956			547,527,568
Receivable on sale of U.S. Treasury obligations	100,314,028			—
Dividends and interest receivables, net of reserves	3,558,565			1,188,398
Deferred financing fees	2,665,380			2,972,864
Fee and other receivables	1,348,570			1,939,827
Prepaid expenses	629,921			646,801
Escrow receivables, net of reserves	292,744			—

Total assets	$	536,751,149		$	577,713,422

LIABILITIES AND SHAREHOLDERS’ EQUITY

Liabilities
Senior notes	$	114,408,750		$	114,408,750
Revolving credit facility	100,000,000			100,000,000
Bridge Loan	12,790,000			—
Provision for incentive compensation (Note 11)	5,747,668			14,733,887
Management fee payable	1,431,849			1,474,223
Professional fees payable	1,332,623			1,309,085
Accrued expenses and liabilities	489,065			456,148
Interest payable	385,386			374,875
Management fee payable - Asset Management	296,812			296,812
Portfolio fees payable - Asset Management	252,001			436,791
Liability for share exchange	226,994			221,424
Consulting fees payable	201,821			97,250
Taxes payable	713			1,219

Total liabilities	237,563,682			233,810,464

Commitments and Contingencies (Note 9)

Shareholders’ equity
Common stock, $0.01 par value; 150,000,000 shares authorized; 28,304,448 shares issued and 22,702,821 and 22,702,821 shares outstanding, respectively	283,044			283,044
Additional paid-in-capital	421,032,155			421,037,726
Accumulated earnings	92,828,448			83,996,734
Dividends paid to stockholders	(125,948,021		)	(116,753,378		)
Accumulated net realized gain	15,828,472			2,697,840
Net unrealized appreciation / (depreciation)	(49,540,425		)	7,937,198
Treasury stock, at cost, 5,601,627 and 5,601,627 shares held, respectively	(55,296,206		)	(55,296,206		)

Total shareholders’ equity	299,187,467			343,902,958

Total liabilities and shareholders’ equity	$	536,751,149		$	577,713,422

Net asset value per share	$	13.18		$	15.15

The accompanying notes are an integral part of these consolidated financial statements.

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MVC Capital, Inc.

Consolidated Statements of Operations

(Unaudited)

	For the Nine Month Period			For the Nine Month Period
	November 1, 2014 to			November 1, 2013 to
	July 31, 2015			July 31, 2014
Operating Income:
Dividend income
Non-control/Non-affiliated investments	$	2,876		$	69,767
Affiliate investments	1,002,872			808,463
Total dividend income	1,005,748			878,230

Payment-in-kind dividend income
Affiliate investments	—			216,928
Total payment-in-kind dividend income	—			216,928

Interest income
Non-control/Non-affiliated investments	9,256,257			4,755,577
Affiliate investments	973,962			2,493,429
Control investments	253,556			236,111
Total interest income	10,483,775			7,485,117

Payment-in-kind/Deferred interest income
Non-control/Non-affiliated investments	3,237,977			2,461,572
Affiliate investments	93,837			582,191
Control investments	116,537			168,559
Total payment-in-kind interest income	3,448,351			3,212,322

Fee income
Non-control/Non-affiliated investments	357,500			301,495
Affiliate investments	542,666			700,835
Control investments	929,492			242,250
Total fee income	1,829,658			1,244,580

Fee income - Asset Management 1
Portfolio fees	772,925			799,563
Management fees	112,301			693,033
Total fee income - Asset Management	885,226			1,492,596

Other income	—			962,252

Total operating income	17,652,758			15,492,025

Operating Expenses:
Interest and other borrowing costs	7,697,985			7,087,004
Management fee	5,944,693			6,560,564
Legal fees	1,021,000			616,000
Audit & tax preparation fees	612,000			478,200
Other expenses	606,251			264,535
Portfolio fees - Asset Management 1	579,694			599,672
Consulting fees	423,153			398,653
Directors’ fees	315,000			302,625
Insurance	257,760			260,100
Administration	181,219			198,121
Public relations fees	138,000			153,000
Management fee - Asset Management 1	75,311			479,522
Printing and postage	66,380			60,216
Net Incentive compensation (Note 11)	(8,986,219		)	(2,411,187		)

Total operating expenses	8,932,227			15,047,025

Less: Voluntary Expense Waiver by Adviser 2	(112,500		)	(112,500		)

Total waivers	(112,500		)	(112,500		)

Net operating gain before taxes	8,833,031			557,500

Tax Expenses:
Current tax expense	1,317			1,316

Total tax expense	1,317			1,316

Net operating gain	8,831,714			556,184

Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currency:

Net realized gain (loss) on investments and foreign currency
Short-term investments	302,246			(131,418		)
Non-control/Non-affiliated investments	(2,073,792		)	308,196
Affiliate investments	—			2,979,685
Control investments	15,024,346			—
Foreign currency	(122,168		)	—

Total net realized gain on investments and foreign currency	13,130,632			3,156,463

Net unrealized depreciation on investments	(57,477,623		)	(12,940,269		)

Net realized and unrealized loss on investments and foreign currency	(44,346,991		)	(9,783,806		)

Net decrease in net assets resulting from operations	$	(35,515,277	)	$	(9,227,622	)

Net decrease in net assets per share resulting from operations	$	(1.56	)	$	(0.42	)

Dividends declared per share	$	0.405		$	0.405

Weighted average number of shares outstanding3	22,702,821			22,611,513

The accompanying notes are an integral part of these consolidated financial statements.

1 These items are related to the management of the MVC Private Equity Fund, L.P. (“PE Fund”). Please see Note 10 “Management” for more information.

2 Reflects the six month portion of the TTG Advisers’ voluntary waiver of $150,000 of expenses for the 2015 and 2014 fiscal years, that the Company would otherwise be obligated to reimburse TTG Advisers under the Advisory Agreement (the “Voluntary Waiver”). Please see Note 10 “Management” for more information.

3Please see Note 13 “Dividends and Distributions to Shareholders and Share Repurchase Program” for more information.

The accompanying notes are an integral part of these consolidated financial statements.

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MVC Capital, Inc.

Consolidated Statements of Operations

(Unaudited)

	For the Quarter			For the Quarter
	May 1, 2015 to			May 1, 2014 to
	July 31, 2015			July 31, 2014
Operating Income:
Dividend income
Non-control/Non-affiliated investments	$	2,431		$	187
Affiliate investments	1,002,872			736,873
Total dividend income	1,005,303			737,060

Payment-in-kind dividend income
Affiliate investments	—			73,746
Total payment-in-kind dividend income	—			73,746

Interest income
Non-control/Non-affiliated investments	3,116,473			2,062,925
Affiliate investments	329,014			86,587
Control investments	82,142			44,313
Total interest income	3,527,629			2,193,825

Payment-in-kind/Deferred interest income
Non-control/Non-affiliated investments	1,258,360			827,099
Affiliate investments	31,941			83,534
Control investments	39,272			91,295
Total payment-in-kind interest income	1,329,573			1,001,928

Fee income
Non-control/Non-affiliated investments	357,500			504
Affiliate investments	180,000			240,834
Control investments	767,991			80,751
Total fee income	1,305,491			322,089

Fee income - Asset Management 1
Portfolio fees	251,825			203,736
Management fees	103,617			75,548
Total fee income - Asset Management	355,442			279,284

Other income	—			408,483

Total operating income	7,523,438			5,016,415

Operating Expenses:
Interest and other borrowing costs	2,627,155			2,426,105
Management fee	1,898,946			2,144,031
Audit & tax preparation fees	274,000			154,100
Legal fees	204,000			326,000
Consulting fees	196,251			139,251
Portfolio fees - Asset Management 1	188,869			152,802
Other expenses	142,352			160,738
Directors’ fees	105,000			96,375
Insurance	85,920			86,700
Management fee - Asset Management 1	77,713			16,408
Administration	60,346			71,998
Public relations fees	46,000			51,000
Printing and postage	21,469			10,327
Net Incentive compensation (Note 11)	(3,404,419		)	567,768

Total operating expenses	2,523,602			6,403,603

Less: Voluntary Expense Waiver by Adviser 2	(37,500		)	(37,500		)

Total waivers	(37,500		)	(37,500		)

Net operating gain (loss) before taxes	5,037,336			(1,349,688		)

Tax Expenses:
Current tax expense	439			439

Total tax expense	439			439

Net operating gain (loss)	5,036,897			(1,350,127		)

Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currency:

Net realized gain (loss) on investments and foreign currency
Short-term investments	257,813			(307,933		)
Non-control/Non-affiliated investments	91,586			—
Affiliate investments	—			2,979,685
Control investments	15,024,346			—
Foreign currency	(122,168		)	—

Total net realized gain on investments and foreign currency	15,251,577			2,671,752

Net unrealized (depreciation) appreciation on investments	(34,247,632		)	416,567

Net realized and unrealized (loss) gain on investments and foreign currency	(18,996,055		)	3,088,319

Net (decrease) increase in net assets resulting from operations	$	(13,959,158	)	$	1,738,192

Net (decrease) increase in net assets per share resulting from operations	$	(0.61	)	$	0.07

Dividends declared per share	$	0.135		$	0.135

Weighted average number of shares outstanding3	22,702,821			22,699,020

The accompanying notes are an integral part of these consolidated financial statements.

1 These items are related to the management of the MVC Private Equity Fund, L.P. (“PE Fund”). Please see Note 10 “Management” for more information.

3Please see Note 13 “Dividends and Distributions to Shareholders and Share Repurchase Program” for more information.

The accompanying notes are an integral part of these consolidated financial statements.

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MVC Capital, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

	For the Nine Month Period			For the Nine Month Period
	November 1, 2014			November 1, 2013
	July 31, 2015			July 31, 2014
Cash flows from Operating Activities:
Net decrease in net assets resulting from operations	$	(35,515,277	)	$	(9,227,622	)
Adjustments to reconcile net (decrease) increase in net assets resulting from operations to net cash provided by (used in) operating activities:
Net realized gain	(13,130,632		)	(3,156,463		)
Net change in unrealized depreciation	57,477,623			12,940,269
Amortization of discounts and fees	(316,277		)	(957,541		)
Increase in accrued payment-in-kind dividends and interest	(1,464,781		)	(3,221,596		)
Amortization of deferred financing fees	821,598			428,755
Allocation of flow through income	—			(485,973		)
Changes in operating assets and liabilities:
Restricted cash	772,500			97,500
Dividends, interest and fees receivable	(2,370,167		)	2,242,470
Fee and other receivables	591,257			279,490
Short-term investments receivables	(100,314,028		)	(99,698,193		)
Escrow receivables, net of reserves	(292,744		)	300,000
Prepaid expenses	16,880			135,816
Prepaid taxes	—			336
Incentive compensation (Note 11)	(8,986,219		)	(2,411,187		)
Other liabilities	(56,134		)	(304,402		)
Purchases of equity investments	(1,841,700		)	(20,681,192		)
Purchases of debt instruments	(59,047,099		)	(40,927,324		)
Purchases of short-term investments	(294,241,984		)	(299,323,968		)
Proceeds from equity investments (1)	25,943,104			10,519,092
Proceeds from debt instruments	39,253,936			23,063,595
Sales/maturities of short-term investments	394,544,993			349,133,991

Net cash provided by operating activities	1,844,849			(81,254,147		)

Cash flows from Financing Activities:
Borrowings from revolving credit facility	295,000,000			250,000,000
Repayments from revolving credit facility	(295,000,000		)	(200,000,000		)
Borrowings from bridge loan	28,672,481			—
Repayments from bridge loan	(15,882,481		)	—
Offering expenses	—			(139,000		)
Repurchase of common stock	—			(4,114,967		)
Share exchange	(5,571		)	(219,567		)
Financing fees paid	(514,114		)	(250,278		)
Distributions paid to shareholders	(9,194,643		)	(9,151,018		)

Net cash provided by (used in) financing activities	3,075,672			36,125,170

Net change in cash and cash equivalents for the period	4,920,521			(45,128,977		)

Cash and cash equivalents, beginning of period	$	17,172,464		$	74,234,560

Cash and cash equivalents, end of period	$	22,092,985		$	29,105,583

(1) For the nine month period ended July 31, 2014, proceeds from equity investments includes $491,075, in escrow receivables, net of reserves.

During the nine month period ended July 31, 2015 and 2014 MVC Capital, Inc. paid $6,792,546 and $6,588,212 in interest expense, respectively.

During the nine month period ended July 31, 2015 and 2014 MVC Capital, Inc. paid $1,823 and $300 in income taxes, respectively.

Non-cash activity:

During the nine month period ended July 31, 2015 and 2014, MVC Capital, Inc. recorded payment in-kind dividend and interest of $1,464,781 and $3,221,596, respectively. This amount was added to the principal balance of the investments and recorded as dividend/interest income.

During the nine month period ended July 31, 2014, MVC Capital, Inc. was allocated $962,053, in flow-through income from its equity investment in Octagon Credit Investors, LLC. Of these amounts, $476,080, was received in cash and the balance of $485,973, was undistributed and therefore increased the cost of the investment. The fair value was then increased by $101,099, by the Company’s Valuation Committee.

On November 19, 2013, MVC Capital, Inc. converted the MVC Automotive Group B.V. bridge loan of approximately $1.6 million to addional common equity interest.

On May 1, 2014, the Company converted the JSC Tekers $12.0 million secured loan to preferred equity. The cost and fair value assigned to the preferred equity was approximately $11.8 million, which was based on the fair value of the real estate using the CZK/USD exchange rate on May 1, 2014. As a result of the loan conversion, the Company realized a loss of approximately $190,000.

On May 14, 2014, the Company signed a share exchange agreement with Equus, another publicly traded business development company, as part of a plan of reorganization adopted by the Equus Board of Directors. Pursuant to the share exchange agreement, the Company has received 2,112,000 common shares, with a fair value of approximately $4 million, of Equus in exchange for 395,839 common shares of the Company.

On June 30, 2014, the Company converted the SGDA $6.5 million term loan and accrued interest of approximately $1.9 million to additional common equity interest in SGDA Europe.

On April 20, 2015, Biovation Acquisition Corp., a newly formed entity by the Company, credit purchased the assets of Biovation Holdings, Inc. in exchange for the majority of the economic ownership. The Company received 90 shares of Class B non-voting common stock of Biovation Acquisition Corp.

The accompanying notes are an integral part of these consolidated financial statements.

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MVC Capital, Inc.

Consolidated Statements of Changes in Net Assets

	For the Nine Month Period			For the Nine Month Period
	November 1, 2014 to			November 1, 2013 to			For the Year Ended
	July 31, 2015			July 31, 2014			October 31, 2014
	(Unaudited)			(Unaudited)
Operations:
Net operating gain	$	8,831,714		$	556,184		$	1,579,417
Net realized gain on investments	13,130,632			3,156,463			16,519,778
Net change in unrealized depreciation on investments	(57,477,623		)	(12,940,269		)	(37,941,262		)

Net decrease in net assets from operations	(35,515,277		)	(9,227,622		)	(19,842,067		)

Shareholder Distributions from:
Income	(8,831,714		)	(556,184		)	(1,579,417		)
Realized gain	(362,929		)	—			(10,636,482		)
Return of capital	—			(8,594,834		)	—

Net decrease in net assets from shareholder distributions	(9,194,643		)	(9,151,018		)	(12,215,899		)

Capital Share Transactions:
Reissuance of treasury stock for share exchange	—			4,350,721			4,350,722
Provision for share exchange	(5,571		)	(219,567		)	(221,424		)
Offering expenses	—			(139,000		)	(139,000		)
Repurchase of common stock	—			(4,114,967		)	(4,114,967		)

Net decrease in net assets from capital share transactions	(5,571		)	(122,813		)	(124,669		)

Total decrease in net assets	(44,715,491		)	(18,501,453		)	(32,182,635		)

Net assets, beginning of period/year	343,902,958			376,085,593			376,085,593

Net assets, end of period/year	$	299,187,467		$	357,584,140		$	343,902,958

Common shares outstanding, end of period/year	22,702,821			22,702,821			22,702,821

The accompanying notes are an integral part of these consolidated financial statements.

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MVC Capital, Inc.

Consolidated Selected Per Share Data and Ratios

	For the Nine Month Period			For the Nine Month Period			For the
	November 1, 2014 to			November 1, 2013 to			Year Ended
	July 31, 2015			July 31, 2014			October 31, 2014
	(Unaudited)			(Unaudited)

Net asset value, beginning of period/year	$	15.15		$	16.63		$	16.63

Gain (Loss) from operations:
Net operating gain	0.39			0.02			0.07
Net realized and unrealized loss on investments	(1.95		)	(0.44		)	(0.95		)

Total loss from investment operations	(1.56		)	(0.42		)	(0.88		)

Less distributions from:
Income	(0.39		)	(0.02		)	(0.07		)
Realized gain	(0.02		)	—			(0.47		)
Return of capital	—			(0.39		)	—

Total distributions	(0.41		)	(0.41		)	(0.54		)

Capital share transactions
Dilutive effect of share issuance	—			(0.10		)	(0.10		)
Anti-dilutive effect of share repurchase program	—			0.05			0.04

Total capital share transactions	—			(0.05		)	(0.06		)

Net asset value, end of period/year	$	13.18		$	15.75		$	15.15

Market value, end of period/year	$	9.79		$	12.39		$	11.27

Market discount	(25.72		)%	(21.33		)%	(25.61		)%

Total Return - At NAV (a)	(10.44		)%(d)	(2.88		)%(d)	(5.75		)%

Total Return - At Market (a)	(9.51		)%(d)	(7.63		)%(d)	(14.97		)%

Ratios and Supplemental Data:

Portfolio turnover ratio	14.37		%	7.68		%	14.16		%

Net assets, end of period/year (in thousands)	$	299,173		$	357,584		$	343,903

Ratios to average net assets:
Expenses including tax expense	3.66		%(c)	5.45		%(c)	5.04		%
Expenses excluding tax expense	3.66		%(c)	5.45		%(c)	5.04		%

Net operating income before tax expense	3.66		%(c)	0.20		%(c)	0.44		%
Net operating income after tax expense	3.66		%(c)	0.20		%(c)	0.44		%

Ratios to average net assets excluding waivers:
Expenses including tax expense	3.70		%(c)	5.49		%(c)	5.08		%
Expenses excluding tax expense	3.70		%(c)	5.49		%(c)	5.08		%

Net operating income before tax expense	3.61		%(c)	0.16		%(c)	0.40		%
Net operating income after tax expense	3.61		%(c)	0.16		%(c)	0.40		%

(a) Total annual return is historical and assumes changes in share price, reinvestments of all dividends and distributions, and no sales charge for the period/year.

(b) Supplemental Ratio information

Ratios to average net assets: (b)
Expenses excluding incentive compensation	7.38	%(c)	6.33	%(c)	6.35	%
Expenses excluding incentive compensation, interest and other borrowing costs	4.19	%(c)	3.74	%(c)	3.75	%

Net operating loss before incentive compensation	(0.06	)%(c)	(0.68	)%(c)	(0.87	)%
Net operating income before incentive compensation, interest and other borrowing costs	3.13	%(c)	1.91	%(c)	1.73	%

Ratios to average net assets excluding waivers: (b)
Expenses excluding incentive compensation	7.42	%(c)	6.37	%(c)	6.40	%
Expenses excluding incentive compensation, interest and other borrowing costs	4.23	%(c)	3.78	%(c)	3.79	%

Net operating loss before incentive compensation	(0.11	)%(c)	(0.72	)%(c)	(0.92	)%
Net operating income before incentive compensation, interest and other borrowing costs	3.08	%(c)	1.87	%(c)	1.69	%

(d) Non- Annualized.

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

MVC Capital, Inc.

Consolidated Schedule of Investments

July 31, 2015

(Unaudited)

Company	Industry	Investment	Principal		Cost		Fair Value/Market Value

Non-control/Non-affiliated investments- 42.29% (a), (c), (f), (g)
Actelis Networks, Inc.	Technology Investment	Preferred Stock (150,602 shares) (d), (i)			$	5,000,003	—
Agri-Carriers Group, Inc.	Transportation	Senior Subordinated Debt 12.0000% Cash, 3.0000% Deferred, 07/20/2017 (l), (m)	$	11,774,486	11,788,966		$	11,774,486
Biogenic Reagents	Renewable energy	Senior Note 12.0000% Cash, 4.0000% PIK, 07/21/2018 (b), (l)	5,407,723		5,407,723		5,407,723
		Senior Convertible Note 12.0000% Cash, 4.0000% PIK, 07/21/2018 (b), (l)	4,866,951		4,866,951		4,945,354
		Senior Note 12.0000% Cash, 4.0000% PIK, 02/29/2016 (b), (l)	4,123,022		4,123,022		4,123,022
		Senior Subordinated Debt 12.0000% Cash, 4.0000% PIK, 02/29/2016 (b), (l)	1,000,000		601,379		601,379
		Warrants (d)	2		620,077		1,724,818
					15,619,152		16,802,296
Biovation Acquisition Co.	Manufacturer of Laminate Material and Composites	Common Stock (90 shares) (d)			784,622		617,330
Biovation Holdings, Inc.	Manufacturer of Laminate Material and Composites	Bridge Loan 6.0000% Cash, 6.0000% PIK, 10/31/2014 (b), (h)	1,079,325		1,079,325		—
		Warrants (d)	3		397,677		—
					1,477,002		—
Custom Alloy Corporation	Manufacturer of Pipe Fittings	Second Lien Loan, 7.3000% Cash, 3.7000% PIK, 04/30/2020 (b), (l)	23,574,425		23,574,425		23,670,564
		Unsecured Subordinated Loan 12.0000% Cash, 09/04/2016 (l)	3,000,000		3,000,000		3,000,000
					26,574,425		26,670,564
FOLIOfn, Inc.	Technology Investment - Financial Services	Preferred Stock (5,802,259 shares) (d), (i)			15,000,000		5,537,000
G3K Display, Inc.	Retail Store Fixtures	Senior Lien Loan 13.0000% Cash, 04/11/2019 (h)	5,625,000		5,625,000		—
		Warrants (d)	1		—		—
					5,625,000		—
Initials, Inc.	Consumer Products	Senior Subordinated Debt 12.0000% Cash, 3.0000% PIK, 06/22/2020 (b), (l)	4,750,000		4,750,000		4,750,000
Inland Environmental & Remediation LP	Environmental Services	Senior Secured Loan 12.0000% Cash, 04/17/2019 (h), (l)	15,000,000		14,470,912		3,000,000
		Warrants (d)	1		713,000		—
					15,183,912		3,000,000
Legal Solutions Holdings, Inc.	Business Services	Senior Subordinated Debt 12.0000% Cash, 2.0000% Deferred, 09/12/2018 (l), (m)	8,705,000		8,719,680		8,705,000
MainStream Data, Inc.	Technology Investment	Common Stock (5,786 shares) (d), (i)			3,750,000		—
Morey’s Seafood International, LLC	Food Services	Second Lien Loan 6.0000% Cash, 9.0000% PIK, 08/12/2018 (b), (l)	15,690,377		15,690,377		14,936,883
NPWT Corporation	Medical Device Manufacturer	Series B Common Stock (281 shares) (d)			1,231,638		2,000
		Series A Convertible Preferred Stock (5,000 shares) (d)			—		32,000
					1,231,638		34,000
The Results Companies, LLC	Business Services	Senior Subordinated Debt 13.0000% Cash, 2.5000% Deferred, 07/01/2016 (l), (m)	9,000,000		9,011,483		9,000,000
RX Innovation, Inc.	Software	Senior Subordinated Debt 12.0000% Cash, 4.0000% Deferred, 03/01/2017 (l), (m)	10,300,000		10,310,029		10,300,000
Thunderdome Restaurants, LLC	Restaurants	Second Lien Loan, 12.0000% Cash, 06/10/2020	2,015,701		2,015,701		2,015,701
U.S. Spray Drying Holding Company	Specialty Chemicals	Class B Common Stock (784 shares) (d)			5,488,000		5,875,000
		Secured Loan 12.0000% Cash, 05/02/2019	1,500,000		1,500,000		1,500,000
					6,988,000		7,375,000
United States Technologies, Inc.	Electronics Manufacturing and Repair	Senior Lien Loan 10.5000% Cash, 07/17/2020 (l)	5,000,000		5,000,000		5,000,000
Sub Total Non-control/Non-affiliated investments					164,519,990		126,518,260

Affiliate investments - 57.67% (a), (c), (f), (g)
Advantage Insurance Holdings LTD	Insurance	Preferred Stock (750,000 shares) (d), (e)			7,500,000		8,015,164
Centile Holdings B.V.	Software	Common Equity Interest (d), (e)			3,524,376		4,656,000
JSC Tekers Holdings	Real Estate Management	Common Stock (3,201 shares) (d), (e)			4,500		4,200
		Preferred Stock (9,159,085 shares) (d), (e)			11,810,188		5,528,800
					11,814,688		5,533,000
Security Holdings B.V.	Electrical Engineering	Common Equity Interest (d), (e)			52,846,140		46,650,000
SGDA Europe B.V.	Environmental Services	Common Equity Interest (d), (e)			28,544,800		6,850,000
U.S. Gas & Electric, Inc.	Energy Services	Second Lien Loan, 13.0000% Cash, 07/01/2019 (l)	7,500,000		7,500,000		7,500,000
		Unsecured Loan 10.0000% Cash, 4.0000% PIK , 07/01/2018 (b), (l)	3,135,063		3,135,063		3,135,063
		Convertible Series I Preferred Stock (32,200 shares) (d), (k)			500,000		83,667,607
		Convertible Series J Preferred Stock (8,216 shares) (d)			—		—
					11,135,063		94,302,670
Vestal Manufacturing Enterprises, Inc.	Iron Foundries	Senior Subordinated Debt 12.0000% Cash, 3.0000% PIK , 11/28/2021 (b), (l)	6,267,188		6,267,188		6,267,188
		Common Stock (5,610 shares) (d)			250,000		250,000
		Warrants (d)	5,303		—		—
					6,517,188		6,517,188

Sub Total Affiliate investments					121,882,255		172,524,022

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

MVC Capital, Inc.

Consolidated Schedule of Investments - (Continued)

July 31, 2015

(Unaudited)

Company	Industry	Investment	Principal		Cost		Fair Value/Market Value
Control Investments - 33.86% (c), (f), (g)
Equus Total Return, Inc.	Regulated Investment Company	Common Stock (4,444,644 shares) (d)			$	10,030,272	$	8,355,931
Harmony Health & Beauty, Inc.	Health & Beauty - Distributor	Common Stock (147,621 shares) (a), (d)			6,700,000		—
MVC Automotive Group GmbH	Automotive Dealerships	Common Equity Interest (a), (d), (e)			46,754,138		16,376,000
MVC Private Equity Fund LP	Private Equity	Limited Partnership Interest (a), (d), (j)			13,838,539		20,557,668
		General Partnership Interest (a), (d), (j)			353,024		518,035
					14,191,563		21,075,703
Ohio Medical Corporation	Medical Device Manufacturer	Common Stock (5,620 shares) (a), (d)			15,763,636		—
		Series A Convertible Preferred Stock 16.0000% PIK (32,600 shares) (a), (b)			30,000,000		7,300,000
		Series C Convertible Preferred Stock 16.0000% PIK (10,324shares) (a), (b)			22,618,466		31,230,087
					68,382,102		38,530,087
RuMe Inc.	Consumer Products	Common Stock (5,297,548 shares) (a), (d)			924,475		924,475
		Series C Preferred Stock (23,896,634 shares) (a), (d)			3,410,694		5,841,390
		Series B-1 Preferred Stock (4,999,076 shares) (a), (d)			999,815		1,484,135
					5,334,984		8,250,000
SIA Tekers Invest	Port Facilities	Common Stock (68,800 shares) (a), (d), (e)			2,300,000		917,000
Turf Products, LLC	Distributor - Landscaping and	Senior Subordinated Debt 7.0000% Cash, 4.0000% PIK, 11/01/2018 (a), (b), (l)	$	3,895,262	3,895,262		3,864,923
	Irrigation Equipment	Limited Liability Company Interest (a), (d)			3,535,694		3,991,794
		Guarantee (a), (d)	1		—		(47,764		)
		Warrants (a), (d)	150		—		—
					7,430,956		7,808,953
Velocitius B.V.	Renewable Energy	Common Equity Interest (a), (d), (e)			2,730,373		—

Sub Total Control Investments					163,854,388		101,313,674

TOTAL PORTFOLIO INVESTMENTS - 133.82% (f)					$	450,256,633	$	400,355,956

Cash Equivalents and Restricted Cash Equivalents - 6.06% (f), (g)
Fidelity Institutional Government Money Market Fund	Money Market Fund	Beneficial Shares (11,736,666 shares)			11,736,666		11,736,666
JP Morgan Prime Money Market Fund	Money Market Fund	Beneficial Shares (6,400,379 shares)			6,400,379		6,400,379
Total Cash Equivalents and Restricted Cash Equivalents					18,137,045		18,137,045

TOTAL INVESTMENTS - 139.88%					$	468,393,678	$	418,493,001

(a) These securities are restricted from public sale without prior registration under the Securities Act of 1933. The Company negotiates certain aspects of the method and timing of the disposition of these investments, including registration, rights and related costs.

(b) These securities accrue a portion of their interest/dividends in “payment in kind” interest/dividends which is capitalized to the investment.

(c) All of the Company’s equity and debt investments are issued by eligible portfolio companies, as defined in the Investment Company Act of 1940, except MVC Automotive Group GmbH, Security Holdings B.V., SGDA Europe B.V., SIA Tekers Invest, JSC Tekers Holdings, Centile Holdings B.V., Velocitius B.V., Equus Total Return, Inc., MVC Private Equity Fund L.P., and Advantage Insurance LTD. The Company makes available significant managerial assistance to all of the portfolio companies in which it has invested.

(d) Non-income producing assets.

(e) The principal operations of these portfolio companies are located in Europe and Cayman Islands which represents approximately 30% of the net assets. The remaining portfolio companies are located in North America which represents approximately 104% of the net assets.

(f) Percentages are based on net assets of $299,187,467 as of July 31, 2015.

(g) See Note 3 for further information regarding “Investment Classification.”

(h) All or a portion of the accrued interest on these securities have been reserved for.

(i) Legacy Investments.

(j) MVC Private Equity Fund, LP is a private equity fund focused on control equity investments in the lower middle market. The fund currently holds five investments, four located in the United States and one in Gibraltar, the investments are in the energy, services, contract manufacturing, and industrial sectors. The Company’s proportional share of the AccuMed Corp. preferred stock, Plymouth Rock Energy membership interest and loan and the Gibdock Limited equity interest is $3,398,500, $6,376,035 and $6,428,020, respectively.

(k) Upon a liquidity event, the Company may receive additional ownership in U.S. Gas & Electric, Inc.

(l) All or a portion of these securities may serve as collateral for the Firstrust Bank Bridge Loan.

(m) Deferred interest of $594,065, $226,269, $700,400 and $528,914 for Agri-Carriers Group, Legal Solutions Holdings, RXInnovation and The Results Companies, respectively, is shown as a receivable on the Consolidated Balance Sheet as of July 31, 2015.

PIK - Payment-in-kind

- Denotes zero cost or fair value.

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

MVC Capital, Inc.

Consolidated Schedule of Investments

October 31, 2014

Company	Industry	Investment	Principal		Cost		Fair Value/Market Value

Non-control/Non-affiliated investments- 36.73% (a), (c), (f), (g)
Actelis Networks, Inc.	Technology Investment	Preferred Stock (150,602 shares) (d), (i)			$	5,000,003	—
Biogenic Reagents	Renewable energy	Senior Note 12.0000% Cash, 4.0000% PIK, 07/21/2018 (b)	$	5,246,951	5,246,951		$	5,246,951
		Senior Convertible Note 12.0000% Cash, 4.0000% PIK, 07/21/2018 (b)	4,722,256		4,722,256		5,027,257
		Senior Note 12.0000% Cash, 4.0000% PIK, 09/30/2015 (b)	4,000,444		4,000,444		4,000,444
		Warrants (d)	1		—		—
					13,969,651		14,274,652
Biovation Holdings, Inc.	Manufacturer of Laminate Material and Composites	Bridge Loan 6.0000% Cash, 6.0000% PIK, 10/31/2014 (b), (h)	3,779,321		3,779,321		3,391,663
		Warrants (d)	3		397,677		—
					4,176,998		3,391,663
Custom Alloy Corporation	Manufacturer of Pipe Fittings	Second Lien Loan, 7.300% Cash, 3.700% PIK, 04/30/2020 (b)	23,000,000		23,000,000		23,000,000
		Unsecured Subordinated Loan 12.0000% Cash, 09/04/2016	6,500,000		6,500,000		6,500,000
					29,500,000		29,500,000
FOLIOfn, Inc.	Technology Investment - Financial Services	Preferred Stock (5,802,259 shares) (d), (i)			15,000,000		5,893,000
G3K Display, Inc.	Retail Store Fixtures	Senior Lien Loan 13.0000% Cash, 04/11/2019 (h)	5,625,000		5,625,000		—
		Warrants (d)	1		—		—
					5,625,000		—
Inland Environmental & Remediation LP	Environmental Services	Senior Secured Loan 12.0000% Cash, 04/17/2019	15,000,000		14,364,313		14,364,313
		Warrants (d)	1		713,000		713,000
					15,077,313		15,077,313
MainStream Data, Inc.	Technology Investment	Common Stock (5,786 shares) (d), (i)			3,750,000		—
Morey’s Seafood International, LLC	Food Services	Second Lien Loan 10.0000% Cash, 3.0000% PIK, 08/12/2018 (b)	15,338,768		15,338,768		15,591,635
NPWT Corporation	Medical Device Manufacturer	Series B Common Stock (281 shares) (d)			1,231,638		5,000
		Series A Convertible Preferred Stock (5,000 shares) (d)			—		81,000
					1,231,638		86,000
Prepaid Legal Services, Inc.	Consumer Services	Second Lien Term Loan , 9.7500% Cash, 07/01/2020	10,000,000		9,877,526		10,100,000
Summit Research Labs, Inc.	Specialty Chemicals	Second Lien Loan 10.0000% Cash, 4.0000% PIK , 10/01/2018 (b)	25,147,976		25,147,976		25,400,785
U.S. Spray Drying Holding Company	Specialty Chemicals	Class B Common Stock (784 shares)			5,488,000		5,488,000
		Secured Loan 12.0000% Cash, 5/02/2019	1,500,000		1,500,000		1,500,000
					6,988,000		6,988,000
Sub Total Non-control/Non-affiliated investments					150,682,873		126,303,048

Affiliate investments - 50.50% (a), (c), (f), (g)
Advantage Insurance Holdings LTD	Insurance	Preferred Stock (750,000 shares) (d), (e)			7,500,000		7,721,000
Centile Holdings B.V.	Software	Common Equity Interest (d), (e)			3,274,376		4,994,000
JSC Tekers Holdings	Real Estate Management	Common Stock (3,201 shares) (d), (e)			4,500		4,200
		Preferred Stock (9,159,085 shares) (d),(e)			11,810,188		6,157,906
					11,814,688		6,162,106
Security Holdings B.V.	Electrical Engineering	Common Equity Interest (d), (e)			52,846,140		50,600,000
SGDA Europe B.V.	Environmental Services	Common Equity Interest (d), (e)			28,544,800		9,996,664
U.S. Gas & Electric, Inc.	Energy Services	Second Lien Loan, 13.0000% Cash, 07/01/2019	7,500,000		7,500,000		7,500,000
		Unsecured Loan 10.0000% Cash, 4.0000% PIK , 07/01/2018 (b)	3,041,550		3,041,550		3,041,550
		Convertible Series I Preferred Stock (32,200 shares) (d), (k)			500,000		83,667,607
		Convertible Series J Preferred Stock (8,216 shares) (d)			—		—
					11,041,550		94,209,157

Sub Total Affiliate investments					115,021,554		173,682,927

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

MVC Capital, Inc.

Consolidated Schedule of Investments - (Continued)

October 31, 2014

Company	Industry	Investment	Principal		Cost		Fair Value/Market Value
Control Investments - 42.93% (c), (f), (g)
Equus Total Return, Inc.	Regulated Investment Company	Common Stock (4,444,644 shares) (d)			$	10,030,272	$	9,778,217
Harmony Health & Beauty, Inc.	Health & Beauty - Distributor	Common Stock (147,621 shares) (a), (d)			6,700,000		—
MVC Automotive Group GmbH	Automotive Dealerships	Common Equity Interest (a), (d), (e)			45,662,438		21,548,000
MVC Private Equity Fund LP	Private Equity	Limited Partnership Interest (a), (d), (j)			14,217,283		19,969,408
		General Partnership Interest (a), (d), (j)			362,686		503,924
					14,579,969		20,473,332
Ohio Medical Corporation	Medical Device Manufacturer	Common Stock (8,512 shares) (a), (d)			15,763,637		—
		Series A Convertible Preferred Stock 16.0000% PIK (28,981 shares) (a), (b)			30,000,000		23,800,000
		Series C Convertible Preferred Stock 16.0000% PIK (9,178 shares) (a), (b)			22,618,466		27,763,434
					68,382,103		51,563,434
RuMe Inc.	Consumer Products	Common Stock (5,297,548 shares) (a), (d)			924,475		924,475
		Series B-1 Preferred Stock (4,999,076 shares) (a), (d)			999,815		1,090,000
		Series C Preferred Stock (23,896,634 shares) (a), (d)			3,410,694		4,285,525
					5,334,984		6,300,000
SIA Tekers Invest	Port Facilities	Common Stock (68,800 shares) (a), (d), (e)			2,300,000		1,225,000
Turf Products, LLC	Distributor - Landscaping and Irrigation Equipment	Senior Subordinated Debt 7.0000% Cash, 4.0000% PIK, 11/01/2018 (a), (b)	$	3,895,262	3,895,262		3,864,272
		Limited Liability Company Interest (a), (d)			3,535,694		3,991,794
		Guarantee (a)	1		—		(66,860		)
		Warrants (a), (d)	150		—		—
					7,430,956		7,789,206
Velocitius B.V.	Renewable Energy	Common Equity Interest (a), (d), (e)			11,395,315		11,467,000
Vestal Manufacturing Enterprises, Inc.	Iron Foundries	Senior Subordinated Debt 12.0000% Cash, 04/29/2015 (a)	600,000		600,000		600,000
		Common Stock (81,000 shares) (a), (d)			1,850,000		16,900,000
					2,450,000		17,500,000

Sub Total Control Investments					174,266,037		147,644,189

TOTAL PORTFOLIO INVESTMENTS - 130.16% (f)					$	439,970,464	$	447,630,164

U,S. Treasury obligations - 29.05% (f), (g)
U.S. Treasury obligation	U.S. Government Securities	1.5000%, 10/31/19 (l)			$	99,999,629	$	99,897,404

Sub Total Short-Term investments					99,999,629		99,897,404

Cash Equivalents and Restricted Cash Equivalents - 4.26% (f), (g)
Fidelity Institutional Government Money Market Fund	Money Market Fund	Beneficial Shares (7,156,858 shares)			7,156,858		7,156,858
JP Morgan Prime Money Market Fund	Money Market Fund	Beneficial Shares (7,499,731 shares)			7,499,731		7,499,731
Total Cash Equivalents and Restricted Cash Equivalents					14,656,589		14,656,589

TOTAL INVESTMENTS - 163.47%					$	554,626,682	$	562,184,157

(b) These securities accrue a portion of their interest/dividends in “payment in kind” interest/dividends which is capitalized to the investment.

(d) Non-income producing assets.

(e) The principal operations of these portfolio companies are located in Europe and Cayman Islands which represents approximately 33% of the net assets. The remaining portfolio companies are located in North America which represents approximately 97% of the net assets.

(f) Percentages are based on net assets of $343,902,958 as of October 31, 2014.

(g) See Note 4 for further information regarding “Investment Classification.”

(h) All or a portion of the accrued interest on these securities have been reserved for.

(i) Legacy Investments.

(k) Upon a liquidity event, the Company may receive additional ownership in U.S. Gas & Electric, Inc.

(l) All or a portion of these securities may serve as collateral for the BB&T Credit Facility.

PIK - Payment-in-kind

- Denotes zero cost or fair value.

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

MVC Capital, Inc. (the “Company”)

Notes to Consolidated Financial Statements

July 31, 2015

(Unaudited)

1. Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete consolidated financial statements. Certain amounts, when applicable, have been reclassified to adjust to current period presentations. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included as required by Regulation S-X, Rule 10-01. These statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended October 31, 2014, as filed with the U.S. Securities and Exchange Commission (the “SEC”) on October 15, 2015. As the Company is an investment company, (as defined by the Investment Company Act of 1940 (the “1940 Act”)), management follows investment company accounting and reporting guidance of Financial Accounting Standards Board (“FASB”) 946-Investment Companies, which is accounting principles generally accepted in the United States of America (“GAAP”).

2. Consolidation

On July 16, 2004, the Company formed a wholly-owned subsidiary, MVC Financial Services, Inc. (“MVCFS”). MVCFS is incorporated in Delaware and its principal purpose is to provide advisory, administrative and other services to the Company, the Company’s portfolio companies and other entities. MVCFS had opening equity of $1 (100 shares at $0.01 per share). The Company does not hold MVCFS for investment purposes and does not intend to sell MVCFS.

On October 14, 2011, the Company formed a wholly-owned subsidiary, MVC Cayman, an exempted company incorporated in the Cayman Islands, to hold certain of its investments and to make certain future investments. The results of MVCFS and MVC Cayman are consolidated into the Company and all inter-company accounts have been eliminated in consolidation.

During fiscal year ended October 31, 2012 and thereafter, MVC Partners, LLC (“MVC Partners”) was consolidated with the operations of the Company as MVC Partners’ limited partnership interest in the MVC Private Equity Fund, L.P. (“PE Fund”) is a substantial portion of MVC Partners operations. Previously, MVC Partners was presented as a portfolio company on the Consolidated Schedule of Investments. The consolidation of MVC Partners has not had any material effect on the financial position or net results of operations of the Company. There are additional disclosures resulting from this consolidation.

MVC GP II, LLC (“MVC GP II”), an indirect wholly-owned subsidiary of the Company, serves as the general partner to the PE Fund. MVC GP II is wholly-owned by MVCFS, a subsidiary of the Company. The results of MVC GP II are consolidated into MVCFS and ultimately the Company. All inter-company accounts have been eliminated in consolidation.

During fiscal year ended October 31, 2014, MVC Turf, LLC (“MVC Turf”) was consolidated with the Company as MVC Turf is a wholly owned holding company. The consolidation of MVC Turf did not have any material effect on the financial position or net results of operations of the Company. Of the $9.4 million in cash on the Company’s Consolidated Balance Sheets as of July 31, 2015, approximately $360,000 was held by MVC Turf, a wholly owned holding company.

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3. Investment Classification

As required by the 1940 Act, we classify our investments by level of control. As defined in the 1940 Act, “Control Investments” are investments in those companies that we are deemed to “Control.” “Affiliate Investments” are investments in those companies that are “Affiliated Companies” of us, as defined in the 1940 Act, other than Control Investments. “Non-Control/Non-Affiliate Investments” are those that are neither Control Investments nor Affiliate Investments. Generally, under that 1940 Act, we are deemed to control a company in which we have invested if we own 25% or more of the voting securities of such company. We are deemed to be an affiliate of a company in which we have invested if we own 5% or more and less than 25% of the voting securities of such company.

4. Cash and Cash Equivalents

For the purpose of the Consolidated Balance Sheets and Consolidated Statements of Cash Flows, the Company considers all money market and all highly liquid temporary cash investments purchased with an original maturity of less than three months to be cash equivalents. The Company places its cash and cash equivalents with financial institutions and cash held in bank accounts may exceed the Federal Deposit Insurance Corporation (“FDIC”) insured limit. As of July 31, 2015, the Company had approximately $18.1 million in cash equivalents and restricted cash equivalents and approximately $9.4 million in cash totaling approximately $27.5 million. Of the $9.4 million in cash, approximately $360,000 was held by MVC Turf, a wholly owned holding company.

Restricted Cash and Cash Equivalents

Cash and cash equivalent accounts that are not available to the Company for day—to-day use and are legally restricted are classified as restricted cash. Restricted cash and cash equivalents are carried at cost, which approximates fair value. On April 26, 2011, the Company agreed to collateralize a 5.0 million Euro letter of credit from JPMorgan Chase Bank, N.A., which is related to a project guarantee by AB DnB NORD bankas to Security Holdings B.V., a portfolio company investment, and is classified as restricted cash equivalents on the Company’s Consolidated Balance Sheets (equivalent to approximately $5.5 million at July 31, 2015 and approximately $6.3 million at October 31, 2014).

5. Recent Accounting Pronouncements

In June 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2013-08, Financial Services—Investment Companies. ASU 2013-08 provides clarifying guidance to determine if an entity qualifies as an investment company. ASU 2013-08 also requires an investment company to measure non-controlling interests in other investment companies at fair value. The following disclosures will also be required upon adoption of ASU 2013-08: (i) whether an entity is an investment company and is applying the accounting and reporting guidance for investment companies; (ii) information about changes, if any, in an entity’s status as an investment company; and (iii) information about financial support provided or contractually required to be provided by an investment company to any of its investees. The requirements of ASU 2013-08 became effective for the Company beginning in fiscal year 2015. These updates have had no impact on the Company’s financial condition or results of operations.

In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements — Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”). The standard requires management to evaluate, at each interim and annual

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reporting period, whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date the financial statements are issued, and provide related disclosures. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and for annual and interim periods thereafter, and early adoption is permitted. The Company does not expect to adopt ASU 2014-15 early and does not believe the standard will have a material impact on our financial statements, when adopted.

In February 2015, the FASB issued Accounting Standards Update 2015-2, which updated consolidation standards under ASC Topic 810, “Consolidation”. Under this update, a new consolidation analysis is required for variable interest entities (“VIEs”) and will limit the circumstances in which investment managers and similar entities are required to consolidate the entities that they manage. The FASB decided to eliminate some of the criteria under which their fees are considered a variable interest and limit the circumstances in which variable interests in a VIE held by related parties of a reporting enterprise require the reporting enterprise to consolidate the VIE. The guidance is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2015. The Company does not expect the adoption of ASU 2015-2 to have a material impact on our financial statements.

In April 2015, the FASB issued Accounting Standards Update 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. Under this guidance, debt issuance costs related to a recognized debt liability are to be presented as a direct deduction from the debt liability rather than as an asset on the balance sheet, consistent with debt discounts. For public business entities, the final guidance will be effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted. The Company does not expect to adopt ASU No. 2015-03 early and does not believe the standard will have a material impact on our financial statements, when adopted.

In May 2015, the FASB issued ASU No. 2015-07, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities that Calculate Net Asset Value per Share (or Its Equivalent). The new guidance removes the requirement that investments for which NAV is determined based on practical expedient reliance be reported utilizing the fair value hierarchy. ASU No. 2015-07 is required to be applied retrospectively for periods beginning on or after December 15, 2015, and interim periods within those fiscal years, with early adoption permitted. The Company does not expect to adopt ASU No. 2015-07 early and is currently evaluating the impact of adopting this ASU on its consolidated financial statements.

6. Investment Valuation Policy

Our investments are carried at fair value in accordance with the 1940 Act and Accounting Standards Codification, Fair Value Measurement (“ASC 820”). In accordance with the 1940 Act, unrestricted minority-owned publicly traded securities for which market quotations are readily available are valued at the closing market quote on the valuation date and majority-owned publicly traded securities and other privately held securities are valued as determined in good faith by the Valuation Committee of our Board of Directors. For legally or contractually restricted securities of companies that are publicly traded, the value is based on the closing market quote on the valuation date minus a discount for the restriction. At July 31, 2015, we did not own restricted or unrestricted securities of any publicly traded company in which we have a majority-owned interest but did own one security in which we have a minority-owned interest.

ASC 820 provides a framework for measuring the fair value of assets and liabilities and provides guidance regarding a fair value hierarchy that prioritizes information used to measure value. In determining fair value, the Valuation Committee primarily uses the level 3 inputs referenced in ASC 820.

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ASC 820 defines fair value in terms of the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The price used to measure the fair value is not adjusted for transaction costs while the cost basis of our investments may include initial transaction costs. Under ASC 820, the fair value measurement also assumes that the transaction to sell an asset occurs in the principal market for the asset or, in the absence of a principal market, the most advantageous market for the asset. The principal market is the market in which the reporting entity would sell or transfer the asset with the greatest volume and level of activity for the asset to which the reporting entity has access to as of the measurement date. If no market for the asset exists or if the reporting entity does not have access to the principal market, the reporting entity should use a hypothetical market.

Valuation Methodology

Pursuant to the requirements of the 1940 Act and in accordance with ASC 820, we value our portfolio securities at their current market values or, if market quotations are not readily available, at their estimates of fair values. Because our portfolio company investments generally do not have readily ascertainable market values, we record these investments at fair value in accordance with our Valuation Procedures adopted by the Board of Directors, which are consistent with ASC 820. As permitted by the SEC, the Board of Directors has delegated the responsibility of making fair value determinations to the Valuation Committee, subject to the Board of Directors’ supervision and pursuant to our Valuation Procedures. Our Board of Directors may also hire independent consultants to review our Valuation Procedures or to conduct an independent valuation of one or more of our portfolio investments.

Pursuant to our Valuation Procedures, the Valuation Committee (which is comprised of three Independent Directors) determines fair values of portfolio company investments on a quarterly basis (or more frequently, if deemed appropriate under the circumstances). In doing so, the Committee considers the recommendations of The Tokarz Group Advisers LLC (“TTG Advisers”). Any changes in valuation are recorded in the consolidated statements of operations as “Net unrealized appreciation (depreciation) on investments.”

Currently, our NAV per share is calculated and published on a quarterly basis. The Company calculates our NAV per share by subtracting all liabilities from the total value of our portfolio securities and other assets and dividing the result by the total number of outstanding shares of our common stock on the date of valuation. Fair values of foreign investments reflect exchange rates, as applicable, in effect on the last business day of the quarter end. Exchange rates fluctuate on a daily basis, sometimes significantly. Exchange rate fluctuations following the most recent quarter end are not reflected in the valuations reported in this Quarterly Report. See Item 3 Risk Factor, “Investments in foreign debt or equity may involve significant risks in addition to the risks inherent in U.S. investments.”

At July 31, 2015 and October 31, 2014, approximately 73.09% and 75.79%, respectively, of total assets represented investments in portfolio companies recorded at fair value (“Fair Value Investments”).

Under most circumstances, at the time of acquisition, Fair Value Investments are carried at cost (absent the existence of conditions warranting, in management’s and the Valuation Committee’s view, a different initial value). During the period that an investment is held by the Company, its original cost may cease to approximate fair value as the result of market and investment specific factors. No pre-determined formula can be applied to determine fair value. Rather, the Valuation Committee analyzes fair value measurements based on the value at which the securities of the portfolio company could be sold in an orderly disposition over a reasonable period of time between willing parties, other than in a forced or liquidation sale. The liquidity event whereby the Company ultimately exits an investment is generally the sale, the merger, the recapitalization of a portfolio company or by a public offering of its securities.

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There is no one methodology to determine fair value and, in fact, for any portfolio security, fair value may be expressed as a range of values, from which the Company derives a single estimate of fair value. To determine the fair value of a portfolio security, the Valuation Committee analyzes the portfolio company’s financial results and projections, publicly traded comparable companies when available, comparable private transactions when available, precedent transactions in the market when available, third-party real estate and asset appraisals if appropriate and available, discounted cash flow analysis, if appropriate, as well as other factors. The Company generally requires, where practicable, Portfolio Companies to provide annual audited and more regular unaudited financial statements, and/or annual projections for the upcoming fiscal year.

The fair value of our portfolio securities is inherently subjective. Because of the inherent uncertainty of fair valuation of portfolio securities and escrow receivables that do not have readily ascertainable market values, our estimate of fair value may significantly differ from the fair value that would have been used had a ready market existed for the securities. Such values also do not reflect brokers’ fees or other selling costs, which might become payable on disposition of such investments.

If a security is publicly traded, the fair value is generally equal to market value based on the closing price on the principal exchange on which the security is primarily traded unless restricted and a restricted discount is applied.

For equity securities of Portfolio Companies, the Valuation Committee estimates the fair value based on market and/or income approach with value then attributed to equity or equity like securities using the enterprise value waterfall (“Enterprise Value Waterfall”) valuation methodology. Under the Enterprise Value Waterfall valuation methodology, the Valuation Committee estimates the enterprise fair value of the portfolio company and then waterfalls the enterprise value over the portfolio company’s securities in order of their preference relative to one another. To assess the enterprise value of the portfolio company, the Valuation Committee weighs some or all of the traditional market valuation methods and factors based on the individual circumstances of the portfolio company in order to estimate the enterprise value. The methodologies for performing assets may be based on, among other things: valuations of comparable public companies, recent sales of private and public comparable companies, discounting the forecasted cash flows of the portfolio company, third party valuations of the portfolio company, considering offers from third parties to buy the company, estimating the value to potential strategic buyers and considering the value of recent investments in the equity securities of the portfolio company, and third-party asset and real estate appraisals. For non-performing assets, the Valuation Committee may estimate the liquidation or collateral value of the portfolio company’s assets. The Valuation Committee also takes into account historical and anticipated financial results.

The Company does not utilize hedge accounting and instead, when applicable, marks its derivatives to market on the Company’s consolidated statement of operations.

In assessing enterprise value, the Valuation Committee considers the mergers and acquisitions (“M&A”) market as the principal market in which the Company would sell its investments in portfolio companies under circumstances where the Company has the ability to control or gain control of the board of directors of the portfolio company (“Control Companies”). This approach is consistent with the principal market that the Company would use for its portfolio companies if the Company has the ability to initiate a sale of the portfolio company as of the measurement date, i.e., if it has the ability to control or gain control of the board of directors of the portfolio company as of the measurement date. In evaluating if the Company can control or gain control of a portfolio company as of the measurement date, the Company takes into account its equity securities on a fully diluted basis, as well as other factors.

For Non-Control Companies, consistent with ASC 820, the Valuation Committee considers a hypothetical secondary market as the principal market in which it would sell investments in those

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companies. The Company also considers other valuation methodologies such as the Option Pricing Method and liquidity preferences when valuing minority equity positions of a portfolio company.

For loans and debt securities of Non-Control Companies (for which the Valuation Committee has identified the hypothetical secondary market as the principal market), the Valuation Committee determines fair value based on the assumptions that a hypothetical market participant would use to value the security in a current hypothetical sale using a market yield (“Market Yield”) valuation methodology. In applying the Market Yield valuation methodology, the Valuation Committee determines the fair value based on such factors as third party broker quotes (if available) and market participant assumptions, including synthetic credit ratings, estimated remaining life, current market yield and interest rate spreads of similar securities as of the measurement date.

Estimates of average life are generally based on market data of the average life of similar debt securities. However, if the Valuation Committee has information available to it that the debt security is expected to be repaid in the near term, the Valuation Committee would use an estimated life based on the expected repayment date.

The Valuation Committee determines fair value of loan and debt securities of Control Companies based on the estimate of the enterprise value of the portfolio company. To the extent the enterprise value exceeds the remaining principal amount of the loan and all other debt securities of the company, the fair value of such securities is generally estimated to be their cost. However, where the enterprise value is less than the remaining principal amount of the loan and all other debt securities, the Valuation Committee may discount the value of such securities to reflect an impairment.

For the Company’s or its subsidiary’s investment in the PE Fund, for which an indirect wholly-owned subsidiary of the Company serves as the general partner (the “GP”) of the PE Fund, the Valuation Committee relies on the GP’s determination of the fair value of the PE Fund which will be generally valued, as a practical expedient, utilizing the net asset valuations provided by the GP, which will be made: (i) no less frequently than quarterly as of the Company’s fiscal quarter end and (ii) with respect to the valuation of PE Fund investments in portfolio companies, will be based on methodologies consistent with those set forth in the Company’s valuation procedures. In making its determinations, the GP considers and generally relies on TTG Advisers’ recommendations. The determination of the net asset value of the Company’s or its subsidiary’s investment in the PE Fund will follow the methodologies described for valuing interests in private investment funds (“Investment Vehicles”) described below. Additionally, when both the Company and the PE Fund hold investments in the same portfolio company, the GP’s Fair Value determination shall be based on the Valuation Committee’s determination of the Fair Value of the Company’s portfolio security in that portfolio company.

As permitted under GAAP, the Company’s interests in private investment funds are generally valued, as a practical expedient, utilizing the net asset valuations provided by management of the underlying Investment Vehicles, without adjustment, unless TTG Advisers is aware of information indicating that a value reported does not accurately reflect the value of the Investment Vehicle, including any information showing that the valuation has not been calculated in a manner consistent with GAAP. Net unrealized appreciation (depreciation) of such investments is recorded based on the Company’s proportionate share of the aggregate amount of appreciation (depreciation) recorded by each underlying Investment Vehicle. The Company’s proportionate investment interest includes its share of interest and dividend income and expense, and realized and unrealized gains and losses on securities held by the underlying Investment Vehicles, net of operating expenses and fees. Realized gains and losses on distributions from Investment Vehicles are generally recognized on a first in, first out basis.

The Company applies the practical expedient to interests in Investment Vehicles on an investment by investment basis, and consistently with respect to the Company’s entire interest in an investment. The

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Company may adjust the valuation obtained from an Investment Vehicle with a premium, discount or reserve if it determines that the net asset value is not representative of fair value.

If the Company intends to sell all or a portion of its interest in an Investment Vehicle to a third-party in a privately negotiated transaction near the valuation date, the Company will consider offers from third parties to buy the interest in an Investment Vehicle in valuations which may be discounted for both probability of close and time.

When the Company receives nominal cost warrants or free equity securities (“nominal cost equity”) with a debt security, the Company typically allocates its cost basis in the investment between debt securities and nominal cost equity at the time of origination.

Interest income, adjusted for amortization of premium and accretion of discount on a yield to maturity methodology, is recorded on an accrual basis to the extent that such amounts are expected to be collected. Origination and/or closing fees associated with investments in portfolio companies are recorded as income at the time the investment is made. Upon the prepayment of a loan or debt security, any unamortized original issue discount or market discount is recorded as a realized gain. Prepayment premiums are recorded on loans when received as fee income. Dividend income, if any, is recognized on an accrual basis on the ex-dividend date to the extent that the Company expects to collect such amounts.

For loans, debt securities, and preferred securities with contractual payment-in-kind interest or dividends, which represent contractual interest/dividends accrued and added to the loan balance or liquidation preference that generally becomes due at maturity, the Company will not ascribe value to payment-in-kind interest/dividends, if the portfolio company valuation indicates that the payment-in-kind interest is not collectible. However, the Company may ascribe value to payment-in-kind interest if the health of the portfolio company and the underlying securities are not in question. All payment-in-kind interest that has been added to the principal balance or capitalized is subject to ratification by the Valuation Committee. For interest or deferred interest receivables purchased by the Company at a discount to their outstanding amount, the Company amortizes the discount using the effective yield method and records it as interest income over the life of the loan. The Company will not ascribe value to the interest or deferred interest, if the Company has determined that the interest is not collectible.

Escrows from the sale of a portfolio company are generally valued at an amount, which may be expected to be received from the buyer under the escrow’s various conditions and discounted for both risk and time.

ASC 460, Guarantees, requires the Company to estimate the fair value of the guarantee obligation at its inception and requires the Company to assess whether a probable loss contingency exists in accordance with the requirements of ASC 450, Contingencies. The Valuation Committee typically will look at the pricing of the security in which the guarantee provided support for the security and compare it to the price of a similar or hypothetical security without guarantee support. The difference in pricing will be discounted for time and risk over the period in which the guarantee is expected to remain outstanding.

7. Concentration of Market Risk

Financial instruments that subjected the Company to concentrations of market risk consisted principally of equity investments, subordinated notes, debt instruments and escrow receivables (other than cash equivalents), which collectively represented approximately 74.64% and 77.48% of the Company’s total assets at July 31, 2015 and October 31, 2014, respectively. As discussed in Note 8, these investments consist of securities in companies with no readily determinable market values and as such are valued in accordance with the Company’s fair value policies and procedures. The Company’s investment strategy represents a high degree of business and financial risk due to the fact that the Company’s portfolio

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investments (other than cash equivalents) are generally illiquid, in small and middle market companies, and include foreign investments (which subject the Company to additional risks such as currency, geographic, demographic and operational risks), entities with little operating history or entities that possess operations in new or developing industries. These investments, should they become publicly traded, would generally be (i) subject to restrictions on resale, if they were acquired from the issuer in private placement transactions; and (ii) susceptible to market risk. Additionally, we are classified as a non-diversified investment company within the meaning of the 1940 Act, and therefore may invest a significant portion of our assets in a relatively small number of portfolio companies, which gives rise to a risk of significant loss should the performance or financial condition of one or more portfolio companies deteriorate. As of July 31, 2015, the fair value of our largest investment, U.S. Gas & Electric, Inc. (“U.S. Gas”), comprised 17.6% of our total assets and 31.5% of our net assets. The Company’s investments in short-term securities are generally in U.S. government securities, with a maturity of greater than three months but generally less than one year or other high quality and highly liquid investments. The Company considers all money market and other cash investments purchased with an original maturity of less than three months to be cash equivalents.

The following table shows the portfolio composition by industry grouping at fair value as a percentage of net assets as of July 31, 2015 and October 31, 2014.

	July 31, 2015	October 31, 2014
Energy Services	31.52%	27.39%
Electrical Engineering	15.59%	14.71%
Medical Device Manufacturer	12.89%	15.02%
Manufacturer of Pipe Fittings	8.91%	8.58%
Private Equity	7.04%	5.95%
Business Services	5.92%	0.00%
Renewable Energy	5.62%	7.49%
Automotive Dealerships	5.47%	6.27%
Software	5.00%	1.45%
Food Services	4.99%	4.53%
Consumer Products	4.35%	1.83%
Transportation	3.94%	0.00%
Environmental Services	3.29%	7.29%
Regulated Investment Company	2.79%	2.84%
Insurance	2.68%	2.25%
Distributor - Landscaping and Irrigation Equipment	2.61%	2.26%
Specialty Chemicals	2.47%	9.42%
Iron Foundries	2.18%	5.09%
Technology Investment - Financial Services	1.85%	1.71%
Real Estate Management	1.85%	1.79%
Electronics Manufacturing and Repair	1.67%	0.00%
Restaurants	0.67%	0.00%
Port Facilities	0.31%	0.36%
Manufacturer of Laminate Material and Composites	0.21%	0.99%
Consumer Services	0.00%	2.94%
Health & Beauty - Distributor	0.00%	0.00%
Retail Store Fixtures	0.00%	0.00%
	133.82%	130.16%

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8. Portfolio Investments

Pursuant to the requirements of the 1940 Act and ASC 820, we value our portfolio securities at their current market values or, if market quotations are not readily available, at their estimated fair values. Because our portfolio company investments generally do not have readily ascertainable market values, we record these investments at fair value in accordance with Valuation Procedures adopted by our Board of Directors. As permitted by the SEC, the Board of Directors has delegated the responsibility of making fair value determinations to the Valuation Committee, subject to the Board of Directors’ supervision and pursuant to our Valuation Procedures.

The levels of fair value inputs used to measure our investments are characterized in accordance with the fair value hierarchy established by ASC 820. Where inputs for an asset or liability fall in more than one level in the fair value hierarchy, the investment is classified in its entirety based on the lowest level input that is significant to that investment’s fair value measurement. We use judgment and consider factors specific to the investment in determining the significance of an input to a fair value measurement. The three levels of the fair value hierarchy and investments that fall into each of the levels are described below:

· Level 1: Level 1 inputs are unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. We use Level 1 inputs for investments in publicly traded unrestricted securities for which we do not have a controlling interest. Such investments are valued at the closing price on the measurement date. We valued one of our investments using Level 1 inputs as of July 31, 2015.

· Level 2: Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly or other inputs that are observable or can be corroborated by observable market data. Additionally, the Company’s interests in Investment Vehicles that can be withdrawn by the Company at the net asset value reported by such Investment Vehicle as of the measurement date or within six months of the measurement date are generally categorized as Level 2 investments. We did not value any of our investments using Level 2 inputs as of July 31, 2015.

· Level 3: Level 3 inputs are unobservable and cannot be corroborated by observable market data. Additionally, included in Level 3 are the Company’s interests in Investment Vehicles from which the Company cannot withdraw at the net asset value reported by such Investment Vehicles as of the measurement date or within six months of the measurement date. We use Level 3 inputs for measuring the fair value of substantially all of our investments. See Note 6 for the investment valuation policies used to determine the fair value of these investments.

As noted above, the interests in Investment Vehicles are included in Level 3 of the fair value hierarchy. In determining the appropriate level, the Company considers the length of time until the investment is redeemable, including notice and lock-up periods and any other restriction on the disposition of the investment. The Company also considers the nature of the portfolios of the underlying Investment Vehicles and such vehicles’ ability to liquidate their investment.

The following fair value hierarchy tables set forth our assets and liabilities by level as of July 31, 2015 and October 31, 2014 (in thousands):

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	July 31, 2015
	Level 1		Level 2		Level 3			Total
Senior/Subordinated Loans and credit facilities	$	—	$	—	$	133,497		$	133,497
Common Stock	8,356		—		8,590			16,946
Preferred Stock	—		—		148,636			148,636
Warrants	—		—		1,725			1,725
Common Equity Interest	—		—		74,532			74,532
LP Interest	—		—		20,558			20,558
GP Interest	—		—		518			518
LLC Interest	—		—		3,992			3,992
Guarantee	—		—		(48		)	(48		)
Escrow Receivable	—		—		293			293
Total Investments, net	$	8,356	$	—	$	392,293		$	400,649

	October 31, 2014
	Level 1		Level 2		Level 3			Total
Senior/Subordinated Loans and credit facilities	$	—	$	—	$	129,129		$	129,129
Common Stock	9,778		—		24,547			34,325
Preferred Stock	—		—		160,459			160,459
Warrants	—		—		713			713
Common Equity Interest	—		—		98,606			98,606
LP Interest	—		—		19,969			19,969
GP Interest	—		—		504			504
LLC Interest	—		—		3,992			3,992
Guarantee	—		—		(67		)	(67		)
Escrow receivables	—		—		—			—
Short-term investments	—		99,897		—			99,897
Total Investments, net	$	9,778	$	99,897	$	437,852		$	547,527

A review of fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification for certain financial assets or liabilities. Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in/out of the Level 3 category as of the beginning of the period in which the reclassifications occur. During the nine month period ended July 31, 2015 and the year ended October 31, 2014, there were no transfers in and out of Level 1 or 2.

The following tables set forth a summary of changes in the fair value of investment assets and liabilities measured using Level 3 inputs for the nine month period ended July 31, 2015, and July 31, 2014 (in thousands):

	Balances, November 1, 2014			Realized Gains (Losses) (1)			Reversal of Prior Period (Appreciation) Depreciation on Realization (2)			Unrealized Appreciation (Depreciation) (3)			Purchases (4)		Sales (5)			Transfers In & Out of Level 3		Balances, July 31, 2015
Senior/Subordinated Loans and credit facilities	$	129,129		$	(2,073	)	$	1,943		$	(15,971	)	$	59,970	$	(39,501	)	$	—	$	133,497
Common Stock	24,547			15,040			(15,050		)	(81		)	1,034		(16,900		)	—		8,590
Preferred Stock	160,459			—			—			(15,289		)	3,466		—			—		148,636
Warrants	713			—			—			392			620		—			—		1,725
Common Equity Interest	98,606			—			—			(16,751		)	1,342		(8,665		)	—		74,532
LP Interest	19,969			—			—			589			—		—			—		20,558
GP Interest	504			—			—			14			—		—			—		518
LLC Interest	3,992			—			—			—			—		—			—		3,992
Guarantees	(67		)	—			—			19			—		—			—		(48		)
Escrow Receivable	—			—			—			(15		)	308		—			—		293
Total	$	437,852		$	12,967		$	(13,107	)	$	(47,093	)	$	66,740	$	(65,066	)	$	—	$	392,293

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	Balances, November 1, 2013		Realized Gains (Losses) (1)			Reversal of Prior Period (Appreciation) Depreciation on Realization (2)			Unrealized Appreciation (Depreciation) (3)			Purchases (4)		Sales (5)			Transfers In & Out of Level 3		Balances, July 31, 2014
Senior/Subordinated Loans and credit facilities	$	113,153	$	(190	)	$	1,000		$	(6,090	)	$	44,245	$	(45,712	)	$	—	$	106,406
Common Stock	19,593		—			—			4,327			764		—			—		24,684
Preferred Stock	180,357		—			—			(8,681		)	18,401		(3,761		)	—		186,316
Warrants	220		—			—			672			825		(722		)	—		995
Other Equity Investments (Common Equity Interest, LP Interest, GP Interest, LLC Interest)	126,975		2,989			(4,128		)	(26,312		)	22,644		(6,267		)	—		115,901
Guarantees	—		—			—			(92		)	—		—			—		(92		)
Escrow receivables	6,237		492			—			—			—		(792		)	—		5,937
Total	$	446,535	$	3,291		$	(3,128	)	$	(36,176	)	$	86,879	$	(57,254	)	$	—	$	440,147

(1) Included in net realized gain (loss) on investments in the Consolidated Statements of Operations.

(2) Included in net unrealized appreciation (depreciation) of investments in the Consolidated Statements of Operations related to securities disposed of during the nine month period ended July 31, 2015 and July 31, 2014, respectively.

(3) Included in net unrealized appreciation (depreciation) of investments in the Consolidated Statements of Operations related to securities held at July 31, 2015 and July 31, 2014, respectively.

(4) Includes increases in the cost basis of investments resulting from new portfolio investments, PIK interest or dividends, the amortization of discounts, premiums and closing fees and the exchange of one or more existing securities for new securities.

(5) Includes decreases in the cost basis of investments resulting from principal repayments or sales.

In accordance with ASU 2011-04, the following tables summarize information about the Company’s Level 3 fair value measurements as of July 31, 2015 and October 31, 2014 (in thousands):

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Quantitative Information about Level 3 Fair Value Measurements*


	Fair value as of					Range				Weighted
	7/31/2015			Valuation technique	Unobservable input	Low		High		average (a)

Common Stock (c) (d)	$	8,590		Adjusted Net Asset Approach	Discount to Net Asset Value	0.0	%	100.0	%	0.0	%
					Real Estate Appraisals	N/A		N/A		N/A

				Income Approach	Discount Rate	15.0	%	30.0	%	30.0	%

				Market Approach	Revenue Multiple	2.0x		2.0x		2.0x
					EBITDA Multiple	4.7x		4.7x		4.7x
					Forward EBITDA Multiple	7.0x		7.0x		7.0x
					Discount to Letter of Intent	2.0	%	2.0	%	2.0	%

Senior/Subordinated loans	$	133,497		Market Approach	EBITDA Multiple	5.0x		6.0x		5.1x
and credit facilities (b) (d)					Forward EBITDA Multiple	7.0x		7.0x		7.0x

				Income Approach	Required Rate of Return	10.0	%	16.0	%	13.7	%

				Adjusted Net Asset Approach	Real Estate Appraisals	N/A		N/A		N/A
					Discount to Liquidation Value of Accounts Recievable	20.0	%	20.0	%	20.0	%
					Discount to Liquidation Value of Equipment	95.0	%	95.0	%	95.0	%

LP Interest	$	20,558		Adjusted Net Asset Approach	Discount to Net Asset Value	0.0	%	0.0	%	0.0	%

GP Interest	$	518		Adjusted Net Asset Approach	Discount to Net Asset Value	0.0	%	0.0	%	0.0	%

LLC Interest	$	3,992		Market Approach	EBITDA Multiple	6.0x		6.0x		6.0x

Common Equity Interest	$	74,532		Market Approach	Revenue Multiple	2.0x		2.0x		2.0x
					Forward EBITDA Multiple	7.0x		7.0x		7.0x
					EBITDA Multiple	5.5x		6.4x		6.1x
					Multiple of Book Value	1.0x		1.0x		1.0x

				Adjusted Net Asset Approach	Real Estate Appraisals	N/A		N/A		N/A

				Income Approach	Discount Rate	12.4	%	15.2	%	14.8	%
					Perpetual Growth Rate of Free Cash Flow	3.0	%	3.0	%	3.0	%

Preferred Stock (c)	$	148,636		Adjusted Net Asset Approach	Discount to Net Asset Value	0.0	%	0.0	%	0.0	%
					Real Estate Appraisals	N/A		N/A		N/A

				Market Approach	Revenue Multiple	2.0x		2.0x		2.0x
					EBITDA Multiple	5.0x		5.0x		3.4x
					% of AUM	9.90	%	9.90	%	9.90	%
					Illiquidity Discount	30.0	%	30.0	%	30.0	%
					Multiple of Book Value	1.0x		1.0x		1.0x
					EBT Multiple	22.5x		22.5x		22.5x
					Discount to Letter of Intent	2.0	%	2.0	%	2.0	%

				Income Approach	Discount Rate	15.0	%	15.7	%	15.7	%
					Perpetual Growth Rate of Free Cash Flow	2.5	%	2.5	%	2.5	%

Warrants	$	1,725		Market Approach	Discount to Enterprise Value of Joint Venture	0.0	%	0.0	%	0.0	%

Guarantees	$	(48	)	Income Approach	Discount Rate	7.3	%	7.3	%	7.3	%

Escrows	$	293		Income Approach	Discount Rate	5.0	%	5.0	%	5.0	%

Total	$	392,293

Notes:

(a) Calculated based on fair values.

(b) Certain investments are priced using non-binding broker or dealer quotes.

(c) Certain common and preferred stock investments are fair valued based on liquidation-out preferential rights held by the Company.

(d) Real estate appraisals are performed by independent third parties and the Company does not have reasonable access to the underlying unobservable inputs.

* The above table excludes certain investments whose fair value is zero due to certain specific situations at the portfolio company level.

NM - Not Meaningful

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Quantitative Information about Level 3 Fair Value Measurements*

	Fair value as of					Range						Weighted
	10/31/2014			Valuation technique	Unobservable input	Low			High			average (a)

Common Stock (c) (d)	$	24,547		Adjusted Net Asset Approach	Discount to Net Asset Value	0.0		%	100.0		%	0.0		%
					Real Estate Appraisals	N/A			N/A			N/A

				Income Approach	Discount Rate	12.6		%	15.0		%	12.6		%
					Perpetual Growth Rate of Free Cash Flow	3.0		%	3.0		%	3.0		%

				Market Approach	Revenue Multiple	2.0x			2.0x			2.0x
					EBITDA Multiple	5.0x			9.0x			5.0x
					Forward EBITDA Multiple	5.5x			5.5x			5.5x

Senior/Subordinated loans	$	129,129		Adjusted Net Asset Approach	Discount to Net Asset Value	30.0		%	30.0		%	30.0		%
and credit facilities (b) (d)

				Market Approach	EBITDA Multiple	5.0x			10.2x			8.0x
					Forward EBITDA Multiple	5.0x			5.5x			5.1x
					Market Quotes	101.0		%	101.0		%	101.0		%
					Discount to Forward EBITDA	15.0		%	15.0		%	15.0		%

				Income Approach	Discount Rate	12.6		%	12.6		%	12.6		%
					Perpetual Growth Rate of Free Cash Flow	3.0		%	3.0		%	3.0		%
					Required Rate of Return	9.2		%	16.0		%	11.7		%

LP Interest	$	19,969		Adjusted Net Asset Approach	Discount to Net Asset Value	N/A			N/A			N/A

GP Interest	$	504		Adjusted Net Asset Approach	Discount to Net Asset Value	N/A			N/A			N/A

LLC Interest	$	3,992		Market Approach	EBITDA Multiple	6.0x			6.0x			6.0x

Common Equity Interest	$	98,606		Market Approach	Revenue Multiple	2.0x			2.0x			2.0x
					Forward EBITDA Multiple	7.0x			7.0x			7.0x
					EBITDA Multiple	5.0x			5.5x			5.2x
					Euros per TTM MWhr	€	0.70		€	0.70		€	0.70
					Multiple of Book Value	1.0x			1.0x			1.0x

				Adjusted Net Asset Approach	Real Estate Appraisals	N/A			N/A			N/A

				Income Approach	Discount Rate	8.0		%	15.5		%	13.5		%
					Perpetual Growth Rate of Free Cash Flow	3.0		%	3.0		%	3.0		%

Preferred Stock (c)	$	160,459		Adjusted Net Asset Approach	Discount to Net Asset Value	0.0		%	0.0		%	0.0		%
					Real Estate Appraisals	N/A			N/A			N/A

				Market Approach	Revenue Multiple	2.0x			2.0x			2.0x
					EBITDA Multiple	9.0x			9.0x			9.0x
					% of AUM	1.06		%	1.06		%	1.06		%
					Illiquidity Discount	30.0		%	30.0		%	30.0		%
					Multiple of Book Value	1.0x			1.0x			1.0x
					EBT Multiple	16.1x			16.1x			16.1x
					Forward EBITDA Multiple	5.0x			5.0x			5.0x
					Discount to Forward EBITDA	15.0		%	15.0		%	15.0		%

				Income Approach	Discount Rate	15.0		%	16.6		%	16.6		%
					Perpetual Growth Rate of Free Cash Flow	2.5		%	2.5		%	2.5		%

Warrants	$	713		Market Approach	EBITDA Multiple	6.0x			6.0x			6.0x

				Income Approach	Discount Rate	21.5		%	21.5		%	NM
					Perpetual Growth Rate of Free Cash Flow	3.0		%	3.0		%	NM
					Illiquidity Discount	100.0		%	100.0		%	NM

				Adjusted Net Asset Approach	Discount to Net Asset Value	0.0		%	0.0		%	NM

Guarantees	$	(67	)	Income Approach	Discount Rate	7.3		%	7.3		%	7.3		%

Total	$	437,852

Notes:

(a) Calculated based on fair values.

(b) Certain investments are priced using non-binding broker or dealer quotes.

(c) Certain common and preferred stock investments are fair valued based on liquidation-out preferential rights held by the Company.

(d) Real estate appraisals are performed by independent third parties and the Company does not have reasonable access to the underlying unobservable inputs.

* The above table excludes certain investments whose fair value is zero due to certain specific situations at the portfolio company level.

NM - Not Meaningful

ASU 2011-04 clarifies the application of existing fair value measurement and disclosure requirements related to the application of the highest and best use and valuation premise concepts for financial and nonfinancial instruments, measuring the fair value of an instrument classified in equity, and disclosures about fair value measurements. ASU 2011-04 requires additional disclosures about fair value measurements categorized within Level 3 of the fair value hierarchy, including the valuation processes used by the reporting entity, the sensitivity of the fair value to changes in unobservable inputs and the interrelationships between those unobservable inputs, if any.

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Following are descriptions of the sensitivity of the Level 3 recurring fair value measurements to changes in the significant unobservable inputs presented in the above table. For securities utilizing the income approach valuation technique, a significant increase (decrease) in the discount rate, risk premium or discount for lack of marketability would result in a significantly lower (higher) fair value measurement. The discount for lack of marketability used to determine fair value may include other factors such as liquidity or credit risk. Generally, a change in the discount rate is accompanied by a directionally similar change in the risk premium and discount for lack of marketability. For securities utilizing the market approach valuation technique, a significant increase (decrease) in the EBITDA, revenue multiple or other key unobservable inputs listed in the above table would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the discount for lack of marketability would result in a significantly lower (higher) fair value measurement. The discount for lack of marketability used to determine fair value may include other factors such as liquidity or credit risk. For securities utilizing an adjusted net asset approach valuation technique, a significant increase (decrease) in the price to book value ratio, discount rate or other key unobservable inputs listed in the above table would result in a significantly higher (lower) fair value measurement.

For the Nine Month Period Ended July 31, 2015

During the nine month period ended July 31, 2015, the Company made eight new investments, committing capital totaling approximately $58.1 million. The investments were made in RX Innovations, Inc. (“RX”) ($10.3 million), Agri-Carriers Group, Inc. (“Agri-Carriers”) ($11.8 million), Legal Solutions Holdings, Inc. (“Legal Solutions”) ($8.7 million), The Results Companies, LLC (“Results Companies”) ($9.0 million), Vestal Manufacturing Enterprises, Inc. (“Vestal”) ($6.5 million), Thunderdome Restaurants, LLC (“Thunderdome”) ($2.0 million), Initials, Inc. (“Initials”) ($4.8 million) and United States Technologies, Inc. (“U.S. Technologies”) ($5.0 million).

During the nine month period ended July 31, 2015, the Company made 4 follow-on investments into 4 existing portfolio companies totaling approximately $2.6 million. On May 27, 2015, the Company invested an additional $1.1 million into MVC Automotive Group GmbH (“MVC Automotive”) in the form of common equity interest. On June 3, 2015, the Company invested an additional $250,000 into Centile Holdings B.V. (“Centile”) in the form of common equity interest. On July 6, 2015, the Company invested $250,000 into Biovation Acquisition Company (“BAC”) in the form of equity. See below for further information on BAC. On July 7, 2015, the Company made a secured $1.0 million loan to Biogenic. The loan has a 16% interest rate and matures on February 29, 2016. The Company also received a warrant at no cost and allocated a portion of the cost basis of the loan to the warrant at the time the investment was made.

On November 26, 2014, Summit Research Labs, Inc. repaid its second lien loan in full including all accrued interest totaling approximately $25.7 million.

On December 31, 2014, the Company received distributions totaling $388,000 from the PE Fund, which was treated as a return of capital.

On April 20, 2015, BAC credit purchased the assets of Biovation. The Company received 90 shares of class B non-voting common stock in BAC as part of the transaction and realized a loss on Biovation of approximately $2.2 million.

On May 1, 2015, the Company sold 2,893 shares of common stock in Ohio Medical Corporation (“Ohio Medical”) for a nominal amount resulting in no realized gain or loss.

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On May 29, 2015, the Company sold its 81,000 shares of common stock in Vestal receiving total proceeds of approximately $17.9 million resulting in a realized gain of approximately $15.0 million. The total proceeds includes a $1.0 million dividend and assumes full receipt of the escrow proceeds. The $600,000 loan was also repaid in full, including all accrued interest. As part of the transaction, the Company reinvested approximately $6.3 million in the form of a subordinated loan, $250,000 for 5,610 shares of common stock and a warrant with no cost. The loan has an interest rate of 15% and matures on November 28, 2021.

On June 19, 2015, the Company monetized a majority of its investment in Velocitius B.V. (“Velocitius”), receiving approximately $9.2 million in proceeds, which included a return of capital and closing fees and was net of a minimal currency loss.

During the month ended June 30, 2015, the Company sold its $10.0 million PrePaid Legal loan for proceeds totaling approximately $10.1 million, including all accrued interest.

During the nine month period ended July 31, 2015, Custom Alloy Corporation (“Custom Alloy”) made principal payments totaling $3.5 million on its unsecured subordinated loan. The balance of the loan at July 31, 2015 was $3.0 million.

During the quarter ended January 31, 2015, the Valuation Committee increased the fair value of the Company’s investments in Foliofn, Inc. (“Foliofn”) preferred stock by $109,000, Turf Products, LLC (“Turf”) loan by approximately $2,000, RuMe Inc. (“RuMe”) series C preferred stock by $800,000 and series B preferred stock by $200,000, Advantage Insurance Holdings LTD (“Advantage”) preferred stock by $20,000, Biogenic Reagents (“Biogenic”) warrant and senior convertible note by a net total of approximately $28,000 and U.S. Spray Drying Holding Company (“SCSD”) common stock by $387,000. In addition, increases in the cost basis and fair value of the loans to Biogenic, Custom Alloy, Morey’s Seafood International, LLC (“Morey’s”), and U.S. Gas were due to the capitalization of PIK interest totaling $436,878. The Valuation Committee also increased the fair value of the Ohio Medical series C convertible preferred stock by approximately $1.1 million due to a PIK distribution, which was treated as a return of capital. The Valuation Committee also decreased the fair value of the Company’s investments in MVC Private Equity Fund L.P. general partnership interest and limited partnership interest in the PE Fund by a total of approximately $759,000, Custom Alloy second lien loan by approximately $84,000, NPWT Corporation (“NPWT”) common stock by $2,000 and preferred stock by $36,000, SIA Tekers Invest (“Tekers”) common stock by $170,000, PrePaid Legal loan by $100,000, Centile equity interest by $538,000, Biovation Holdings Inc. (“Biovations”) loan by approximately $716,000, Velocitius equity interest by approximately $1.1 million, Security Holdings B.V. (“Security Holdings”) equity interest by $1.1 million, JSC Tekers Holdings (“JSC Tekers”) preferred stock by approximately $599,000, MVC Automotive equity interest by approximately $5.9 million, SGDA Europe B.V. (“SGDA Europe”) equity interest by approximately $749,000 and Inland Environmental & Remediation LP (“Inland”) warrant by approximately $700,000.

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value of the Company’s investments in Custom Alloy second lien loan by approximately $11,000, Foliofn, Inc. preferred stock by $82,000, NPWT common stock by $1,000 and preferred stock by $12,000, Tekers common stock by $21,000, Centile equity interest by $98,000, Morey’s second lien loan by approximately $253,000, Advantage preferred stock by approximately $28,000, Velocitius equity interest by $899,000, Biovations loan by approximately $2.7 million, SGDA Europe equity interest by approximately $1.3 million, Security Holdings equity interest by $850,000, Ohio Medical series A preferred stock by $10.5 million and the Inland loan by approximately $1.4 million.

During the quarter ended July 31, 2015, the Valuation Committee increased the fair value of the Company’s investments in RuMe series C preferred stock by approximately $198,000 and series B preferred stock by approximately $53,000, Custom Alloy second lien loan by approximately $191,000, Turf guarantee by approximately $19,000, Centile equity interest by $48,000, MVC Private Equity Fund L.P. general partnership interest and limited partnership interest in the PE Fund by a total of approximately $751,000 and Advantage preferred stock by approximately $302,000. In addition, increases in the cost basis and fair value of the loans to Biogenic, Custom Alloy, Morey’s, Vestal and U.S. Gas were due to the capitalization of PIK interest totaling $525,997. The Valuation Committee also increased the fair value of the Ohio Medical series C convertible preferred stock by approximately $1.2 million due to a PIK distribution, which was treated as a return of capital. The Valuation Committee also decreased the fair value of the Company’s investments in Foliofn, Inc. preferred stock by $383,000, NPWT preferred stock by $1,000, Tekers common stock by $117,000, Turf loan by approximately $2,000, Vestal escrow by approximately $15,000, BAC common stock by approximately $167,000, Biogenic warrant and senior convertible note by a net total of approximately $2,000, Morey’s second lien loan by approximately $753,000, Inland loan by $10.0 million, Velocitius equity interest by approximately $774,000, JSC Tekers preferred stock by $35,000, SGDA Europe equity interest by approximately $1.1 million, Ohio Medical series A preferred stock by $6.0 million, MVC Automotive equity interest by $616,000 and Security Holdings equity interest by $2.0 million.

During the nine month period ended July 31, 2015, the Valuation Committee increased the fair value of the Company’s investments in Turf loan and guarantee by a total of approximately $20,000, Biogenic warrant and senior convertible note by a net total of approximately $878,000, SCSD common stock by $387,000, Advantage preferred stock by approximately $294,000, MVC Private Equity Fund L.P. general partnership interest and limited partnership interest in the PE Fund by a total of approximately $602,000, Custom Alloy second lien loan by approximately $96,000 and RuMe series C preferred stock by approximately $1.6 million and series B preferred stock by approximately $395,000. In addition, increases in the cost basis and fair value of the loans to Biogenic, Custom Alloy, Morey’s, Vestal and U.S. Gas were due to the capitalization of PIK interest totaling $1,464,781. The Valuation Committee also increased the fair value of the Ohio Medical series C convertible preferred stock by approximately $3.5 million due to a PIK distribution, which was treated as a return of capital. The Valuation Committee also decreased the fair value of the Company’s investments in Foliofn, Inc. preferred stock by $356,000, NPWT common stock by $3,000 and preferred stock by $49,000, Tekers common stock by $308,000, PrePaid Legal loan by $100,000, Centile equity interest by $588,000, BAC common stock by approximately $167,000, Vestal escrow by approximately $15,000, Biovations loan by approximately $3.4 million, Morey’s second lien loan by approximately $1.0 million, Velocitius equity interest by $2.8 million, JSC Tekers preferred stock by $629,000, Security Holdings equity interest by $4.0 million, SGDA Europe equity interest by approximately $3.2 million, Ohio Medical series A preferred stock by $16.5 million, MVC Automotive equity interest by $6.3 million and Inland warrant by approximately $700,000 and loan by approximately $11.4 million.

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prior investment objective (“Legacy Investments”) was $5.5 million and $23.8 million, respectively, and the fair value and cost basis of portfolio investments made by the Company’s current management team was $394.9 million and $426.5 million, respectively. At October 31, 2014, the fair value of all portfolio investments, exclusive of short-term investments and escrow receivables, was $447.6 million with a cost basis of $440.0 million. At October 31, 2014, the fair value and cost basis of portfolio investments of the Legacy Investments was $5.9 million and $23.8 million, respectively, and the fair value and cost basis of portfolio investments made by the Company’s current management team was $441.7 million and $416.2 million, respectively.

For the Fiscal Year Ended October 31, 2014

During the year ended October 31, 2014, the Company made four new investments, committing capital totaling approximately $48.4 million. The investments were made in G3K Displays, Inc. (“G3K”) ($6.0 million), Inland ($15.0 million), Equus Total Return, Inc. (“Equus”) ($4.4 million) and Custom Alloy ($23.0 million).

During the year ended October 31, 2014, the Company made 20 follow-on investments into 13 existing portfolio companies totaling approximately $57.4 million. On November 13, 2013, the Company loaned $4.0 million to Security Holdings B.V. (“Security Holdings”) in the form of a 5% cash bridge loan with a maturity date of February 15, 2014. On November 19, 2013, the Company increased its common equity interest in Centile by $100,000. Also on November 19, 2013, the Company invested $5.0 million into MVC Automotive Group B.V. (“MVC Automotive”) in the form of common equity interest and converted its bridge loan of approximately $1.8 million, including accrued interest, to common equity interest. On December 23, 2013, the Company made a senior secured loan of $3.3 million to RuMe with a cash interest rate of 12% and a maturity date of April 4, 2014. The Company also purchased warrants for shares of common stock in RuMe for a nominal amount and allocated a portion of the cost basis of the loan to the warrants at the time the investment was made. On January 2, 2014, the Company loaned $7.0 million to Morey’s, increasing its second lien loan amount to $15.0 million. The interest rate on the total loan was increased to 10% cash and 3% PIK. On March 5, 2014, the Company invested an additional $4.0 million into MVC Automotive in the form of common equity interest. On March 10, 2014, the Company exercised its warrant in RuMe at a cost of approximately $43,000 and received 4,297,549 shares of common stock. On March 5, 2014 and April 1, 2014, the Company contributed a total of approximately $2.8 million to the PE Fund related to expenses, an additional investment in Plymouth Rock Energy, LLC and an investment in Advanced Oilfield Services, LLC. On April 1, 2014, the Company loaned $1.5 million to Marine Exhibition Corporation (“Marine”) in the form of a second lien loan with an interest rate of 11%. The loan matured on June 30, 2014. On May 2, 2014, the Company loaned $1.5 million to SCSD in the form of a secured loan. The loan has an interest rate of 12% and a maturity date of May 2, 2019. On May 7, 2014, the Company converted RuMe’s $3.3 million senior secured loan and accrued interest of approximately $161,000 into 23,896,634 shares of series C preferred stock. On May 9, 2014, the Company loaned an additional $500,000 to Biovation increasing the total amount outstanding on the bridge loan to $3.8 million and extended the maturity date of the loan to October 31, 2014. The Company also received a warrant at no cost and allocated a portion of the cost basis of the loan to the warrant at the time the investment was made. On May 14, 2014, the Company signed a share exchange agreement with Equus, another publicly traded business development company, as part of a plan of reorganization adopted by the Equus Board of Directors. Under the terms of the reorganization, Equus will pursue a merger or consolidation with the Company, a subsidiary of the Company, or one or more of the Company’s portfolio companies. Absent Equus merging or consolidating with/into the Company itself (whereby the Company would own a majority of Equus shares), the current intention is for Equus to (i) be restructured into a publicly-traded operating company focused on the energy and/or financial services sectors and (ii) seek to terminate its election as a business development company. Pursuant to the share exchange agreement, the Company has received 2,112,000 shares of

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Equus in exchange for 395,839 shares of the Company. The exchange was calculated based upon each company’s respective net asset value per share published at that time. As part of the reorganization, the Company may acquire additional Equus shares from time to time, either through Equus’ direct sale of newly issued shares to the Company or through the purchase of outstanding Equus shares. The Company continues to discuss reorganization options with Equus. As a result of the restatement for the quarter ending July 31, 2014, the Company has a liability to Equus of $221,424 for additional shares and dividends due to Equus. TTG Advisers has voluntarily agreed to waive any management fees on the Company’s assets invested in Equus common stock. Also, as part of the Equus plan of reorganization, on May 21, 2014, June 3, 2014 and June 12, 2014, the Company purchased 512,557, 850,000 and 970,087 additional outstanding common shares of Equus, respectively, at a cost of approximately $1.2 million, $2.1 million and $2.4 million, respectively. On May 27, 2014, the Company purchased 2,893 common shares of Ohio Medical from Champlain Capital Partners at a nominal cost. On May 30, 2014, the Company loaned $3.0 million to U.S. Gas. The loan has an interest rate of 14% and a maturity date of July 1, 2018. On August 26, 2014, the Company invested $12.7 million in Security Holdings for additional common equity interest. On September 30, 2014, the Company loaned $4.0 million to Biogenics in the form of a secured loan. The loan has a 16% interest rate and matures on September 30, 2015. On October 7, 2014, the Company contributed a total of approximately $2.4 million to the PE Fund related to an investment in AccuMed Corp. As of October 31, 2014, the PE Fund had invested in Plymouth Rock Energy, LLC, Gibdock Limited, Focus Pointe Holdings, Inc., Advanced Oilfield Services, LLC and AccuMed Corp.

On November 1, 2013, Turf repaid its $1.0 million junior revolving note in full, including all accrued interest. The junior revolving note is no longer a commitment of the Company. Turf also made a $4.5 million principal payment on its senior subordinated loan, resulting in an outstanding balance of approximately $3.9 million as of October 31, 2014. The Company also guaranteed $1.0 million of Turf’s indebtedness to Berkshire Bank. The guarantee was valued at -$67,000 or negative $67,000 at October 31, 2014.

On November 11, 2013, MVC Automotive Group B.V. completed a tax free reorganization into MVC Automotive Group GmbH “MVC Automotive”, an Austrian holding company, to increase operating efficiencies.

On December 16, 2013, the Company announced the termination of its agreement to sell U.S. Gas to United States Gas & Electric Holdings, Inc. (“US Holdings”), a company organized to acquire U.S. Gas. US Holdings was unable to satisfy the closing conditions of the original agreement (October 4, 2013) and subsequently submitted a transaction termination notice to the Company on December 10, 2013.

On January 30, 2014, BPC II, LLC completed the dissolution of its operations. The Company realized a loss of $180,000 as a result of this dissolution.

On April 14, 2014, the Company agreed to provide G3K a $10.0 million loan in three installments and made its first loan of $6.0 million. The closing of the Company’s G3K investment and first loan occurred following extensive due diligence, including receipt of an unqualified audit report on G3K’s financial statements and a separate quality of earnings review by an accounting firm. The Company has initiated legal action in the Superior Court of New Jersey, Chancery Division, against G3K, its three shareholders and certain corporate officers for fraudulently misrepresenting G3K’s financial records in order to secure financing from the Company. The Company is working diligently to uncover the full extent of what it believes to be a highly sophisticated fraud and is seeking to recover loan proceeds. All legal options available are being examined. The Company did recover $375,000 in principal prior to October 31, 2014. The loan had an outstanding balance of approximately $5.6 million and had a fair value of $0 as of October 31, 2014.

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On May 1, 2014, the Company converted the JSC Tekers Holdings (“JSC Tekers”) $12.0 million secured loan and accrued interest to preferred equity. The cost and fair value assigned to the preferred equity was approximately $11.8 million. As a result of the loan conversion, the Company realized a loss of approximately $190,000.

On May 19, 2014, the Company loaned an additional $2.0 million to Inland. The total amount outstanding of the senior secured loan as of October 31, 2014 was $15.0 million.

On May 30, 2014, the Company received an approximately $2.9 million principal payment from U.S. Gas on its second lien loan. The second lien loan interest rate was adjusted to 13% and the maturity date was extended to July 1, 2019.

On June 30, 2014, the Company converted its Sanierungsgesellschaft fur Deponien und Altasten GmbH (“SGDA”) $6.5 million term loan and accrued interest of approximately $1.9 million to additional common equity interest in SGDA Europe.

On July 1, 2014, Marine repaid its $11.7 million senior subordinated and $1.5 million second lien loans in full including all accrued interest. The 20,000 shares of Marine’s preferred stock was also sold for approximately $3.8 million, which resulted in no gain or loss from the sale. During the fiscal year ended October 31, 2014, the Company received dividends totaling approximately $760,000 from Marine.

On July 29, 2014, the Company sold its limited liability company interest in Octagon Credit Investors, LLC (“Octagon”) for approximately $6.3 million resulting in a realized gain of approximately $3.2 million.

On September 2, 2014, Security Holdings repaid its $4.0 million bridge loan in full, including all accrued interest.

On October 3, 2014, Freshii USA, Inc. (“Freshii”) repaid its $1.1 million senior secured loan in full, including all accrued interest. With this repayment and the removal of the warrant associated with Freshii, the Company recorded a net realized loss of approximately $14,000.

On October 8, 2014, the Company received approximately $6.3 million in proceeds related to the Summit escrow which was fair valued at approximately $5.9 million, resulting in a realized gain of approximately $377,000.

On October 31, 2014, the Company redeemed its convertible series A and series B preferred shares of Custom Alloy for $23.0 million, which resulted in a realized gain of $13.0 million. The Company then reinvested $23.0 million in Custom Alloy in the form of a second lien loan with an interest rate of 11% and a maturity date of April 30, 2020.

During the fiscal year ended October 31, 2014, Custom Alloy made $1.0 million of principal payments on its loan.

During the fiscal year ended October 31, 2014, the Company received a dividend of approximately $67,000 from NPWT.

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$34,000, SGDA Europe equity interest by approximately $649,000, Vestal Manufacturing Enterprises, Inc. (“Vestal”) common stock by $3.0 million, MVC Private Equity Fund L.P. general partnership interest and limited partnership interest in the PE Fund by a total of approximately $2.2 million, Biovation warrants by $162,000, and Freshii warrant by approximately $15,000. In addition, increases in the cost basis and fair value of the loans to Marine Exhibition Corporation (“Marine”), Summit, Freshii, Biogenic and U.S. Gas, and the Marine preferred stock were due to the capitalization of PIK interest/dividends totaling $1,008,665. The Valuation Committee also increased the fair value of the Ohio Medical series C convertible preferred stock by approximately $949,000 due to a PIK distribution, which was treated as a return of capital. The Valuation Committee also decreased the fair value of the Company’s investments in Centile equity interest by $29,000, Security Holdings equity interest by $304,000, Octagon equity interest by approximately $1.2 million, MVC Automotive equity interest by approximately $3.2 million, Velocitius equity interest by approximately $1.9 million, Biovation bridge loan by approximately $102,000, Foliofn, Inc. preferred stock by approximately $1.1 million, Turf guarantee by $92,000 and Tekers common stock by $12,000. Also, during the quarter ended January 31, 2014, the undistributed allocation of flow through income from the Company’s equity investment in Octagon increased the cost basis and fair value of this investment by approximately $101,000.

During the quarter ended April 30, 2014, the Valuation Committee increased the fair value of the Company’s investments in Foliofn, Inc. preferred stock by $127,000, MVC Private Equity Fund L.P. general partnership interest and limited partnership interest in the PE Fund by a total of approximately $900,000, Octagon equity interest by approximately $1.1 million, Security Holdings equity interest by $422,000, PrePaid Legal loan by $100,000, Centile equity interest by $57,000, Freshii warrant by approximately $8,000 and Tekers common stock by $7,000. In addition, increases in the cost basis and fair value of the loans to Marine, Summit, Freshii, Biogenic, Morey’s and U.S. Gas, and the Marine preferred stock were due to the capitalization of PIK interest/dividends totaling $1,118,793. The Valuation Committee also increased the fair value of the Ohio Medical series C convertible preferred stock by approximately $987,000 due to a PIK distribution, which was treated as a return of capital. The Valuation Committee also decreased the fair value of the Company’s investments in Custom Alloy series A preferred stock by approximately $6,000 and series B preferred stock by approximately $1.3 million, SGDA Europe equity interest by approximately $111,000, MVC Automotive equity interest by approximately $3.4 million, G3K loan by approximately $5.6 million, NPWT common stock by approximately $4,000 and preferred stock by approximately $70,000, U.S. Gas preferred stock by $9.0 million, Velocitius equity interest by approximately $606,000 and the Biovation bridge loan by approximately $20,000. Also, during the quarter ended April 30, 2014, the undistributed allocation of flow through income from the Company’s equity investment in Octagon increased only the cost basis of this investment by approximately $181,000.

During the quarter ended July 31, 2014, the Valuation Committee increased the fair value of the Company’s investments in MVC Private Equity Fund L.P. general partnership interest and limited partnership interest in the PE Fund by a total of approximately $359,000, Vestal common stock by approximately $1.5 million, RuMe series C preferred stock by approximately $75,000, Biogenic senior convertible note by $275,000, MVC Automotive equity interest by approximately $4.4 million, Biovation bridge loan by approximately $103,000 and Advantage preferred stock by $96,000. In addition, increases in the cost basis and fair value of the loans to Marine, Summit, Freshii, Biogenic, Morey’s and U.S. Gas, and the Marine preferred stock were due to the capitalization of PIK interest/dividends totaling $1,094,938. The Valuation Committee also increased the fair value of the Ohio Medical series C convertible preferred stock by approximately $1.0 million due to a PIK distribution, which was treated as a return of capital. The Valuation Committee also decreased the fair value of the Company’s investments in Foliofn, Inc. preferred stock by approximately $109,000, Velocitius equity interest by approximately $198,000, Octagon equity interest by approximately $730,000, Ohio Medical series A preferred stock by $800,000, NPWT common stock by $5,000 and preferred stock by $104,000, Tekers common stock by

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$111,000, SGDA Europe equity interest by approximately $2.6 million, Security Holdings equity interest by $564,000, Centile equity interest by $76,000, JSC Tekers common and preferred stock by approximately $499,000 and the Biovation warrants by approximately $232,000. Also, during the quarter ended July 31, 2014, the undistributed allocation of flow through income from the Company’s equity investment in Octagon increased the cost basis of this investment by approximately $204,000.

During the quarter ended October 31, 2014, the Valuation Committee increased the fair value of the Company’s investments in MVC Private Equity Fund L.P. general partnership interest and limited partnership interest in the PE Fund by a total of approximately $76,000, Centile equity interest by $165,000, Security Holdings equity interest by $2.1 million, RuMe series C preferred stock by approximately $800,000, Biogenic senior convertible note by $30,000, Advantage preferred stock by $125,000, Summit loan by approximately $253,000, Turf equity interest by $525,000, Turf guarantee by approximately $25,000, and Morey’s loan by approximately $253,000. In addition, increases in the cost basis and fair value of the loans to Summit, Freshii, Biogenic, Morey’s, Inland and U.S. Gas were due to the capitalization of PIK interest totaling $706,601. The Valuation Committee also increased the fair value of the Ohio Medical series C convertible preferred stock by approximately $1.1 million due to a PIK distribution, which was treated as a return of capital. The Valuation Committee also decreased the fair value of the Company’s investments in Foliofn, Inc. preferred stock by approximately $16,000, MVC Automotive equity interest by approximately $4.5 million, NPWT common stock by approximately $1,000 and preferred stock by approximately $20,000, Velocitius equity interest by approximately $5.7 million, Biovation warrants by $240,000, SGDA Europe equity interest by approximately $584,000, Biovation bridge loan by approximately $420,000, Tekers common stock by $136,000, JSC Tekers common and preferred stock by approximately $5.1 million and the Turf loan by approximately $31,000.

During the fiscal year ended October 31, 2014, the Valuation Committee increased the fair value of the Company’s investments in Custom Alloy series A preferred stock by approximately $12,000 and series B preferred stock by approximately $2.7 million, MVC Private Equity Fund L.P. general partnership interest and limited partnership interest in the PE Fund by a total of approximately $3.6 million, Centile equity interest by $117,000, PrePaid Legal loan by $100,000, Freshii warrant by approximately $23,000, Security Holdings equity interest by $1.7 million, RuMe series C preferred stock by approximately $875,000, Biogenic senior convertible note by $305,000, Advantage preferred stock by $221,000, Summit loan by approximately $253,000, Turf equity interest by $525,000, Morey’s loan by approximately $253,000 and Vestal common stock by approximately $4.5 million. In addition, increases in the cost basis and fair value of the loans to Marine, Summit, Freshii, Biogenic, Morey’s, Inland and U.S. Gas, and the Marine preferred stock were due to the capitalization of PIK interest/dividends totaling $3,928,997. The Valuation Committee also increased the fair value of the Ohio Medical series C convertible preferred stock by approximately $4.0 million due to a PIK distribution, which was treated as a return of capital. The Valuation Committee also decreased the fair value of the Company’s investments in Foliofn, Inc. preferred stock by approximately $1.1 million, MVC Automotive equity interest by approximately $6.7 million, G3K loan by approximately $5.6 million, NPWT common stock by approximately $9,000 and preferred stock by approximately $160,000, U.S. Gas preferred stock by $9.0 million, Velocitius equity interest by approximately $8.4 million, Ohio Medical series A preferred stock by $800,000, Biovation warrants by $311,000, SGDA Europe equity interest by approximately $2.6 million, Biovation bridge loan by approximately $439,000, Octagon equity interest by approximately $750,000, Tekers common stock by $252,000, JSC Tekers common and preferred stock by approximately $5.6 million, Turf loan by approximately $31,000 and the Turf guarantee by approximately $67,000. Also, during the fiscal year ended October 31, 2014, the undistributed allocation of flow through income from the Company’s equity investment in Octagon totaled approximately $486,000. The $486,000 increased the cost basis and $101,000 increased the fair value of this investment.

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At October 31, 2014, the fair value of all portfolio investments, exclusive of short-term investments and escrow receivables, was $447.6 million with a cost basis of $440.0 million. At October 31, 2014, the fair value and cost basis of portfolio investments of the Legacy Investments was $5.9 million and $23.8 million, respectively, and the fair value and cost basis of portfolio investments made by the Company’s current management team was $441.7 million and $416.2 million, respectively. At October 31, 2013, the fair value of all portfolio investments, exclusive of short-term investments and escrow receivables, was $417.9 million with a cost basis of $372.0 million. At October 31, 2013, the fair value and cost basis of the Legacy Investments was $7.0 million and $23.8 million, respectively, and the fair value and cost basis of portfolio investments made by the Company’s current management team was $410.9 million and $348.2 million, respectively.

9. Commitments and Contingencies

Commitments to Portfolio Companies:

At July 31, 2015 and October 31, 2014, the Company’s existing commitments to portfolio companies consisted of the following:

Portfolio Company	Amount Committed		Amount Funded at July 31, 2015
MVC Private Equity Fund LP	$	20.1 million	$	14.6 million
Total	$	20.1 million	$	14.6 million

Portfolio Company	Amount Committed		Amount Funded at October 31, 2014
MVC Private Equity Fund LP	$	20.1 million	$	14.6 million
Total	$	20.1 million	$	14.6 million

Guarantees:

At July 31, 2015 and October 31, 2014, the Company had the following commitments to guarantee various loans and mortgages:

Guarantee	Amount Committed		Amount Funded at July 31, 2015
MVC Automotive	$	7.1 million	—
Tekers	—		—
Turf	$	1.0 million	—
Total	$	8.1 million	—

Guarantee	Amount Committed		Amount Funded at October 31, 2014
MVC Automotive	$	5.0 million	—
Tekers	—		—
Turf	$	1.0 million	—
Total	$	6.0 million	—

These guarantees are further described below, together with the Company’s other commitments.

On July 19, 2007, the Company agreed to guarantee a 1.4 million Euro mortgage for Tekers, which did not have an outstanding balance as of July 31, 2015.

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On January 16, 2008, the Company agreed to support a 4.0 million Euro mortgage for a Ford dealership owned and operated by MVC Automotive through making financing available to the dealership and agreeing under certain circumstances not to reduce its equity stake in MVC Automotive. Overtime, Erste Bank, the bank extending the mortgage to MVC Automotive, increased the amount of the mortgage. As such, the balance of the guarantee as of July 31, 2015 is approximately 6.5 million Euro (equivalent to approximately $7.1 million).

The Company guaranteed $1.0 million of Turf’s indebtedness to Berkshire Bank, which had a fair value of -$48,000 or negative $48,000 as of July 31, 2015.

On March 31, 2010, the Company pledged its Series I and Series J preferred stock of U.S. Gas to Macquarie Energy, LLC (“Macquarie Energy”) as collateral for Macquarie Energy’s trade supply credit facility to U.S. Gas.

On October 29, 2010, through MVC Partners and MVCFS, the Company committed to invest approximately $20.1 million in the PE Fund, for which an indirect wholly-owned subsidiary of the Company serves as GP. The PE Fund closed on approximately $104 million of capital commitments. During the fiscal year ended October 31, 2012 and thereafter, MVC Partners was consolidated with the operations of the Company as MVC Partners’ limited partnership interest in the PE Fund is a substantial portion of MVC Partners operations. The investment period related to the PE Fund has ended. Additional capital may be called for follow-on investments in portfolio companies of the PE Fund or to pay operating expenses of the PE Fund. As of July 31, 2015, $14.6 million of the Company’s commitment has been contributed.

On April 26, 2011, the Company agreed to collateralize a 5.0 million Euro letter of credit from JPMorgan Chase Bank, N.A. (equivalent to approximately $5.5 million at July 31, 2015), which is classified as restricted cash equivalents on the Company’s consolidated balance sheet at July 31, 2015. This letter of credit is being used as collateral for a project guarantee by AB DnB NORD bankas to Security Holdings.

On November 30, 2011, the Company pledged its common stock and series A convertible preferred stock of Ohio Medical to collateralize a loan made to Ohio Medical by another financial institution. On June 27, 2013, the Company pledged its series C convertible preferred stock of Ohio Medical to further collateralize the same third party loan made to Ohio Medical in 2011.

Commitments of the Company

On February 19, 2013, the Company sold $70.0 million of senior unsecured notes (the “Senior Notes”) in a public offering. The Senior Notes will mature on January 15, 2023 and may be redeemed in whole or in part at any time or from time to time at the Company’s option on or after April 15, 2016. The Senior Notes bear interest at a rate of 7.25% per year payable quarterly on January 15, April 15, July 15, and October 15 of each year, beginning April 15, 2013. The Company had also granted the underwriters a 30-day option to purchase up to an additional $10.5 million of Senior Notes to cover overallotments. The additional $10.5 million in principal was purchased and the total principal amount of the Senior Notes totaled $80.5 million. The net proceeds to the Company from the sale of the Senior Notes, after offering expenses, were approximately $77.4 million. The offering expenses incurred are amortized over the term of the Senior Notes.

On February 26, 2013, the Company received the funds related to the Senior Notes offering, net of expenses, and subsequently repaid the credit facility (the “Credit Facility”) with Guggenheim as

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administrative agent for the lenders in full, including all accrued interest. The Company used the excess net proceeds after the repayment of the Credit Facility for general corporate purposes, including, for example, investing in portfolio companies according to our investment objective and strategy, repurchasing shares pursuant to the share repurchase program adopted by our Board of Directors, funding distributions, and/or funding the activities of our subsidiaries.

On May 3, 2013, the Company sold approximately $33.9 million of additional Senior Notes in a direct offering. The additional Senior Notes will also mature on January 15, 2023 and may be redeemed in whole or in part at any time or from time to time at the Company’s option on or after April 15, 2016. The Notes will also bear interest at a rate of 7.25% per year payable quarterly on January 15, April 15, July 15, and October 15 of each year. As of July 31, 2015, the total outstanding amount of the Senior Notes was approximately $114.4 million with a market value of approximately $113.7 million. The market value of the Senior Notes is based on the closing price of the security as of July 31, 2015 on the New York Stock Exchange (NYSE:MVCB).

On July 31, 2013, the Company entered into a one-year, $50 million revolving credit facility (“Credit Facility II”) with Branch Banking and Trust Company (“BB&T”). At October 31, 2013, the balance of Credit Facility II was $50.0 million. On January 31, 2014, Credit Facility II was increased to a $100 million revolving credit facility. On December 1, 2015, Credit Facility II was renewed and will now expire on May 31, 2016, at which time all outstanding amounts under it will be due and payable. During the nine month period ended July 31, 2015, the Company’s net repayments on Credit Facility II were $0, resulting in an outstanding balance of $100.0 million at July 31, 2015. Credit Facility II is used to provide the Company with better overall financial flexibility in managing its investment portfolio. Borrowings under Credit Facility II bear interest at LIBOR plus 100 basis points. In addition, the Company is also subject to a 25 basis point commitment fee for the average amount of Credit Facility II that is unused during each fiscal quarter. The Company paid closing fees, legal and other costs associated with these transactions. These costs will be amortized over the life of the facility. Borrowings under Credit Facility II will be secured by cash, short-term and long-term U.S. Treasury securities and other governmental agency securities.

On December 30, 2014, the Company entered into a 6 month, $25.0 million bridge loan (“Bridge Loan”) with Firstrust Bank, initially borrowing approximately $15.9 million. Prior to maturity, the Bridge Loan was extended to October 30, 2015. During the nine month period ended July 31, 2015 and after the initial borrowing of $15.9 million, the Company borrowed approximately $12.8 million and repaid approximately $15.9 million, resulting in an outstanding balance of approximately of $12.8 million. Borrowings under the Bridge Loan will bear interest at 5%. The Company paid closing fees, legal and other costs associated with the transaction. These costs will be amortized over the life of the Bridge Loan. See Note 16 Subsequent Events for additional information.

The Company enters into contracts with Portfolio Companies and other parties that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not experienced claims or losses pursuant to these contracts and believes the risk of loss related to indemnifications to be remote.

10. Management

On November 6, 2003, Michael Tokarz assumed his positions as Chairman, Portfolio Manager and Director of the Company. From November 6, 2003 to October 31, 2006, the Company was internally managed. Effective November 1, 2006, Mr. Tokarz’s employment agreement with the Company terminated and the obligations under that agreement were superseded by those under the Advisory Agreement entered into with TTG Advisers. Under the terms of the Advisory Agreement, the Company

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pays TTG Advisers a base management fee and an incentive fee for its provision of investment advisory and management services.

Our Board of Directors, including all of the directors who are not “interested persons,” as defined under the 1940 Act, of the Company (the “Independent Directors”), last approved a renewal of the Advisory Agreement at their in-person meeting held on October 23, 2014.

Under the terms of the Advisory Agreement, TTG Advisers determines, consistent with the Company’s investment strategy, the composition of the Company’s portfolio, the nature and timing of the changes to the Company’s portfolio and the manner of implementing such changes. TTG Advisers also identifies and negotiates the structure of the Company’s investments (including performing due diligence on prospective Portfolio Companies), closes and monitors the Company’s investments, determines the securities and other assets purchased, retains or sells and oversees the administration, recordkeeping and compliance functions of the Company and/or third parties performing such functions for the Company. TTG Advisers’ services under the Advisory Agreement are not exclusive, and it may furnish similar services to other entities. Pursuant to the Advisory Agreement, the Company is required to pay TTG Advisers a fee for investment advisory and management services consisting of two components—a base management fee and an incentive fee. The base management fee is calculated at 2.0% per annum of the Company’s total assets excluding cash, the value of any investment in a Third-Party Vehicle covered by a Separate Agreement (as defined in the Advisory Agreement) and the value of any investment by the Company not made in portfolio companies (“Non-Eligible Assets”) but including assets purchased with borrowed funds that are not Non-Eligible Assets. The incentive fee consists of two parts: (i) one part is based on our pre-incentive fee net operating income; and (ii) the other part is based on the capital gains realized on our portfolio of securities acquired after November 1, 2003.

The Advisory Agreement provides for an expense cap pursuant to which TTG Advisers will absorb or reimburse operating expenses of the Company, to the extent necessary to limit the Company’s expense ratio (the consolidated expenses of the Company, including any amounts payable to TTG Advisers under the base management fee, but excluding the amount of any interest and other direct borrowing costs, taxes, incentive compensation and extraordinary expenses taken as a percentage of the Company’s average net assets) to 3.5% in each of the 2009 and 2010 fiscal years.

On various dates, TTG Advisers and the Company entered into annual agreements to extend the expense cap of 3.5% to the 2011, 2012, 2013 and 2014 fiscal years (“Expense Limitation Agreement”). The Company and the Adviser have agreed to continue the expense cap into fiscal year 2015, though they have modified the methodology so that the cap is applied to limit the Company’s ratio of expenses to total assets less cash (the “Modified Methodology”), consistent with the asset level used to calculate the base management fee. (The expenses covered by the cap remain unchanged.) The amount of any payments made by the GP of the PE Fund to TTG Advisers pursuant to the Portfolio Management Agreement between the GP and TTG Advisers respecting the PE Fund was excluded from the calculation of the Company’s expense ratio under the Expense Limitation Agreement. In addition, for fiscal years 2010 through 2015, TTG Advisers voluntarily agreed to waive $150,000 of expenses that the Company is obligated to reimburse to TTG Advisers under the Advisory Agreement (the “Voluntary Waiver”). TTG Advisers also voluntarily agreed that any assets of the Company that are invested in exchange-traded funds would not be taken into account in the calculation of the base management fee due to TTG Advisers under the Advisory Agreement. See Note 16 Subsequent Events for additional information.

On October 29, 2010, through MVC Partners and MVCFS, the Company committed to invest approximately $20.1 million in the PE Fund. The PE Fund has closed on approximately $104 million of capital commitments. The Company’s Board of Directors authorized the establishment of, and investment in, the PE Fund for a variety of reasons, including the Company’s ability to make additional investments that represent more than 5% of its total assets or more than 10% of the outstanding voting securities of the

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issuer (“Non-Diversified Investments”) through the PE Fund. As previously disclosed, the Company is restricted in its ability to make Non-Diversified Investments. For services provided to the PE Fund, the GP and MVC Partners are together entitled to receive 25% of all management fees and other fees paid by the PE Fund and its portfolio companies and up to 30% of the carried interest generated by the PE Fund. Further, at the direction of the Board of Directors, the GP retained TTG Advisers to serve as the portfolio manager of the PE Fund. In exchange for providing those services, and pursuant to the Board of Directors’ authorization and direction, TTG Advisers is entitled to receive the balance of the fees generated by the PE Fund and its portfolio companies and a portion of any carried interest generated by the PE Fund. Given this separate arrangement with the GP and the PE Fund (the “PM Agreement”), under the terms of the Company’s Advisory Agreement with TTG Advisers, TTG Advisers is not entitled to receive from the Company a management fee or an incentive fee on assets of the Company that are invested in the PE Fund. During the fiscal year ended October 31, 2012 and thereafter, MVC Partners was consolidated with the operations of the Company as MVC Partners’ limited partnership interest in the PE Fund is a substantial portion of MVC Partners operations. Previously, MVC Partners was presented as a Portfolio Company on the Consolidated Schedules of Investments. The consolidation of MVC Partners has not had any material effect on the financial position or net results of operations of the Company. There are additional disclosures resulting from this consolidation.

Management and portfolio fees (e.g., closing or monitoring fees) generated by the PE Fund (including its portfolio companies) that are paid to the GP are classified on the Consolidated Statements of Operations as Management fee income - Asset Management and Portfolio fee income - Asset Management, respectively. The portion of such fees that the GP pays to TTG Advisers (in accordance with its PM Agreement described above) are classified on the Consolidated Statements of Operations as Management fee - Asset Management and Portfolio fees - Asset Management. Under the PE Fund’s agreements, a significant portion of the portfolio fees that are paid by the PE Fund’s portfolio companies to the GP and TTG Advisers is subject to recoupment by the PE Fund in the form of an offset to future management fees paid by the PE Fund.

11. Incentive Compensation

Pursuant to the Advisory Agreement, the Company pays an incentive fee to TTG Advisers which is generally: (i) 20% of pre-incentive fee net operating income and (ii) 20% of cumulative aggregate net realized capital gains less aggregate unrealized depreciation (on our portfolio securities acquired after November 1, 2003). TTG Advisers is entitled to an incentive fee with respect to our pre-incentive fee net operating income in each fiscal quarter as follows: no incentive fee in any fiscal quarter in which our pre-incentive fee net operating income does not exceed the lower hurdle rate of 1.75% of net assets, 100% of our pre-incentive fee net operating income with respect to that portion of such pre-incentive fee net operating income, if any, that exceeds the lower hurdle amount but is less than 2.1875% of net assets in any fiscal quarter and 20% of the amount of our pre-incentive fee net operating income, if any, that exceeds 2.1875% of net assets in any fiscal quarter.

At October 31, 2014, the provision for estimated incentive compensation was approximately $14.7 million. During the nine month period ended July 31, 2015, this provision for incentive compensation was decreased by a net amount of approximately $9.0 million to approximately $5.7 million. The net decrease in the provision for incentive compensation during the nine month period ended July 31, 2015 primarily reflects the Valuation Committee’s determination to decrease the fair values of fifteen of the Company’s portfolio investments (NPWT, BAC, Tekers, PrePaid Legal, Centile, Biovation, Inland, MVC Automotive, Ohio Medical, SGDA Europe, Security Holdings, JSC Tekers, Morey’s, Velocitius and Equus) by a total of approximately $52.5 million. The net decrease in the provision also reflects the Valuation Committee’s determination to increase the fair values of six of the Company’s portfolio investments (Turf, RuMe, Biogenic, Custom Alloy, Advantage Insurance and SCSD) by a total of

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approximately $3.7 million. The Valuation Committee also increased the fair value of the Ohio Medical series C convertible preferred stock by approximately $3.5 million due to a PIK distribution, which was treated as a return of capital. For the nine month period ended July 31, 2015, no provision was recorded for the net operating income portion of the incentive fee as pre-incentive fee net operating income did not exceed the hurdle rate.

At October 31, 2013, the provision for estimated incentive compensation was approximately $19.5 million. During the fiscal year ended October 31, 2014, this provision for incentive compensation was decreased by a net amount of approximately $4.7 million to approximately $14.7 million. The net decrease in the provision for incentive compensation during the fiscal year ended October 31, 2014 primarily reflects the Valuation Committee’s determination to decrease the fair values of eleven of the Company’s portfolio investments (MVC Automotive, G3K, Ohio Medical, NPWT, U.S. Gas, Velocitius, Octagon, Tekers, JSC Tekers, SGDA Europe and Biovation) by a total of approximately $40.7 million. The net decrease in the provision also reflects the Valuation Committee’s determination to increase the fair values of twelve of the Company’s portfolio investments (Custom Alloy, Advantage, Biogenic, PrePaid Legal, RuMe, Freshii, Centile, Security Holdings, Summit, Morey’s, Turf and Vestal) by a total of approximately $11.5 million. The Valuation Committee also increased the fair value of the Ohio Medical series C convertible preferred stock by approximately $4.0 million due to a PIK distribution, which was treated as a return of capital. For the fiscal year ended October 31, 2014, no provision was recorded for the net operating income portion of the incentive fee as pre-incentive fee net operating income did not exceed the hurdle rate.

12. Tax Matters

On October 31, 2014, the Company did not have a net capital loss carryforward. The Company had approximately $18.3 million in unrealized losses associated with Legacy Investments as of July 31, 2015.

ASC 740, Income Taxes, provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions deemed to meet a “more-likely-than-not” threshold would be recorded as a tax benefit or expense in the current period. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the consolidated statement of operations. During the nine month period ended July 31, 2015, the Company did not incur any interest or penalties. Although we file federal and state tax returns, our major tax jurisdiction is federal for the Company and MVCFS. The fiscal years 2011 through 2015 for the Company and MVCFS remain subject to examination by the IRS.

On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which changed various technical rules governing the tax treatment of regulated investment companies. The changes are generally effective for taxable years beginning after the date of enactment. One of the more prominent changes addresses capital loss carryforwards. Under the Act, each fund will be permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards will retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under previous regulation.

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13. Dividends and Distributions to Shareholders and Share Repurchase Program

As a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), the Company is required to distribute to its shareholders, in a timely manner, at least 90% of its investment company taxable and tax-exempt income each year. If the Company distributes, in a calendar year, at least 98% of its ordinary income for such calendar year and 98.2% of its capital gain net income for the 12-month period ending on October 31 of such calendar year (as well as any portion of the respective 2% balances not distributed in the previous year), it will not be subject to the 4% non-deductible federal excise tax on certain undistributed income of RICs.

Dividends and capital gain distributions, if any, are recorded on the ex-dividend date. Dividends and capital gain distributions are generally declared and paid quarterly according to the Company’s policy established on July 11, 2005. An additional distribution may be paid by the Company to avoid imposition of federal income tax on any remaining undistributed net investment income and capital gains. Distributions can be made payable by the Company either in the form of a cash distribution or a stock dividend. The amount and character of income and capital gain distributions are determined in accordance with income tax regulations that may differ from U.S. generally accepted accounting principles. These differences are due primarily to differing treatments of income and gain on various investment securities held by the Company, differing treatments of expenses paid by the Company, timing differences and differing characterizations of distributions made by the Company. Key examples of the primary differences in expenses paid are the accounting treatment of MVCFS (which is consolidated for GAAP purposes, but not income tax purposes) and the variation in treatment of incentive compensation expense. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications and may affect the allocation between net operating income, net realized gain (loss) and paid-in capital.

All of our shareholders who hold shares of common stock in their own name will automatically be enrolled in our dividend reinvestment plan (the “Plan”). All such shareholders will have any cash dividends and distributions automatically reinvested by Computershare Ltd. (“the Plan Agent”) in shares of our common stock. Of course, any shareholder may elect to receive his or her dividends and distributions in cash. Currently, the Company has a policy of paying quarterly dividends to shareholders. For any of our shares that are held by banks, brokers or other entities that hold our shares as nominees for individual shareholders, the Plan Agent will administer the Plan on the basis of the number of shares certified by any nominee as being registered for shareholders that have not elected to receive dividends and distributions in cash. To receive your dividends and distributions in cash, you must notify the Plan Agent, broker or other entity that holds the shares.

For the Quarter Ended January 31, 2015

On December 19, 2014, the Company’s Board of Directors declared a dividend of $0.135 per share. The dividend was paid on January 7, 2015 to shareholders of record on December 31, 2014 and amounted to $3,064,881.

During the quarter ended January 31, 2015, as part of the Company’s dividend reinvestment plan for our common stockholders, the Plan Agent purchased 5,647 shares of our common stock at an average price of $10.14, including commission, in the open market in order to satisfy the reinvestment portion of our dividends under the Plan.

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For the Quarter Ended April 30, 2015

On April 17, 2015, the Company’s Board of Directors declared a dividend of $0.135 per share. The dividend was paid on April 30, 2015 to shareholders of record on April 27, 2015 and amounted to $3,064,881.

During the quarter ended April 30, 2015, as part of the Company’s dividend reinvestment plan for our common stockholders, the Plan Agent purchased 5,855 shares of our common stock at an average price of $9.92, including commission, in the open market in order to satisfy the reinvestment portion of our dividends under the Plan.

For the Quarter Ended July 31, 2015

On July 17, 2015, the Company’s Board of Directors declared a dividend of $0.135 per share. The dividend was paid on July 31, 2015 to shareholders of record on July 27, 2015 and amounted to $3,064,881.

During the quarter ended July 31, 2015, as part of the Company’s dividend reinvestment plan for our common stockholders, the Plan Agent purchased 6,141 shares of our common stock at an average price of $9.55, including commission, in the open market in order to satisfy the reinvestment portion of our dividends under the Plan.

SHARE REPURCHASE PROGRAM

On April 3, 2013 the Company’s Board of Directors authorized an expanded share repurchase program to opportunistically buy back shares in the market in an effort to narrow the market discount of its shares. The previously authorized $5 million limit has been eliminated. Under the repurchase program, shares may be repurchased from time to time at prevailing market prices. The repurchase program does not obligate the Company to acquire any specific number of shares and may be discontinued at any time. The following table represents purchases made under our stock repurchase program for the fiscal year ended October 31, 2014. There were no repurchases made during the nine month period ended July 31, 2015.

Period *	Total Number of Shares Purchased	Average Price Paid per Share including commission		Total Number of Shares Purchased as Part of Publicly Announced Program	Approximate Dollar Value of Shares Purchased Under the Program
As of October 31, 2013	1,299,294	$	12.83	1,299,294	$	16,673,207
For the Year Ended October 31, 2014	310,706	$	13.24	1,610,000	$	4,114,967
Total	1,610,000	$	12.91	1,610,000	$	20,788,174

14. Segment Data

The Company’s reportable segments are its investing operations as a business development company, MVC Capital, Inc. and the wholly-owned subsidiaries MVC Financial Services, Inc. and MVC Cayman.

The following table presents book basis segment data for the nine month period ended July 31, 2015:

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	MVC			MVCFS			Consolidated

Interest and dividend income	$	14,937,810		$	64		$	14,937,874
Fee income	—			1,829,658			1,829,658
Fee income - asset management	—			885,226			885,226

Total operating income	14,937,810			2,714,948			17,652,758

Total operating expenses	3,584,483			5,347,744			8,932,227
Less: Waivers by Adviser	(112,500		)	—			(112,500		)
Total net operating expenses	3,471,983			5,347,744			8,819,727

Net operating income (loss) before taxes	11,465,827			(2,632,796		)	8,833,031

Tax expense	—			1,317			1,317
Net operating income (loss)	11,465,827			(2,634,113		)	8,831,714

Net realized gain on investments	13,130,632			—			13,130,632
Net unrealized (depreciation) appreciation on investments	(57,501,396		)	23,773			(57,477,623		)

Net decrease in net assets resulting from operations	$	(32,904,937	)	$	(2,610,340	)	$	(35,515,277	)

15. Significant Subsidiaries

We have determined that for the nine month period ended July 31, 2015, MVC Automotive and Ohio Medical, unconsolidated portfolio companies, have met the conditions of significant subsidiaries. The financial information presented below includes summarized balance sheets as of June 30, 2015 (the last fiscal quarter-end prior to July 31, 2015 for each of these companies) and income statements for the period October 1, 2014 to June 30, 2015. The financial information below is based on unaudited financial statements and has been prepared and furnished by MVC Automotive / Ohio Medical and not the Company.

Balance Sheet All numbers In thousands	Ohio Medical As of June 30, 2015		MVC Automotive As of June 30, 2015		Ohio Medical As of June 30, 2014		MVC Automotive As of June 30, 2014*
Assets:
Total current assets	$	20,225	$	48,616	$	20,792	$	74,059
Total non-current assets	99,038		31,144		104,666		38,331
Total Assets	$	119,263	$	79,760	$	125,458	$	112,390

Liabilities and Shareholders Equity:
Current Liabilities	$	9,339	$	58,004	$	9,195	$	75,721
Long-term liabilities	45,769		19,827		52,672		24,488
Shareholders Equity	64,155		1,929		63,591		12,181
Total Liabilities and Shareholders Equity	$	119,263	$	79,760	$	125,458	$	112,390

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	Ohio Medical		MVC Automotive			Ohio Medical			MVC Automotive
	For the Period from		For the Period from			For the Period from			For the Period from
Income Statement	October 1, 2014 to		October 1, 2014 to			October 1, 2013 to			October 1, 2013 to
All numbers In thousands	June 30, 2015		June 30, 2015			June 30, 2014			June 30, 2014*
Net Sales & Revenue	$	38,611	$	135,586		$	36,088		$	182,423
Cost of Sales	20,016		127,402			19,744			165,484
Gross Margin	18,595		8,184			16,344			16,939
Operating Expenses	13,243		14,271			12,142			20,245
Operating Income	5,352		(6,087		)	4,202			(3,306		)
Income Tax (Benefit)	580		(186		)	324			41
Interest Expense	3,434		1,314			3,901			1,233
Other Expenses (Income), Net	426		(142		)	651			(373		)
Net Income (Loss)	$	912	$	(7,073	)	$	(674	)	$	(4,207	)

*The MVC Auto financial information excludes the results of one of MVC Auto’s subsidiary dealerships which filed for bankruptcy in March 2014 and whose records are restricted by the local administrator of the bankruptcy.

16. Subsequent Events

On October 16, 2015, the Company’s Board of Directors declared a dividend of $0.135 per share. The dividend was paid on October 30, 2015 to shareholders of record on October 26, 2015 and amounted to approximately $3.1 million.

On October 16, 2015, the Company sold its remaining equity interest in Velocitius and received zero proceeds resulting in a realized loss of approximately $2.7 million.

On October 19, 2015, the Company invested an additional $1.7 million in MVC Automotive.

On October 29, 2015, the Board approved the renewal of the Advisory Agreement for the 2016 fiscal year. Further, the Adviser agreed to waive a portion of the base management fee so that it is reduced to 1.50% for fiscal year 2016. In addition, the Adviser agreed to waive $1 million of any incentive fee on capital gains if and when payable to the Adviser under the Advisory Agreement. Furthermore, the Company and the Adviser agreed to reduce the expense cap for fiscal 2016 to 3.25% under the Modified Methodology.

On October 30, 2015, the Bridge Loan’s maturity date was extended to December 31, 2015. The Bridge Loan was then replaced on December 9, 2015 with the new revolving borrowing base credit facility with Santander Bank N.A.

On October 30, 2015, the Company realized a loss of $6.7 million with the dissolution of Harmony.

On November 3, 2015, Results Companies repaid its loan in full, including all accrued interest totaling approximately $10.0 million.

On November 20, 2015 and December 3, 2015, the Company invested an additional $538,000 and $1.1 million, respectively, in MVC Automotive common equity.

On December 1, 2015, Credit Facility II was renewed and will now expire on May 31, 2016, at which time all outstanding amounts under it will be due and payable. The Company is in compliance with all loan covenants related to Credit Facility II as of the filing of this Form 10-Q.

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On December 9, 2015, the Company entered into a three-year, $50 million revolving borrowing base credit facility with Santander Bank N.A. as a lender and lead agent and Wintrust Bank as a lender and syndication agent. The revolving credit facility can, under certain conditions, be increased up to $85 million. The new facility bears an interest rate of LIBOR plus 3.75% or the prime rate plus 1% (at the Company’s option), and includes a 1% closing fee of the commitment amount and a 0.75% unused fee. The compensating balance for the revolving credit facility is $10.0 million. The new facility will replace the $30.0 million Bridge Loan with Firstrust Bank that matured on December 31, 2015.

On December 15, 2015, the Company loaned approximately $1.6 million to Somotra nv, a wholly-owned subsidiary of MVC Automotive.

On December 18, 2015, the Company invested approximately $5.1 million in Pride Engineering, LLC in the form of a second lien loan. The loan bears annual interest of 12% and matures on May 18, 2021.

On December 21, 2015, the Company’s Board of Directors declared a dividend of $0.135 per share. Additionally, due to the realization of capital gains, the Company’s Board of Directors declared a special dividend of $0.17 per share. The dividend was paid on January 8, 2016 to shareholders of record on December 31, 2015 and totaled approximately $6.9 million.

On December 31, 2015, the Company completed the sale of Ohio Medical through an asset sale. The Company expects gross proceeds of approximately $40.0 million, including fees. At the time of closing, the Company received cash proceeds of approximately $29.0 million and anticipates receiving an additional $11.0 million, assuming the full receipt of all escrow proceeds scheduled for various periods, with the final release of payment scheduled for 18 months from the closing.

On January 4, 2016, the Company loaned an additional $1.5 million to Legal Solutions Holdings, Inc., which increased the senior subordinated loan to approximately $8.7 million.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This report contains certain statements of a forward-looking nature relating to future events or the future financial performance of the Company and its investment portfolio companies. Words such as may, will, expect, believe, anticipate, intend, could, estimate, might and continue, and the negative or other variations thereof or comparable terminology, are intended to identify forward-looking statements. Forward-looking statements are included in this report pursuant to the “Safe Harbor” provision of the Private Securities Litigation Reform Act of 1995. Such statements are predictions only, and the actual events or results may differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those relating to adverse conditions in the U.S. and international economies, competition in the markets in which our portfolio companies operate, investment capital demand, pricing, market acceptance, any changes in the regulatory environments in which we operate, changes in our accounting assumptions that regulatory agencies, including the SEC, may require or that result from changes in the accounting rules or their application, competitive forces, adverse conditions in the credit markets impacting the cost, including interest rates and/or availability of financing, the results of financing and investing efforts, the ability to complete transactions, the inability to implement our business strategies and other risks identified below or in the Company’s filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. The following analysis of the financial condition and results of operations of the Company should be read in conjunction with the Consolidated

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Financial Statements, the Notes thereto and the other financial information included elsewhere in this report and the Company’s annual report on Form 10-K for the year ended October 31, 2014.

SELECTED CONSOLIDATED FINANCIAL DATA:

Financial information for the fiscal year ended October 31, 2014 is derived from the consolidated financial statements included in the Company’s annual report on Form 10-K, which have been audited by Ernst & Young LLP, the Company’s independent registered public accounting firm. Quarterly financial information is derived from unaudited financial data, but in the opinion of management, reflects all adjustments (consisting only of normal recurring adjustments), which are necessary to present fairly the results for such interim periods.

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Selected Consolidated Financial Data

	For the Nine Month Period Ended July 31, 2015			For the Nine Month Period Ended July 31, 2014			Year Ended
	(Unaudited)			(Unaudited)			October 31, 2014
	(In thousands, except per share data)
Operating Data:
Interest and related portfolio income:
Interest and dividend income	$	14,938		$	11,792		$	15,311
Fee income	1,830			1,245			1,562
Fee income - asset management	885			1,493			1,910
Other income	—			962			1,033

Total operating income	17,653			15,492			19,816

Expenses:
Management fee	5,945			6,561			8,681
Portfolio fees - asset management	580			600			986
Management fee - asset management	75			480			354
Administrative	3,620			2,730			3,672
Interest and other borrowing costs	7,698			7,087			9,442
Net Incentive compensation (Note 11)	(8,986		)	(2,411		)	(4,750		)

Total operating expenses	8,932			15,047			18,385

Voluntary Expense Waiver by Adviser	(113		)	(113		)	(150		)

Total waiver by adviser	(113		)	(113		)	(150		)

Total net operating expenses	8,819			14,934			18,235

Net operating income before taxes	8,834			558			1,581

Tax expense, net	2			2			2

Net operating income	8,832			556			1,579

Net realized and unrealized loss:
Net realized gain (loss) on investments	13,131			3,156			16,520
Net change in unrealized depreciation on investments	(57,478		)	(12,940		)	(37,941		)

Net realized and unrealized loss on investments	(44,347		)	(9,784		)	(21,421		)

Net decrease in net assets resulting from operations	$	(35,515	)	$	(9,228	)	$	(19,842	)

Per Share:
Net decrease in net assets per share resulting from operations	$	(1.56	)	$	(0.42	)	$	(0.88	)
Dividends per share	$	0.405		$	0.405		$	0.540
Balance Sheet Data:
Portfolio at value	$	400,356		$	445,187		$	447,630
Portfolio at cost	450,257			412,249			439,970
Total assets	536,751			593,233			577,713
Shareholders’ equity	299,187			357,584			343,903
Shareholders’ equity per share (net asset value)	$	13.18		$	15.75		$	15.15
Common shares outstanding at period end	22,703			22,703			22,703
Other Data:
Number of Investments funded in period	12			20			24
Investments funded ($) in period	$	60,889		$	61,608		$	103,671
Repayment/sales in period	65,197			33,583			62,508
Net investment activity in period	(4,308		)	28,025			41,163

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	2015						2014								2013
	Q3		Q2		Qtr 1		Qtr 4		Qtr 3		Qtr 2		Qtr 1		Qtr 4		Qtr 3		Qtr 2		Qtr 1
	(In thousands, except per share data)
Quarterly Data (Unaudited):

Total operating income	7,524		5,273		4,856		4,325		5,016		5,862		4,613		4,469		7,245		6,663		6,386

Management fee	1,899		2,066		1,980		2,121		2,144		2,227		2,189		2,109		1,986		1,758		1,979
Portfolio fees - asset management	189		187		204		386		153		341		106		105		103		103		106
Management fee - asset management	77		(18	)	16		(126	)	17		231		232		233		232		232		232
Administrative	1,136		1,325		1,159		942		1,095		727		908		1,024		897		902		890
Interest, fees and other borrowing costs	2,627		2,616		2,455		2,355		2,426		2,406		2,255		2,254		2,115		1,418		937
Net Incentive compensation	(3,404	)	(3,462	)	(2,120	)	(2,339	)	568		(3,414	)	435		2,248		3,674		794		(2,888	)
Total waiver by adviser	(38	)	(37	)	(38	)	(37	)	(38	)	(37	)	(38	)	(37	)	(38	)	(37	)	(38	)
Tax expense	1		1		—		—		1		—		1		1		1		1		1
Net operating income (loss) before net realized and unrealized gains	5,037		2,595		1,200		1,023		(1,350	)	3,381		(1,475	)	(3,468	)	(1,725	)	1,492		5,167
Net increase (decrease) in net assets resulting from operations	(13,959	)	(11,813	)	(9,743	)	(10,614	)	1,738		(12,651	)	1,685		4,319		17,081		7,143		(9,273	)
Net increase (decrease) in net assets resulting from operations per share	(0.61	)	(0.52	)	(0.43	)	(0.46	)	0.07		(0.57	)	0.08		0.16		0.74		0.30		(0.38	)
Net asset value per share	13.18		13.93		14.58		15.15		15.75		15.89		16.57		16.63		16.57		15.84		15.62

OVERVIEW

The Company is an externally managed, non-diversified, closed-end management investment company that has elected to be regulated as a business development company under the 1940 Act. The Company’s investment objective is to seek to maximize total return from capital appreciation and/or income.

On November 6, 2003, Mr. Tokarz assumed his positions as Chairman and Portfolio Manager of the Company. He and the Company’s investment professionals (who, effective November 1, 2006, provide their services to the Company through the Company’s investment adviser, TTG Advisers) are seeking to implement our investment objective (i.e., to maximize total return from capital appreciation and/or income) through making a broad range of private investments in a variety of industries.

The investments can include senior or subordinated loans, convertible debt and convertible preferred securities, common or preferred stock, equity interests, warrants or rights to acquire equity interests, and other private equity transactions. During the fiscal year ended October 31, 2014, the Company made four new investments and made 20 follow-on investments in 13 existing portfolio companies committing a total of $105.8 million of capital to these investments. During the nine month period ended July 31, 2015, the Company made eight new investments and made 4 follow-on investments committing capital totaling $60.7 million.

The Company’s prior investment objective was to achieve long-term capital appreciation from venture capital investments in information technology companies. The Company’s investments had thus previously focused on investments in equity and debt securities of information technology companies. As of July 31, 2015, approximately 1.0% of the current fair value of our assets consisted of Legacy Investments. We are, however, seeking to manage these Legacy Investments to try and realize maximum returns. We generally seek to capitalize on opportunities to realize cash returns on these investments when presented with a potential “liquidity event,” i.e., a sale, public offering, merger or other reorganization.

Our new portfolio investments are made pursuant to our current objective and strategy. We are concentrating our investment efforts on small and middle-market companies that, in our view, provide opportunities to maximize total return from income and/or capital appreciation. Under our investment approach, we are permitted to invest, without limit, in any one portfolio company, subject to any diversification limits required in order for us to continue to qualify as a RIC under Subchapter M of the Code. Due to the asset growth and composition of the portfolio, compliance with the RIC requirements limits our ability to make additional investments that represent more than 5% of our total assets or more than 10% of the outstanding voting securities of an issuer (“Non-Diversified Investments”).

We participate in the private equity business generally by providing privately negotiated long-term equity and/or debt investment capital to small and middle-market companies. Our financings are generally used to fund growth, buyouts, acquisitions, recapitalizations, note purchases, and/or bridge financings.

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We generally invest in private companies, though, from time to time, we may invest in public companies that may lack adequate access to public capital.

We may also seek to achieve our investment objective by establishing a subsidiary or subsidiaries that would serve as general partner to a private equity or other investment funds. Furthermore, the Board of Directors authorized the establishment of a PE Fund, for which an indirect wholly-owned subsidiary of the Company serves as the GP and which may raise up to $250 million. On October 29, 2010, through MVC Partners and MVCFS, the Company committed to invest approximately $20.1 million in the PE Fund. The PE Fund closed on approximately $104 million of capital commitments. The Company’s Board of Directors authorized the establishment of, and investment in, the PE Fund for a variety of reasons, including the Company’s ability to make Non-Diversified Investments through the PE Fund. As previously disclosed, the Company is limited in its ability to make Non-Diversified Investments. For services provided to the PE Fund, the GP and MVC Partners are together entitled to receive 25% of all management fees and other fees paid by the PE Fund and its portfolio companies and up to 30% of the carried interest generated by the PE Fund. Further, at the direction of the Board of Directors, the GP retained TTG Advisers to serve as the portfolio manager of the PE Fund. In exchange for providing those services, and pursuant to the Board of Directors’ authorization and direction, TTG Advisers is entitled to receive the balance of the fees and any carried interest generated by the PE Fund and its portfolio companies. Given this separate arrangement with the GP and the PE Fund, under the terms of the Company’s Advisory Agreement with TTG Advisers, TTG Advisers is not entitled to receive from the Company a management fee or an incentive fee on assets of the Company that are invested in the PE Fund. During the fiscal year ended October 31, 2012, MVC Partners was consolidated with the operations of the Company as MVC Partners’ limited partnership interest in the PE Fund is a substantial portion of MVC Partners operations. Previously, MVC Partners was presented as a portfolio company on the Consolidated Schedules of Investments. The consolidation of MVC Partners has not had any material effect on the financial position or net results of operations of the Company. Also, during fiscal year ended October 31, 2014, MVC Turf, LLC (“MVC Turf”) was consolidated with the Company as MVC Turf is a wholly owned holding company. The consolidation of MVC Turf has not had any material effect on the financial position or net results of operations of the Company. Please see Note 2 of our consolidated financial statements “Consolidation” for more information.

As a result of the closing of the PE Fund, consistent with the Board-approved policy concerning the allocation of investment opportunities, the PE Fund will receive a priority allocation of all private equity investments that would otherwise be Non-Diversified Investments for the Company during the PE Fund’s investment period.

Additionally, in pursuit of our objective, we may acquire a portfolio of existing private equity or debt investments held by financial institutions or other investment funds should such opportunities arise.

Furthermore, pending investments in portfolio companies pursuant to the Company’s principal investment strategy, the Company may invest in certain securities on a short-term or temporary basis. In addition to cash-equivalents and other money market-type investments, such short-term investments may include exchange-traded funds and private investment funds offering periodic liquidity.

OPERATING INCOME

For the Nine Month Period Ended July 31, 2015 and 2014. Total operating income was $17.7 million and $15.5 million for the nine month period ended July 31, 2015 and 2014, respectively, an increase of $2.2 million.

For the Nine Month Period Ended July 31, 2015

Total operating income was $17.7 million for the nine month period ended July 31, 2015. The increase in operating income over the same period last year was primarily due to an increase in interest earned on loans, which was the main component of operating income for the nine month period ended

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July 31, 2015. The Company earned approximately $14.9 million in interest and dividend income from investments in portfolio companies. Of the $14.9 million recorded in interest/dividend income, approximately $3.4 million was “payment in kind”/deferred interest. The “payment in kind”/deferred interest are computed at the contractual rate specified in each investment agreement and may be added to the principal balance of each investment. The Company’s debt investments yielded annualized rates from 9.75% to 16.0%. The Company also received fee income from asset management of the PE Fund and its portfolio companies totaling approximately $885,000 and fee income from the Company’s portfolio companies of approximately $1.8 million, totaling approximately $2.7 million. Of the $885,000 of fee income from asset management activities, 75% of the income is obligated to be paid to TTG Advisers. However, under the PE Fund’s agreements, a significant portion of the portfolio fees that are paid by the PE Fund’s portfolio companies to the GP and TTG Advisers is subject to recoupment by the PE Fund in the form of an offset to future management fees paid by the PE Fund.

For the Nine Month Period Ended July 31, 2014

Total operating income was $15.5 million for the nine month period ended July 31, 2014. The decrease in operating income over the same period last year was primarily due to a decrease in dividend income from portfolio companies, specifically U.S. Gas, which was partially offset by an increase in interest income from portfolio companies. The main components of operating income for the nine month period ended July 31, 2014 were interest earned on loans and fee income from portfolio companies and asset management. The Company earned approximately $11.8 million in interest and dividend income from investments in portfolio companies. Of the $11.8 million recorded in interest/dividend income, approximately $3.4 million was “payment in kind” interest/dividends. The “payment in kind” interest/dividends are computed at the contractual rate specified in each investment agreement and added to the principal balance of each investment. The Company’s debt investments yielded rates from 5% to 16%. The Company also received fee income from asset management of the PE Fund and its portfolio companies totaling approximately $1.5 million and fee income from the Company’s portfolio companies of approximately $1.2 million, totaling approximately $2.7 million. Of the $1.5 million of fee income from asset management activities, 75% of the income is obligated to be paid to TTG Advisers. However, under the PE Fund’s agreements, a significant portion of the portfolio fees that are paid by the PE Fund’s portfolio companies to the GP and TTG Advisers is subject to recoupment by the PE Fund in the form of an offset to future management fees paid by the PE Fund.

OPERATING EXPENSES

For the Nine Month Period Ended July 31, 2015 and 2014. Operating expenses, net of Voluntary Waivers, were approximately $8.8 million and $14.9 million for the nine month period ended July 31, 2015 and 2014, respectively, a decrease of approximately $6.1 million.

For the Nine Month Period Ended July 31, 2015

Operating expenses, net of the Voluntary Waivers (as described below), were approximately $8.8 million or 3.66% of the Company’s average net assets, when annualized, for the nine month period ended July 31, 2015. Significant components of operating expenses for the nine month period ended July 31, 2015 were interest and other borrowing costs of approximately $7.7 million and management fee expense paid by the Company of approximately $5.9 million.

The approximately $6.1 million decrease in the Company’s net operating expenses for the nine month period ended July 31, 2015 compared to the same period in 2014, was primarily due to the approximately $6.6 million decrease in the estimated provision for incentive compensation expense, which was partially offset by an increase in interest and other borrowing costs of approximately $611,000. The portfolio fees - asset management are payable to TTG Advisers for monitoring and other customary fees received by the

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GP from portfolio companies of the PE Fund. To the extent the GP or TTG Advisers receives advisory, monitoring, organization or other customary fees from any portfolio company of the PE Fund or management fees related to the PE Fund, 25% of such fees shall be paid to or retained by the GP and 75% of such fees shall be paid to or retained by TTG Advisers. For the 2015 fiscal year, TTG Advisers voluntarily agreed to waive $150,000 of expenses that the Company is obligated to reimburse to TTG Advisers under the Advisory Agreement (the “Voluntary Waiver”). TTG Advisers voluntarily agreed that any assets of the Company that were invested in exchange-traded funds would not be taken into account in the calculation of the base management fee due to TTG Advisers under the Advisory Agreement. TTG Advisers has voluntarily agreed to waive any management fees on the Company’s assets invested in Equus common stock. The Company and the Adviser have agreed to continue the expense cap of 3.5% (on consolidated expenses of the Company, including any amounts payable to TTG Advisers under the base management fee, but excluding the amount of any interest and other direct borrowing costs, taxes, incentive compensation, payments made by the GP of the PE Fund to TTG Advisers pursuant to the Portfolio Management Agreement between the GP and TTG Advisers respecting the PE Fund and extraordinary expenses taken as a percentage of the Company’s average net assets) into fiscal year 2015, though they have modified the methodology so that the cap is applied to limit the Company’s ratio of expenses to total assets less cash (the “Modified Methodology”), consistent with the asset level used to calculate the base management fee. (The expenses covered by the cap remain unchanged.) Under the Modified Methodology, for the nine month period ended July 31, 2015, the Company’s expense ratio was 3.05%, (taking into account the same carve outs as those applicable to the expense cap).

Pursuant to the terms of the Advisory Agreement, during the nine month period ended July 31, 2015, the provision for incentive compensation was decreased by a net amount of approximately $9.0 million to approximately $5.7 million. The net decrease in the provision for incentive compensation during the nine month period ended July 31, 2015 primarily reflects the Valuation Committee’s determination to decrease the fair values of fifteen of the Company’s portfolio investments (NPWT, BAC, Tekers, PrePaid Legal, Centile, Biovation, Inland, MVC Automotive, Ohio Medical, SGDA Europe, Security Holdings, JSC Tekers, Morey’s, Velocitius and Equus) by a total of approximately $52.5 million. The net decrease in the provision also reflects the Valuation Committee’s determination to increase the fair values of six of the Company’s portfolio investments (Turf, RuMe, Biogenic, Custom Alloy, Advantage Insurance and SCSD) by a total of approximately $3.7 million. The Valuation Committee also increased the fair value of the Ohio Medical series C convertible preferred stock by approximately $3.5 million due to a PIK distribution, which was treated as a return of capital. For the nine month period ended July 31, 2015, no provision was recorded for the net operating income portion of the incentive fee as pre-incentive fee net operating income did not exceed the hurdle rate. Please see Note 11 of our consolidated financial statements “Incentive Compensation” for more information.

For the Nine Month Period Ended July 31, 2014

Operating expenses, net of the Voluntary Waivers (as described below), were approximately $14.9 million or 5.45% of the Company’s average net assets, when annualized, for the nine month period ended July 31, 2014. Significant components of operating expenses for the nine month period ended July 31, 2014 were management fee expense paid by the Company of approximately $6.6 million and interest and other borrowing costs of approximately $7.1 million.

The approximately $423,000 decrease in the Company’s net operating expenses for the nine month period ended July 31, 2014 compared to the same period in 2013, was primarily due to the approximately $4.0 million decrease in the estimated provision for incentive compensation expense, which was partially offset by an increase in interest and other borrowing costs of approximately $2.6 million and an increase in the Company’s management fee expense of approximately $837,000. The portfolio fees - asset management are payable to TTG Advisers for monitoring and other customary fees received by the GP from portfolio companies of the PE Fund. To the extent the GP or TTG Advisers receives advisory, monitoring, organization or other customary fees from any portfolio company of the PE Fund or

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management fees related to the PE Fund, 25% of such fees shall be paid to or retained by the GP and 75% of such fees shall be paid to or retained by TTG Advisers. For the 2014 fiscal year, TTG Advisers voluntarily agreed to waive $150,000 of expenses that the Company is obligated to reimburse to TTG Advisers under the Advisory Agreement (the “Voluntary Waiver”). TTG Advisers voluntarily agreed that any assets of the Company that were invested in exchange-traded funds would not be taken into account in the calculation of the base management fee due to TTG Advisers under the Advisory Agreement. TTG Advisers has voluntarily agreed to waive any management fees on the Company’s assets invested in Equus common stock. The Company and the Adviser have agreed to continue the expense cap of 3.5% (on consolidated expenses of the Company, including any amounts payable to TTG Advisers under the base management fee, but excluding the amount of any interest and other direct borrowing costs, taxes, incentive compensation, payments made by the GP of the PE Fund to TTG Advisers pursuant to the Portfolio Management Agreement between the GP and TTG Advisers respecting the PE Fund and extraordinary expenses taken as a percentage of the Company’s average net assets) into fiscal year 2014, though they reserved the right to determine to revise the present calculation methodology later in the year. For fiscal year 2013 and the nine month period ended July 31, 2014, the Company’s expense ratio was 3.03% and 3.34%, respectively, (taking into account the same carve outs as those applicable to the expense cap).

Pursuant to the terms of the Advisory Agreement, during the nine month period ended July 31, 2014, the provision for incentive compensation was decreased by a net amount of approximately $2.4 million to approximately $17.1 million. The net decrease in the provision for incentive compensation during the nine month period ended July 31, 2014 primarily reflects the Valuation Committee’s determination to decrease the fair values of fourteen of the Company’s portfolio investments (MVC Automotive, G3K, Ohio Medical, NPWT, U.S. Gas, Velocitius, Octagon, Tekers, JSC Tekers, SGDA Europe, Security Holdings, Centile, Biovation and Turf) by a total of approximately $24.4 million. The net decrease in the provision also reflects the Valuation Committee’s determination to increase the fair values of seven of the Company’s portfolio investments (Custom Alloy, Advantage, Biogenic, PrePaid Legal, RuMe, Freshii and Vestal) by a total of approximately $7.8 million. The Valuation Committee also increased the fair value of the Ohio Medical series C convertible preferred stock by approximately $2.9 million due to a PIK distribution, which was treated as a return of capital. For the nine month period ended July 31, 2014, no provision was recorded for the net operating income portion of the incentive fee as pre-incentive fee net operating income did not exceed the hurdle rate. Please see Note 11 of our consolidated financial statements “Incentive Compensation” for more information.

REALIZED GAINS AND LOSSES ON PORTFOLIO SECURITIES

For the Nine Month Period Ended July 31, 2015 and 2014. Net realized gains for the nine month period ended July 31, 2015 were approximately $13.1 million and $3.2 million for the nine month period ended July 31, 2014, an increase of approximately $9.9 million.

For the Nine Month Period Ended July 31, 2015

Net realized gains for the nine month period ended July 31, 2015 were approximately $13.1 million. The main component of the Company’s net realized gain for the nine month period ended July 31, 2015 was primarily due to the realized gain of approximately $15.0 million on the sale of Vestal common stock that was partially offset by the net realized loss of $2.2 million on the sale of the Biovation loans when BAC credit purchased the assets of Biovation.

During the nine month period ended July 31, 2015, the Company also recorded net realized gains of approximately $302,000 with the sale of its short-term investments.

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For the Nine Month Period Ended July 31, 2014

Net realized gains for the nine month period ended July 31, 2014 were approximately $3.2 million. The significant component of the Company’s net realized gains for the nine month period ended July 31, 2014 was primarily due to the sale of Octagon’s limited liability company interest, which resulted in a realized gain of approximately $3.2 million.

On November 7, 2013, the Company recorded a realized gain of approximately $25,000 associated with the SHL Group Limited escrow.

On November 11, 2013, the Company recorded a realized gain of approximately $19,000 associated with the Vendio escrow.

On January 30, 2014, BPC II, LLC completed the dissolution of its operations. The Company realized a loss of $180,000 as a result of this dissolution.

On May 1, 2014, the Company converted the JSC Tekers $12.0 million secured loan to preferred equity. The cost and fair value assigned to the preferred equity was approximately $11.8 million. As a result of the loan conversion, the Company realized a loss of approximately $190,000.

On July 29, 2014, the Company sold its limited liability company interest in Octagon for approximately $6.3 million resulting in a realized gain of approximately $3.2 million.

During the nine month period ended July 31, 2014, the Company recorded realized losses of approximately $131,000 with the sale of its short-term investments and realized gains of approximately $446,000 related to a Summit distribution.

UNREALIZED APPRECIATION AND DEPRECIATION OF PORTFOLIO SECURITIES

For the Nine Month Period Ended July 31, 2015 and 2014. The Company had a net change in unrealized depreciation on portfolio investments of approximately $57.5 million and $12.9 million for the nine month period ended July 31, 2015 and 2014, respectively, a net increase of approximately $44.6 million.

For the Nine Month Period Ended July 31, 2015

The Company had a net change in unrealized depreciation on portfolio investments of approximately $57.5 million for the nine month period ended July 31, 2015. The change in unrealized depreciation for the nine month period ended July 31, 2015 primarily resulted from the Valuation Committee’s decision to decrease the fair value of the Company’s investments in Foliofn, Inc. preferred stock by $356,000, NPWT common stock by $3,000 and preferred stock by $49,000, Tekers common stock by $308,000, PrePaid Legal loan by $100,000, Centile equity interest by $588,000, BAC common stock by approximately $167,000, Vestal escrow by approximately $15,000, Biovations loan by approximately $3.4 million, Morey’s second lien loan by approximately $1.0 million, Velocitius equity interest by $2.8 million, JSC Tekers preferred stock by $629,000, Security Holdings equity interest by $4.0 million, SGDA Europe equity interest by approximately $3.2 million, Ohio Medical series A preferred stock by $16.5 million, MVC Automotive equity interest by $6.3 million, Inland warrant by approximately $700,000 and loan by approximately $11.4 million and the reversal of the unrealized appreciation on the Vestal common stock which resulted in a realized gain of approximately $15.0 million. These changes in unrealized depreciation were partially off-set by the Valuation Committee determination to increase the fair value of the Company’s investments in Turf loan and guarantee by a total of approximately $20,000, Biogenic warrant and senior convertible note by a total of approximately $878,000, SCSD common stock by $387,000, Advantage preferred stock by approximately $294,000, MVC Private Equity Fund L.P. general partnership interest and limited partnership interest in the PE Fund by a total of approximately $602,000, Custom Alloy second lien loan by approximately $96,000 and RuMe series C preferred stock by approximately $1.6 million and series B preferred stock by approximately $395,000 and the reversal of the unrealized depreciation on the Biovation loan which resulted in a realized loss of approximately $2.2 million. In addition, increases in the cost basis and fair value of the loans to Biogenic, Custom Alloy, Morey’s, Vestal and U.S. Gas were due to the capitalization of PIK interest totaling $1,464,781. The

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Valuation Committee also increased the fair value of the Ohio Medical series C convertible preferred stock by approximately $3.5 million due to a PIK distribution, which was treated as a return of capital.

For the Nine Month Period Ended July 31, 2014

The Company had a net change in unrealized depreciation on portfolio investments of approximately $13.0 million for the nine month period ended July 31, 2014. The change in unrealized depreciation for the nine month period ended July 31, 2014 primarily resulted from the Valuation Committee’s decision to decrease the fair value of the Company’s investments in Foliofn, Inc. preferred stock by approximately $1.1 million, MVC Automotive equity interest by approximately $2.2 million, G3K loan by approximately $5.6 million, NPWT common stock by approximately $8,000 and preferred stock by approximately $140,000, U.S. Gas preferred stock by $9.0 million, Velocitius equity interest by approximately $2.7 million, Ohio Medical series A preferred stock by $800,000, Security Holdings equity interest by $446,000, Biovation warrants by $70,000, Centile equity interest by $48,000, SGDA Europe equity interest by approximately $2.0 million, Biovation bridge loan by approximately $18,000, Octagon equity interest by approximately $750,000, Tekers common stock by $116,000, JSC Tekers common and preferred stock by approximately $499,000 and the Turf guarantee by $92,000. These changes in unrealized depreciation were partially off-set by the Valuation Committee determinations to increase the fair value of the Company’s investments in Custom Alloy series A preferred stock by approximately $12,000 and series B preferred stock by approximately $2.7 million, MVC Private Equity Fund L.P. general partnership interest and limited partnership interest in the PE Fund by a total of approximately $3.5 million, PrePaid Legal loan by $100,000, Freshii warrant by approximately $23,000, RuMe series C preferred stock by approximately $75,000, Biogenic senior convertible note by $275,000, Advantage preferred stock by $96,000 and Vestal common stock by approximately $4.5 million. The Valuation Committee also increased the fair value of the Ohio Medical series C convertible preferred stock by approximately $2.9 million due to a PIK distribution, which was treated as a return of capital. The reclassification from unrealized depreciation to a realized loss caused by the dissolution of BPC II, LLC of $180,000 was also a component in the change in unrealized depreciation.

PORTFOLIO INVESTMENTS

For the Nine Month Period Ended July 31, 2015 and the Year Ended October 31, 2014. The cost of the portfolio investments held by the Company at July 31, 2015 and at October 31, 2014 was $450.3 million and $440.0 million, respectively, an increase of $10.3 million. The aggregate fair value of portfolio investments at July 31, 2015 and at October 31, 2014 was $400.4 million and $447.6 million, respectively, a decrease of $47.2 million. The Company held unrestricted cash, cash equivalents and restricted cash equivalents at July 31, 2015 and at October 31, 2014 of $27.6 million and $23.4 million, respectively, an increase of approximately $4.2 million. The Company held no short-term investments at July 31, 2015 and at October 31, 2014 held U.S. Treasury obligations with a cost and fair value of approximately $100.0 million and approximately $99.9 million, respectively.

For the Nine Month Period Ended July 31, 2015

During the nine month period ended July 31, 2015, the Company made eight new investments, committing capital totaling approximately $58.1 million. The investments were made in RX ($10.3 million), Agri-Carriers ($11.8 million), Legal Solutions ($8.7 million), Results Companies ($9.0 million), Vestal ($6.5 million), Thunderdome ($2.0 million), Initials ($4.8 million) and U.S. Technologies ($5.0 million).

During the nine month period ended July 31, 2015, the Company made 4 follow-on investments into 4 existing portfolio companies totaling approximately $2.6 million. On May 27, 2015, the Company

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invested an additional $1.1 million into MVC Automotive in the form of common equity interest. On June 3, 2015, the Company invested an additional $250,000 into Centile in the form of common equity interest. On July 6, 2015, the Company invested $250,000 into BAC in the form of equity. See below for further information on BAC. On July 7, 2015, the Company made a secured $1.0 million loan to Biogenic. The loan has a 16% interest rate and matures on February 29, 2016. The Company also received a warrant at no cost and allocated a portion of the cost basis of the loan to the warrant at the time the investment was made.

On November 26, 2014, Summit Research Labs, Inc. repaid its second lien loan in full including all accrued interest totaling approximately $25.7 million.

On December 31, 2014, the Company received distributions totaling $388,000 from the PE Fund, which was treated as a return of capital.

On May 1, 2015, the Company sold 2,893 shares of common stock in Ohio Medical for a nominal amount resulting in no realized gain or loss.

On June 19, 2015, the Company monetized a majority of its investment in Velocitius receiving approximately $9.2 million in proceeds, which included a return of capital and closing fees and was net of a minimal currency loss.

During the month ended June 30, 2015, the Company sold its $10.0 million PrePaid Legal loan for proceeds totaling approximately $10.1 million, including all accrued interest.

During the nine month period ended July 31, 2015, Custom Alloy made principal payments totaling $3.5 million on its unsecured subordinated loan. The balance of the loan at July 31, 2015 was $3.0 million.

During the quarter ended January 31, 2015, the Valuation Committee increased the fair value of the Company’s investments in Foliofn preferred stock by $109,000, Turf loan by approximately $2,000, RuMe series C preferred stock by $800,000 and series B preferred stock by $200,000, Advantage preferred stock by $20,000, Biogenic warrant and senior convertible note by a net total of approximately $28,000 and SCSD common stock by $387,000. In addition, increases in the cost basis and fair value of the loans to Biogenic, Custom Alloy, Morey’s, and U.S. Gas were due to the capitalization of PIK interest totaling $436,878. The Valuation Committee also increased the fair value of the Ohio Medical series C convertible preferred stock by approximately $1.1 million due to a PIK distribution, which was treated as a return of capital. The Valuation Committee also decreased the fair value of the Company’s investments in MVC Private Equity Fund L.P. general partnership interest and limited partnership interest in the PE Fund by a total of approximately $759,000, Custom Alloy second lien loan by approximately $84,000, NPWT common stock by $2,000 and preferred stock by $36,000, Tekers common stock by $170,000,

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PrePaid Legal loan by $100,000, Centile equity interest by $538,000, Biovation loan by approximately $716,000, Velocitius equity interest by approximately $1.1 million, Security Holdings equity interest by $1.1 million, JSC Tekers preferred stock by approximately $599,000, MVC Automotive equity interest by approximately $5.9 million, SGDA Europe equity interest by approximately $749,000 and Inland warrant by approximately $700,000.

During the quarter ended April 30, 2015, the Valuation Committee increased the fair value of the Company’s investments in MVC Private Equity Fund L.P. general partnership interest and limited partnership interest in the PE Fund by a total of approximately $610,000, Turf loan by approximately $2,000, JSC Tekers preferred stock by $5,000, Biogenic warrant and senior convertible note by a total of approximately $852,000, MVC Automotive equity interest by $246,000 and RuMe series C preferred stock by approximately $558,000 and series B preferred stock by $142,000. In addition, increases in the cost basis and fair value of the loans to Biogenic, Custom Alloy, Morey’s, and U.S. Gas were due to the capitalization of PIK interest totaling $501,906. The Valuation Committee also increased the fair value of the Ohio Medical series C convertible preferred stock by approximately $1.2 million due to a PIK distribution, which was treated as a return of capital. The Valuation Committee also decreased the fair value of the Company’s investments in Custom Alloy second lien loan by approximately $11,000, Foliofn, Inc. preferred stock by $82,000, NPWT common stock by $1,000 and preferred stock by $12,000, Tekers common stock by $21,000, Centile equity interest by $98,000, Morey’s second lien loan by approximately $253,000, Advantage preferred stock by approximately $28,000, Velocitius equity interest by $899,000, Biovations loan by approximately $2.7 million, SGDA Europe equity interest by approximately $1.3 million, Security Holdings equity interest by $850,000, Ohio Medical series A preferred stock by $10.5 million and the Inland loan by approximately $1.4 million.

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U.S. Gas were due to the capitalization of PIK interest totaling $1,464,781. The Valuation Committee also increased the fair value of the Ohio Medical series C convertible preferred stock by approximately $3.5 million due to a PIK distribution, which was treated as a return of capital. The Valuation Committee also decreased the fair value of the Company’s investments in Foliofn, Inc. preferred stock by $356,000, NPWT common stock by $3,000 and preferred stock by $49,000, Tekers common stock by $308,000, PrePaid Legal loan by $100,000, Centile equity interest by $588,000, BAC common stock by approximately $167,000, Vestal escrow by approximately $15,000, Biovations loan by approximately $3.4 million, Morey’s second lien loan by approximately $1.0 million, Velocitius equity interest by $2.8 million, JSC Tekers preferred stock by $629,000, Security Holdings equity interest by $4.0 million, SGDA Europe equity interest by approximately $3.2 million, Ohio Medical series A preferred stock by $16.5 million, MVC Automotive equity interest by $6.3 million and Inland warrant by approximately $700,000 and loan by approximately $11.4 million.

At July 31, 2015, the fair value of all portfolio investments, exclusive of short-term investments and escrow receivables, was $400.4 million with a cost basis of $450.3 million. At July 31, 2015, the fair value and cost basis of portfolio investments of the Legacy Investments was $5.5 million and $23.8 million, respectively, and the fair value and cost basis of portfolio investments made by the Company’s current management team was $394.9 million and $426.5 million, respectively. At October 31, 2014, the fair value of all portfolio investments, exclusive of short-term investments and escrow receivables, was $447.6 million with a cost basis of $440.0 million. At October 31, 2014, the fair value and cost basis of portfolio investments of the Legacy Investments was $5.9 million and $23.8 million, respectively, and the fair value and cost basis of portfolio investments made by the Company’s current management team was $441.7 million and $416.2 million, respectively.

For the Fiscal Year Ended October 31, 2014

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loaned $1.5 million to SCSD in the form of a secured loan. The loan has an interest rate of 12% and a maturity date of May 2, 2019. On May 7, 2014, the Company converted RuMe’s $3.3 million senior secured loan and accrued interest of approximately $161,000 into 23,896,634 shares of series C preferred stock. On May 9, 2014, the Company loaned an additional $500,000 to Biovation increasing the total amount outstanding on the bridge loan to $3.8 million and extended the maturity date of the loan to October 31, 2014. The Company also received a warrant at no cost and allocated a portion of the cost basis of the loan to the warrant at the time the investment was made. On May 14, 2014, the Company signed a share exchange agreement with Equus, another publicly traded business development company, as part of a plan of reorganization adopted by the Equus Board of Directors. Under the terms of the reorganization, Equus will pursue a merger or consolidation with the Company, a subsidiary of the Company, or one or more of the Company’s portfolio companies. Absent Equus merging or consolidating with/into the Company itself (whereby the Company would own a majority of Equus shares), the current intention is for Equus to (i) be restructured into a publicly-traded operating company focused on the energy and/or financial services sectors and (ii) seek to terminate its election as a business development company. Pursuant to the share exchange agreement, the Company has received 2,112,000 shares of Equus in exchange for 395,839 shares of the Company. The exchange was calculated based upon each company’s respective net asset value per share published at that time. As part of the reorganization, the Company may acquire additional Equus shares from time to time, either through Equus’ direct sale of newly issued shares to the Company or through the purchase of outstanding Equus shares. The Company continues to discuss reorganization options with Equus. As a result of the restatement for the quarter ending July 31, 2014, the Company has a liability to Equus of $221,424 for additional shares and dividends due to Equus. TTG Advisers has voluntarily agreed to waive any management fees on the Company’s assets invested in Equus common stock. Also, as part of the Equus plan of reorganization, on May 21, 2014, June 3, 2014 and June 12, 2014, the Company purchased 512,557, 850,000 and 970,087 additional outstanding common shares of Equus, respectively, at a cost of approximately $1.2 million, $2.1 million and $2.4 million, respectively. On May 27, 2014, the Company purchased 2,893 common shares of Ohio Medical from Champlain Capital Partners at a nominal cost. On May 30, 2014, the Company loaned $3.0 million to U.S. Gas. The loan has an interest rate of 14% and a maturity date of July 1, 2018. On August 26, 2014, the Company invested $12.7 million in Security Holdings for additional common equity interest. On September 30, 2014, the Company loaned $4.0 million to Biogenics in the form of a secured loan. The loan has a 16% interest rate and matures on September 30, 2015. On October 7, 2014, the Company contributed a total of approximately $2.4 million to the PE Fund related to an investment in AccuMed Corp. As of October 31, 2014, the PE Fund had invested in Plymouth Rock Energy, LLC, Gibdock Limited, Focus Pointe Holdings, Inc., Advanced Oilfield Services, LLC and AccuMed Corp.

On November 11, 2013, MVC Automotive Group B.V. completed a tax-free reorganization into MVC Automotive Group GmbH “MVC Automotive”, an Austrian holding company, to increase operating efficiencies.

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On January 30, 2014, BPC II, LLC completed the dissolution of its operations. The Company realized a loss of $180,000 as a result of this dissolution.

On May 19, 2014, the Company loaned an additional $2.0 million to Inland. The total amount outstanding of the senior secured loan as of October 31, 2014 was $15.0 million.

On September 2, 2014, Security Holdings repaid its $4.0 million bridge loan in full, including all accrued interest.

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During the fiscal year ended October 31, 2014, Custom Alloy made $1.0 million of principal payments on its loan.

During the fiscal year ended October 31, 2014, the Company received a dividend of approximately $67,000 from NPWT.

During the quarter ended January 31, 2014, the Valuation Committee increased the fair value of the Company’s investments in Custom Alloy series A preferred stock by approximately $18,000 and series B preferred stock by approximately $4.0 million, NPWT common stock by $1,000 and preferred stock by $34,000, SGDA Europe equity interest by approximately $649,000, Vestal Manufacturing Enterprises, Inc. (“Vestal”) common stock by $3.0 million, MVC Private Equity Fund L.P. general partnership interest and limited partnership interest in the PE Fund by a total of approximately $2.2 million, Biovation warrants by $162,000, and Freshii warrant by approximately $15,000. In addition, increases in the cost basis and fair value of the loans to Marine Exhibition Corporation (“Marine”), Summit, Freshii, Biogenic and U.S. Gas, and the Marine preferred stock were due to the capitalization of PIK interest/dividends totaling $1,008,665. The Valuation Committee also increased the fair value of the Ohio Medical series C convertible preferred stock by approximately $949,000 due to a PIK distribution, which was treated as a return of capital. The Valuation Committee also decreased the fair value of the Company’s investments in Centile equity interest by $29,000, Security Holdings equity interest by $304,000, Octagon equity interest by approximately $1.2 million, MVC Automotive equity interest by approximately $3.2 million, Velocitius equity interest by approximately $1.9 million, Biovation bridge loan by approximately $102,000, Foliofn, Inc. preferred stock by approximately $1.1 million, Turf guarantee by $92,000 and Tekers common stock by $12,000. Also, during the quarter ended January 31, 2014, the undistributed allocation of flow through income from the Company’s equity investment in Octagon increased the cost basis and fair value of this investment by approximately $101,000.

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convertible preferred stock by approximately $4.0 million due to a PIK distribution, which was treated as a return of capital. The Valuation Committee also decreased the fair value of the Company’s investments in Foliofn, Inc. preferred stock by approximately $1.1 million, MVC Automotive equity interest by approximately $6.7 million, G3K loan by approximately $5.6 million, NPWT common stock by approximately $9,000 and preferred stock by approximately $160,000, U.S. Gas preferred stock by $9.0 million, Velocitius equity interest by approximately $8.4 million, Ohio Medical series A preferred stock by $800,000, Biovation warrants by $311,000, SGDA Europe equity interest by approximately $2.6 million, Biovation bridge loan by approximately $439,000, Octagon equity interest by approximately $750,000, Tekers common stock by $252,000, JSC Tekers common and preferred stock by approximately $5.6 million, Turf loan by approximately $31,000 and the Turf guarantee by approximately $67,000. Also, during the fiscal year ended October 31, 2014, the undistributed allocation of flow through income from the Company’s equity investment in Octagon totaled approximately $486,000. The $486,000 increased the cost basis and $101,000 increased the fair value of this investment.

Portfolio Companies

During the nine month period ended July 31, 2015, the Company had investments in the following portfolio companies:

Actelis Networks, Inc.

Actelis Networks, Inc. (“Actelis”), Fremont, California, a Legacy Investment, provides authentication and access control solutions designed to secure the integrity of e-business in Internet-scale and wireless environments.

At October 31, 2014 and July 31, 2015, the Company’s investment in Actelis consisted of 150,602 shares of Series C preferred stock at a cost of $5.0 million. The investment has been fair valued at $0.

Advantage Insurance Holdings

Advantage, Cayman Islands, is a provider of specialty insurance, reinsurance and related services to business owners and high net worth individuals.

At October 31, 2014, the Company’s investment in Advantage consisted of 750,000 shares of preferred stock with a cost basis of $7.5 million and a fair value of approximately $7.7 million.

During the nine month period ended July 31, 2015, the Valuation Committee increased the fair value of the preferred stock by approximately $294,000.

At July 31, 2015, the 750,000 shares of preferred stock had a cost basis of $7.5 million and a fair value of approximately $8.0 million.

Bruce Shewmaker, an officer of the Company, serves as a director of Advantage.

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Agri-Carriers Group Inc.

Agri-Carriers Group, Inc. (“Agri-Carriers”), Covina, CA, is a transportation company focused on over-the-road, full-truckload transportation of agriculture products to be used in consumer food manufacturing.

On December 30, 2014, the Company invested approximately $11.8 million in Agri-Carriers in the form of a senior subordinated loan. The loan bears annual interest at 15% and has a maturity date of July 20, 2017.

At July 31, 2015, the Company’s investment in Agri-Carriers consisted of a senior subordinated loan with an outstanding amount, cost basis and fair value of approximately $11.8 million. The decrease in cost basis of the loan is due to the amortization of loan origination costs.

Biogenic Reagents

Biogenic, Minneapolis, Minnesota, is a producer of high-performance activated carbon products made from renewable biomass.

At October 31, 2014, the Company’s investment in Biogenic consisted of two senior notes with maturity dates of July 21, 2018 and September 30, 2015, a senior convertible note with a maturity note of July 21, 2018 and a warrant. The notes have an interest rate of 16%. The loans had a combined outstanding balance and cost basis of approximately $14.0 million and a combined fair value of approximately $14.3 million. The warrant had a cost basis and fair value of $0.

On July 7, 2015, the Company loaned $1.0 million to Biogenic in the form of a secured loan. The loan has a 16% interest rate and matures on February 29, 2016. The Company also received a warrant at no cost and allocated a portion of the cost basis of the loan to the warrant at the time the investment was made.

During the nine month period ended July 31, 2015, the Valuation Committee decreased the fair value of the senior convertible note by approximately $227,000 and increased the fair value of the warrant by approximately $1.1 million.

At July 31, 2015, the Company’s loans had a combined outstanding balance of approximately $15.4 million, a cost basis of approximately $14.0 million and a combined fair value of approximately $15.1 million. The warrants have a combined fair value of approximately $1.7 million. The increase in cost basis of the loans is due to amortization of the warrants and capitalization of “payment in kind” interest and the increase in the fair value is due to the capitalization of “payment in kind” interest. These increases were approved by the Company’s Valuation Committee.

Biovation Acquisition Co.

BAC, Montgomery, Minnesota, is a manufacturer and marketer of environmentally friendly, organic and sustainable laminate materials and composites.

On April 20, 2015, BAC credit purchased the assets of Biovation. The Company received 90 shares of class B non-voting common stock in BAC as part of the transaction.

On July 6, 2015, the Company invested $250,000 into BAC in the form of equity.

During the nine month period ended July 31, 2015, the Valuation Committee decreased the fair value of the common stock by approximately $167,000.

At July 31, 2015, the Company’s investment consisted of 90 shares of class B non-voting common stock with cost basis of approximately $785,000 and a fair value of approximately $617,000.

Biovation Holdings Inc.

Biovation, Montgomery, Minnesota, was a manufacturer and marketer of environmentally friendly, organic and sustainable laminate materials and composites.

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At October 31, 2014, the Company’s investment in Biovation consisted of a bridge loan with an annual interest of 12% and had a maturity date of October 31, 2014. The loan had an outstanding balance and cost basis of approximately $3.8 million and a fair value of approximately $3.4 million. The warrants had a cost of $398,000 and a fair value of $0.

During the nine month period ended July 31, 2015, the Valuation Committee decreased the fair value of the loan by approximately $3.4 million.

At July 31, 2015, the Company’s investment consisted of a bridge loan with an outstanding balance and cost basis of approximately $1.1 million and a fair value of $0. The warrants had a cost of $398,000 and a fair value of $0. The Company reserved in full against all of the accrued interest starting August 1, 2014.

Peter Seidenberg and Jim Lynch, representatives of the Company, serve as directors of Biovation.

Centile Holding B.V.

Centile, Sophia-Antipolis, France, is a leading European innovator of unified communications, network platforms, hosted solutions, applications and tools that help mobile, fixed and web-based communications service providers serve the needs of enterprise end users.

At October 31, 2014, the Company’s investment in Centile consisted of common equity interest at a cost of $3.3 million and a fair value of approximately $5.0 million.

On June 3, 2015, the Company invested an additional $250,000 into Centile in the form of common equity interest.

During the nine month period ended July 31, 2015, the Valuation Committee decreased the fair value of the common equity interest by approximately $588,000.

At July 31, 2015, the Company’s investment in Centile consisted of common equity interest at a cost of $3.5 million and a fair value of approximately $4.7 million.

Kevin Scoby, a representative of the Company, serves as a director of Centile.

Custom Alloy Corporation

Custom Alloy, High Bridge, New Jersey, manufactures time sensitive and mission critical butt-weld pipe fittings and forgings for the natural gas pipeline, power generation, oil/gas refining and extraction, and nuclear generation markets.

At October 31, 2014, the Company’s investment in Custom Alloy consisted of an unsecured subordinated loan with a cost basis, outstanding balance and fair value of approximately $6.5 million and a second lien loan with a cost basis, outstanding balance and fair value of approximately $23.0 million. The second lien loan had an interest rate of 11% and a maturity date of April 30, 2020 and the unsecured subordinated loan had an interest rate of 12% and a maturity date of September 4, 2016.

During the nine month period ended July 31, 2015, Custom Alloy made principal payments totaling $3.5 million on its unsecured subordinated loan.

During the nine month period ended July 31, 2015, the Valuation Committee increased the fair value of the second lien loan by approximately $96,000.

At July 31, 2015, the Company’s investment in Custom Alloy consisted of an unsecured subordinated loan with a cost basis, outstanding balance and fair value of approximately $3.0 million and a second lien loan with a cost basis and outstanding balance of approximately $23.6 million and a fair value of approximately $23.7 million. The increase in cost and fair value of the loans is due to the capitalization of “payment in kind” interest. These increases were approved by the Company’s Valuation Committee.

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Equus Total Return, Inc.

Equus is a publicly traded business development company and regulated investment company listed on the New York Stock Exchange (NYSE:EQS). Consistent with the Company’s valuation procedures, the Company has been marking this investment to its market price.

At October 31, 2014, the Company’s investment in Equus consisted of 4,444,644 shares of common stock with a cost of approximately $10.0 million and a market value of approximately $9.8 million.

At July 31, 2015, the Company’s investment in Equus consisted of 4,444,644 shares of common stock with a cost of approximately $10.0 million and a market value of approximately $8.4 million.

Foliofn, Inc.

Foliofn, Vienna, Virginia, a Legacy Investment, is a financial services technology company that offers investment solutions to financial services firms and investors.

At October 31, 2014, the Company’s investment in Foliofn consisted of 5,802,259 shares of Series C preferred stock with a cost of $15.0 million and a fair value of $5.9 million.

During the nine month period ended July 31, 2015, the Valuation Committee decreased the fair value of the preferred stock by approximately $356,000.

At July 31, 2015, the Company’s investment in Foliofn consisted of 5,802,259 shares of Series C preferred stock with a cost of $15.0 million and a fair value of approximately $5.5 million.

Bruce Shewmaker, an officer of the Company, serves as a director of Foliofn.

G3K Displays, Inc.

G3K, Hoboken, New Jersey, was a custom designer, manufacturer and installer of in-store environments, signage, displays and fixtures for major retailers such as Foot Locker, adidas and Luxottica.

On April 14, 2014, the Company agreed to provide G3K a $10.0 million loan in three installments and made its first loan of $6.0 million. The closing of the Company’s G3K investment and first loan occurred following extensive due diligence, including receipt of an unqualified audit report on G3K’s financial statements by an accounting firm and a separate quality of earnings review by another accounting firm. The Company has initiated legal action in the Superior Court of New Jersey, Chancery Division, against G3K, its three shareholders and certain corporate officers for fraudulently misrepresenting G3K’s financial records in order to secure financing from the Company. The Company is working diligently to uncover the full extent of what it believes to be a highly sophisticated fraud and is seeking to recover loan proceeds. All legal options available are being examined. The Company did recover $375,000 in principal prior to October 31, 2014.

At October 31, 2014, and July 31, 2015, the Company’s investment in G3K consisted of a senior loan with an outstanding balance and cost basis of $5.6 million and a fair value of $0. The senior loan has an interest rate of 13% and a maturity date of April 11, 2019. The Company has reserved in full against all of the accrued interest starting April 14, 2014.

Harmony Health & Beauty, Inc.

HH&B, Purchase, New York, purchased the assets of Harmony Pharmacy on November 30, 2010, during a public UCC sale for approximately $6.4 million. HH&B was a distributor of health and beauty products. The Company’s initial investment consisted of 100,010 shares of common stock.

At October 31, 2014 and July 31, 2015, the Company’s investment in HH&B consisted of 147,621 shares of common stock with a cost of $6.7 million and fair value of $0.

Michael Tokarz, Chairman of the Company, serves as a director of HH&B.

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Initials, Inc.

Initials, Inc. (“Initials”), Clarkesville, Georgia, is a direct selling organization specializing in customized bags, organizational products and fashion accessories.

On June 23, 2015, the Company loaned approximately $4.8 million to Initials in the form of a senior subordinated loan. The loan has an interest rate of 15% and matures on June 22, 2020.

At July 31, 2015, the Company’s investment in Initials consisted of a senior subordinated loan with an outstanding amount, cost basis and fair value of approximately $4.8 million.

Inland Environmental & Remediation LP

Inland, Columbus, Texas, has developed a patented, environmentally-friendly recycling process to transform waste produced from oil field drilling sites into a road base product used in road construction.

At October 31, 2014, the Company’s investment in Inland consisted of a senior secured loan with a cash interest rate of 12% and a maturity date of April 17, 2019 and warrants for shares of common stock. The loan had an outstanding balance of $15.0 million and a cost basis and fair value of approximately $14.4 million. The warrants had a cost basis and fair value of $713,000.

During the nine month period ended July 31, 2015, the Valuation Committee decreased the fair value of the warrant by $713,000 and the senior secured loan by approximately $11.4 million.

At July 31, 2015, the Company’s investment in Inland consisted of a senior secured loan with an outstanding balance of $15.0 million, a cost basis of $14.5 million and a fair value of approximately $3.0 million. The warrants had a cost basis of $713,000 and a fair value of $0.

JSC Tekers Holdings

JSC Tekers, Latvia, is an acquisition company focused on real estate management.

At October 31, 2014, the Company’s investment in JSC Tekers consisted of preferred equity with a cost basis of $11.8 million and a fair value of $6.2 million and 3,201 shares of common stock with a cost basis of $4,500 and a fair value of $4,200.

During the nine month period ended July 31, 2015, the Valuation Committee decreased the fair value of the preferred stock by approximately $629,000.

At July 31, 2015, the Company’s investment in JSC Tekers consisted of preferred equity with a cost basis of $11.8 million and a fair value of $5.5 million and 3,201 shares of common stock with a cost basis of $4,500 and a fair value of $4,200.

Legal Solutions Holdings, Inc.

Legal Solutions Holdings, Inc. (“Legal Solutions”), Covina, CA, is a provider of record retrieval services to the California workers’ compensation applicant attorney market.

On December 30, 2014, the Company invested $8.7 million in Legal Solutions in the form of a senior subordinated loan. The loan bears annual interest at 14% and has a maturity date of September 12, 2018.

At July 31, 2015, the Company’s investment in Legal Solutions consisted of a senior subordinated loan with an outstanding amount, cost basis and fair value of approximately $8.7 million. The decrease in cost basis of the loan is due to the amortization of loan origination costs.

Mainstream Data, Inc.

Mainstream Data, Inc. (“Mainstream”), Salt Lake City, Utah, a Legacy Investment, develops and operates satellite, internet and wireless broadcast networks for information companies. Mainstream networks deliver text news, streaming stock quotations and digital images to subscribers around the world.

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At October 31, 2014 and July 31, 2015, the Company’s investment in Mainstream consisted of 5,786 shares of common stock with a cost of $3.75 million. The investment has been fair valued at $0.

Morey’s Seafood International LLC

Morey’s, Motley, Minnesota, is a manufacturer, marketer and distributor of fish and seafood products.

At October 31, 2014, the Company’s investment in Morey’s consisted of a second lien loan that had an outstanding balance and cost basis of $15.3 million and a fair value of $15.6 million. The loan had an interest rate of 13% and a maturity date of August 12, 2018.

On June 28, 2015, the interest rate on the loan increased to 14%.

During the nine month period ended July 31, 2015, the Valuation Committee decreased the fair value of the loan by approximately $1.0 million.

At July 31, 2015, the loan had an outstanding balance and cost basis of $15.7 million and a fair value of $14.9 million. The increase in cost and fair value of the loan is due to the capitalization of PIK interest. The increase in the fair value due to the capitalization of PIK interest was approved by the Company’s Valuation Committee.

MVC Automotive Group GmbH

MVC Automotive, an Amsterdam-based holding company, owns and operates ten Ford, Jaguar, Land Rover, Mazda, and Volvo dealerships located in Austria, Belgium, and the Czech Republic.

At October 31, 2014, the Company’s investment in MVC Automotive consisted of an equity interest with a cost of approximately $45.7 million and a fair value of approximately $21.5 million. The mortgage guarantee for MVC Automotive was equivalent to approximately $5.0 million at October 31, 2014. This guarantee was taken into account in the valuation of MVC Automotive.

On May 27, 2015, the Company invested an additional $1.1 million into MVC Automotive in the form of common equity interest.

During the nine month period ended July 31, 2015, the Valuation Committee decreased the fair value of the equity interest by approximately $6.3 million.

At July 31, 2015, the Company’s investment in MVC Automotive consisted of an equity interest with a cost of approximately $46.8 million and a fair value of approximately $16.4 million. The mortgage guarantee for MVC Automotive was equivalent to approximately $7.1 million at July 31, 2015. This guarantee was taken into account in the valuation of MVC Automotive.

Michael Tokarz, Chairman of the Company, and Puneet Sanan, a representative of the Company, serve as directors of MVC Automotive.

MVC Private Equity Fund, L.P.

MVC Private Equity Fund, L.P., Purchase, New York, is a private equity fund focused on control equity investments in the lower middle market. MVC GP II, an indirect wholly-owned subsidiary of the Company, serves as the GP to the PE Fund and is exempt from the requirement to register with the Securities and Exchange Commission as an investment adviser under Section 203 of the Investment Advisers Act of 1940. MVC GP II is wholly-owned by MVCFS, a subsidiary of the Company. The Company’s Board of Directors authorized the establishment of, and investment in, the PE Fund for a variety of reasons, including the Company’s ability to participate in Non-Diversified Investments made by the PE Fund. As previously disclosed, the Company is limited in its ability to make Non-Diversified Investments. For services provided to the PE Fund, the GP and MVC Partners are together entitled to receive 25% of all management fees and other fees paid by the PE Fund and its portfolio companies and up to 30% of the carried interest generated by the PE Fund. Further, at the direction of the Board of Directors, the GP retained TTG Advisers to serve as the portfolio manager of the PE Fund. In exchange

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for providing those services, and pursuant to the Board of Directors’ authorization and direction, TTG Advisers is entitled to the remaining 75% of the management and other fees generated by the PE Fund and its portfolio companies and any carried interest generated by the PE Fund. A significant portion of the portfolio fees that are paid by the PE Fund’s portfolio companies to the GP and TTG Advisers is subject to recoupment by the PE Fund in the form of an offset to future management fees paid by the PE Fund. Given this separate arrangement with the GP and the PE Fund, under the terms of the Company’s Advisory Agreement with TTG Advisers, TTG Advisers is not entitled to receive from the Company a management fee or an incentive fee on assets of the Company that are invested in the PE Fund. The PE Fund’s term will end on October 29, 2016; unless the GP, in its sole discretion, extends the term of the PE Fund for two additional periods of one year each.

On October 29, 2010, through MVC Partners and MVCFS, the Company committed to invest approximately $20.1 million in the PE Fund. Of the $20.1 million total commitment, MVCFS, through its wholly-owned subsidiary MVC GP II, has committed $500,000 to the PE Fund as its general partner. See MVC Partners for more information on the other portion of the Company’s commitment to the PE Fund. The PE Fund has closed on approximately $104 million of capital commitments.

During the fiscal year ended October 31, 2012 and thereafter, MVC Partners was consolidated with the operations of the Company as MVC Partners’ limited partnership interest in the PE Fund is a substantial portion of MVC Partners’ operations.

At October 31, 2014, the limited partnership interest in the PE Fund had a cost of approximately $14.2 million and a fair value of approximately $20.0 million. The Company’s general partnership interest in the PE Fund had a cost basis of approximately $363,000 and a fair value of approximately $504,000.

On December 31, 2014, the Company received distributions totaling $388,000 from the PE Fund which was treated as a return of capital.

During the nine month period ended July 31, 2015, the Valuation Committee increased the fair values of the limited partnership and general partnership interests totaling approximately $602,000.

At July 31, 2015, the limited partnership interest in the PE Fund had a cost of approximately $13.8 million and a fair value of approximately $20.6 million. The Company’s general partnership interest in the PE Fund had a cost basis of approximately $353,000 and a fair value of approximately $518,000. As of July 31, 2015, the PE Fund had invested in Plymouth Rock Energy, LLC, Gibdock Limited, Focus Pointe Holdings, Inc., Advanced Oilfield Services, LLC and AccuMed Corp.

NPWT Corporation

NPWT, Gurnee, Illinois, is a medical device manufacturer and distributor of negative pressure wound therapy products.

At October 31, 2014, the Company’s investment in NPWT consisted of 281 shares of common stock with a cost basis of approximately $1.2 million and a fair value of approximately $5,000 and 5,000 shares of convertible preferred stock with a cost basis of $0 and a fair value of $81,000.

During the nine month period ended July 31, 2015, the Valuation Committee decreased the fair values of the common stock and preferred stock totaling approximately $52,000.

At July 31, 2015, the common stock had a cost basis of approximately $1.2 million and a fair value of $2,000. The convertible preferred stock had a cost basis of $0 and a fair value of $32,000.

Scott Schuenke, an officer of the Company, serves as a director of NPWT.

Ohio Medical Corporation

Ohio Medical, Gurnee, Illinois, is a manufacturer and supplier of suction and oxygen therapy products, medical gas equipment, and input devices.

At October 31, 2014, the Company’s investment in Ohio Medical consisted of 8,512 shares of common stock with a cost basis of approximately $15.8 million and a fair value of $0, 28,981 shares of

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series A convertible preferred stock with a cost basis of $30.0 million and a fair value of $23.8 million and 9,178 shares of series C convertible preferred stock with a cost basis of $22.6 million and a fair value of $27.8 million.

On May 1, 2015, the Company sold 2,893 shares of common stock in Ohio Medical for a nominal amount resulting in no realized gain or loss.

During the nine month period ended July 31, 2015, the fair value of the series C convertible preferred stock was increased by approximately $3.5 million due to a PIK distribution, which was treated as a return of capital.

During the nine month period ended July 31, 2015, the Valuation Committee decreased the fair values of the series A preferred stock by $16.5 million.

At July 31, 2015, the Company’s investment in Ohio Medical consisted of 5,620 shares of common stock with a cost basis of approximately $15.8 million and a fair value of $0, 32,600 shares of series A convertible preferred stock with a cost basis of $30.0 million and a fair value of $7.3 million and 10,324 shares of series C convertible preferred stock with a cost basis of $22.6 million and a fair value of $31.2 million.

Michael Tokarz, Chairman of the Company, and Peter Seidenberg, representative of the Company, serve as directors of Ohio Medical.

PrePaid Legal Services, Inc.

PrePaid Legal, Ada, Oklahoma, is the leading marketer of legal counsel and identity theft solutions to families and small businesses in the U.S. and Canada.

At October 31, 2014, the Company’s investment in PrePaid Legal consisted of a $9.9 million second lien loan, which was purchased at a discount. The interest rate on the loan is the greater of LIBOR plus 8.50% with a LIBOR floor of 1.25% or the ABR plus 7.5% with an ABR floor of 2.25% per annum. The loan matures on July 1, 2020. The loan had an outstanding balance of $10.0 million, a cost basis of approximately $9.9 million and a fair value of $10.1 million.

During the nine month period ended July 31, 2015, the Valuation Committee decreased the fair value of the loan by $100,000.

During the month ended June 30, 2015, the Company sold its $10.0 million PrePaid Legal loan for proceeds totaling approximately $10.1 million, including all accrued interest.

At July 31, 2015, the Company no longer held an investment in PrePaid Legal.

The Results Companies, LLC

The Results Companies, LLC (“Results Companies”), Fort Lauderdale, FL, is a leading business process outsourcing provider of customer management solutions.

On December 30, 2014, the Company invested $9.0 million in Results Companies in the form of a senior subordinated loan. The loan bears annual interest at 15.5% and has a maturity date of July 1, 2016.

At July 31, 2015, the Company’s investment in Results Companies consisted of a senior subordinated loan with an outstanding amount, cost basis and fair value of approximately $9.0 million. The decrease in cost basis of the loan is due to the amortization of loan origination costs.

RX Innovation, Inc.

RX Innovation, Inc. (“RX Innovation”), Fort Worth, TX, provides hardware and software products to pharmacies throughout the United States.

On December 30, 2014, the Company invested $10.3 million in RX Innovation in the form of a senior subordinated loan. The loan bears annual interest at 16% and has a maturity date of March 1, 2017.

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At July 31, 2015, the Company’s investment in RX Innovation consisted of a senior subordinated loan with an outstanding amount, cost basis and fair value of approximately $10.3 million. The decrease in cost basis of the loan is due to the amortization of loan origination costs.

RuMe, Inc.

RuMe, Denver, Colorado, produces functional and affordable products for the environmentally and socially-conscious consumer reducing dependence on single-use products.

At October 31, 2014, the Company’s investment in RuMe consisted of 5,297,548 shares of common stock with a cost basis and fair value of approximately $924,000, 4,999,076 shares of series B-1 preferred stock with a cost basis of approximately $1.0 million and a fair value of approximately $1.1 million and 23,896,634 shares of series C preferred stock with a cost basis of approximately $3.4 million and a fair value of approximately $4.3 million.

During the nine month period ended July 31, 2015, the Valuation Committee increased the fair value of the series C preferred stock by $1.6 million and the Series B preferred stock by $395,000.

At July 31, 2015, the Company’s investment in RuMe consisted of 5,297,548 shares of common stock with a cost basis and fair value of approximately $924,000, 4,999,076 shares of series B-1 preferred stock with a cost basis of approximately $1.0 million and a fair value of approximately $1.5 million and 23,896,634 shares of series C preferred stock with a cost basis of approximately $3.4 million and a fair value of approximately $5.8 million.

John Kelly, a representative of the Company, serves as a director of RuMe.

Security Holdings, B.V.

Security Holdings is an Amsterdam-based holding company that owns FIMA, a Lithuanian security and engineering solutions company.

On April 26, 2011, the Company agreed to collateralize a 5.0 million Euro letter of credit from JPMorgan Chase Bank, N.A., which is classified as restricted cash on the Company’s consolidated balance sheet. This letter of credit is being used as collateral for a project guarantee by AB DnB NORD bankas to Security Holdings.

At October 31, 2014, the Company’s common equity interest in Security Holdings had a cost basis of approximately $52.9 million and a fair value of approximately $50.6 million.

During the nine month period ended July 31, 2015, the Valuation Committee decreased the fair value of the common equity interest by approximately $4.0 million.

At July 31, 2015, the Company’s common equity interest in Security Holdings had a cost basis of approximately $52.9 million and a fair value of approximately $46.7 million.

Puneet Sanan, a representative of the Company, serves as a director of Security Holdings.

SGDA Europe B.V.

SGDA Europe is an Amsterdam-based holding company that pursues environmental and remediation opportunities in Romania.

At October 31, 2014, the Company’s equity investment had a cost basis of approximately $28.5 million and a fair value of approximately $10.0 million.

During the nine month period ended July 31, 2015, the Valuation Committee decreased the fair value of the common equity interest by approximately $3.2 million.

At July 31, 2015, the Company’s equity investment had a cost basis of approximately $28.5 million and a fair value of approximately $6.9 million.

John Kelly, a representative of the Company, serves as a director of SGDA Europe.

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SIA Tekers Invest

Tekers, Riga, Latvia, is a port facility used for the storage and servicing of vehicles.

At October 31, 2014, the Company’s investment in Tekers consisted of 68,800 shares of common stock with a cost of $2.3 million and a fair value of approximately $1.2 million. There was no balance on the guarantee for Tekers at October 31, 2014.

During the nine month period ended July 31, 2015, the Valuation Committee decreased the fair value of the common stock by approximately $308,000.

At July 31, 2015, the Company’s investment in Tekers consisted of 68,800 shares of common stock with a cost of $2.3 million and a fair value of approximately $917,000. There was no balance on the guarantee for Tekers at July 31, 2015. This guarantee was taken into account in the valuation of Tekers.

Summit Research Labs, Inc.

Summit, Huguenot, New York, is a specialty chemical company that manufactures antiperspirant actives.

At October 31, 2013, the Company’s investment in Summit consisted of a second lien loan that had an outstanding balance and cost basis of approximately $25.1 million and a fair value of approximately $25.4 million. The second lien loan bears annual interest at 14% and matures on October 1, 2018.

On November 26, 2014, Summit Research Labs, Inc. repaid its second lien loan in full including all accrued interest totaling approximately $25.7 million.

At July 31, 2015, the Company no longer held an investment in Summit.

Thunderdome restaurants, LLC

Thunderdome Restaurants, LLC (“Thunderdome”), Cincinnati, Ohio, is a restaurant group with locations in Cincinnati, Columbus, Cleveland, Indianapolis, Nashville and Charlotte.

On June 11, 2015, the Company loaned $2.0 million to Thunderdome Restaurants LLC in the form of a second lien loan. The loan has an interest rate of 12% and matures on June 10, 2020.

At July 31, 2015, the Company’s investment in Thunderdome consisted of a second lien loan with an outstanding amount, cost basis and fair value of approximately $2.0 million.

Turf Products, LLC

Turf, Enfield, Connecticut, is a wholesale distributor of golf course and commercial turf maintenance equipment, golf course irrigation systems and consumer outdoor power equipment.

At October 31, 2014, the Company’s investment in Turf consisted of a senior subordinated loan, bearing interest at 11% per annum with a maturity date of November 1, 2018, membership interest and warrants. The senior subordinated loan had an outstanding balance, cost basis and a fair valued of $3.9 million. The membership interest had a cost of approximately $3.5 million and a fair value of approximately $4.0 million. The warrants had a cost of $0 and a fair value of $0. The Company also had a guarantee to Berkshire Bank that was fair valued at -$67,000 or negative $67,000.

During the nine month period ended July 31, 2015, the Valuation Committee increased the fair value of the loan by approximately $1,000 and the guarantee by approximately $19,000.

At July 31, 2015, the senior subordinated loan had an outstanding balance, cost basis and a fair value of approximately $3.9 million. The membership interest had a cost of approximately $3.5 million and a fair value of approximately $4.0 million. The warrants had a cost and fair value of $0 and the guarantee was fair valued at -$48,000 or negative $48,000.

Michael Tokarz, Chairman of the Company, and Puneet Sanan and Shivani Khurana, representatives of the Company, serve as directors of Turf.

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United States Technologies, Inc.

United States Technologies, Inc. (“U.S. Technologies”), Fairlawn, New Jersey, offers diagnostic testing, redesign, manufacturing, reverse engineering and repair services for malfunctioning electronic components of machinery and equipment.

On July 17, 2015, the Company loaned $5.0 million to U.S Technologies in the form of a senior term loan. The loan has an interest rate of 10.5% and matures on July 17, 2020.

At July 31, 2015, the Company’s investment in U.S Technologies consisted of a senior term loan with an outstanding amount, cost basis and fair value of approximately $5.0 million.

U.S. Gas & Electric, Inc.

U.S. Gas, North Miami Beach, Florida, is a licensed Energy Service Company (“ESCO”) that markets and distributes natural gas to small commercial and residential retail customers in the state of New York.

At October 31, 2014, the Company’s investment in U.S. Gas consisted of a second lien loan, an unsecured loan, convertible Series I preferred stock and convertible Series J preferred stock. The second lien loan had an outstanding balance, cost and fair value of $7.5 million and the unsecured loan with an outstanding balance, cost and fair value of approximately $3.0 million. The second lien loan bears annual interest at 13% and has a maturity date of July 1, 2019. The unsecured loan bears annual interest at 14% and has a maturity date of July 1, 2018. The 32,200 shares of convertible Series I preferred stock had a fair value of $83.7 million and a cost of $500,000 and the 8,216 shares of convertible Series J preferred stock had a cost and fair value of $0.

At July 31, 2015, the loans had a combined outstanding balance, cost basis and a fair value of approximately $10.6 million. The increases in the outstanding balance, cost and fair value of the loan are due to the capitalization of “payment in kind” interest. The increase in the fair value was approved by the Company’s Valuation Committee. The convertible Series I preferred stock had a fair value of approximately $83.7 million and a cost basis of $500,000 and the convertible Series J preferred stock had a cost basis and fair value of $0.

Puneet Sanan and Peter Seidenberg, representatives of the Company, serve as Chairman and director, respectively, of U.S. Gas and Warren Holtsberg, a director of the Company, also serves as a director of U.S. Gas.

U.S. Spray Drying Holding Company

SCSD, Huguenot, New York, provides custom spray drying products to the food, pharmaceutical, nutraceutical, flavor and fragrance industries.

At October 31, 2014, the Company’s investment in SCSD consisted of 784 shares of class B common stock with a cost and fair value of approximately $5.5 million and a secured loan with an outstanding balance, cost basis and fair value of $1.5 million. The secured loan had an interest rate of 12% and a maturity date of May 2, 2019.

During the nine month period ended July 31, 2015, the Valuation Committee increased the fair value of the common stock by $387,000.

At July 31, 2015, the Company’s investment in SCSD consisted of 784 shares of class B common stock with a cost basis of approximately $5.5 million and a fair value of approximately $5.9 million. The secured loan had an outstanding balance, cost basis and fair value of $1.5 million.

Puneet Sanan and Shivani Khurana, representatives of the Company, serve as directors of SCSD.

Velocitius B.V.

Velocitius, a Netherlands based holding company, manages wind farms based in Germany through operating subsidiaries.

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At October 31, 2014, the Company’s investment in Velocitius consisted of an equity investment with a cost of $11.4 million and a fair value of approximately $11.5 million.

On June 19, 2015, the Company monetized a majority of its investment in Velocitius receiving approximately $9.2 million in proceeds which included a return of capital and closing fees and was net of a minimal currency loss.

During the nine month period ended July 31, 2015, the Valuation Committee decreased the fair value of the equity investment by approximately $2.8 million.

At July 31, 2015, the equity investment in Velocitius had a cost of approximately $2.7 million and a fair value of $0.

Peter Seidenberg, a representative of the Company, serves as a director of Velocitius.

Vestal Manufacturing Enterprises, Inc.

Vestal, Sweetwater, Tennessee, is a market leader for steel fabricated products to brick and masonry segments of the construction industry. Vestal manufactures and sells both cast iron and fabricated steel specialty products used in the construction of single-family homes.

At October 31, 2014, the Company’s investment in Vestal consisted of a senior subordinated promissory note and 81,000 shares of common stock. The senior subordinated note had an annual interest of 12%, a maturity date of April 29, 2015 and an outstanding balance, cost, and fair value of $600,000. The 81,000 shares of common stock had a cost basis of $1.9 million and a fair value of approximately $16.9 million.

On May 29, 2015, the Company sold its 81,000 shares of common stock in Vestal receiving total proceeds of approximately $17.9 million resulting in a realized gain of approximately $15.0 million. The total proceeds includes a $1.0 million dividend and assumes full receipt of the escrow proceeds. The $600,000 loan was also repaid in full including all accrued interest. As part of the transaction, the Company reinvested approximately $6.3 million in the form of a subordinated loan, $250,000 for 5,610 shares of common stock and a warrant with no cost. The loan has an interest rate of 15% and matures on November 28, 2021.

At July 31, 2015, the Company’s investment in Vestal consisted of a subordinated loan, 5,610 shares of common stock and a warrant. The loan had an outstanding balance, cost, and fair value of $6.3 million. The 5,610 shares of common stock had a cost basis and fair value of $250,000 and the warrant had no cost and was fair valued at $0.

Liquidity and Capital Resources

Our liquidity and capital resources are derived from our public offering of securities, our credit facility and cash flows from operations, including investment sales and repayments and income earned. Our primary use of funds includes investments in portfolio companies and payments of fees and other operating expenses we incur. We have used, and expect to continue to use, proceeds generated from our portfolio investments and/or proceeds from public and private offerings of securities to finance pursuit of our investment objective.

At July 31, 2015, the Company had investments in portfolio companies totaling $400.4 million. Also, on that date, the Company had approximately $12.6 million in cash equivalents and approximately $9.4 million in cash. The Company considers all money market and other cash investments purchased with an original maturity of less than three months to be cash equivalents. U.S. government securities and cash equivalents are highly liquid. Pending investments in portfolio companies pursuant to our principal investment strategy, the Company may make other short-term or temporary investments, including in exchange-traded funds and private investment funds offering periodic liquidity.

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During the nine month period ended July 31, 2015, the Company made eight new investments, committing capital totaling approximately $58.1 million. The investments were made in RX ($10.3 million), Agri-Carriers ($11.8 million), Legal Solutions ($8.7 million), Results Companies ($9.0 million), Vestal ($6.5 million), Thunderdome ($2.0 million), Initials ($4.8 million) and U.S. Technologies ($5.0 million).

During the nine month period ended July 31, 2015, the Company made 4 follow-on investments into 4 existing portfolio companies totaling approximately $2.6 million. On May 27, 2015, the Company invested an additional $1.1 million into MVC Automotive in the form of common equity interest. On June 3, 2015, the Company invested an additional $250,000 into Centile in the form of common equity interest. On July 6, 2015, the Company invested $250,000 into BAC in the form of equity. See below for further information on BAC. On July 7, 2015, the Company made a secured $1.0 million loan to Biogenic. The loan has a 16% interest rate and matures on February 29, 2016. The Company also received a warrant at no cost and allocated a portion of the cost basis of the loan to the warrant at the time the investment was made.

Current commitments include:

Commitments to Portfolio Companies:

At July 31, 2015 and October 31, 2014, the Company’s existing commitments to portfolio companies consisted of the following:

Portfolio Company	Amount Committed		Amount Funded at July 31, 2015
MVC Private Equity Fund LP	$	20.1 million	$	14.6 million
Total	$	20.1 million	$	14.6 million

Portfolio Company	Amount Committed		Amount Funded at October 31, 2014
MVC Private Equity Fund LP	$	20.1 million	$	14.6 million
Total	$	20.1 million	$	14.6 million

Guarantees:

At July 31, 2015 and October 31, 2014, the Company had the following commitments to guarantee various loans and mortgages:

Guarantee	Amount Committed		Amount Funded at July 31, 2015
MVC Automotive	$	7.1 million	—
Tekers	—		—
Turf	$	1.0 million	—
Total	$	8.1 million	—

Guarantee	Amount Committed		Amount Funded at October 31, 2014
MVC Automotive	$	5.0 million	—
Tekers			—
Turf	$	1.0 million	—
Total	$	6.0 million	—

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These guarantees are further described below, together with the Company’s other commitments.

On July 19, 2007, the Company agreed to guarantee a 1.4 million Euro mortgage for Tekers, which did not have an outstanding balance as of July 31, 2015.

The Company guaranteed $1.0 million of Turf’s indebtedness to Berkshire Bank, which had a fair value of -$48,000 or negative $48,000 as of July 31, 2015.

Commitments of the Company

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offering expenses, were approximately $77.4 million. The offering expenses incurred are amortized over the term of the Senior Notes.

On February 26, 2013, the Company received the funds related to the Senior Notes offering, net of expenses, and subsequently repaid the credit facility (the “Credit Facility”) with Guggenheim as administrative agent for the lenders in full, including all accrued interest. The Company intends to use the excess net proceeds after the repayment of the Credit Facility for general corporate purposes, including, for example, investing in portfolio companies according to our investment objective and strategy, repurchasing shares pursuant to the share repurchase program adopted by our Board of Directors, funding distributions, and/or funding the activities of our subsidiaries.

On July 31, 2013, the Company entered into a one-year, $50 million revolving credit facility (“Credit Facility II”) with Branch Banking and Trust Company (“BB&T”). At October 31, 2013, the balance of Credit Facility II was $50.0 million. On January 31, 2014, Credit Facility II was increased to a $100 million revolving credit facility. Credit Facility II was renewed on December 1, 2015 and will now expire on May 31, 2016, at which time all outstanding amounts under it will be due and payable. During the nine month period ended July 31, 2015, the Company’s net repayments on Credit Facility II were $0, resulting in an outstanding balance of $100.0 million at July 31, 2015. Credit Facility II is used to provide the Company with better overall financial flexibility in managing its investment portfolio. Borrowings under Credit Facility II bear interest at LIBOR plus 100 basis points. In addition, the Company is also subject to a 25 basis point commitment fee for the average amount of Credit Facility II that is unused during each fiscal quarter. The Company paid closing fees, legal and other costs associated with these transactions. These costs will be amortized over the life of the facility. Borrowings under Credit Facility II will be secured by cash, short-term and long-term U.S. Treasury securities and other governmental agency securities.

On December 30, 2014, the Company entered into a 6 month, $25.0 million bridge loan (“Bridge Loan”) with Firstrust Bank, initially borrowing approximately $15.9 million. Prior to maturity, the Bridge Loan was extended to October 30, 2015. During the nine month period ended July 31, 2015, after the initial borrowing of $15.9 million, the Company borrowed approximately $12.8 million and repaid approximately $15.9 million, resulting in an outstanding balance of approximately of $12.8 million. Borrowings under the Bridge Loan will bear interest at 5%. The Company paid closing fees, legal and other costs associated with the transaction. These costs will be amortized over the life of the Bridge Loan. See Note 16 Subsequent Events for additional information.

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Subsequent Events

On October 16, 2015, the Company sold its remaining common equity interest in Velocitius and received zero proceeds resulting in a realized loss of approximately $2.7 million.

On October 19, 2015, the Company invested an additional $1.7 million in MVC Automotive.

On October 30, 2015, the Company realized a loss of $6.7 million with the dissolution of Harmony.

On November 3, 2015, Results Companies repaid its loan in full, including all accrued interest totaling approximately $10.0 million.

On November 20, 2015 and December 3, 2015, the Company invested an additional $538,000 and $1.1 million, respectively, in MVC Automotive common equity.

On November 20, 2015, Grant Thornton, LLP was engaged as the independent registered public accounting firm for fiscal year 2015, effective following the Company’s filing of its Quarterly Report on Form 10-Q for the quarter ended April 30, 2015 (the “April 30 10-Q”). As previously disclosed by the Company, on June 29, 2015, Ernst & Young LLP informed the Company that it would not stand for reappointment as the Company’s independent registered public accounting firm for the fiscal year ending October 31, 2015.

On December 15, 2015, the Company loaned approximately $1.6 million to Somotra nv, a wholly-owned subsidiary of MVC Automotive.

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On December 18, 2015, the Company invested approximately $5.1 million in Pride Engineering, LLC in the form of a second lien loan. The loan bears annual interest of 12% and matures on May 18, 2021.

On January 4, 2016, the Company invested an additional $1.5 million in Legal Solutions Holdings, Inc. increasing its senior subordinated loan to approximately $8.7 million.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Historically the Company has invested in small companies, and its investments in these companies are considered speculative in nature. The Company’s investments often include securities that are subject to legal or contractual restrictions on resale that adversely affect the liquidity and marketability of such securities. As a result, the Company is subject to risk of loss which may prevent our shareholders from achieving price appreciation, dividend distributions and return of capital.

Financial instruments that subjected the Company to concentrations of market risk consisted principally of equity investments, subordinated notes, debt instruments, and escrow receivables, which represent approximately 74.64% of the Company’s total assets at July 31, 2015. As discussed in Note 8 “Portfolio Investments,” these investments consist of securities in companies with no readily determinable market values and as such are valued in accordance with the Company’s fair value policies and procedures. The Company’s investment strategy represents a high degree of business and financial risk due to the fact that portfolio company investments are generally illiquid, in small and middle market companies, and include entities with little operating history or entities that possess operations in new or developing industries. These investments, should they become publicly traded, would generally be: (i) subject to restrictions on resale, if they were acquired from the issuer in private placement transactions; and (ii) susceptible to market risk. The Company may make short-term investments in 90-day Treasury Bills or longer-term treasury notes, which are federally guaranteed securities, or other investments, including exchange-traded funds, private investment funds and designated money market accounts, pending investments in portfolio companies made pursuant to our principal investment strategy.

In addition, the following risk factors relate to market risks impacting the Company.

Investing in private companies involves a high degree of risk.

Our investment portfolio generally consists of loans to, and investments in, private companies. Investments in private businesses involve a high degree of business and financial risk, which can result in substantial losses and accordingly should be considered speculative. There is generally very little publicly available information about the companies in which we invest, and we rely significantly on the due diligence of the members of the investment team to obtain information in connection with our investment decisions. It is thus difficult, if not impossible, to protect the Company from the risk of fraud, misrepresentation or poor judgment by these companies.

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Our investments in portfolio companies are generally illiquid.

We generally acquire our investments directly from the issuer in privately negotiated transactions. Most of the investments in our portfolio (other than cash or cash equivalents and certain other investments made pending investments in portfolio companies such as investments in exchange-traded funds) are typically subject to restrictions on resale or otherwise have no established trading market. We may exit our investments when the portfolio company has a liquidity event, such as a sale, recapitalization or initial public offering. The illiquidity of our investments may adversely affect our ability to dispose of equity and debt securities at times when it may be otherwise advantageous for us to liquidate such investments. In addition, if we were forced to immediately liquidate some or all of the investments in the portfolio, the proceeds of such liquidation could be significantly less than the current fair value of such investments.

Substantially all of our portfolio investments and escrow receivables are recorded at “fair value” and, as a result, there is a degree of uncertainty regarding the carrying values of our portfolio investments.

Pursuant to the requirements of the 1940 Act, because our portfolio company investments do not have readily ascertainable market values, we record these investments at fair value in accordance with our Valuation Procedures adopted by our Board of Directors. As permitted by the SEC, the Board of Directors has delegated the responsibility of making fair value determinations to the Valuation Committee, subject to the Board of Directors’ supervision and pursuant to the Valuation Procedures.

At July 31, 2015, approximately 73.09% of our total assets represented portfolio investments and escrow receivables recorded at fair value.

There is no single standard for determining fair value in good faith. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each portfolio investment while employing a consistently applied valuation process for the types of investments we make. In determining the fair value of a portfolio investment, the Valuation Committee analyzes, among other factors, the portfolio company’s financial results and projections and publicly traded comparable companies when available, which may be dependent on general economic conditions. We specifically value each individual investment and record unrealized depreciation for an investment that we believe has become impaired, including where collection of a loan or realization of an equity security is doubtful. Conversely, we will record unrealized appreciation if we have an indication (based on a significant development) that the underlying portfolio company has appreciated in value and, therefore, our equity security has also appreciated in value, where appropriate. Without a readily ascertainable market value and because of the inherent uncertainty of fair valuation, fair value of our investments may differ significantly from the values that would have been used had a ready market existed for the investments, and the differences could be material.

Pursuant to our Valuation Procedures, our Valuation Committee (which is currently comprised of three Independent Directors) reviews, considers and determines fair valuations on a quarterly basis (or more frequently, if deemed appropriate under the circumstances). Any changes in valuation are recorded in the consolidated statements of operations as “Net change in unrealized appreciation (depreciation) on investments.”

We have identified a material weakness in our internal control over financial reporting. Our failure to establish and maintain effective internal control over financial reporting could result in material misstatements in our financial statements and cause investors to lose confidence in our reported financial information, which in turn could cause the trading price of our securities to decline.

We have identified a material weakness in our internal control over financial reporting related to the valuation of certain portfolio companies and, as a result of such weakness, our management concluded

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that our disclosure controls and procedures and internal control over financial reporting were not effective as of October 31, 2014. This contributed to a delay in the filing of our Annual Report on Form 10-K for the fiscal year ended October 31, 2014 (and, as a result, the Form 10-K for the fiscal year ended October 31, 2015) and the restatement of our previously issued quarterly and annual financial statements for the fiscal year ended October 31, 2013. For further information regarding this matter, please refer to Item 4. Controls and Procedures.

In addition, we may experience delay or be unable to meet our reporting obligations or to comply with SEC rules and regulations, which could result in investigations and sanctions by regulatory authorities. Management’s ongoing assessment of disclosure controls and procedures as well as internal control over financial reporting may in the future identify additional weaknesses and conditions that need to be addressed. Any failure to improve our disclosure controls and procedures or internal control over financial reporting to address identified weaknesses in the future, if they were to occur, could prevent us from maintaining accurate accounting records and discovering material accounting errors, which in turn, could adversely affect our business and the value of our common stock.

Our failure to prepare and timely file our periodic reports with the SEC limits our access to the public markets to raise debt or equity capital

We did not file this Quarterly Report on Form 10-Q within the timeframe required by the SEC. In addition, our Annual Report on Form 10-K for the fiscal year ended October 31, 2015 (the “2015 Form 10-K”) currently is delinquent, and is not expected to be filed until the first half of 2016. Because we have not remained current in our reporting requirements with the SEC, we are limited in our ability to access the public markets to raise debt or equity capital. Our limited ability to access the public markets could prevent us from pursuing transactions or implementing business strategies that we might otherwise believe are beneficial to our business.

Economic recessions or downturns, including the current economic instability in Europe and the United States, could impair our portfolio companies and have a material adverse impact on our business, financial condition and results of operations.

Many of the companies in which we have made or will make investments may be susceptible to economic slowdowns or recessions. An economic slowdown may affect the ability of a company to engage in a liquidity event. These conditions could lead to financial losses in our portfolio and a decrease in our revenues, net income and assets. Through the date of this report, conditions in the public debt and equity markets have been volatile and pricing levels have performed similarly. As a result, depending on market conditions, we could incur substantial realized losses and suffer unrealized losses in future periods, which could have a material adverse impact on our business, financial condition and results of operations. If current market conditions continue, or worsen, it may adversely impact our ability to deploy our investment strategy and achieve our investment objective.

Our overall business of making loans or private equity investments may be affected by current and future market conditions. The absence of an active mezzanine lending or private equity environment may slow the amount of private equity investment activity generally. As a result, the pace of our investment activity may slow, which could impact our ability to achieve our investment objective. In addition, significant changes in the capital markets could have an effect on the valuations of private companies and on the potential for liquidity events involving such companies. This could affect the amount and timing of any gains realized on our investments and thus have a material adverse impact on our financial condition.

Depending on market conditions, we could incur substantial realized losses and suffer unrealized losses in future periods, which could have a material adverse impact on our business, financial condition

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and results of operations. In addition, the global financial markets have not fully recovered from the global financial crisis and the economic factors which gave rise to the crisis. The continuation of current global market conditions, uncertainty or further deterioration, including the economic instability in Europe, could result in further declines in the market values of the Company investments. Such declines could also lead to diminished investment opportunities for the Company, prevent the Company from successfully executing its investment strategies or require the Company to dispose of investments at a loss while such adverse market conditions prevail.

Our borrowers may default on their payments, which could adversely affect our financial performance.

We may make long-term unsecured, subordinated loans, which may involve a higher degree of repayment risk than conventional secured loans. We primarily invest in companies that may have limited financial resources and that may be unable to obtain financing from traditional sources. In addition, numerous factors may adversely affect a portfolio company’s ability to repay a loan we make to it, including the failure to meet a business plan, a downturn in its industry or operating results, or negative economic conditions. Deterioration in a borrower’s financial condition and prospects may be accompanied by deterioration in any related collateral.

Our investments in mezzanine and other debt securities may involve significant risks.

Our investment strategy contemplates investments in mezzanine and other debt securities of privately held companies. “Mezzanine” investments typically are structured as subordinated loans (with or without warrants) that carry a fixed rate of interest. We may also make senior secured and other types of loans or debt investments. Our debt investments are typically not rated by any rating agency, but we believe that if such investments were rated, they would be below investment grade quality (rated lower than “Baa3” by Moody’s or lower than “BBB-” by Standard & Poor’s, commonly referred to as “junk bonds”). Loans of below investment grade quality have predominantly speculative characteristics with respect to the borrower’s capacity to pay interest and repay principal. Our debt investments in portfolio companies may thus result in a high level of risk and volatility and/or loss of principal.

We may not realize gains from our equity investments.

When we invest in mezzanine and senior debt securities, we may acquire warrants or other equity securities as well. We may also invest directly in various equity securities. Our goal is ultimately to dispose of such equity interests and realize gains upon our disposition of such interests. However, the equity interests we receive or invest in may not appreciate in value and, in fact, may decline in value. In addition, the equity securities we receive or invest in may be subject to restrictions on resale during periods in which it would be advantageous to resell. Accordingly, we may not be able to realize gains from our equity interests, and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset any other losses we experience.

Our investments in small and middle-market privately-held companies are extremely risky and you could lose your entire investment.

Investments in small and middle-market privately-held companies are subject to a number of significant risks including the following:

· Small and middle-market companies may have limited financial resources and may not be able to repay the loans we make to them. Our strategy includes providing financing to companies that typically do not have capital sources readily available to them. While we believe that this provides

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an attractive opportunity for us to generate profits, this may make it difficult for the borrowers to repay their loans to us upon maturity.

· Small and middle-market companies typically have narrower product lines and smaller market shares than large companies. Because our target companies are smaller businesses, they may be more vulnerable to competitors’ actions and market conditions, as well as general economic downturns. In addition, smaller companies may face intense competition, including competition from companies with greater financial resources, more extensive development, manufacturing, marketing and other capabilities, and a larger number of qualified managerial and technical personnel.

· There is generally little or no publicly available information about these privately-held companies. There is generally little or no publicly available operating and financial information about privately-held companies. As a result, we rely on our investment professionals to perform due diligence investigations of these privately-held companies, their operations and their prospects. We may not learn all of the material information we need to know regarding these companies through our investigations. It is difficult, if not impossible, to protect the Company from the risk of fraud, misrepresentation or poor judgment by our portfolio companies. Accordingly, the Company’s performance (including the valuation of its investments) is subject to the ongoing risk that the portfolio companies or their employees, agents, or service providers, may commit fraud adversely affecting the value of our investments.

· Small and middle-market companies generally have less predictable operating results. We expect that our portfolio companies may have significant variations in their operating results, may from time to time be parties to litigation, may be engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence, may require substantial additional capital to support their operations, finance expansion or maintain their competitive position, may otherwise have a weak financial position or may be adversely affected by changes in the business cycle. Our portfolio companies may not meet net income, cash flow and other coverage tests typically imposed by their senior lenders.

· Small and middle-market businesses are more likely to be dependent on one or two persons. Typically, the success of a small or middle-market company also depends on the management talents and efforts of one or two persons or a small group of persons. The death, disability or resignation of one or more of these persons could have a material adverse impact on our portfolio company and, in turn, on us.

· Small and middle-market companies are likely to have greater exposure to economic downturns than larger companies. We expect that our portfolio companies will have fewer resources than larger businesses and an economic downturn may thus more likely have a material adverse effect on them.

· Small and middle-market companies may have limited operating histories. We may make debt or equity investments in new companies that meet our investment criteria. Portfolio companies with limited operating histories are exposed to the operating risks that new businesses face and may be particularly susceptible to, among other risks, market downturns, competitive pressures and the departure of key executive officers.

Our portfolio companies may be highly leveraged.

Some of our portfolio companies may be highly leveraged, which may have adverse consequences to

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these companies and to us as an investor. These companies may be subject to restrictive financial and operating covenants and the leverage may impair such companies’ ability to finance their future operations and capital needs. As a result, the flexibility of these companies’ to respond to changing business and economic conditions and to take advantage of business opportunities may be limited. Further, a leveraged company’s income and net assets will tend to increase or decrease at a greater rate than if borrowed money were not used.

When we are a debt or minority equity investor in a portfolio company, we may not be in a position to control the entity, and management of the company may make decisions that could decrease the value of our portfolio holdings.

We anticipate making debt and minority equity investments; therefore, we will be subject to the risk that a portfolio company may make business decisions with which we disagree, and the shareholders and management of such company may take risks or otherwise act in ways that do not serve our interests. Due to the lack of liquidity in the markets for our investments in privately held companies, we may not be able to dispose of our interests in our portfolio companies as readily as we would like. As a result, a portfolio company may make decisions that could decrease the value of our portfolio holdings.

We may choose to waive or defer enforcement of covenants in the debt securities held in our portfolio, which may cause us to lose all or part of our investment in these companies.

Some of our loans to our portfolio companies may be structured to include customary business and financial covenants placing affirmative and negative obligations on the operation of each company’s business and its financial condition. However, from time to time, we may elect to waive breaches of these covenants, including our right to payment, or waive or defer enforcement of remedies, such as acceleration of obligations or foreclosure on collateral, depending upon the financial condition and prospects of the particular portfolio company. These actions may reduce the likelihood of our receiving the full amount of future payments of interest or principal and be accompanied by a deterioration in the value of the underlying collateral as many of these companies may have limited financial resources, may be unable to meet future obligations and may go bankrupt. This could negatively impact our ability to pay dividends and cause your investment to lose value and could become worthless.

Our portfolio companies may incur obligations that rank equally with, or senior to, our investments in such companies. As a result, the holders of such obligations may be entitled to payments of principal or interest prior to us, preventing us from obtaining the full value of our investment in the event of an insolvency, liquidation, dissolution, reorganization, acquisition, merger or bankruptcy of the relevant portfolio company.

Our portfolio companies may have other obligations that rank equally with, or senior to, the securities in which we invest. By their terms, such other securities may provide that the holders are entitled to receive payment of interest or principal on or before the dates on which we are entitled to receive payments in respect of the securities we own. Also, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company, holders of securities ranking senior to our investment in the relevant portfolio company would typically be entitled to receive payment in full before we receive any distribution in respect of our investment. After repaying investors that are senior to us, the portfolio company may not have any remaining assets to use for repaying its obligation to us. In the case of other securities ranking equally with securities in which we invest, we would have to share on an equal basis any distributions with such investors in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio company. As a result, we may not obtain the full value of our investment in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio company.

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We are a non-diversified investment company within the meaning of the 1940 Act, and therefore may invest a significant portion of our assets in a relatively small number of portfolio companies, which subjects us to a risk of significant loss should the performance or financial condition of one or more portfolio companies deteriorate.

We are classified as a non-diversified investment company within the meaning of the 1940 Act, and therefore we may invest a significant portion of our assets in a relatively small number of portfolio companies in a limited number of industries. As of July 31, 2015, the fair value of our largest investment, U.S. Gas, comprised 31.5% of our net assets. Beyond the asset diversification requirements associated with our qualification as a RIC, we do not have fixed guidelines for diversification, and while we are not targeting any specific industries, relatively few industries may continue to be significantly represented among our investments. To the extent that we have large positions in the securities of a small number of portfolio companies, we are subject to an increased risk of significant loss should the performance or financial condition of these portfolio companies or their respective industries deteriorate. We may also be more susceptible to any single economic or regulatory occurrence as a result of holding large positions in a small number of portfolio companies.

As a result of our significant portfolio investment in U.S. Gas, we are particularly subject to the risks of that company and the energy services industry.

Given the extent of our investment in U.S. Gas, the Company is particularly subject to the risks impacting U.S. Gas and the energy service industry.

U.S. Gas’s operating results may fluctuate on a seasonal or quarterly basis and with general economic conditions. Weather conditions and other natural phenomena can also have an adverse impact on earnings and cash flows. Unusually mild weather in the future could diminish U.S. Gas’s results of operations and harm its financial condition. U.S. Gas enters into contracts to purchase and sell electricity and natural gas as part of its operations. With respect to such transactions, the rate of return on its capital investments is not determined through mandated rates, and its revenues and results of operations are likely to depend, in large part, upon prevailing market prices for power in its regional markets and other competitive markets. These market prices can fluctuate substantially over relatively short periods of time. Trading margins may erode as markets mature and there may be diminished opportunities for gain should volatility decline. Fuel prices may also be volatile, and the price U.S. Gas can obtain for power sales may not change at the same rate as changes in fuel costs. These factors could reduce U.S. Gas’s margins and therefore diminish its revenues and results of operations.

U.S. Gas relies on a firm supply source to meet its energy management obligations for its customers. Should U.S. Gas’s suppliers fail to deliver supplies of natural gas and electricity, there could be a material impact on its cash flows and statement of operations. U.S. Gas depends on natural gas pipelines and other storage and transportation facilities owned and operated by third parties to deliver natural gas to wholesale markets and to provide retail energy services to customers. If transportation or storage of natural gas is disrupted, including for reasons of force majeure, the ability of U.S. Gas to sell and deliver its services may be hindered. As a result, it may be responsible for damages incurred by its customers, such as the additional cost of acquiring alternative supply at then-current market rates. Additionally, U.S. Gas depends on transmission facilities owned and operated by unaffiliated power companies to deliver the power it sells at wholesale. If transmission is disrupted, or transmission capacity is inadequate, U.S. Gas may not be able to deliver its wholesale power.

U.S. Gas is subject to substantial regulation by federal, state and local regulatory authorities. It is required to comply with numerous laws and regulations and to obtain numerous authorizations, permits, approvals and certificates from governmental agencies. U.S. Gas cannot predict the impact of any future

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revisions or changes in interpretations of existing regulations or the adoption of new laws and regulations applicable to it. Changes in regulations or the imposition of additional regulations could influence its operating environment and may result in substantial costs to U.S. Gas.

The ‘Polar Vortex’

A confluence of issues in January and February 2014 associated with the 2013-2014 winter season’s ‘polar vortex’ resulted in extraordinarily large spikes in the prices of wholesale electricity and, to some extent, natural gas in markets where U.S. Gas and other retail providers purchase their supply. U.S. Gas responded by taking various actions, including providing rebates to hard hit customers.

A repeat of these or comparable circumstances could similarly harm margins and profitability in the future, and U.S. Gas could find it necessary to take similar or other actions that may have a negative impact on its financial condition and results of operations in order to mitigate the impact of extreme weather and retain customers.

As a result of price increases caused by the ‘polar vortex,’ customers of U.S. Gas and other industry competitors filed claims or complaints regarding their bills during the 2013-2014 winter season, many of which have been reported to local public utility commissions and other regulatory bodies. In addition to dealing with any private litigation, regulatory bodies may take action to counter actual or perceived violations of regulations that could have a negative impact on retail energy providers such as U.S. Gas, even if such actions are successfully defended. Legislators and regulators may enact or modify laws or regulations to prevent the repetition of the price spikes discussed above, which could negatively impact U.S. Gas’ financial condition and results of operation.

Investments in foreign debt or equity may involve significant risks in addition to the risks inherent in U.S. investments.

Our investment strategy has resulted in some investments in debt or equity of foreign companies (subject to applicable limits prescribed by the 1940 Act). Investing in foreign companies can expose us to additional risks not typically associated with investing in U.S. companies. These risks include exchange rates, changes in exchange control regulations, political and social instability, expropriation, imposition of foreign taxes, less liquid markets and less available information than is generally the case in the United States, higher transaction costs, less government supervision of exchanges, brokers and issuers, less developed bankruptcy laws, difficulty in enforcing contractual obligations, lack of uniform accounting and auditing standards and greater price volatility. A portion of our investments are located in countries that use the euro as their official currency. The USD/euro exchange rate, like foreign exchange rates in general, can be volatile and difficult to predict. This volatility could materially and adversely affect the value of the Company’s shares.

The market for private equity investments can be highly competitive. In some cases, our status as a regulated business development company may hinder our ability to participate in investment opportunities.

We face competition in our investing activities from private equity funds, other business development companies, investment banks, investment affiliates of large industrial, technology, service and financial companies, small business investment companies, wealthy individuals and foreign investors. As a regulated business development company, we are required to disclose quarterly the name and business description of portfolio companies and the value of any portfolio securities. Many of our competitors are not subject to this disclosure requirement. Our obligation to disclose this information could hinder our ability to invest in certain portfolio companies. Additionally, other regulations, current and future, may

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make us less attractive as a potential investor to a given portfolio company than a private equity fund not subject to the same regulations. Furthermore, some of our competitors have greater resources than we do. Increased competition would make it more difficult for us to purchase or originate investments at attractive prices. As a result of this competition, sometimes we may be precluded from making certain investments.

Complying with the RIC requirements may cause us to forego otherwise attractive opportunities.

In order to qualify as a RIC for U.S. federal income tax purposes, we must satisfy tests concerning the sources of our income, the nature and diversification of our assets and the amounts we distribute to our shareholders. We may be unable to pursue investments that would otherwise be advantageous to us in order to satisfy the source of income or asset diversification requirements for qualification as a RIC. In particular, to qualify as a RIC, at least 50% of our assets must be in the form of cash and cash items, Government securities, securities of other RICs, and other securities that represent not more than 5% of our total assets and not more than 10% of the outstanding voting securities of the issuer. We have from time to time held a significant portion of our assets in the form of securities that exceed 5% of our total assets or more than 10% of the outstanding voting securities of an issuer, and compliance with the RIC requirements limits us from making additional investments that represent more than 5% of our total assets or more than 10% of the outstanding voting securities of the issuer. Thus, compliance with the RIC requirements may hinder our ability to take advantage of investment opportunities believed to be attractive, including potential follow-on investments in certain of our portfolio companies. Furthermore, as a result of the foregoing restrictions, the Board has approved an amended policy for the allocation of investment opportunities, which requires TTG Advisers to give first priority to the PE Fund for all equity investments that would otherwise be Non-Diversified Investments for the Company.

Regulations governing our operation as a business development company affect our ability to, and the way in which we, raise additional capital.

We are not generally able to issue and sell our common stock at a price below net asset value per share. We may, however, sell our common stock or warrants at a price below the then-current net asset value per share of our common stock if our board of directors determines that such sale is in the best interests of the Company and its stockholders, and our stockholders approve such sale. In any such case, the price at which our securities are to be issued and sold may not be less than a price that, in the determination of our board of directors, closely approximates the market value of such securities (less any distributing commission or discount). If we raise additional funds by issuing more common stock or senior securities convertible into, or exchangeable for, our common stock, then the percentage ownership of our stockholders at that time will decrease, and you might experience dilution.

Our common stock price can be volatile.

The trading price of our common stock may fluctuate substantially. The price of the common stock may be higher or lower than the price you pay for your shares, depending on many factors, some of which are beyond our control and may not be directly related to our operating performance. These factors include the following:

· Price and volume fluctuations in the overall stock market from time to time;

· Significant volatility in the market price and trading volume of securities of business development companies or other financial services companies;

· Volatility resulting from trading in derivative securities related to our common stock including puts, calls, long-term equity participation securities, or LEAPs, or short trading positions;

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· Changes in regulatory policies or tax guidelines with respect to business development companies or RICs;

· Our adherence to applicable regulatory and tax requirements, including the current restriction on our ability to make Non-Diversified Investments;

· Actual or anticipated changes in our earnings or fluctuations in our operating results or changes in the expectations of securities analysts;

· General economic conditions and trends;

· Loss of a major funding source, which would limit our liquidity and our ability to finance transactions; or

· Departures of key personnel of TTG Advisers.

We are subject to market discount risk.

As with any stock, the price of our shares will fluctuate with market conditions and other factors. If shares are sold, the price received may be more or less than the original investment. Whether investors will realize gains or losses upon the sale of our shares will not depend directly upon our NAV, but will depend upon the market price of the shares at the time of sale. Since the market price of our shares will be affected by such factors as the relative demand for and supply of the shares in the market, general market and economic conditions and other factors beyond our control, we cannot predict whether the shares will trade at, below or above our NAV. Although our shares, from time to time, have traded at a premium to our NAV, currently, our shares are trading at a discount to NAV, which discount may fluctuate over time.

Our ability to grow depends on our ability to raise capital.

To fund new investments, we may need to issue periodically equity securities or borrow from financial institutions. Unfavorable economic conditions could increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. If we fail to obtain capital to fund our investments, it could limit both our ability to grow our business and our profitability. With certain limited exceptions, we are only allowed to borrow amounts such that our asset coverage, as defined in the 1940 Act, equals at least 200% after such borrowing. The amount of leverage that we employ depends on TTG Advisers’ and our board of directors’ assessment of market and other factors at the time of any proposed borrowing. We cannot assure you that we will be able to maintain our current facilities or obtain other lines of credit at all or on terms acceptable to us.

Changes in interest rates may affect our cost of capital and net operating income and our ability to obtain additional financing.

Because we have borrowed and may continue to borrow money to make investments, our net investment income before net realized and unrealized gains or losses, or net investment income, may be dependent upon the difference between the rate at which we borrow funds and the rate at which we invest these funds. As a result, there can be no assurance that a significant change in market interest rates would not have a material adverse effect on our net investment income. Because of the fixed-rate nature of our debt investments and our borrowings, a hypothetical 1% increase or 1% decrease in interest rates is not expected to have a determinable (or easily predictable) material impact on the Company’s net investment income. In periods of declining interest rates, we may have difficulty investing our borrowed capital into investments that offer an appropriate return. In periods of sharply rising interest rates, our cost of funds would increase, which could reduce our net investment income. We may use a combination of long-term and short-term borrowings and equity capital to finance our investing activities. We may utilize our short-term credit facilities as a means to bridge to long-term financing. Our long-term fixed-rate investments are financed primarily with equity and long-term fixed-rate debt. We may use interest rate risk management techniques in an effort to limit our exposure to interest rate fluctuations. Such techniques

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may include various interest rate hedging activities to the extent permitted by the 1940 Act. Additionally, we cannot assure you that financing will be available on acceptable terms, if at all. Recent turmoil in the credit markets has greatly reduced the availability of debt financing. Deterioration in the credit markets, which could delay our ability to sell certain of our loan investments in a timely manner, could also negatively impact our cash flows.

Hedging transactions may expose us to additional risks.

We may enter into hedging transactions to seek to reduce currency, commodity or other rate risks. However, unanticipated changes in currency or other rates may result in poorer overall investment performance than if we had not engaged in any such hedging transactions. In addition, the degree of correlation between price movements of the instruments used in a hedging strategy and price movements in the portfolio positions being hedged may vary. Moreover, for a variety of reasons, we may not seek or be able to establish a perfect or effective correlation between such hedging instruments and the portfolio holdings being hedged. Any such imperfect correlation may prevent us from achieving the intended hedge and expose us to risk of loss. In addition, it may not be possible to hedge fully or perfectly against currency fluctuations affecting the value of securities denominated in non-U.S. currencies.

Our ability to use our capital loss carryforwards may be subject to limitations.

On October 31, 2014, the Company did not have a net capital loss carryforward. The Company had approximately $18.3 million in unrealized losses associated with Legacy Investments as of July 31, 2015.

If we experience an aggregate 50% shift in the ownership of our common stock from shareholder transactions over a three year period (e.g., if a shareholder acquires 5% or more of our outstanding shares of common stock, or if a shareholder who owns 5% or more of our outstanding shares of common stock significantly increases or decreases its investment in the Company), our ability to utilize our capital loss carryforwards to offset future capital gains may be severely limited. Further, in the event that we are deemed to have failed to meet the requirements to qualify as a RIC, our ability to use our capital loss carryforwards could be adversely affected. The Regulated Investment Company Modernization Act of 2010, which was enacted on December 22, 2010, changed various technical rules governing the tax treatment of regulated investment companies, including the treatment of capital loss carryforwards. Please see Note 12 of our consolidated financial statements “Tax Matters” for more information.

Wars, terrorist attacks, and other acts of violence may affect any market for our common stock, impact the businesses in which we invest and harm our operations and our profitability.

Wars, terrorist attacks and other acts of violence are likely to have a substantial impact on the U.S. and world economies and securities markets. The nature, scope and duration of the unrest, wars and occupation cannot be predicted with any certainty. Furthermore, terrorist attacks may harm our results of operations and your investment. We cannot assure you that there will not be further terrorist attacks against the United States or U.S. businesses. Such attacks and armed conflicts in the United States or elsewhere may impact the businesses in which we invest directly or indirectly, by undermining economic conditions in the United States. Losses resulting from terrorist events are generally uninsurable.

We have not established a mandated minimum dividend payment level and we cannot assure you of our ability to make distributions to our shareholders in the future.

We cannot assure that we will achieve investment results that will allow us to make cash distributions or year-to-year increases in cash distributions. Our ability to make distributions is impacted by, among other things, the risk factors described in this report. In addition, the asset coverage test applicable to us as

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a business development company can limit our ability to make distributions. Any distributions will be made at the discretion of our board of directors and will depend on our earnings, our financial condition, maintenance of our RIC status and such other factors as our board of directors may deem relevant from time to time. We cannot assure you of our ability to make distributions to our shareholders.

During certain periods, our distribution proceeds (dividends) have exceeded and may, in the future, exceed our taxable earnings and profits. Therefore, during those times, portions of the distributions that we make may represent a return of capital to you for tax purposes, which will reduce your tax basis in your shares.

During certain periods, our distribution proceeds have exceeded and may, in the future, exceed our earnings and profits. For example, in the event that we encounter delays in locating suitable investment opportunities, we may pay all or a portion of our distributions from the proceeds of any securities offering, from borrowings that were made in anticipation of future cash flow or from available funds. Therefore, portions of the distributions that we make may be a return of the money that you originally invested and represent a return of capital to you for tax purposes. A return of capital generally is a return of your investment rather than a return of earnings or gains derived from our investment activities and will be made after deducting the fees and expenses payable in connection with the offering. Such a return of capital is not taxable, but reduces your tax basis in your shares.

We have borrowed and may continue to borrow money, which magnifies the potential for gain or loss on amounts invested and may increase the risk of investing in us.

We have borrowed and may continue to borrow money (subject to the 1940 Act limits) in seeking to achieve our investment objective going forward. Borrowings, also known as leverage, magnify the potential for gain or loss on amounts invested and, therefore, can increase the risks associated with investing in our securities.

Under the provisions of the 1940 Act, we are permitted, as a business development company, to borrow money or “issue senior securities” only in amounts such that our asset coverage, as defined in the 1940 Act, equals at least 200% after each issuance of senior securities. If the value of our assets declines, we may be unable to satisfy this test. If that happens, we may be required to sell a portion of our investments and, depending on the nature of our leverage, repay a portion of our indebtedness at a time when such sales may be disadvantageous.

We have borrowed from and may continue to borrow from, and issue senior debt securities to, banks, insurance companies and other private and public lenders. Lenders of these senior securities have fixed dollar claims on our assets that are superior to the claims of our common shareholders. If the value of our assets increases, then leveraging would cause the NAV attributable to our common stock to increase more sharply than it would had we not used leverage. Conversely, if the value of our consolidated assets decreases, leveraging would cause the NAV to decline more sharply than it otherwise would have had we not used leverage.

Similarly, any increase in our consolidated income in excess of consolidated interest expense on the borrowed funds would cause our net investment income to increase more than it would without the leverage, while any decrease in our consolidated income would cause net investment income to decline more sharply than it would have had we not borrowed. Such a decline could negatively affect our ability to make common stock dividend payments. Leverage is generally considered a speculative investment technique.

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As of July 31, 2015, we borrowed $100 million under our short-term credit facility, Credit Facility II (as defined above), which is due on May 31, 2016. Further, we have approximately $114.4 million in aggregate principal amount of Senior Notes, due on January 15, 2023, and an approximately $12.8 million Bridge loan outstanding (as defined above), due on October 31, 2015. See Note 16 Subsequent Events for additional information.

Our ability to service our debt depends largely on our financial performance and is subject to prevailing economic conditions and competitive pressures. The amount of leverage that we employ at any particular time will depend on our management’s and our Board of Director’s assessments of market and other factors at the time of any proposed borrowing. The Senior Notes and Credit Facility II impose certain financial and operating covenants that may restrict a portion of our business activities, including limitations that could hinder our ability to obtain additional financings. A failure to add new or replacement debt facilities or issue additional debt securities or other evidences of indebtedness could have an adverse effect on our business, financial condition or results of operations.

There are potential conflicts of interest that could impact our investment returns.

Our officers and directors, and members of the TTG Advisers investment team, may serve other entities, including the PE Fund and others that operate in the same or similar lines of business as we do. Accordingly, they may have obligations to those entities, the fulfillment of which might not be in the best interests of the Company or our shareholders. It is possible that new investment opportunities that meet our investment objective may come to the attention of one of the management team members or our officers or directors in his or her role as an officer or director of another entity or as an investment professional associated with that entity, and, if so, such opportunity might not be offered, or otherwise made available, to the Company.

Additionally, as an investment adviser, TTG Advisers has a fiduciary obligation to act in the best interests of its clients, including us. To that end, if TTG Advisers manages any additional investment vehicles or client accounts (which includes its current management of the PE Fund), TTG Advisers will endeavor to allocate investment opportunities in a fair and equitable manner. When the investment professionals of TTG Advisers identify an investment, they will have to choose which investment fund should make the investment. As a result, there may be times when the management team of TTG Advisers has interests that differ from those of our shareholders, giving rise to a conflict. In an effort to mitigate situations that give rise to such conflicts, TTG Advisers adheres to a policy (which was approved by our Board of Directors) relating to allocation of investment opportunities, which generally requires, among other things, that TTG Advisers continue to offer the Company investment opportunities in mezzanine and debt securities as well as non-control equity investments in small and middle market U.S. companies.

Investing in our securities may involve a high degree of risk.

The investments we make in accordance with our investment objective may result in a higher amount of risk than alternative investment options and volatility or loss of principal. Our investments in portfolio companies may be highly speculative and aggressive, and therefore, an investment in our securities may not be suitable for someone with a low risk tolerance.

Loss of pass-through tax treatment would substantially reduce net assets and income available for dividends.

We have operated so as to qualify as a RIC. If we meet source of income, diversification and distribution requirements, we will qualify for effective pass-through tax treatment. We would cease to

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qualify for such pass-through tax treatment if we were unable to comply with these requirements. In addition, we may have difficulty meeting the requirement to make distributions to our shareholders because in certain cases we may recognize income before or without receiving cash representing such income, such as in the case of debt obligations that are treated as having original issue discount. If we fail to qualify as a RIC, we will have to pay corporate-level taxes on all of our income whether or not we distribute it, which would substantially reduce the amount of income available for distribution to our shareholders, and all of our distributions will be taxed to our shareholders as ordinary corporate distributions. Even if we qualify as a RIC, we generally will be subject to a corporate-level income tax on the income we do not distribute. Moreover, if we do not distribute at least; (1) 98% of our ordinary income during each calendar year, (2) 98.2% of our net capital gains realized in the period from November 1 of the prior year through October 31 of the current year, and (3) all such ordinary income and net capital gains for the previous years that were not distributed during those years, we generally will be subject to a 4% excise tax on certain undistributed amounts.

There are certain risks associated with the Company holding debt obligations that are treated under applicable tax rules as having original issue discount.

For federal income tax purposes, we may be required to recognize taxable income in circumstances in which we do not receive a corresponding payment in cash. For example, if we hold debt obligations that are treated under applicable tax rules as having original issue discount (“OID”) (such as debt instruments with payment-in-kind, or PIK, interest or, in certain cases, increasing interest rates or debt instruments that were issued with warrants), we must include in income each year a portion of the original issue discount that accrues over the life of the obligation, regardless of whether cash representing such income is received by us in the same taxable year. We may also have to include in income other amounts that we have not yet received in cash, such as deferred loan origination fees that are paid after origination of the loan or are paid in non-cash compensation such as warrants or stock. We anticipate that a portion of our income may constitute original issue discount or other income required to be included in taxable income prior to receipt of cash. Further, we may elect to amortize market discounts and include such amounts in our taxable income in the current year, instead of upon disposition, as an election not to do so would limit our ability to deduct interest expenses for tax purposes.

Any original issue discount or other amounts accrued will be included in our investment company taxable income for the year of the accrual. Therefore, we may be required to make a distribution to our shareholders in order to satisfy the annual distribution requirement necessary to qualify for and maintain RIC tax treatment under Subchapter M of the Code, even though we will not have received any corresponding cash amount. As a result, we may have to sell some of our investments at times and/or at prices we would not consider advantageous, raise additional debt or equity capital or forgo new investment opportunities for this purpose. If we are not able to obtain cash from other sources, we may fail to qualify for or maintain RIC tax treatment and thus become subject to corporate-level income tax, as described in the previous risk factor regarding loss of pass-through tax treatment.

Additionally, the higher interest rates of OID instruments reflect the payment deferral and increased credit risk associated with these instruments, and OID instruments generally represent a significantly higher credit risk than coupon loans. Even if the accounting conditions for income accrual are met, the borrower could still default when the Company’s actual collection is supposed to occur at the maturity of the obligation.

OID instruments may have unreliable valuations because their continuing accruals require continuing judgments about the collectability of the deferred payments and the value of any associated collateral. OID income may also create uncertainty about the source of the Company’s cash distributions. For accounting purposes, any cash distributions to shareholders representing OID income are not treated as

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coming from paid-in capital, even though the cash to pay them comes from the offering proceeds. Thus, despite the fact that a distribution of OID income comes from the cash invested by the shareholders, the 1940 Act does not require that shareholders be given notice of this fact by reporting it as a return of capital. PIK interest has the effect of generating investment income and potentially increasing the incentive fees payable to TTG Adviser at a compounding rate. In addition, the deferral of PIK interest also reduces the loan-to-value ratio at a compounding rate. Furthermore, OID creates the risk that fees will be paid to TTG Adviser based on non-cash accruals that ultimately may not be realized, while TTG Adviser will be under no obligation to reimburse the Company for these fees.

Changes in the law or regulations that govern business development companies and RICs, including changes in tax regulations, may significantly impact our business.

We and our portfolio companies are subject to regulation by laws at the local, state and federal levels, including federal securities law and federal taxation law. These laws and regulations, as well as their interpretation, may change from time to time. A change in these laws or regulations may significantly affect our business.

Results may fluctuate and may not be indicative of future performance.

Our operating results will fluctuate and, therefore, you should not rely on current or historical period results to be indicative of our performance in future reporting periods. In addition to many of the above-cited risk factors, other factors could cause operating results to fluctuate including, among others, variations in the investment origination volume and fee income earned, variation in timing of prepayments, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which we encounter competition in our markets and general economic conditions.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Management, with the participation of the individual who performs the functions of the Company’s Principal Executive Officer (“CEO”) and the individual who performs the functions of the Principal Financial Officer (“CFO”), has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, management has concluded that the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended were not effective because of the material weakness in our internal control over financial reporting, as described in Management’s Report On Internal Control Over Financial Reporting in Item 9A of our Annual Report on Form 10-K for the year ended October 31, 2014 (the “2014 10-K”), which continued to exist as of July 31, 2015.

Remediation of Material Weakness in Internal Control over Financial Reporting

We are in the process of improving our controls to remediate the material weakness that existed as of October 31, 2014 and July 31, 2015. As discussed in the 2014 10-K, to address the material weakness, in the second half of 2015 the Company has adopted a corrective action plan which will add new and/or enhance existing controls surrounding the valuation process and financial reporting oversight of various controlled/affiliated portfolio companies, including additional reviews (by one or more MVC Capital representatives) of the financial reporting of controlled and certain affiliated portfolio companies and additional reviews and testing of valuation data of these controlled/affiliated portfolio companies. The Company has also enhanced its internal audit plan to incorporate risk assessments of controlled and certain affiliated portfolio companies. In addition, the Company has retained a third party consultant to

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perform external reviews of certain fair valuations. While some of the remediation actions are in process, this will take time to be fully integrated and confirmed to be effective and sustainable. Until the remediation steps are fully implemented and tested, the material weakness described above will continue to exist.

Management does not expect that the Company’s disclosure controls and procedures or the Company’s internal control over financial reporting (even if fully remediated) will prevent or detect all error and all fraud. A control system, regardless of how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system will be met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

Changes in Internal Control over Financial Reporting

Other than the changes related to the material weakness and related remediation described in the 2014 10-K, there has been no change in the Company’s internal control over financial reporting that occurred during the third quarter of 2015, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II. Other Information

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

A description of the risk factors associated with our business is set forth in the “Quantitative and Qualitative Disclosures about Market Risk” section, above.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

We had no unregistered sales of equity securities for the quarter ended July 31, 2015.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

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ITEM 6. EXHIBITS

(a) Exhibits

Exhibit No.		Exhibit

10(A)		Seventh Amended and Restated Credit Agreement between MVC Capital, Inc. and Branch Banking and Trust

10(B)		Credit Agreement between MVC Capital, Inc., Santander Bank, N.A. and Wintrust Bank

31		Rule 13a-14(a) Certifications.

32		Section 1350 Certifications.

Other required Exhibits are included in this Form 10-Q or have been previously filed with the Securities and Exchange Commission (the “SEC”) in the Company’s Registration Statements on Form N-2 (Reg. Nos. 333-147039, 333-119625, 333-125953) or the Company’s Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, as filed with the SEC (File No. 814-00201).

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Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed by the undersigned, thereunto duly authorized.

	MVC CAPITAL, INC.

Date: 1/29/16
	/s/ Michael Tokarz
	Michael Tokarz

	In the capacity of the officer who performs the functions of Principal Executive Officer.

	MVC CAPITAL, INC.

Date: 1/29/16
	/s/ Scott Schuenke
	Scott Schuenke

	In the capacity of the officer who performs the functions of Principal Financial Officer.

Exhibit 10(A)

SEVENTH AMENDMENT TO SECURED REVOLVING CREDIT AGREEMENT

This SEVENTH AMENDMENT TO SECURED REVOLVING CREDIT AGREEMENT (this “Amendment”) is entered into as of December 1, 2015 (the “Effective Date”) by and between MVC CAPITAL, INC., a Delaware corporation, as borrower (“Borrower”), and BRANCH BANKING AND TRUST COMPANY, a North Carolina banking corporation, as lender (“Lender”).

RECITALS:

WHEREAS, the Borrower and Lender entered into a certain Secured Revolving Credit Agreement dated as of July 31, 2013 (the “Credit Agreement”), as amended by that certain First Amendment to Secured Revolving Credit Agreement dated January 31, 2014 between Borrower and Lender (the “First Amendment”), that certain Second Amendment to Secured Revolving Credit Agreement dated April 29, 2014 between Borrower and Lender (the “Second Amendment”), that certain Third Amendment to Secured Revolving Credit Agreement dated July 30, 2014 between Borrower and Lender (the “Third Amendment”), that certain Fourth Amendment to Secured Revolving Credit Agreement dated April 29, 2015 (the “Fourth Amendment”), that certain Fifth Amendment to Secured Revolving Credit Agreement dated July 31, 2015 (the “Fifth Amendment”) and that certain Sixth Amendment to Secured Revolving Credit Agreement dated September 30, 2015 (the “Sixth Amendment” and collectively with the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment and the Fifth Amendment, the “Prior Amendments”);

WHEREAS, the Borrower has requested that the Lender extend the maturity of the Revolver Commitment under the Credit Agreement by amending the definition of “Termination Date”;

WHEREAS, the Lender is willing to provide the requested amendment upon the terms and subject to the conditions set forth below and amend the Credit Agreement as provided herein subject to the terms and conditions herein.

NOW, THEREFORE, in consideration of the Recitals and the mutual promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower and the Lender agree as follows:

AGREEMENT:

SECTION 1. Recitals. The Recitals are incorporated herein by reference and shall be deemed to be a part of this Amendment.

Section 2. Waiver. Section 5.01(b) of the Credit Agreement for the Fiscal Quarter ending July 31, 2015 is hereby waived (the “Waiver”). The Waiver shall be limited precisely as written and relates solely to Section 5.01(b) of the Credit Agreement in the manner and to the extent described above. Nothing in this Amendment shall be deemed to:

(a) Constitute a waiver of compliance by the Borrower with respect to any other term, provision, or condition of the Credit Agreement or any other Loan Document, or any other instrument or agreement referred to therein; or

(b) Prejudice any right or remedy that the Lender may now have or may have in the future under or in connection with the Credit Agreement or any other Loan Document, or any other instrument or agreement referred to therein.

SECTION 3. Amendments to Credit Agreement. The Credit Agreement is hereby amended as set forth in this Section 3.

SECTION 3.01. Amendment to Section 1.01. The definition of “Termination Date” in Section 1.01 of the Credit Agreement is deleted and replaced with the following:

“Termination Date” means the earlier to occur of (i) May 31, 2016, (ii) the date the Revolver Commitment is terminated pursuant to Section 6.01 following the occurrence of an Event of Default, or (iii) the date the Borrower terminates the Revolver Commitment entirely pursuant to Section 2.09.

SECTION 3.02. Amendment to Section 2.07(b). Section 2.07(b) of the Credit Agreement is deleted and replaced with the following:

(b) The Borrower shall pay to the Lender a commitment fee equal to the product of: (i) the aggregate of the daily average amounts of the Unused Commitment, times (ii) a per annum percentage equal to 0.20%. Such commitment fee shall accrue from and including the Closing Date to and including the Termination Date. Commitment fees shall be payable (i) quarterly in arrears on each Quarterly Payment Date, and (ii) on the Termination Date; provided that should the Revolver Commitment be terminated at any time prior to the Termination Date for any reason, the entire accrued and unpaid fee shall be paid on the date of such termination.

SECTION 4. Reaffirmation. To induce the Lender to enter into this Amendment, the Borrower hereby (a) restates and renews each and every representation and warranty heretofore made by it under, or in connection with the execution and delivery of, the Credit Agreement and the other Loan Documents (except to the extent any such representation or warranty is expressly stated to have been made as of a specific date, in which case such representation or warranty is true and correct as of such date), and (b) restates, ratifies and reaffirms each and every term and condition set forth in the Credit Agreement and in the other Loan Documents.

SECTION 5. Conditions to Effectiveness. This Amendment shall become effective as of the date first written above when, and only when, each of the following conditions precedent shall have been satisfied or waived:

(a) the Lender shall have received this Amendment, duly executed by the Borrower and the Lender;

(b) the Lender shall have received resolutions from the Borrower and other evidence as the Lender may reasonably request, respecting the authorization, execution and delivery of this Amendment;

(c) the fact that the representations and warranties of the Borrower contained in Section 6 of this Amendment shall be true and correct on and as of the date hereof;

(d) after giving effect to this Amendment, no Default or Event of Default shall have occurred and be continuing;

(e) the Borrower shall have delivered, by wire transfer or immediately available funds, to the Lender the amount of $100,000 as an upfront fee, which such upfront fee shall be fully earned and payable on the Effective Date; and

(f) all other documents and legal matters in connection with the transactions contemplated by this Amendment shall be reasonably satisfactory in form and substance to the Lender and its counsel.

SECTION 6. No Other Amendment. Except for the amendments set forth above, the text of the Credit Agreement shall remain unchanged and in full force and effect. On and after the Effective Date, all references to the Credit Agreement in each of the Loan Documents shall hereafter mean the Credit Agreement as amended by the Prior Amendments and this Amendment. This Amendment is not intended to effect, nor shall it be construed as, a novation. The Credit Agreement, the Prior Amendments and this Amendment shall be construed together as a single agreement. Nothing herein contained shall waive, annul, vary or affect any provision, condition, covenant or agreement contained in the Credit Agreement or the Prior Amendments, except as herein amended, nor affect nor impair any rights, powers or remedies under the Credit Agreement or the Prior Amendments, as each is hereby amended, and each is confirmed to be in full force and effect.

SECTION 7. Representations and Warranties. The Borrower hereby represents and warrants to the Lender that, as of the Effective Date:

(a) the Borrower has all requisite power and authority to enter into this Amendment and to carry out the transactions contemplated by, and perform its obligations under, the Credit Agreement and the other Loan Documents;

(b) the execution and delivery of this Amendment and the performance of the Credit Agreement and the other Loan Documents have been duly authorized by all necessary action (if any) on the part of the Borrower;

(c) the execution and delivery by the Borrower of this Amendment will not result in, or require, the creation or imposition of any Lien on any of its properties or revenues pursuant to any Applicable Law or any such contractual obligation (other than the Liens created by the Loan Documents on the Closing Date and from time to time thereafter);

(d) this Amendment has been duly executed and delivered by the Borrower and constitutes a legal, valid, and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium,

reorganization, or other similar laws affecting creditors’ rights generally and except as enforceability may be limited by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or in law);

(e) the execution and delivery of this Amendment and the performance by the Borrower hereunder does not and will not require the consent or approval of any regulatory authority or governmental authority or agency having jurisdiction over the Borrower, nor be in contravention of or in conflict with the articles of incorporation, bylaws or other organizational documents of the Borrower, or the provision of any statute, or any judgment, order or indenture, instrument, agreement or undertaking, to which the Borrower is party or by which the assets or properties of the Borrower are or may become bound;

(f) the Collateral Documents continue to create a valid security interest in, and Lien upon, the Collateral, in favor of the Lender, which security interests and Liens are perfected in accordance with the terms of the Collateral Documents and prior to all other Liens; and

(g) no event has occurred and is continuing or will result from the consummation of the transactions contemplated by this Amendment that would constitute an Event of Default or a Default.

SECTION 8. Counterparts. This Amendment may be executed in multiple counterparts, each of which shall be deemed to be an original and all of which, taken together, shall constitute one and the same agreement.

SECTION 9. Governing Law. This Amendment shall be construed in accordance with and governed by the laws of the State of North Carolina.

SECTION 10. Further Assurances. The Borrower agrees to promptly take such action, upon the request of the Lender, as is necessary to carry out the intent of this Amendment.

SECTION 11. Waiver of Claims or Defenses. The Borrower represents that it does not have any set-offs, defenses, recoupments, offsets, counterclaims or other causes of action against the Lender relating to the Loan Documents and the indebtedness evidenced and secured thereby and agree that, if any such set-off, defense, counterclaim, recoupment or offset otherwise exists on the date of this Amendment, each such defense, counterclaim, recoupment, offset or cause of action is hereby waived and released forever.

SECTION 12. Loan Document. This Amendment is a Loan Document and is subject to all provisions of the Credit Agreement applicable to Loan Documents, all of which are incorporated in this Amendment by reference the same as if set forth in this Amendment verbatim.

SECTION 13. Severability. Any provision of this Amendment that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating the remainder of such provision or the

remaining provisions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction.

SECTION 14. Entire Agreement. This Amendment contains the entire and exclusive agreement of the parties hereto with reference to the matters discussed herein. This Amendment supersedes all prior drafts and communications with respect hereto.

SECTION 15. Notices. All notices, requests and other communications to any party to the Loan Documents, as amended hereby, shall be given in accordance with the terms of Section 9.01 of the Credit Agreement.

SECTION 16. Expenses. The Borrower shall pay all reasonable out-of-pocket expenses incurred by the Lender (including the reasonable fees, charges and disbursements of counsel for the Lender) in connection with the preparation and closing of this Amendment.

SECTION 17. Definitions. Capitalized terms used in this Amendment which are not otherwise defined in this Amendment shall have the respective meanings assigned to them in the Credit Agreement.

[SIGNATURE PAGES FOLLOW]

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

	MVC CAPITAL, INC.


	By:	/s/ Scott J. Schuenke
	Name:	Scott J. Schuenke
	Title:	Chief Financial Officer


	[CORPORATE SEAL]

	BRANCH BANKING AND TRUST COMPANY


	By:	/s/ Steven Whitcomb
	Name:	Steven Whitcomb
	Title:	Senior Vice President

Exhibit 10(B)

EXECUTION COPY

CREDIT AND SECURITY AGREEMENT

by and between

MVC CAPITAL, INC.,

as Borrower,

and

MVC FINANCIAL SERVICES, INC.,

MVC CAYMAN,

MVC GP II, LLC

and

MVC PARTNERS LLC

As Guarantors

and

THE LENDERS FROM TIME TO TIME PARTIES

HERETO,

as Lenders,

and

SANTANDER BANK, N.A.

Agent

and

Wintrust Bank

Syndication Agent

Dated: December 9, 2015

TABLE OF CONTENTS

		Page

ARTICLE 1	DEFINITIONS	1

1.1	Defined Terms	1
1.2	Interpretative Provisions	40
1.3	Accounting Terms	41
1.4	Rounding	42

ARTICLE 2	CREDIT FACILITY	42

2.1	Revolving Loans	42
2.2	Requests for Borrowings	43
2.3	Incremental Facility	43

ARTICLE 3	INTEREST AND FEES	45

3.1	Rates and Payment of Interest	45
3.2	Computation of Interest and Fees	45
3.3	Unused Line Fee	45
3.4	Termination Fee	46
3.5	Commitment Fee	46
3.6	Agency Fee	46
3.7	Inability to Determine Applicable Interest Rate	46
3.8	Illegality	47
3.9	Increased Costs	47
3.10	Capital Requirements	47
3.11	Certificates for Reimbursement	47
3.12	Delay in Requests	48
3.13	Maximum Interest	48

ARTICLE 4	PAYMENTS AND ADMINISTRATION	48

4.1	Payments Generally, Allocation of Proceeds	48
4.2	Indemnity for Returned Payments	49
4.3	Repayments	50
4.4	Prepayments	50
4.5	Statements	50
4.6	Borrower’s Loan Account; Evidence of Debt	50
4.7	Taxes	51

ARTICLE 5	SECURITY INTEREST	52

5.1	Grant of Security Interest	52
5.2	Financing Statement Filings	52

ARTICLE 6	CONDITIONS PRECEDENT	53

6.1	Conditions Precedent to Effectiveness of Agreement to Make Initial Revolving Loans	53

6.2	Conditions Precedent to All Revolving Loans	53

ARTICLE 7	REPRESENTATIONS AND WARRANTIES	54

7.1	Organization; Powers	54
7.2	Authorization; Enforceability	54
7.3	No Conflicts	54
7.4	Governmental Approvals	55
7.5	Financial Statements; No Material Adverse Effect; Solvent	55
7.6	Assets; No Liens	56
7.7	Litigation	56
7.8	Compliance with Laws	56
7.9	Environmental Condition	56
7.10	No Defaults	56
7.11	Material Contracts	56
7.12	Restrictive Agreements	56
7.13	Taxes	57
7.14	ERISA	57
7.15	Insurance	57
7.16	Capitalization and Subsidiaries	57
7.17	Security Interest in Collateral	57
7.18	Brokers	58
7.19	Intellectual Property	58
7.20	Reserved	58
7.21	Labor Relations	58
7.22	Payable Practices	58
7.23	Margin Stock	58
7.24	Investment Company Act; Regulated Investment Company	58
7.25	Anti-Terrorism Laws; Anti-Money Laundering Laws	59
7.26	Equity Investments and Debt Investments	60
7.27	Credit and Compliance Policies	61
7.28	Pledge Agreement	61
7.29	Complete Disclosure	61

ARTICLE 8	AFFIRMATIVE COVENANTS	62

8.1	Financial Statements, Borrowing Base Certificate and Other Information	62
8.2	Notices of Material Events	62
8.3	Existence; Business Development Company; Regulated Investment Company	63
8.4	Payment of Obligations	63
8.5	Maintenance of Properties	63
8.6	Compliance with Laws	63
8.7	Insurance	63
8.8	Inspection Rights; Field Examinations; Valuations	63
8.9	Use of Proceeds	64
8.10	Cash Management; Collection of Proceeds of Collateral	64
8.11	Additional Collateral; Further Assurances	65
8.12	End of Fiscal Years; Fiscal Quarters	66
8.13	Required Pledged Cash Amount	66
8.14	Investment Documents	66
8.15	Maintenance of Current Administrative Procedures	66

8.16	Credit Policy	66
8.17	Investments	67
8.18	Subordination	67
8.19	Costs and Expenses	67

ARTICLE 9	NEGATIVE COVENANTS	68

9.1	Indebtedness	68
9.2	Liens	68
9.3	Fundamental Changes	68
9.4	Asset Sales	68
9.5	Loans, Advances, Investments, Etc.	68
9.6	Investments	69
9.7	Transactions with Affiliates	69
9.8	Change in Business	69
9.9	Restricted Payments	69
9.10	Restrictive Agreements	69
9.11	Certain Payments of Indebtedness, Etc.	70
9.12	Amendment of Material Documents	70
9.13	Sale and Leasebacks	70

ARTICLE 10	FINANCIAL COVENANTS	70

10.1	Maximum Balance Sheet Leverage	70
10.2	Minimum Interest Coverage Ratio	70
10.3	Financial Covenant Cure Provisions	71

ARTICLE 11	EVENTS OF DEFAULT AND REMEDIES	72

11.1	Events of Default	72
11.2	Remedies	74

ARTICLE 12	ASSIGNMENTS AND PARTICIPATIONS; APPOINTMENT OF AGENT	75

12.1	Assignment and Participations	75
12.2	Appointment of Agent	77
12.3	Agent’s Reliance, Etc.	78
12.4	Agent and Affiliates	79
12.5	Lender Credit Decision	79
12.6	Indemnification	79
12.7	Successor Agent	80
12.8	Setoff and Sharing of Payments	80
12.9	Revolving Loans; Payments; Non-Funding Lenders; Defaulting Lenders; Information; Actions in Concert	81
12.10	Amendments and Waivers	83

ARTICLE 13	JURY TRIAL WAIVER; OTHER WAIVERS; CONSENTS; GOVERNING LAW	84

13.1	Obligations and Liabilities of Lender	84
13.2	Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver	85
13.3	Waiver of Notices	86

iii

13.4	Amendments and Waivers	86
13.5	Waiver of Counterclaims	86
13.6	Indemnification	86

ARTICLE 14	NOTICES; MISCELLANEOUS	87

14.1	Notices	87
14.2	Partial Invalidity	89
14.3	Successors	89
14.4	Entire Agreement	90
14.5	USA Patriot Act	90
14.6	Counterparts, Etc.	90

INDEX

EXHIBITS AND SCHEDULES

Exhibit A		Form of Borrowing Base Certificate

Exhibit B		Form of Compliance Certificate

Exhibit C		Form of Assignment and Acceptance Agreement

Exhibit D		Wire Instructions

Exhibit E		Supplemental Agreement

Exhibit F		Form of Revolving Note

Exhibit G		MVC Capital Debt Investing Guidelines

Schedule 1.1		Lenders’ Commitment Amounts

Schedule 5.1(b)		Excluded Collateral

Schedule 6.1		Conditions Precedent to Initial Loans

Schedule 7.7		Litigation

Schedule 7.9		Environmental Matters

Schedule 7.12		Restrictive Agreements

Schedule 7.15		Insurance

Schedule 7.16		Subsidiaries

Schedule 7.19		Intellectual Property

Schedule 7.21		Collective Bargaining Agreements

Schedule 7.26(a)		Equity Investments

Schedule 7.26(b)		Debt Investments

Schedule 7.26(c)		Remaining Equity Interests

Schedule 8.1		Financial and Collateral Reporting

Schedule 8.5		Permitted Investments

Schedule 8.10		Bank Accounts

Schedule 9.1		Permitted Indebtedness

Schedule 9.2		Permitted Liens

Schedule 12.1(b)		Disqualified Lenders

CREDIT AND SECURITY AGREEMENT

This Credit and Security Agreement (“Agreement”) dated as of December 9, 2015 is entered into by and between MVC CAPITAL, INC., a corporation formed under the laws of the State of Delaware (the “Borrower”), MVC FINANCIAL SERVICES, INC., a corporation formed under the laws of the State of Delaware, MVC CAYMAN, an exempted company incorporated under the laws of the Cayman Islands, MVC GP II, LLC, a limited liability company formed under the laws of the State of Delaware, and MVC PARTNERS LLC, a limited liability company formed under the laws of the State of Delaware, (collectively and individually, the “Guarantors”), the financial institutions or entities from time to time parties to this Agreement (collectively and individually, the “Lenders”), and SANTANDER BANK, N.A., as agent, (“Agent”) and WINTRUST BANK, as syndication agent.

WITNESSETH:

WHEREAS, Borrower has requested that Agent and Lenders provide a credit facility to Borrower and Agent and Lenders are willing to provide such credit facility on the terms and conditions set forth herein and in the other Loan Documents (as defined below);

NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

ARTICLE 1 DEFINITIONS

1.1 Defined Terms. For purposes of this Agreement, the following terms shall have the respective meanings given to them below:

“Additional Disqualified Lender” has the meaning set forth in the definition of Disqualified Lenders.

“Additional Disqualified Lender Notice” has the meaning set forth in the definition of Disqualified Lenders.

“Affiliate” means, with respect to a specified Person, any other Person (excluding any Subsidiary) which directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with such Person. For the purposes of this definition, the term “control” (including with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power either (a) to vote ten percent (10%) or more of the securities having ordinary voting power for the election of directors of such Person or (b) to direct or cause the direction of the management and policies, whether through the ownership of Equity Interests, by agreement or otherwise. Notwithstanding the foregoing, the term “Affiliate” shall not include any Person that is an “Affiliate” solely by reason of Borrower’s or any Subsidiary’s investment therein in connection with an Equity Interest owned by the Borrower or Debt Investment made in the ordinary course of business and consistent with the Credit Policy.

“Agent” has the meaning set forth hereinabove, in its capacity as the arranger of the Commitments and as the administrative and collateral agent for the Lenders under this Agreement and the other Loan Documents, together with any of its successors and assigns.

“Agent’s Bailee” shall mean any Person at any time designated by Agent as bailee for Agent with respect to any of the Equity Documents or Debt Investment Loan Documents; provided, that, (a) from and after the Closing Date, Agent’s Bailee shall be U.S. Bank National Association for the Equity Documents and the Debt Investment Loan Documents pursuant to the U.S. Bank Securities Control Agreement, subject to the right of Agent to designate at any time, in its sole discretion, a successor Agent’s Bailee to replace U.S. Bank National Association, as provided for in the Bailment Agreement and (b) in the event that Agent exercises such right, Agent shall give the Borrower ten (10) days’ prior written notice of any replacement Agent’s Bailee.

“Agreement” means, this Credit and Security Agreement, as it may be amended, modified or restated hereafter.

“Anti-Money Laundering Laws” means all applicable laws, regulations and government guidance on the prevention and detection of money laundering, including 18 U.S.C. Section 1956 and 1957, and the BSA.

“Anti-Terrorism Laws” means the OFAC Laws and Regulations and the Executive Orders as each of such terms is defined in Section 5.32 and the USA Patriot Act.

“Applicable Margin” means, with respect to LIBOR Loans, three and three-quarters percent (3.75%) and with respect to Prime Rate Loans, one percent (1%).

“Asset Sale” means any transaction, or series of related transactions, pursuant to which any Person or any of its Subsidiaries sells, assigns, transfers, conveys, leases or subleases, licenses or otherwise disposes of any property or assets (whether now owned or hereafter acquired) to any other Person, in each case, whether or not the consideration therefor consists of cash, securities or other assets owned by the acquiring Person.

“Assignment Agreement” means an Assignment and Acceptance Agreement substantially in the form of Exhibit C.

“Availability Block” means, on the Closing Date and at all times after the Closing Date, Five Million Dollars ($5,000,000).

“Balance Sheet Leverage Ratio” means (a) total senior debt less any outstanding principal on the BB&T Credit Facility divided by (b) Shareholders’ Equity plus Subordinated Debt.

“Bank Product Agreement” means an agreement entered into at any time by any Credit Party with Agent, a Lender or an Affiliate of Agent or a Lender, governing the terms and conditions with respect to a Bank Product provided by Agent, a Lender or an Affiliate of Agent or a Lender to any Credit Party.

“Bank Product Obligations” means any obligation of Credit Parties on account of any Bank Product.

“Bank Products” means any one or more of the following types of services or facilities provided to Credit Parties by Agent or a Lender (or an Affiliate of Agent or a Lender): (a) credit cards, debit cards or stored value cards or the processing of payments and other administrative services with respect to credit cards, debit cards or stored value cards or (b) cash management or related services, including (i) the automated clearinghouse transfer of funds for the account of Borrower pursuant to agreement or overdraft for any accounts of Credit Parties maintained at Agent or at a Lender, (ii) controlled disbursement services and (iii) Hedge Agreements, to the extent permitted hereunder.

“BB&T” means Branch Banking and Trust Company, a North Carolina banking corporation.

“BB&T Intercreditor Agreement” means the intercreditor agreement by and between the Agent and BB&T.

“Borrower” has the meaning set forth hereinabove.

“Borrowing Base” means, at any time of calculation, an amount equal to:

(a) Sixty-five percent (65%) multiplied by the lower of (i) the outstanding principal balance or (ii) the Fair Market Value, of all Eligible Senior Debt Investments; plus

(b) Fifty percent (50%) (which shall reduce to forty (40%) percent after the first anniversary of the Closing Date) multiplied by the lower of (i) the outstanding principal balance or (ii) the Fair Market Value, of all Eligible Subordinate Debt Investments; minus

(d) the Availability Block.

“Borrowing Base Certificate” means a certificate substantially in the form of Exhibit A hereto, as such form, subject to the terms hereof, may from time to time be modified by Agent, which is duly completed (including all schedules thereto) and executed by a Responsible Officer of the Borrower and delivered to Agent.

“BSA” means the Bank Secrecy Act (31 U.S.C. Section 5311 et. seq.), and it’s implementing regulations, Title 31 Part 103 of the U.S. Code of Federal Regulations.

“Business Day” means any day other than a Saturday, Sunday, or other day on which commercial banks are authorized or required to close under the laws of the State of New York, and a day on which Agent is open for the transaction of business, except that if a determination of a Business Day shall relate to any LIBOR Loans, the term Business Day shall also exclude any day on which banks are closed for dealings in dollar deposits in the London interbank market.

“Capital Expenditures” means with respect to any Person for any period the aggregate of all expenditures by such Person and its Subsidiaries made during such period that in accordance with GAAP are or should be included in “property, plant and equipment” or in a similar fixed asset account on its balance sheet, whether such expenditures are paid in cash or financed and including all Capital Lease Obligations paid or payable during such period, other than the interest component of any Capital Lease Obligation (without duplication as to any period).

“Capital Lease Obligations” means, as to any Person, the obligations of such Person under a lease that are required to be classified and accounted for as capital lease obligations under GAAP and, for purposes of this definition, the amount of such obligations at any date shall be the capitalized amount of such obligations at such date on a balance sheet prepared in accordance with GAAP.

“Cash Equivalents” means (a) marketable direct obligations issued or unconditionally guaranteed by the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within six (6) months from the date of acquisition thereof; (b) commercial paper maturing no more than six (6) months from the date issued and, at the time of acquisition, having a rating of at least A-1 from Standard & Poor’s Corporation or at least P-1 from Moody’s Investors Service, Inc.; and (c) certificates of deposit or bankers’ acceptances maturing within six (6) months from the date of issuance thereof issued by, or overnight reverse repurchase agreements from, any commercial bank organized under the laws of the United States, or any state thereof or the District of Columbia, having combined capital and surplus of not less than Two Hundred Fifty Million Dollars and 00/100 ($250,000,000.00) and not subject to setoff rights in favor of such bank.

“Cash Management Bank” shall have the meaning set forth in Section 8.10.

“Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided, that, notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

“Change of Control” shall mean (a) the liquidation or dissolution of Borrower or the adoption of a plan by the stockholders of Borrower relating to the dissolution or liquidation of Borrower; (b) the acquisition by any Person or group (as such term is used in Section 13(d)(3) of the Exchange Act) of beneficial ownership, directly or indirectly, of thirty (30%) percent or more of the voting power of the total outstanding voting stock of Borrower, except as otherwise consented to in writing by Agent; (c) during any period of two (2) years, individuals who at the beginning of such period constituted the Board of Directors of Borrower (together with any new

directors whose nomination for election was approved by a vote of at least a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of Borrower then still in office; (d) the failure of Borrower to own, directly or indirectly, one hundred (100%) percent of the voting power of the total outstanding voting stock of the Guarantors; or (e) termination of the Investment Agreement.

“Closing Date” means the date on which the conditions specified in Section 6.1 are satisfied or waived in writing by Agent.

“Code” means the Internal Revenue Code of 1986, as the same now exists or may from time to time hereafter be amended, modified, recodified or supplemented, together with all rules, regulations and interpretations thereunder or related thereto.

“Collateral” means any and all of the following property owned, leased, or operated by Credit Parties and any and all other property of Credit Parties, now existing or hereafter acquired, that may at any time be, become or be intended to be, subject to a security interest or Lien in favor of Agent, for the benefit of Agent, the Lenders and providers of Bank Products, to secure the Obligations:

(a) all Accounts;

(b) all Goods, including Equipment, Inventory and Fixtures;

(c) all Documents, Instruments and Chattel Paper, including without limitation, all Debt Investments and Debt Investment Loan Documents;

(d) all Letters of Credit and Letter-of-Credit Rights;

(e) all Securities Collateral;

(f) all Investment Property, including, without limitation, the Equity Investments listed on Schedule 7.26(a) and the Equity Interests owned by the Borrower in the Remaining Equity Interests listed on Schedule 7.26(c);

(g) all Intellectual Property Collateral;

(h) all Commercial Tort Claims;

(i) all General Intangibles, including, without limitation, all Payment Intangibles;

(j) all Money and all Deposit Accounts;

(k) all Supporting Obligations;

(l) all books and records, customer lists, credit files, computer files, programs, printouts and other computer materials and records relating to the Collateral; and

(m) to the extent not covered by clauses (a) through (l) of this sentence, all other personal property of the Credit Parties, whether tangible or intangible and all Proceeds and products of each of the foregoing and all accessions to, substitutions and replacements for, and rents, profits and products of, each of the foregoing, any and all proceeds of any insurance, indemnity, warranty or guaranty payable to the Credit Parties from time to time with respect to any of the foregoing.

Notwithstanding anything to the contrary set forth herein, “Collateral” shall not include any of the Excluded Collateral.

“Collateral Access Agreement” means an agreement in writing, in form and substance satisfactory to Agent, from any lessor of premises to Borrower or any other person to whom any Collateral is consigned or who has custody, control or possession of any such Collateral or is otherwise the owner or operator of any premises on which any of such Collateral is located, in favor of Agent.

“Commitment” means, with respect to each Lender, the commitment of such Lender to make Revolving Loans and, subject to, and in accordance with the terms hereof, as such commitment may be reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 2.3 and 12.1. The initial amount of each Lender’s Commitment is set forth on Schedule 1.1, or in the Assignment and Assumption pursuant to which such Lender shall have assumed its Commitment, as applicable. The initial aggregate principal amount of the Lenders’ Commitments on the Closing Date is equal to the Maximum Credit.

“Compliance Certificate” means a certificate substantially in the form of Exhibit B.

“Consenting Lenders” shall have the meaning set forth in Section 12.10(b) hereof.

“Consent Rights Trigger Events” means the occurrence of one of the following events:

(a) the Borrower’s receipt of a Notice of Acceleration;

(b) the Agent and/or the Lenders commence exercising their remedies pursuant to Section 11.2; or

“Control Agreements” means, collectively and individually, a control agreement, in form and substance reasonably satisfactory to Agent, executed and delivered by Credit Parties, Agent, Agent’s Bailee and/or the applicable securities intermediary (with respect to a securities account) or bank (with respect to a Deposit Account) with respect to a securities account or Deposit Account, or bailee (with respect to the Debt Investment Loan Documents and Equity Investments), as the case may be, that is sufficient to perfect the security interests of Agent for the ratable benefit of Agent and the Lenders therein and provides such other rights with respect thereto as Agent, for the ratable benefit of Agent and the Lenders, requires.

“Credit Facility” means the Revolving Loans provided to or for the benefit of Borrower pursuant to Sections 2.1 and 2.3 hereof.

“Credit Parties” means, collectively, Borrower and Guarantors, and “Credit Party” means Borrower or any Guarantor, individually.

“Credit Policy” means the MVC Capital Debt Investing Guidelines and MVC Investment Limits/Guidelines of Borrower and all other documents listed on Exhibit G hereto by which Borrower from time to time originates, manages, services and collects Debt Investments as in effect on the Closing Date, as such Credit Policy may be amended or supplemented from time to time in accordance with the provisions of Section 9.12 of this Agreement.

“Cure Notice” shall have the meaning as defined in Section 10.3.

“Cure Period” shall have the meaning as defined in Section 10.3.

“Cure Right” shall have the meaning as defined in Section 10.3.

“Debt Investment” means any Investment in the form of a loan or advance to a Debt Investment Obligor, making of a time deposit with a Debt Investment Obligor, or guarantee or assumption of any obligations of a Debt Investment Obligor or otherwise.

“Debt Investment Collateral” means any and all property of a Debt Investment Obligor that secures its obligations under the applicable Debt Investment Loan Documents.

“Debt Investment Loan Documents” means collectively and individually, the Senior Debt Investment Loan Documents and the Subordinate Debt Investment Loan Documents.

“Debt Investment Obligor EBITDA” means for any Debt Investment Obligor for any period, “EBITDA” (or, if applicable, “Consolidated EBITDA”) of such Debt Investment Obligor and, if applicable, its Subsidiaries, as defined in the applicable Debt Investment Loan Documents. In the event “EBITDA” (or, if applicable, “Consolidated EBITDA”) is not defined in the Debt Investment Loan Documents for a particular Debt Investment, then “EBITDA” (or, if applicable, “Consolidated EBITDA”) shall mean the calculation resulting from applying the definition of “EBITDA” in this Agreement to the applicable Debt Investment Obligor for the applicable period.

“Debt Investment Obligors” means, collectively and individually, the Senior Debt Investment Obligors and the Subordinate Debt Investment Obligors.

“Debt Investment Obligor Material Adverse Effect” means, as to any Debt Investment Obligor, a material adverse effect on any of (a) the operations, business, assets, properties or condition (financial or otherwise) of such Debt Investment Obligor, (b) the ability of such Debt Investment Obligor to perform its material obligations under the Debt Investment Loan Documents to which it is a party, (c) the legality, validity or enforceability of the Debt Investment of Borrower in such Debt Investment Obligor or any of the Debt Investment Loan Documents related thereto, (d) the rights and remedies of Borrower in respect of its Debt Investment in such Debt Investment Obligor or under any of the Debt Investment Loan

Documents related thereto or the ability of Borrower to realize on its Debt Investment in such Debt Investment Obligor.

“Default” means an act, condition or event which with notice or passage of time or both would constitute an Event of Default.

“Default Rate” means, for any Obligation (including, to the extent permitted by law, interest not paid when due), two percent (2%) plus the interest rate otherwise applicable thereto.

“Defaulting Lender” means any Lender, as determined by Agent in its Permitted Discretion, that has (a) become a Non-Funding Lender, (b) notified the Borrower, the Agent or any other Lender in writing that it does not intend to comply with any of its funding obligations under this Agreement or has made a public statement to the effect that it does not intend to comply with its funding obligations under this Agreement or under other agreements in which it commits to extend credit, (c) failed to fund, and not cured, loans, participations, advances, or reimbursement obligations under one or more other syndicated credit facilities, unless subject to a good faith dispute, (d) failed, within two (2) Business Days after written request by the Agent, to confirm that it will comply with the terms of this Agreement relating to its obligations to fund Revolving Loans, (e) otherwise failed to pay over to the Agent or any other Lender any other amount required to be paid by it hereunder within two (2) Business Days of the date when due, unless the subject of a good faith dispute, (f) become or is insolvent or any Person that directly or indirectly controls such Lender has become or is insolvent, (g) has become the subject of a bankruptcy or insolvency proceeding or any Person that directly or indirectly controls such Lender has become the subject of a bankruptcy or insolvency proceeding, (h) has had a receiver, conservator, trustee, custodian or similar official appointed for it or any substantial part of its assets or any Person that directly or indirectly controls such Lender has had a receiver, conservator, trustee, custodian or similar official appointed for it or any substantial part of its assets, (i) made a general assignment for the benefit of creditors, been liquidated, or otherwise been adjudicated as, or determined by any Governmental Authority having regulatory authority over such Person or its assets to be, insolvent or bankrupt, or (j) has, or any Person that directly or indirectly controls such Lender has, taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any proceeding or appointment described in the foregoing paragraphs (e), (f), (g), (h) or (i).

“Deposit Accounts” means, collectively and individually (a) all deposit accounts as such term is defined in the UCC and all accounts and sub-accounts relating to any of the foregoing accounts and (b) all cash, funds, checks, notes and instruments from time to time on deposit in any of the accounts or sub-accounts described in clause (a) of this definition.

“Designated Person” shall have the meaning as defined in Section 7.25(a).

“Disqualified Lenders” means any of the following, which shall be subject to the Agent’s agreement (in consultation with Lenders) in its Permitted Discretion, (a) each bank, financial institution, business development company or fund, which are competitors of Borrower, (including all Affiliates of and funds managed or advised by each such Person to the extent reasonably identifiable, on the basis of such Person’s name, as an Affiliate or fund managed or advised by such Person) and in each case identified to Agent by Borrower in writing as a

“Disqualified Lender” as set forth on Schedule 12.1(b) and (b) each additional Person who shall become a competitor of Borrower specified by Borrower from time to time after the Closing Date (including all Affiliates of and funds managed or advised by each such Person to the extent reasonably identifiable, on the basis of such Person’s name, as an Affiliate or fund managed or advised by such Person) (“Additional Disqualified Lender”) in a written notice to Agent and Lenders by Borrower (each such notice, an “Additional Disqualified Lender Notice”). Each Additional Disqualified Lender Notice shall become effective two (2) Business Days after the date approved by the Agent (in consultation with Lenders) or all Lenders in their Permitted Discretion, but which shall not apply retroactively to disqualify any Persons that have previously acquired an assignment or participation interests in the Loans and/or Commitments as permitted herein.

“EBITDA” means, for any period for any Person, Net Income for such period plus (a) without duplication and to the extent deducted in determining Net Income for such period, the sum of (i) Interest Expense for such period, (ii) income tax expense for such period net of tax refunds, (iii) all amounts attributable to depreciation and amortization expense for such period, (iv) any extraordinary non-cash charges for such period and (v) any other non-cash charges for such period (but excluding any non-cash charge in respect of an item that was included in Net Income in a prior period and any non-cash charge that relates to the write-down or write-off of Debt Investments and Equity Interests owned by such Person) , minus (b) without duplication and to the extent included in Net Income, (i) any cash payments made during such period in respect of non-cash charges described in clause (a)(v) taken in a prior period and (ii) any extraordinary gains and any non-cash items of income for such period, all calculated for such Person on a consolidated basis in accordance with GAAP.

“Eligible Debt Investments” shall mean Debt Investments that have been originated, purchased or otherwise acquired by Borrower in the ordinary course of business, net of purchase discount, to the extent funded by Borrower but not yet collected, that in each case at the time of creation and at all times thereafter no such Debt Investment shall be an Eligible Debt Investment unless:

(a) such Debt Investment is owned by the Borrower and is subject to a perfected first priority security interest in favor of Agent for the ratable benefit of Agent, Lenders and Bank Product providers;

(b) such Debt Investment is evidenced by Debt Investment Loan Documents that has been duly authorized, executed and delivered and are enforceable against the Debt Investment Obligor thereof;

(d) such Debt Investment is owed by a Debt Investment Obligor that has not sold all or substantially all its assets (unless such Debt Investment has been assumed by a Person that shall have acquired such assets and otherwise satisfies the requirements set forth in this definition);

(e) such Debt Investment and the Debt Investment Loan Documents evidencing Borrower’s security interest in the Debt Investment Collateral is not subject to any Lien (other than Liens arising under the Loan Documents);

(f) no right of rescission, set-off, counterclaim, defense or other material dispute has been asserted with respect to such Debt Investment or any instrument or agreement evidencing Borrower’s security interest in any Debt Investment Collateral;

(g) the Debt Investment Obligor in respect of such Debt Investment is not (i) an individual, (ii) organized or incorporated under the laws of a jurisdiction other than the United States of America or Canada (including any state, territory or insular area thereof, but excluding the Province of Quebec), (iii) the subject of an Insolvency Proceeding or (iv) sixty (60) days (or such shorter number of days as may be applicable for determining when an Investment is to be considered as a default Debt Investment under any debt instrument to which Borrower or any of their Subsidiaries is a party, but in no event less than forty-five (45) days) or more past due with respect to any interest or principal payments or that is or otherwise should be considered a non-accrual or charged-off loan by Borrower in accordance with the Credit Policy;

(h) such Debt Investment is not owed by the government (or any department, agency, public corporation, or instrumentality thereof) of any country;

(i) such Debt Investment is not owed, directly or indirectly, by a Credit Party or any of their Affiliates, or any employee, officer, director or agent of a Credit Party or their Affiliates;

(j) Borrower and its Subsidiaries are not indebted to the Debt Investment Obligor or any Affiliate of such Debt Investment Obligor, but only to the extent of such indebtedness;

(k) such Debt Investment is not subject to any counterclaim, deduction, defense, setoff or dispute;

(l) such Debt Investment shall not be evidenced by or arise under any promissory note, lease, chattel paper, or instrument, other than the Debt Investment Loan Documents;

(m) such Debt Investment complies in all material respects with the requirements of all applicable laws and regulations, whether Federal, State or local;

(n) such Debt Investment has an internal rating of at least one (1) and not more than five (5) under the Investment Rating Policy;

(o) there are no material covenant defaults under the Debt Investment Loan Documents;

(p) such Debt Investment has a valuation of not less than ninety percent (90%) of par value from an external valuation prepared by a valuation agency acceptable to the Agent

(the Borrower’s current valuation agency, Murray Devine & Company are acceptable to the Agent);

(q) to the extent the aggregate amount of Eligible Debt Investments owing by any Industry Class exceeds twenty percent (20%) of the aggregate amount of Debt Investments, the amount in excess of twenty percent (20%) shall not be Eligible Debt Investments;

(r) to the extent the aggregate amount of Eligible Debt Investments owing by any one Debt Instrument Obligor and its Subsidiaries and Affiliates exceeds fifteen percent (15%) (which shall reduce to ten percent (10%) after the first anniversary of the Closing Date) of the aggregate amount of Debt Investments, the amount in excess of such limits shall not be Eligible Debt Investments;

(s) there shall be at least eight (8) Eligible Debt Investments at any time;

(t) the amount of Eligible Debt Investment for each Senior Debt Investment shall be limited to (i) four and one-half (4.5) (which shall reduce to four (4) after the first anniversary of the Closing Date) multiplied by (ii) the Senior Debt Investment Obligor’s trailing twelve (12) month Debt Investment Obligor EBITDA for the period being measured;

(u) the amount of Eligible Debt Investment for each Subordinate Debt Investment shall be limited to (i) four and one-half (4.5) (which shall reduce to four (4) after the first anniversary of the Closing Date) multiplied, by (ii) the Subordinate Debt Investment Obligor’s trailing twelve (12) month Debt Investment Obligor EBITDA for such period being measured;

(v) the Debt Investment Obligor shall have a Fixed Charge Coverage Ratio, as such term is defined in the applicable Debt Investment Loan Document, of not less than 1.0 to 1 computed on a trailing twelve (12) month basis;

(w) notwithstanding anything herein to the contrary, subject to the limitations otherwise set forth herein, the Debt Investments to Biogenic Reagents shall be eligible as Senior Debt Investments until the first anniversary of the Closing Date and thereafter it shall be considered as Senior Debt Investments or Subordinate Debt Investments, as applicable;

(x) at the time the Debt Investment was made, it was in substantial compliance with the Credit Policy;

(y) (i) the Debt Investment Loan Documents do not restrict (A) the Borrower’s ability to grant the Agent a security interest in the Debt Investment and the Debt Investment Loan Documents, (B) if required hereunder, the Borrower’s ability to assign or transfer all of its right, title and interest in the Debt Investment and the Debt Investment Loan Documents to the Agent, for the benefit of the Agent and the Lenders and (C) the Agent’s ability to foreclose on and take ownership of the Borrower’s interest in the Debt Investment and the Debt Investment Loan Documents, or (ii) the Debt Investment Obligor, its lenders and the Agent have executed a Joinder Agreement, in form and substance satisfactory to the Agent in its Permitted Discretion; and

(z) which Agent otherwise determines is unacceptable in its Permitted Discretion and provides the Borrower with 10 days prior written notice before it is no longer an Eligible Debt Investment.

Upon 10 days prior written notice to the Borrower, the criteria for Eligible Debt Investments set forth above may be changed and any new criteria for Eligible Debt Investments may be established by Agent in the exercise of its Permitted Discretion solely based on either: (i) an event, condition or other circumstance arising after the Closing Date, or (ii) an event, condition or other circumstance existing on the Closing Date to the extent that such event, condition or circumstance has not been identified by Borrower to the field examiners of Agent prior to the Closing Date (except to the extent that it may have been identified but Agent has elected not to establish eligibility criteria with respect thereto as of the Closing Date), in either case under clause (i) or (ii) which adversely affects or would reasonably be expected to adversely affect the Debt Investments or Agent’s ability to realize upon the Debt Investments as determined by Agent in its Permitted Discretion. Any Debt Investments that are not Eligible Debt Investments shall nevertheless be part of the Collateral. In determining the amount of the Debt Investments to be included in the Borrowing Base, the face amount of a Debt Investments shall be reduced, to the extent not reflected in such face amount, by (i) the amount of all accrued and actual set off, discounts, claims, credits or credits pending, or other reductions (including any amount that Borrower may be obligated to reduce the Debt Investments pursuant to the terms of any agreement or understanding (written or oral)) and (ii) the aggregate amount of all cash received or being held by Borrower as cash collateral in respect of such Debt Investments but not yet applied by Borrower to reduce the amount of such Eligible Debt Investments.

“Eligible Senior Debt Investments” means Eligible Debt Investments consisting of Senior Debt Investments.

“Eligible Subordinate Debt Investments” means Eligible Debt Investments consisting of Subordinate Debt Investments.

“Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by 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.

“Equipment” means now owned and hereafter acquired equipment of the Credit Parties, wherever located, including machinery, data processing and computer equipment (whether owned or leased and including embedded software that is licensed as part of such computer equipment), vehicles, rolling stock, tools, furniture, fixtures, all attachments, accessions and property now or hereafter affixed thereto or used in connection therewith, and substitutions and replacements thereof, wherever located.

“Equity Documents” means all shareholder agreements, limited liability operating agreements and any agreements, instruments and documents executed in connection therewith or pursuant thereto and related to Portfolio Company, and including any registration rights agreement, any proxy, voting rights agreements, operating agreement, certificate of incorporation

or formation, articles of incorporation, certificate of formation, member agreement, by-laws, and any similar agreements or documents) and certificates, documents or other tangible evidence or representation of the Equity Interests in such Portfolio Company.

“Equity Interests” means, with respect to any Person, all of the shares, interests, participations or other equivalents (however designated) of such Person’s capital stock or partnership, limited liability company or other equity, ownership or profit interests at any time outstanding, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), but excluding any interests in phantom equity plans and any debt security that is convertible into or exchangeable for such shares, and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.

“Equity Investments” means (i) all Equity Interests in any Portfolio Company directly and beneficially owned by Borrower consisting of common stock or preferred stock, membership interests, limited partnership interests or similar non-contingent equity ownership interests, (ii) which are listed on Schedule 7.26(a) and (iii) are subject to a first priority Lien in favor of the Lender.

“Equity Issuance” means (a) any issuance or sale by Borrower or any other Credit Party on or after the Closing Date of (i) any of such Person’s Equity Interests (including, without limitation, any Equity Interests issued upon the exercise of any warrants or options referred to in clause (ii)), (ii) any warrants or options exercisable in respect of such person’s Equity Interests (other than any Equity Interests, warrants or options issued to directors, officers or employees of the Credit Parties and Tokarz Group pursuant to employee benefit plans, equity compensation plan, restricted stock plan, employee stock ownership plan and/or employment agreement established in the ordinary course of business and any Equity Interests issued upon the exercise of such warrants or options) or (iii) any other security or instrument representing a membership or other equity interest (or the right to obtain a membership or other equity interest) in such person or (b) the receipt by the Credit Parties of any capital contribution (whether or not evidenced by an membership interest or other equity security issued by such person upon such contribution).

“ERISA” means the Employee Retirement Income Security Act of 1974.

“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with the Credit Parties, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for 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” means (a) 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); (b) the failure to satisfy the “minimum funding standard” (as

defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Credit Parties or any of their ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Credit Parties or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the Credit Parties or any of their ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal of the Credit Parties or any of their ERISA Affiliates from any Plan or Multiemployer Plan; or (g) the receipt by the Credit Parties or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Credit Parties or any ERISA Affiliate of any notice, concerning the imposition upon the Credit Parties or any of their ERISA Affiliates 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.

“Event of Default” shall have the meaning set forth in Section 11.1 hereof.

“Excess Availability” means the amount, as determined by Agent, calculated at any date, equal to: (a) the Borrowing Base (after giving effect to any applicable Reserves), minus (b) the aggregate outstanding and unpaid principal balance of all Revolving Loans.

“Excluded Collateral” means:

(a) motor vehicles covered by a certificate of title law of any state or other Equipment subject to a certificate of title statute;

(b) Excluded Deposit Accounts;

(d) any leasehold interests in Real Property;

(e) any United States intent-to-use trademark applications to the extent that, and solely during the period in which, the grant of a security interest therein would impair the validity or enforceability of such intent-to-use trademark applications under applicable Federal law; provided, that, upon submission and acceptance by the United States Patent and Trademark Office of an amendment to allege use pursuant to 15 U.S.C. Section 1060(a), such intent-to-use trademark application shall cease to be Excluded Collateral and shall be considered Collateral;

(f) any leases, licenses, contracts, permits and agreements which under the terms of such lease, license, contract, permit or agreement, or applicable law with respect thereto, the grant of a Lien therein or in such assets to Agent is prohibited and such prohibition is enforceable under applicable law and has not been or is not waived or the consent of the other party to such lease, license, contract, permit or agreement has not been or is not otherwise obtained or under applicable law such prohibition cannot be waived;

(g) Equity Interests in any Portfolio Companies not formed in the United States of America;

(h) the Third Party Pledged Equity Interests; and

(i) any asset with respect to which Agent shall have determined in consultation with Borrower that the cost of obtaining a security interest in such asset is excessive in relation to the value of the security to be afforded thereby.

“Excluded Deposit Account” shall mean (a) any Deposit Account that is specifically and exclusively used for payroll, payroll taxes, employee wages and benefits, withholding tax payments, earnest money and escrow deposits, (b) any Deposit Account in which BB&T holds a perfected first priority security interest as provided for in the BB&T Intercreditor Agreement, (c) other Deposit Accounts so long as the aggregate amount on deposit in all such other Deposit Accounts under this clause (c) does not exceed One Million Dollars ($1,000,000) for any period of three or more consecutive Business Days, and (d) the JPM Letter of Credit Deposit Account.

“Excluded Taxes” means any of the following Taxes imposed on or with respect to Agent or Lenders or required to be withheld or deducted from a payment to Agent or Lenders: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, imposed as a result of the Agent or Lenders being organized under the laws of, or having its principal office or its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof), and (b) any U.S. Federal withholding Taxes imposed under Sections 1471 through 1474 of the Code.

“Executive Orders” shall have the meaning as defined in Section 7.25(a).

“Fair Market Value” means, with respect to any Investment of Borrower, at any time, the fair market value of such Investment as required by, and determined in accordance with, the Investment Company Act and any orders of the SEC issued to Borrower or its Subsidiaries (other than MVC PE Fund), all as determined by the Board of Directors of Borrower and their independent accountants in a manner consistent with the current Investment Ratings Policy and Credit Policy; provided, that, if such Investment has been subject to a Third Party Valuation, the Fair Market Value as to such Investment shall be the lesser of the fair market value determined as described above and the most recent value thereof pursuant to the most recent Third Party Valuation with respect thereto.

“Fee Letter” means that certain Fee Letter of even date herewith between the Borrower and the Agent.

“Financial Covenants” shall have the meaning as defined in Section 10.3.

“Financial Covenant Default” shall have the meaning as defined in Section 10.3.

“Financial Statements” means the consolidated and consolidating income statements, statements of cash flows and balance sheets of the Credit Parties delivered in accordance with Sections 7.5 and 8.1.

“GAAP” means generally accepted accounting principles in effect from time to time in the United States of America, applied on a consistent basis (other than such changes, with respect to Borrower, as are appropriate to reflect Borrower’s election to become a business development company under the Investment Company Act); provided, that, (a) for the purpose of Section 10.1 hereof and the definitions used therein, “GAAP” shall mean generally accepted accounting principles in effect on the date hereof and (b) in the event of any change in GAAP after the date hereof that affects the covenants in Section 10.1 hereof, Borrower may by notice to Agent, or Agent may, and at the request of Required Lenders shall, by notice to Borrower require that such covenants be calculated in accordance with GAAP as in effect, and as applied by Borrower, immediately before the applicable change in GAAP became effective, until either the notice from the applicable party is withdrawn or such covenant is amended in a manner satisfactory to Borrower and Agent.

“Governmental Authority” means 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 (including any supra-national body exercising such function, such as the European Union or the European Central Bank).

“Guarantors” means, collectively and individually, the “Guarantors” defined in the preamble hereto and any other Person guaranteeing the Obligations of Borrower to the Agent and Lenders from time to time.

“Guaranty Agreements” collectively and individually, each guaranty agreement executed by a Guarantor in favor of the Agent, for the benefit of itself and the Lenders, as the same may be modified, amended, supplemented or restated from time to time.

“Guaranty Obligations” means, with respect to any Person, without duplication, any obligations of such Person (other than endorsements in the ordinary course of business of negotiable instruments for deposit or collection) guaranteeing or intended to guarantee any Indebtedness of any other Person in any manner, whether direct or indirect, and including, without limitation, any obligation, whether or not contingent, (a) to purchase any such Indebtedness or any property constituting security therefor, (b) to advance or provide funds or other support for the payment or purchase of any such Indebtedness or to maintain working capital, solvency or other balance sheet condition of such other Person (including, without limitation, keep-well agreements, maintenance agreements, comfort letters or similar agreements or arrangements) for the benefit of any holder of Indebtedness of such other Person, (c) to lease or purchase property, securities or services primarily for the purpose of assuring the holder of such Indebtedness, or (d) to otherwise assure or hold harmless the holder of such Indebtedness against loss in respect thereof. The amount of any Guaranty Obligation hereunder shall (subject to any limitations set forth therein) be deemed to be an amount equal to the outstanding principal amount (or maximum principal amount, if larger) of the Indebtedness in respect of which such Guaranty Obligation is made.

“Hazardous Materials” means 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.

“Hedge Agreement” means any agreement with respect to any swap, forward, spot, future, credit default or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions.

“Increased Amount Date” shall have the meaning set forth in Section 2.3(a) hereof.

“Increasing Lender” shall have the meaning set forth in Section 2.3(a) hereof.

“Indebtedness” means, with respect to any Person, without duplication, (a) all indebtedness of such Person for borrowed money; (b) all obligations of such Person for the deferred purchase price of property or services (excluding (i) compensation of employees and consultants in the ordinary course of business, (ii) trade payables and (iii) other accounts payable incurred in the ordinary course of such Person’s business and not outstanding for more than ninety (90) days after the date such payable was due under its original terms nor such trade payables if outstanding longer that are being contested or disputed by such Person in good faith in the ordinary course of business shall be deemed to constitute Indebtedness) and including any earn-outs or similar arrangements in connection with any acquisition of businesses by such Person, whether contingent or otherwise subject to any conditions or limitations; (c) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments or upon which interest payments are customarily made; (d) all reimbursement, payment or other obligations and liabilities of such Person created or arising under any conditional sales or other title retention agreement with respect to property used and/or acquired by such Person, even though the rights and remedies of the lessor, seller and/or lender thereunder may be limited to repossession or sale of such property and all obligations and liabilities arising in connection with factoring arrangements or other arrangements with respect to the sale of receivables; (e) that portion of Capitalized Lease Obligations of such Person that is (or is required to be) classified as a liability on its balance sheet in conformity with GAAP, but excluding landlord financing of leasehold improvements; (f) all obligations and liabilities, contingent or otherwise, of such Person, in respect of letters of credit, acceptances and similar facilities; (g) all net obligations and liabilities, calculated on a basis satisfactory to Agent and in accordance with accepted practice, of such Person under Hedging Agreements; (h) all Contingent Obligations; (i) liabilities incurred under Title IV of ERISA with respect to any plan (other than a Multiemployer Plan) covered by Title IV of ERISA and maintained for employees of such Person or any of its ERISA Affiliates; (j) withdrawal liability incurred under ERISA by such Person or any of its ERISA Affiliates with respect to any Multiemployer Plan; and (k) all obligations referred to in clauses (a) through (j) of this definition of another Person secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) a Lien upon property owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness. The Indebtedness of any Person shall include the Indebtedness of any partnership of or joint venture in which such Person is a general partner or a joint venturer to the extent such Person is liable therefor as a result of such Person’s ownership interest in such entity, except to

the extent the terms of such Indebtedness expressly provide that such Person is not liable therefor.

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of Borrower under any Loan Document and (b) to the extent not otherwise described in subsection (a), Other Taxes.

“Industry Class” means the following industries: Transportation, Consumer Services, Distribution, Energy Services, Environmental Services, Food Services, Pipe Fitting, Renewable Energy, Software, Specialty Chemical, Agriculture, Forestry, Fishing and Hunting, Automotive, Business Process Outsourcing, Consumer Goods Manufacturing, Financial Services, Food Manufacturing, Healthcare, Hospitality, Industrial Manufacturing, Professional Scientific and Technical Services and Retail.

“Insolvency Proceeding” means (a) any proceeding by or against any Person seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution, liquidation, winding up, reorganization, administration, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency, reorganization or relief of debtors (including, but not limited to, any case with respect to any such Person under any provision of the Bankruptcy Code), or seeking the entry of an order for relief or the appointment of a receiver, administrative receiver, administrator, manager, examiner, trustee, custodian, liquidator, sequestrator or other similar official for any such Person or for any substantial part of its property under any provision of the Bankruptcy Code or under any other Federal, State or other foreign bankruptcy, insolvency, receivership, liquidation or similar law now or hereafter in effect, or (b) the appointment of a receiver, administrative receiver, administrator, manager, examiner, trustee, liquidator, custodian, sequestrator or similar official for such Person or a substantial part of its assets shall occur under any Federal, State or foreign bankruptcy, insolvency, receivership, liquidation or similar law now or hereafter in effect.

“Intellectual Property” means Borrower’s now owned and hereafter arising or acquired: trademarks, servicemarks, trade names, trade styles, trademark and service mark applications, and licenses and rights to use any of the foregoing and all applications, registrations and recordings relating to any of the foregoing as may be filed in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof, any political subdivision thereof or in any other country or jurisdiction, together with all rights and privileges arising under applicable law with respect to Borrower’s use of any of the foregoing; all extensions, renewals, reissues, divisions, continuations, and continuations-in-part of any of the foregoing; all rights to sue for past, present and future infringement of any of the foregoing; inventions, trade secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys, reports, manuals, and operating standards; goodwill (including any goodwill associated with any trademark or servicemark, or the license of any trademark or servicemark); customer and other lists in whatever form maintained; trade secret rights, copyright rights, rights in works of authorship; software and contract rights relating to computer software programs, in whatever form created or maintained.

“Intellectual Property Security Agreement” means any trademark security agreement executed and delivered by Borrower and Agent, in each case, in such form as is satisfactory to Agent.

“Interest Coverage Ratio” means, for any period, the ratio of (a) (i) Net Operating Income before taxes plus (ii) interest and other borrowing costs plus/minus (iii) Non-Cash Net Incentive Compensation minus (iv) payment-in-kind dividend income minus (v) payment-in-kind Interest Income minus (vi) other non-cash income, divided by (b) Cash Interest Expense.

“Interest Expense” means, for any period, as to any Person, as determined in accordance with GAAP, the amount equal to total interest expense of such Person and its Subsidiaries on a consolidated basis for such period, whether paid or accrued (including the interest component of any Capital Lease for such period), and in any event, including, without limitation, (a) discounts in connection with the sale of any Debt Investments, (b) bank fees, commissions, discounts and other fees and charges owed with respect to letters of credit, banker’s acceptances or similar instruments or any factoring, securitization or similar arrangements, (c) interest payable by addition to principal or in the form of property other than cash and any other interest expense not payable in cash, and (d) the costs or fees for such period associated with Hedging Agreements to the extent not otherwise included in such total interest expense (excluding breakage costs incurred in connection with the termination of Hedging Agreements on or about the date hereof, if any).

“Interest Payment Date” means (a) as to any Prime Rate Loan, the last Business Day of each calendar month while such Loan is outstanding, (b) as to any LIBOR Rate Loan, the last Business Day of such LIBOR Period, and (c) as to all Revolving Loans, the Termination Date.

“Interest Rate” means (a) subject to clause (b) of this definition below: (i) as to Prime Rate Loans, a rate equal to the then Applicable Margin for Prime Rate Loans on a per annum basis plus the Prime Rate, and (ii) as to LIBOR Loans, a rate equal to the then Applicable Margin for LIBOR Loans on a per annum basis plus LIBOR and (b) notwithstanding anything to the contrary contained herein, to the extent provided for herein, the Default Rate.

“Investment” shall have the meaning set forth in Section 9.5 hereof.

“Investment Agreement” means that Amended and Restated Investment Advisory and Management Agreement between Borrower and Tokarz Group dated April 14, 2009, as same may be amended, modified or restated from time to time.

“Investment Books” means, in respect of an Investment, all books and records in respect thereof.

“Investment Company Act” means the Investment Company Act of 1940, as amended, and all rules, regulations, judgments, decrees and orders arising thereunder.

“Investment Ratings Policy” means the written policy of Borrower by which it from time to time assigns an investment rating to each Debt Investment of Borrower; as such investment rating policy may be amended or supplemented from time to time in accordance with the provision of Section 9.11 of this Agreement.

“Joinder Agreements” collectively and individually, each joinder agreement executed by a Debt Investment Obligor’s lenders, the Borrower and the Agent, for the benefit of itself and the Lenders, as the same may be modified, amended, supplemented or restated from time to time.

“JPM Letter of Credit Deposit Account” means a Deposit Account maintained by Borrower with JPMorgan Chase having a balance of not more than Six Million Five Hundred Thousand Dollars ($6,500,000) to secure a letter of credit reimbursement obligation of the Borrower.

“Lenders” means the parties from time to time hereto as lenders, whether by execution of this Agreement or an Assignment and Acceptance, and their respective successors and assigns; each sometimes being referred to herein individually as a “Lender”.

“Lien” means any mortgage, deed of trust, deed to secure debt or similar instrument, pledge, lien (statutory or otherwise), security interest, charge, attachment, assignment or other encumbrance or security or preferential arrangement of any nature, including, without limitation, any conditional sale or title retention arrangement, any Capitalized Leases and any assignment, deposit arrangement or financing lease intended as, or having the effect of, security.

“LIBOR Loans” means any Revolving Loans or portion thereof on which interest is payable based on LIBOR in accordance with the terms hereof.

“LIBOR Period” means, with respect to any LIBOR Loan, (a) initially, the period commencing on (and including) the date on which such LIBOR Rate Loan is made, continued or converted, as the case may be, and ending on (but excluding) the day which numerically corresponds to such date one (1), two (2) or three (3) months thereafter (or, if such month has no numerically corresponding day, on the last Business Day of such month); and (b) thereafter, each period commencing on the last day of the next preceding Libor Period applicable to such LIBOR Rate Loan and ending one (1), two (2) or three (3) months thereafter; provided, that, all of the foregoing provisions relating to Libor Periods are subject to the following:

(a) if any LIBOR Period would otherwise end on a day that is not a Business Day, such LIBOR Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such LIBOR Period into another calendar month in which event such LIBOR Period shall end on the immediately preceding Business Day;

(b) the Borrower may not select a LIBOR Period that would extend beyond the Termination Date; and

(c) any LIBOR Period that 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 LIBOR Period) shall end on the last Business Day of a calendar month.

“LIBOR Rate” for each LIBOR Period, a rate of interest determined by Agent equal to:

(a) the offered rate for deposits in United States Dollars for the applicable LIBOR Period that appears on ICE Benchmark Administration Official Libor Fixings as of 10:00 a.m. London time on the day which is two (2) full LIBOR Banking Days prior to the

beginning of such Libor Period (unless such date is not a Business Day, in which event the next succeeding Business Day will be used); divided by

(b) a number equal to 1.0 minus the LIBOR Reserve Percentage.

(c) If such interest rates shall cease to be available from ICE Benchmark Administration Official Libor Fixings, the LIBOR Rate shall be determined from such financial reporting service or other information as shall be mutually acceptable to Agent and Borrower.

“LIBOR Reserve Percentage” means, relative to any day of any LIBOR Period for LIBOR Rate Loans, the aggregate (without duplication) of the rates (expressed as a decimal fraction) of reserve requirements in effect on the day that is two (2) LIBOR Banking Days prior to the beginning of such LIBOR Period (including all basic, emergency, supplemental, marginal and other reserves and taking into account any transitional adjustments or other scheduled changes in reserve requirements) under any regulations of the Board or other Governmental Authority having jurisdiction with respect thereto as issued from time to time and then applicable to assets or liabilities consisting of “Eurocurrency Liabilities”, as currently defined in Regulation D of the Board, having a term approximately equal or comparable to such LIBOR Period.

“Lien” means any security interest, security title, mortgage, deed to secure debt, deed of trust, lien, pledge, charge, conditional sale or other title retention agreement, or other encumbrance of any kind in respect of any property, including the interest of each lessor under any capitalized lease and the interest of any bondsman under any payment or performance bond, in, of or on any assets or properties of a Person, whether now owned or hereafter acquired and whether arising by agreement or operation of law.

“Liquidity” means, at any time, the sum of (a) Excess Availability at such time plus (b) the aggregate amount of Pledged Cash at such time minus (c) the Required Pledged Cash Amount at such time.

“Lists” shall have the meaning as defined in Section 7.25(a).

“Loan Documents” means, collectively, this Agreement and all notes, guarantees, intercreditor agreements and all other agreements, documents and instruments now or at any time hereafter executed and/or delivered by Borrower in connection with this Agreement.

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

“Material Adverse Effect” means a material adverse effect on (a) business, assets, liabilities, results of operations, property or financial condition of the Credit Parties, taken as a whole; (b) the ability of the Credit Parties to perform their obligations, when such obligations are required to be performed under this Agreement or any of the other Loan Documents; or (c) the validity or enforceability of this Agreement or any of the other Loan Documents or the rights or remedies of Agent and Lenders hereunder or thereunder or the perfection or priority of any security interest or Lien on any material portion of the Collateral in favor of Agent for the ratable benefit of Agent and the Lenders.

“Material Contract” means (a) any contract or other agreement (other than the Loan Documents and Bank Product Agreements), written or oral, of Credit Parties involving monetary liability of or to any Person in an amount in excess of One Million Dollars ($1,000,000) in any fiscal year (but excluding for this purpose contracts or other agreements for the purchase and sale of goods or services where the other party thereto has no obligation to purchase or sell such goods or services under such contract or other agreement) and (b) any other contract or other agreement (other than the Loan Documents and Bank Product Agreements), whether written or oral, to which any Credit Party is a party as to which the breach, nonperformance, cancellation or failure to renew by any party thereto has or could reasonably be expected to have a Material Adverse Effect.

“Material Indebtedness” means Indebtedness (other than the Revolving Loans or obligations in respect of one or more Bank Product Agreements), of Credit Parties in an aggregate principal amount exceeding One Million Dollars ($1,000,000). For purposes of determining Material Indebtedness, the “principal amount” of the obligations of Credit Parties in respect of any Hedge Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that Credit Parties would be required to pay if such Hedge Agreement were terminated at such time.

“Maturity Date” means December , 2018.

“Maximum Credit” means the initial amount of Fifty Million Dollars ($50,000,000) as the same may be increased in accordance with Section 2.3 of this Agreement.

“Maximum Interest Rate” means the maximum non-usurious rate of interest under applicable Federal or State law as in effect from time to time that may be contracted for, taken, reserved, charged or received in respect of the indebtedness of Borrower to Agent and Lenders, or to the extent that at any time such applicable law may thereafter permit a higher maximum non-usurious rate of interest, then such higher rate.

“Multiemployer Plan” means a “multi-employer plan” as defined in Section 4001(a)(3) of ERISA which is or was at any time during the current year or the immediately preceding six (6) years contributed to by Borrower or any ERISA Affiliate or with respect to which Borrower or any ERISA Affiliate may incur any liability.

“MVC PE Fund” means MVC Private Equity L.P., a Delaware limited partnership.

“Net Cash Proceeds” means the aggregate cash proceeds received by Credit Parties in respect of any sale, lease, transfer or other disposition of any assets or properties, or interest in assets and properties or as proceeds of any loans or other financial accommodations provided to it or as proceeds from the issuance and/or sale of any Equity Interests or Indebtedness, in each case net of the reasonable and customary direct costs relating to such sale, lease, transfer or other disposition or loans or other financial accommodation or issuance and/or sale (including, without limitation, legal, accounting and investment banking fees, and sales commissions) and taxes paid or payable as a result thereof and in the case of a sale of any assets or properties or interest in assets and properties, amounts applied to the repayment of Indebtedness secured by a valid and enforceable Lien (other than a Lien created under the Loan Documents) on the asset or assets

that are the subject of such sale or other disposition required to be repaid in connection with such transaction.

“Net Income” means, with respect to any Person for any period, the aggregate of the Net Operating (Loss) Income Before Taxes of such Person and its Subsidiaries, on a consolidated basis, for such period, all as determined in accordance with GAAP.

“New Commitments” shall have the meaning set forth in Section 2.3(a) hereof.

“New Lender” shall have the meaning set forth in Section 2.3(a) hereof.

“Non-Consenting Lenders” shall have the meaning set forth in Section 12.10(b) hereof.

“Non-Funding Lender” means the Lender defined in Section 12.9(d).

“Notice of Acceleration” means Agent has notified the Borrower in writing that it has accelerated the payment of all Obligations and demanded immediate payment thereof to Agent and Lenders (provided, that, upon the occurrence of any Event of Default described in Sections 11.1(e) and 11.1(f), all Obligations shall automatically become immediately due and payable).

“Obligations” means any and all Revolving Loans, Bank Product Obligations and all other obligations, liabilities and indebtedness of every kind, nature and description owing by Credit Parties to Agent and Lenders (or in the case of Bank Product Agreements, Affiliates of Agent and Lenders), including principal, interest, charges, fees, costs and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, arising under any of the Loan Documents or the Bank Product Agreements, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of this Agreement or after the commencement of any case under the United States Bankruptcy Code or any similar statute (including the payment of interest and other amounts which would accrue and become due but for the commencement of such case, whether or not such amounts are allowed or allowable in whole or in part in such case), whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, or secured or unsecured.

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

“OFAC Laws and Regulations” shall have the meaning as defined in Section 7.25(a).

“Ohio Medical” means Ohio Medical Corporation, A Delaware corporation.

“Organization Documents” means, with respect to any Person, the certificate or articles of incorporation, by-laws, or other organizational documents of such Person.

“Other Taxes” means present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies of the United States or any political subdivision thereof or any applicable foreign jurisdiction, and all liabilities with respect thereto, in each case arising from any payment made hereunder or under any of the other Loan Documents or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any of the other Loan Documents.

“Pension Plan” means a pension plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA which Borrower sponsors, maintains, or to which Borrower or an ERISA Affiliate makes, is making, or is obligated to make contributions, other than a Multiemployer Plan.

“Permitted Discretion” means as used in this Agreement with reference to Agent or a Lender, as applicable, a determination made in good faith in the exercise of its reasonable business judgment based on how an asset-based lender with similar rights providing a credit facility of the type set forth herein would act in similar circumstances at the time with the information then available to it.

“Permitted Dispositions” means each of the following:

(a) the sale or other disposition of property by any Subsidiary of Borrower to Borrower or to any other Subsidiary of Borrower;

(b) the transfer of cash for the payment of Indebtedness to the extent such payments are permitted hereunder and for the payment of other payables in the ordinary course of the business of Credit Parties;

(c) sales or other dispositions of Debt Investments not otherwise subject to the provisions set forth in this definition, provided that, as to any such sale or other disposition, each of the following conditions is satisfied:

(i) in the case of any sale or other disposition of Debt Investments by the Borrower the Net Cash Proceeds shall be deposited by the Credit Parties into the operating Deposit Account the Borrower maintains with the Agent;

(ii) the consideration paid or payable in cash and shall be in an amount not less than eighty-five percent (85%) of the Fair Market Value of the Debt Investment disposed of;

(iii) such sale or other disposition, shall be to a bona fide third party unaffiliated with the Credit Parties; and

(iv) as of the date of any such sale or other disposition, and in each case after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing;

(d) sales or other dispositions of assets of the Credit Parties (other than Debt Investments) not otherwise subject to the provisions set forth in this definition, provided that, as to any such sale or other disposition, each of the following conditions is satisfied:

(i) in the case of any sale or other disposition of Equity Interests by the Credit Parties the Net Cash Proceeds shall be deposited by the Credit Parties into the operating Deposit Account the Borrower maintains with the Agent;

(ii) the consideration paid or payable in cash and shall be in an amount not less than eighty-five percent (85%) of the fair market value of the property disposed of (and as to any Equity Investment of Borrower, not less than eighty-five percent (85%) of the most recently determined Fair Market Value);

(iii) such transaction shall not involve the sale or other disposition of any Equity Interest in any of the Credit Parties, other than the Borrower;

(iv) such sale or other disposition, shall be to a bona fide third party unaffiliated with the Credit Parties; and

(v) as of the date of any such sale or other disposition, and in each case after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing.

“Permitted Indebtedness” means:

(a) the Obligations (excluding Obligations under Hedge Agreements permitted pursuant to clause (c) below) and the Senior Notes;

(b) Indebtedness (including Capital Lease Obligations) arising after the date hereof to the extent secured by security interests in Equipment and mortgages on Real Property acquired after the date hereof in an aggregate outstanding principal amount not to exceed Two Hundred Fifty Thousand Dollars ($250,000) at any time; provided, that, (i) such security interests and mortgages do not apply to any property of Borrower other than specific items of Equipment or Real Property, (ii) the Indebtedness secured thereby does not exceed the cost of the applicable Equipment or Real Property, as the case may be and (iii) as of the date any such Indebtedness is incurred and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing;

(c) Indebtedness of Borrower entered into in the ordinary course of business pursuant to a Hedge Agreement; provided, that, (i) such arrangements are not for speculative purposes, and (ii) such Indebtedness shall be unsecured, except to the extent such Indebtedness constitutes part of the Obligations arising under or pursuant to Hedge Agreements with Agent or Lenders (or their respective Affiliates) that are secured under the terms hereof, provided, however, in the event the Borrower is able to obtain a better offer for a Hedge Agreement than offered by the Agent or any Lender and the Agent (or such Lender) fails to match the terms of such Hedge Agreement within ten (10) Business Days of written notice of such better offer, then the Borrower shall be permitted to enter into such Hedge Agreement on a secured basis with another financial institution in an amount not to exceed Ten Million Dollars ($10,000,000) in the aggregate exposure at any one time;

(d) Indebtedness in respect of netting services, overdraft protections and otherwise in connection with Deposit Accounts and Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, that, such Indebtedness is extinguished within five (5) Business Days of incurrence;

(e) Guaranty Obligations in respect of Indebtedness of Credit Parties to the extent that such Indebtedness is otherwise permitted pursuant to this definition of Permitted Indebtedness;

(f) Indebtedness of Credit Parties in respect of bid, payment and performance bonds, workers’ compensation claims, unemployment insurance, health, disability and other employee benefits or property, casualty or liability insurance, or guarantees of the foregoing types of Indebtedness, in the ordinary course of business and consistent with current practices as of the date hereof;

(g) Indebtedness to BB&T at the end of each of Borrower’s fiscal quarters to be outstanding for a period not to exceed forty-five (45) days in an amount not to exceed One Hundred Million Dollars ($100,000,000) to be used to purchase U.S. Treasury Bills which are held by BB&T as collateral for such loan;

(h) Refinancing Indebtedness;

(i) the Indebtedness set forth in Schedule 9.1, which is not otherwise permitted by the other clauses of this definition;

(j) (i) the unsecured guaranties by the Borrower of (A) not more than One Million Dollars ($1,000,000) for the obligations of Turf Products, LLC, (B) Sabiedrieba ar ierobezotu atbildibu “Tekers Invest” and Ford Wien Autohaus and (ii) the guaranty by the Borrower of not more than One Million Dollars ($1,000,000) for the obligations of Inland Environmental and Remediation Inc. which is secured by cash collateral in an amount not to exceed One Million Dollars ($1,000,000) held in account number 1182001184 with Branch Banking and Trust Company subject to a Control Agreement dated September 23, 2015 between the Borrower, and Branch Banking and Trust Company, as Custodian and Lender, as same may be amended or modified from time to time; and

(k) unsecured Indebtedness and unsecured Guaranty Obligations for Indebtedness of the Portfolio Companies not listed on Schedule 7.26(a) and not otherwise permitted by the other clauses of this definition in an aggregate principal amount not to exceed Five Million Dollars ($5,000,000).

“Permitted Investments” means each of the following:

(a) Investments consisting of Debt Investments made by Borrower if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary terms and the Credit Policy;

(b) Investments consisting of (i) the Debt Investments listed on Schedule 7.26(b), (ii) the Equity Investments listed on Schedules 7.26(a) and (c), and (iii) “follow-on” Investments consisting of Equity Interests in Portfolio Companies currently owned by Credit Parties in an aggregate amount not to exceed Two Million Dollars ($2,000,000);

(d) Investments in cash or Cash Equivalents; provided, that, Borrower may make deposits of cash or other immediately available funds (i) in Deposit Accounts maintained with the Agent; or (ii) in Excluded Deposit Accounts subject to the applicable limitations set forth in the definition of “Excluded Deposit Accounts”;

(e) cash deposited in the Required Pledged Deposit Accounts;

(f) deposits of cash for leases, utilities, worker’s compensation and similar matters in the ordinary course of business;

(g) obligations under Hedge Agreements permitted under clause (c) of the definition of Permitted Indebtedness hereof which may be secured by cash or Cash Equivalents in an aggregate amount not to exceed Ten Million Dollars ($10,000,000);

(h) payroll, travel, commission and similar advances to cover matters that in good faith are expected at the time of such advances to be treated as expenses for accounting purposes in accordance with GAAP and that are made in the ordinary course of business consistent with current practices as of the date hereof;

(i) loans and advances by Credit Parties to directors, officers and employees of Credit Parties and Tokarz Group in the ordinary course of business for bona fide (including, without limitation, in connection with the purchase of Equity Interests by such directors, officers and employees) business purposes not in excess of Two Hundred Fifty Thousand Dollars ($250,000) at any time outstanding;

(j) stock or obligations issued to Credit Parties by any Person (or the representative of such Person) in respect of Indebtedness of such Person owing to Borrower in connection with the insolvency, bankruptcy, receivership or reorganization of such Person or a composition or readjustment of the debts of such Person;

(k) investment in U.S. Treasury Bills, cash and Cash Equivalents at the end of Borrower’s fiscal quarters for a period not to exceed forty-five (45) days in an amount not to exceed One Hundred Million Dollars ($100,000,000) purchased with proceeds of loans from BB&T plus an amount not to exceed Eight Million Dollars ($8,000,000) deposited by the Borrower, which is all pledged to BB&T as collateral for such loan;

(l) obligations of Debt Investment Obligors to Borrower arising from Debt Investments which are past due evidenced by a promissory note made by such Debt Investment Obligors payable to Borrower;

(m) Investments consisting of loans and advances set forth on Schedule 8.5 which are not otherwise permitted by the other clauses of this definition;

(n) Additional Investments in MVC PE Fund in an amount not to exceed Five Million Five Hundred Thousand Dollars ($5,500,000) in the aggregate during the term of this Agreement;

(o) Investments consisting of cash or Cash Equivalents in an amount not to exceed Ten Million Dollars ($10,000,000) pledged to secure Hedge Agreements permitted pursuant to Subsection (c) of the definition of Permitted Indebtedness;

(p) Provided Liquidity is in excess of Fifteen Million Dollars ($15,000,000) prior to and immediately after making such Equity Investment, Equity Investments in Debt Investment Obligors after the Closing Date made simultaneously with the Debt Investment in an amount not to exceed Five Million Dollars ($5,000,000) in the aggregate; and

(q) Investments not otherwise permitted by the other clauses of this definition, provided that the aggregate consideration paid by Credit Parties (other than MVC PE Fund) after the Closing Date for all such Investments pursuant to this clause (p) shall not exceed Five Hundred Thousand Dollars ($500,000).

“Permitted Liens” means:

(a) the security interests and Liens of Agent for the ratable benefit of Agent and Lenders and the rights of setoff of Agent and Lenders provided for herein or under applicable law;

(b) Liens securing the payment of taxes, assessments or other governmental charges or levies either not yet overdue or the validity of which are being contested in good faith by appropriate proceedings diligently pursued and available to Credit Parties, which proceedings (or orders entered in connection with such proceedings) have the effect of preventing the forfeiture or sale of the property subject to any such Lien and with respect to which adequate reserves have been set aside on their books in accordance with GAAP;

(c) non-consensual statutory Liens (other than Liens arising under ERISA or securing the payment of taxes) arising in the ordinary course of the Credit Parties’ businesses that do not secure Indebtedness for borrowed money, such as carriers’, warehousemen’s, materialmen’s, landlords’, workmen’s suppliers’, repairmen’s and mechanics’ Liens, to the extent: (i) such Liens do not in the aggregate materially detract from the value of the property of Credit Parties and do not materially impair the use thereof in the operation of Credit Parties, and (ii) such Liens secure Indebtedness which is not overdue or is fully insured and being defended at the sole cost and expense and at the sole risk of the insurer or being contested in good faith by appropriate proceedings diligently pursued and available to Credit Parties, in each case prior to the commencement of foreclosure or other similar proceedings, which proceedings (or orders entered in connection with such proceeding) have the effect of preventing the forfeiture or sale of the property subject to any such Lien and with respect to which adequate reserves have been set aside on their books in accordance with GAAP;

(d) zoning restrictions, easements, licenses, covenants and other restrictions affecting the use of Real Property which do not interfere in any material respect with the use of such Real Property or ordinary conduct of the business of Credit Parties as presently conducted thereon or materially impair the value or marketability of the Real Property which may be subject thereto;

(e) security interests in Equipment and Real Property arising after the date hereof to secure Indebtedness permitted under clause (b) of the definition of Permitted Indebtedness, whether such Indebtedness is assumed or incurred by Credit Parties;

(f) pledges and deposits of cash by Credit Parties after the date hereof in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security benefits consistent with the current practices of Credit Parties as of the date hereof;

(g) pledges and deposits of cash by Credit Parties after the date hereof to secure the performance of tenders, bids, leases, trade contracts (other than for the repayment of Indebtedness), statutory obligations and other similar obligations in each case in the ordinary course of business consistent with the current practices of Credit Parties as of the date hereof;

(h) Liens arising from (i) operating leases and the precautionary UCC financing statement filings in respect thereof and (ii) equipment or other materials which are not owned by Credit Parties located on the premises of Credit Parties (but not in connection with, or as part of, the financing thereof) from time to time in the ordinary course of business and consistent with current practices of Credit Parties and the precautionary UCC financing statement filings in respect thereof;

(i) statutory or common law Liens or rights of setoff of depository banks with respect to funds of Credit Parties at such banks to secure fees and charges in connection with returned items or the standard fees and charges of such banks in connection with the Deposit Accounts maintained by Credit Parties at such banks (but not any other Indebtedness or obligations);

(j) judgments and other similar Liens arising in connection with court proceedings that do not constitute an Event of Default, provided, that, (i) such Liens are being contested in good faith and by appropriate proceedings diligently pursued, (ii) adequate reserves or other appropriate provision, if any, as are required by GAAP have been made therefor, (iii) a stay of enforcement of any such Liens is in effect and (iv) Agent may establish a Reserve with respect thereto;

(k) leases or subleases of Real Property granted by Credit Parties in the ordinary course of business and consistent with current practices of Credit Parties to any Person so long as any such leases or subleases do not interfere in any material respect with the ordinary conduct of the business of Credit Parties as presently conducted thereon;

(l) Liens on goods in favor of customs and revenue authorities arising as a matter of law to secure custom duties in connection with the importation of such goods;

(m) Liens on U.S. Treasury Bills, cash and Cash Equivalents at the end of Borrower’s fiscal quarters for a period not to exceed forty-five (45) days in an amount not to exceed One Hundred Million Dollars ($100,000,000) to secure Indebtedness permitted under clause (g) of the definition of Permitted Indebtedness;

(n) carriers’, warehousemen’s’, mechanics’ or other like liens arising in the ordinary course of business and not overdue for a period of more than thirty (30) days or which are being contested diligently in good faith by appropriate proceedings with adequate reserves set aside, in a manner which will not jeopardize or diminish in any material respect the interest of the Agent in any of the Collateral for the Obligations;

(o) the security interests and Liens set forth on Schedule 9.2 which are not otherwise permitted under the other clauses of this definition and any security interests and Liens to secure Refinancing Indebtedness of the Indebtedness secured by such security interests and Liens to the extent permitted under the definition of Refinancing Indebtedness;

(p) Liens existing on the assets of a Debt Investment Obligor at the time Borrower or any of its Subsidiaries acquires such assets following a default under any Debt Investment Loan Documents;

(q) Liens on Third Party Pledged Equity Interests and Liens on additional equity purchased or contributed after the Closing Date in such Portfolio Companies which are Third Party Pledged Equity Interests as of the Closing Date and pledged to secure indebtedness of the issuer of the Equity Interest; and

(r) Liens not otherwise permitted under this definition securing Indebtedness not in excess of Five Hundred Thousand Dollars ($500,000).

“Permitted Restricted Payment” means:

(a) the payment by any Subsidiary of Borrower of cash dividends or distributions to Borrower or to any Subsidiary of Borrower;

(b) the making of any dividend or distribution by Borrower to its stockholders in the form of additional Equity Interests, warrants, options or other rights for the purchase or acquisition of shares of any class of Equity Interests of Borrower, provided, that no such Equity Interest, warrant, option or other purchase right shall require any payment of cash by Borrower or any of its Subsidiaries (other than MVC PE Fund) prior to the Maturity Date;

(c) the payment by Borrower of dividends and distributions to Borrower’s shareholders in cash in the Borrower’s discretion, all at such times and solely in such amounts (i) as necessary to satisfy the requirements for Borrower to remain qualified as a “regulated investment company” under Subchapter M, Section 851 of the Code (as the same may be amended, modified, supplemented or superseded from time to time) and (ii) to avoid excise taxes that might otherwise be imposed on Borrower as a “regulated investment company” under the Code;

(d) Regular Quarterly Dividends shall be permitted to be declared and paid quarterly in cash at the then applicable QDPS Amount so long as (i) no Event of Default has occurred and is continuing at the time of declaration or payment of such Regular Quarterly Dividends or (ii) if an Event of Default has occurred and is continuing at the time of declaration or payment, if, after giving effect to such payments, Liquidity is equal to or greater than Ten Million Dollars ($10,000,000);

(e) the payment by Borrower of one-time additional special distributions in each case so long as (i) no Event of Default has occurred and is continuing at the time of declaration or payment of any distributions and (ii) after giving effect to any such distributions, Liquidity is equal to or greater than Thirty Million Dollars ($30,000,000);

(f) the repurchase by the Borrower of its own Equity Interests, in each case so long as (i) no Event of Default has occurred and is continuing prior to or immediately after the making of any such repurchase and (ii) after giving effect to any such repurchase, Liquidity is equal to or greater than Thirty Million Dollars ($30,000,000);

(g) the regularly scheduled payment of the principal amount of, or repurchase, redemption, retirement or defeasance of the Senior Notes, in each case so long as (i) no Default or Event of Default shall have occurred and be continuing prior to or immediately after the making of any such payment and (ii) prior to and after making any such payment the Borrower has Liquidity in an amount equal to or greater than Thirty Million Dollars ($30,000,000);

(h) the repurchase by Borrower in cash of Equity Interests of Borrower (including, warrants, options and other purchase rights) issued to employees or directors of Tokarz Group or Borrower in connection with the termination or resignation of such employees or directors, provided, that (i) the aggregate amount of cash paid by Borrower for all repurchases under this clause (e) during any calendar year shall not exceed Five Hundred Thousand Dollars ($500,000) and (ii) no Default or Event of Default shall have occurred or be continuing at the time of each such repurchase;

(i) the payment by Borrower of incentive compensation to employees of Tokarz Group in accordance with the Investment Agreement; and

(j) the payment by Borrower of the management fees and other fees and expenses (including the reimbursement thereof by Borrower) in the amounts and on the dates provided for in the Investment Agreement as in effect on the date hereof.

“Person” or “person” means any individual, sole proprietorship, partnership, corporation (including any corporation which elects subchapter S status under the Code), limited liability company, limited liability partnership, business trust, unincorporated association, joint stock corporation, trust, joint venture or other entity or any government or any agency or instrumentality or political subdivision thereof.

“Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA) which any Credit Party sponsors, maintains, or to which it makes, is making, or is obligated to make contributions, or in the case of a Multiemployer Plan have made contributions at any time during the immediately preceding six (6) plan years or with respect to which any Credit Party may incur liability.

“Pledge Agreement” collectively and individually, each pledge agreement executed by Borrower, any Subsidiary, Affiliate or a Guarantor in favor of the Agent, for the benefit of itself and the Lenders, as the same may be modified, amended, supplemented or restated from time to time.

“Pledged Cash” means the aggregate amount of cash of Borrower held in Deposit Accounts with Lenders.

“Prime Rate” means, for any day, a fluctuating rate per annum equal to the rate of interest in effect for such day as publicly announced from time to time by Agent as its “prime rate,” whether or not such prime rate is the best rate available at it. The “prime lending rate” is a rate set by Agent based upon various factors and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such rate announced by Agent shall take effect at the opening of business on the day specified in the public announcement of such change.

“Prime Rate Loans” means any Revolving Loans or portion thereof on which interest is payable based on the Prime Rate in accordance with the terms hereof.

“Pro Rata Share” means with respect to all matters relating to any Lender (a) with respect to the Revolving Loans, the percentage obtained by dividing (i) the Revolving Loan Commitment of that Lender by (ii) the aggregate Revolving Loan Commitments of all Lenders; and (b) with respect to Revolving Loans on and after the Termination Date, the percentage obtained by dividing (i) the aggregate outstanding principal balance of the Revolving Loans held by that Lender, by (ii) the outstanding principal balance of the Revolving Loans held by all Lenders.

“Portfolio Company” means a corporation, limited liability company or limited partnership in which Borrower is the direct and beneficial owner of Equity Interests issued by such corporation, limited liability company or limited partnership in the ordinary of their business, that is a Person that is accounted for under GAAP as a portfolio investment of Borrower.

“Portfolio Company Material Adverse Effect” means, as to any Portfolio Company, a material adverse effect on any of (a) the operations, business, assets, properties, condition (financial or otherwise) or prospects of such Portfolio Company, (b) the ability of such Portfolio Company to perform any of its obligations under the Equity Documents to which it is a party, (c) the legality, validity or enforceability of the Equity Interest of Borrower in such Portfolio Company or any of the Equity Documents related thereto, or (d) the rights and remedies of Borrower in respect of their Equity Interest in such Portfolio Company or under any of the Equity Documents related thereto or the ability of Borrower to realize on its Equity Interest in such Portfolio Company.

“Provision for Taxes” means an amount equal to all taxes imposed on or measured by net income, whether Federal, State, county or local, and whether foreign or domestic, that are paid.

“QDPS Amount” means the amount of the quarterly dividend per share, which shall initially be Thirteen and One-Half Cents ($0.135) per share per quarter. The QDPS Amount shall be subject to increase from time to time by the Borrowers’ Board of Directors by up to a maximum of fifteen percent (15%) per annum over the prior QDPS Amount (by way of example, (x) for the first year the Borrower can increase the QDPS Amount by a maximum of Two and Twenty-Five Thousandths of Cents ($.02025) per share per quarter based upon the initial QDPS

Amount and (y) assuming the Borrower increases the QDPS Amount by the full fifteen percent (15%) for the first year, then for the second year, the Borrower can increase the QDPS Amount by a maximum of Two and Thirty-Two Thousand Eight Hundred Seventy-Five Hundred-Thousandths Cents ($.0232875) per share per quarter), so long as (i) no Default or Event of Default shall have occurred and be continuing and (ii) Liquidity, at the time the Borrowers’ Board of Directors increases the QDPS Amount, after giving effect to each such quarterly dividend payment, is equal to or greater than Ten Million Dollars ($10,000,000). Following any permitted increase by the Borrowers’ Board of Directors, the QDPS Amount shall thereafter be fixed at the new QDPS Amount until such time as the Borrowers’ Board of Directors elects to further change the QDPS Amount.

“Qualified Assignee” means (a) any Lender, any Affiliate of any Lender and, with respect to any Lender that is an investment fund that invests in commercial loans, any other investment fund that invests in commercial loans and that is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor, and (b) any commercial bank, savings and loan association or savings bank or any other entity which is an “accredited investor” (as defined in Regulation D under the Securities Act of 1933) which extends credit or buys loans as one of its businesses, including insurance companies, mutual funds, lease financing companies and commercial finance companies, in each case, which has a rating of BBB or higher from S&P and a rating of Baa2 or higher from Moody’s at the date that it becomes a Lender and which, through its applicable lending office, is capable of lending to Borrower without the imposition of any withholding or similar taxes; provided that prior to the occurrence of a Default or an Event of Default (i) no Person determined by Agent in its Permitted Discretion to be acting in the capacity of a vulture fund or distressed debt purchaser shall be a Qualified Assignee and (ii) no Person or Affiliate of such Person (other than a Person that is already a Lender) holding Indebtedness subordinated to the Obligations of Borrower to the Agent and Lenders or holding any Stock issued by Borrower shall be a “Qualified Assignee”. Prior to the occurrence of a Consent Rights Trigger Event, no Disqualified Lender shall be a “Qualified Assignee”. After the occurrence of a Consent Rights Trigger Event, any Lender may make an assignment to a non-Qualified Assignee with the consent of the Agent (not to be unreasonably withheld or delayed).

“Real Property” means all now owned and hereafter acquired real property of Credit Parties, including leasehold interests, together with all buildings, structures, and other improvements located thereon and all licenses, easements and appurtenances relating thereto, wherever located.

“Records” means all present and future books of account of the Credit Parties of every kind or nature, purchase and sale agreements, ledger cards, statements, correspondence, memoranda, credit files and other data relating to the Collateral, any Debt Investment or any Equity Interests of Portfolio Companies, together with the tapes, disks, diskettes and other data and software storage media and devices, file cabinets or containers in or on which the foregoing are stored (including any rights of Credit Parties with respect to the foregoing maintained with or by any other person).

“Refinancing Indebtedness” means Indebtedness of Credit Parties arising after the Closing Date issued in exchange for, or the proceeds of which are used to extend, refinance,

replace or substitute for other Indebtedness (such extended, refinanced, replaced or substituted Indebtedness, the “Refinanced Obligations”) to the extent permitted hereunder; provided, that: (a) Agent shall have received not less than ten (10) Business Days’ prior written notice of the intention to incur such Indebtedness, which notice shall set forth in reasonable detail reasonably satisfactory to Agent the amount of such Indebtedness, the schedule of repayments and maturity date with respect thereto and such other information with respect thereto as Agent may reasonably request; (b) the principal amount of such Refinancing Indebtedness shall not exceed the principal amount of the Refinanced Obligations (plus the amount of reasonable refinancing fees and expenses incurred in connection therewith), any prepayment premiums and any accrued interest on account thereof; (c) such Indebtedness shall have a final maturity that is no earlier than the final maturity of the Refinanced Obligations; (d) such Indebtedness shall have a Weighted Average Life to Maturity not less than the Weighted Average Life to Maturity of the Refinanced Obligations; (e) such Indebtedness shall rank in right of payment no more senior than, and be subordinated (if subordinated) to the Obligations on terms no less favorable to Credit Parties than the Refinanced Obligations; (f) if the Refinanced Obligations or any guarantees thereof are unsecured, such Indebtedness and any guarantees thereof shall be unsecured; (g) if the Refinanced Obligations or any guarantees thereof are secured, such Indebtedness and any guarantees thereof shall be secured in all material respects by substantially the same or less collateral as secured such Refinanced Obligations or any guarantees thereof; (h) if the Refinanced Obligations or any guarantees thereof are secured, the Liens to secure such Indebtedness shall not have a priority more senior than the Liens securing the Refinanced Obligations and if subordinated to any other Liens on such property, shall be subordinated to Agent’s security interests; (i) if the Refinanced Obligations or any guarantees thereof are subordinated to any Indebtedness of Credit Parties other than the Obligations, such Refinancing Indebtedness and any guarantees thereof shall be subordinated to the Obligations on terms (including intercreditor terms) no less favorable to Agent and Lenders; (j) the obligors in respect of the Refinanced Obligations immediately prior to such refinancing, refunding, extending, renewing or replacing thereof shall be the only obligors on such Indebtedness; and (k) the terms and conditions (excluding as to pricing, premiums and optional prepayment or redemption provisions) of any such Indebtedness, taken as a whole, are not more restrictive with respect to Credit Parties, as reasonably determined by Credit Parties in good faith, than the terms and conditions of the Refinanced Obligations.

“Register” shall have the meaning set forth in Section 12.1(a) hereof.

“Regular Quarterly Dividends” means regular quarterly dividends and/or distributions made by the Borrower to its shareholders.

“Relevant Quarterly Period” shall have the meaning as defined in Section 10.3.

“Remaining Equity Interests” means the Equity Interests owned by the Borrower in the Portfolio Companies listed on Schedule 7.26(c).

“Reporting Date” shall have the meaning as defined in Section 12.9(a) (ii).

“Required Lenders” means the Lenders having more than (a) sixty-six and two-thirds percent (66 2/3%) of the Revolving Loan Commitment Amount, or (b) if the Commitments have

been terminated, more than sixty-six and two-thirds percent (66 2/3%) of the aggregate outstanding amount of all Revolving Loans; provided, however, that if there shall be two Lenders or more, Required Lenders shall mean at least two (2) Lenders.

“Required Pledged Cash Deposit Accounts” means, collectively and individually, the Deposit Accounts maintained at Lenders pursuant to Control Agreements which accounts are separate from any other investment account or Deposit Account of Borrower, and the cash held in such Deposit Accounts is not subject to any other security interest, pledge, lien, encumbrance or claim (other than customary liens or rights of setoff of the institution maintaining such accounts permitted hereunder solely in its capacity as a depository).

“Required Pledged Cash Amount” means Ten Million Dollars ($10,000,000); provided that at any time after the first anniversary of the Closing Date, Borrower shall be permitted to reduce the Required Pledged Cash Amount to an amount equal to not less than Five Million Dollars ($5,000,000) so long as (i) no Event of Default shall have occurred and be continuing and (ii) Liquidity for the prior six (6) calendar months shall have equaled or exceeded Thirty Million Dollars ($30,000,000).

“Reserves” means as of any date of determination, upon 10 days prior written notice to the Borrower, such amounts as Agent may from time to time establish and revise in its Permitted Discretion reducing the amount of Revolving Loans which would otherwise be available to Borrower under the lending formula(s) provided for herein: (a) to reflect events, conditions, contingencies or risks which, as determined by Agent in its Permitted Discretion, adversely affect, or would have a reasonable likelihood of adversely affecting, either (i) the Collateral or any other property which is security for the Obligations, its value or the amount that might be received by Agent and the Lenders from the sale or other disposition or realization upon such Collateral, or (ii) the assets or business of Borrower or (iii) the security interests and other rights of Agent in the Collateral (including the enforceability, perfection and priority thereof) or (b) to reflect Agent’s good faith belief that any collateral report or financial information furnished by or on behalf of Borrower to Agent is or may have been incomplete, inaccurate or misleading in any material respect or (c) in respect of any Default or an Event of Default. To the extent that such Reserve is in respect of amounts that may be payable to third parties Agent may, at its option, deduct such Reserve from the Maximum Credit at any time that such limit is less than the amount of the Borrowing Base.

“Responsible Officer” means the chief executive officer, president or chief financial officer, of Borrower, or any of the other individuals designated in writing by an existing Responsible Officer of Borrower as an authorized signatory of any certificate or other document to be delivered hereunder. Any document delivered hereunder that is signed by a Responsible Officer of Borrower shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of Borrower and such Responsible Officer shall be conclusively presumed to have acted on behalf of Borrower.

“Restricted Payment” means any of the following:

(a) the declaration or payment of any dividend or other distribution by Borrower, or permit any Subsidiary to declare or pay any dividend or other distribution, in each case directly or indirectly, on account of any Equity Interests of Borrower, except:

(i) Any Subsidiary of Guarantor may pay dividends or make other distributions to Borrower;

(ii) Borrower may make distributions or other issuances in the form of Equity Interests consisting of membership interests or preferred membership interests otherwise permitted to be issued hereunder (but in no event in the form of redeemable preferred Equity Interests requiring any payment prior to the Maturity Date unless such payment is subordinated to the repayment of all of the Obligations);

(iii) Borrower may pay dividends and other distributions in respect of its Equity Interests as permitted by the definition of Permitted Restricted Payments; or

(b) Other than as permitted by the definition of Permitted Restricted Payments, the repurchase, redemption, retirement, defeasance, establishment of a sinking fund or making of similar payment, purchase or other acquisition for value, direct or indirect, of any Equity Interests of Borrower, now or hereafter outstanding or the making of any payment to retire, or to obtain the surrender of, any outstanding warrants, options or other rights for the purchase or acquisition of shares of any class of Equity Interests of Borrower, now or hereafter outstanding;

(c) Return any Equity Interests to any shareholders or other equity holders of Borrower or any of its Subsidiaries, or make any other distribution of property, assets, shares of Equity Interests, warrants, rights, options, obligations or securities thereto as such, or, in the case of such distribution of property or assets, to the extent not otherwise prohibited hereunder);

(d) The payment of any extraordinary salary, bonus or other form of compensation to any Person who is directly or indirectly a significant partner, shareholder, owner or executive officer of Borrower, to the extent such extraordinary salary, bonus or other form of compensation is not included in the corporate overhead of Borrower;

(e) Pay any management fees or any other fees or expenses (including the reimbursement thereof by Borrower) pursuant to any management, consulting or other services agreement to any of the shareholders or other equity holders of Borrower or other Affiliates except, provided no Default or Event of Default has occurred, any such management fees or any other fees or expenses paid to Borrower and except for the fees and expenses payable by Borrower under the Investment Agreement as in effect on the date hereof; or

(f) The payment of any principal amount, repurchase, redemption, retirement, or defeasance of the Senior Notes, except as permitted under the definition of Permitted Restricted Payments.

“Revolving Loan Commitment” means as to any Revolving Lender, the obligation of such Lender, if any, to make Revolving Loans in an aggregate principal and/or face amount not to exceed the amount set forth under the heading “Commitment” opposite such Lender’s name

on Schedule 1.1 or in the Assignment Agreement pursuant to which such Lender became a party hereto, as the same may be changed from time to time pursuant to the terms hereof.

“Revolving Loans” means loans now or hereafter made by Lenders on a revolving basis pursuant to the Credit Facility (involving advances, repayments and readvances) as set forth in Sections 2.1 and 2.3 hereof.

“Revolving Notes” shall have the meaning as defined in Section 2.1(b).

“Sale and Leaseback Transaction” shall have the meaning set forth in Section 9.12.

“Sanctioned Entity” means an agency of the government of, or an organization directly or indirectly controlled by, or a person resident in, a country that is subject to Sanctions, or a country or territory that is at any time subject to Sanctions.

“Sanctioned Person” means a person named on the list of Specially Designated Nationals or Blocked Persons maintained by OFAC.

“Sanctions” means (a) economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by the U.S. government and administered by OFAC and (b) economic or financial sanctions imposed, administered or enforced from time to time by the U.S. State Department, the U.S. Department of Commerce or the U.S. Department of the Treasury.

“SEC” means the Securities and Exchange Commission or any other similar or successor agency of the Federal government administering the Securities Act.

“Securities Act” means the Securities Act of 1933, as amended, or any similar Federal statute, and the rules and regulations of the SEC thereunder, all as the same shall be in effect from time to time.

“Senior Debt Investment” means a Debt Investment secured by a first priority lien on the Debt Investment Obligor’s property.

“Senior Debt Investment Collateral” means the collateral securing a Senior Debt Investment.

“Senior Debt Investment Loan Documents” with respect to each Senior Debt Investment, each promissory note, each loan agreement, each security agreement and all other documents, instruments and certificates executed and/or delivered by such Senior Debt Investment Obligor in connection therewith, including amendments and modifications thereto and all instruments, security agreements, deeds of trust, mortgages, guaranties, financing statements and other documentation evidencing any security for such Senior Debt Investment.

“Senior Debt Investment Obligor” means such Person who is obligated to the Borrower under a Senior Debt Investment as evidenced by Senior Debt Investment Loan Documents.

“Senior Notes” means those notes issued pursuant to that certain Indenture dated as of February 26, 2013 between Borrower as Issuer and U.S. Bank National Association as Trustee and the First Supplemental Indenture of even date thereof between the Issuer and the Trustee. For purposes of this Agreement, the Senior Notes shall be considered Subordinated Debt.

“Settlement Date” shall have the meaning as defined in Section 12.9(a) (ii).

“Solvent” means, at any time with respect to any Person, that at such time such Person (a) is able to pay its debts as they mature and has (and has a reasonable basis to believe it will continue to have) sufficient capital (and not unreasonably small capital) to carry on its business consistent with its practices as of the date hereof, and (b) the assets and properties of such Person at a fair valuation (and including as assets for this purpose at a fair valuation all rights of subrogation, contribution or indemnification arising pursuant to any guarantees given by such Person) are greater than the Indebtedness of such Person, and including subordinated and contingent liabilities computed at the amount which, such person has a reasonable basis to believe, represents an amount which can reasonably be expected to become an actual or matured liability (and including as to contingent liabilities arising pursuant to any guarantee the face amount of such liability as reduced to reflect the probability of it becoming a matured liability).

“Subordinated Debt” means any Indebtedness of Credit Parties that is subject to, and subordinate in right of payment to, the right of Agent for the ratable benefit of Agent and Lenders to receive payment in full of all of the Obligations and is otherwise on terms (including maturity, interest, fees, repayment, covenants and subordination) satisfactory to Required Lenders.

“Subordinate Debt Investment” means a Debt Investment secured by a second priority lien on the Debt Investment Obligor’s property subject only to a senior lien acceptable to the Borrower in accordance with their Credit Policy.

“Subordinate Debt Investment Collateral” means collateral securing a Subordinate Debt Investment.

“Subordinate Debt Investment Loan Documents” with respect to each Subordinate Debt Investment, each promissory note, each loan agreement, each security agreement and all other documents, instruments and certificates executed and/or delivered by such Subordinate Debt Investment Obligor in connection therewith, including amendments and modifications thereto and all instruments, security agreements, deeds of trust, mortgages, guaranties, financing statements and other documentation evidencing any security for such Subordinate Debt Investment.

“Subordinate Debt Investment Obligor” means such Person who is obligated to the Borrower under a Subordinate Debt Investment as evidenced by Subordinate Debt Investment Loan Documents.

“Subordination Agreements” means, collectively and individually, any subordination agreement executed after the date hereof relating to Subordinated Debt, in form and substance reasonably satisfactory to Required Lenders, as the same may be modified or amended from time to time.

“Subsidiary” or “subsidiary” means, with respect to any Person, any corporation, limited liability company, limited liability partnership or other limited or general partnership, trust, association or other business entity of which an aggregate of at least a majority of the outstanding Equity Interests or other interests entitled to vote in the election of the board of directors of such corporation (irrespective of whether, at the time, Equity Interests of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency), managers, trustees or other controlling persons, or an equivalent controlling interest therein, of such Person is, at the time, directly or indirectly, owned by such Person and/or one or more subsidiaries of such Person.

“Supplemental Agreement” means a Supplemental Agreement substantially in the form of Exhibit E, as such Supplemental Agreement may be supplemented in a manner agreed to by Borrower, the Increasing Lender(s) (if applicable), the New Lender(s) (if applicable) and the Agent.

“Syndication Agent” shall have the meaning as defined in the preamble.

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

“Termination Date” means the earlier of (a) the Maturity Date or (b) the date on which the Lenders’ agreement to make Revolving Loans shall have terminated pursuant to this Agreement.

“Third Party Pledged Equity Interests” means the Equity Interests of Ohio Medical and US Gas & Electric owned by the Borrower which are subject to a lien of the third party lenders to Ohio Medical and US Gas & Electric, respectively.

“Third Party Valuation” means written appraisals as to the Debt Investments in form, scope and methodology acceptable to Agent and by an appraiser acceptable to Agent, addressed to Agent and Lenders and upon which Agent and Lenders are expressly permitted to rely.

“Tokarz Group” means The Tokarz Group Advisors LLC, a limited liability company organized under the laws of the State of Delaware.

“UCC” means the Uniform Commercial Code as in effect in the State of New York on the date hereof and any successor statute, as in effect from time to time (except that terms used herein which are not otherwise defined herein and defined in the Uniform Commercial Code as in effect in the State of New York on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such statute except as Agent may otherwise determine).

“USA Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 272 (2001), as amended.

“U.S. Bank Securities Account Control Agreement” means, that certain Securities Account Control Agreement dated as of December , 2015 among Borrower, as Pledgor, Agent, as Pledgee and U.S. Bank.

“US Gas & Electric” means US Gas & Electric, Inc., a Delaware corporation.

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing (a) the then outstanding principal amount of such Indebtedness into (b) the total of the product obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment.

1.2 Interpretative Provisions. With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:

(a) General. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document shall be construed as referring to such agreement, instrument or other document as from time to time amended, modified, supplemented, extended, renewed, restated or replaced (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “herein,” “hereof” and “hereunder,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Sections, Exhibits and Schedules shall be construed to refer to Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing, recodifying, supplementing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document. An Event of Default shall exist or continue or be continuing until such Event of Default is waived in accordance with Section 13.4 or is cured. Borrower shall have the burden of establishing any alleged negligence, misconduct or lack of good faith by Agent or Lenders under any Loan Documents. No provision of any Loan Documents shall be construed against any party by reason of such party having, or being deemed to have, drafted the provision. Reference to Borrower’s “knowledge” or similar concept means actual knowledge of a Responsible Officer, or knowledge that a Responsible Officer would have obtained if he or she had engaged in good faith and diligent performance of his or

her duties, including reasonably specific inquiries of employees or agents and a good faith attempt to ascertain the matter.

(b) UCC Terms. Any terms used in this Agreement that are defined in the UCC shall be construed and defined as set forth in the UCC unless otherwise defined herein; provided, that, to the extent that the UCC is used to define any term herein and such term is defined differently in different Articles of the UCC, the definition of such term contained in Article 9 of the UCC shall govern.

(c) Time References. Unless otherwise indicated herein, all references to time of day refer to Eastern standard time or Eastern daylight saving time, as in effect in New York City on such day. For purposes of the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to and including”; provided, that, with respect to a computation of fees or interest payable to Agent for the ratable benefit of Agent and Lenders, such period shall in any event consist of at least one full day.

(d) Payment in Full. Any reference herein or in any other Loan Document to the satisfaction, repayment, or payment in full of the Obligations shall mean (i) the payment in full in cash of the principal and accrued and unpaid interest with respect to the Revolving Loans, (ii) the payment in full of all fees, charges and expenses that have accrued and are unpaid regardless of whether payment has been demanded or are otherwise due, (iii) the delivery to Agent of cash collateral, or at Agent’s option, the delivery to Agent of a letter of credit payable to Agent for the ratable benefit of Agent and Lenders issued by a bank acceptable to Agent and in form and substance satisfactory to Agent, in either case in respect of (A) Bank Product Obligations (or, at the option of Agent and Lenders, the termination of the applicable Bank Product or cash management arrangements and the payment in full in cash of the Bank Product Obligations due and payable in connection with such termination), (B) continuing obligations of Agent under Control Agreements and (C) other contingent Obligations for which a claim or demand for payment has been made at such time or in respect of matters or circumstances known to Agent at the time, and which are reasonably expected to result in any loss, cost, damage or expense (including attorneys’ fees and legal expenses) to Agent for which Agent would be entitled to indemnification by Credit Parties hereunder and (iv) the termination of the Commitment of Agent and Lenders and the financing arrangements provided by Agent and Lenders to Credit Parties hereunder.

1.3 Accounting Terms. Unless otherwise 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 applied on a basis consistent with the most recent audited consolidated financial statements of Borrower delivered to Agent; provided, that, in the event of any change in GAAP after the date hereof that affects the covenant in Section 10 hereof, Borrower may by notice to Agent, or Agent may by notice to Borrower require that such covenants be calculated in accordance with GAAP as in effect, and as applied by Borrower immediately before the applicable change in GAAP became effective, until either the notice from the applicable party is withdrawn or such covenant is amended in a manner satisfactory to Borrower and Agent. Borrower shall deliver to Agent at the same time as the delivery of any financial statements

given in accordance with the provisions of Section 8.1 hereof (i) a description in reasonable detail of any material change in the application of accounting principles employed in the preparation of such financial statements from those applied in the most recently preceding monthly, quarterly or annual financial statements and (ii) a reasonable estimate of the effect on the financial statements on account of such changes in application. Notwithstanding anything to the contrary contained herein, (i) all financial statements delivered hereunder shall be prepared, and all financial covenants contained herein shall be calculated, without giving effect to any election under the Statement of Financial Accounting Standards No. 159 (or any similar accounting principle) permitting a Person to value its financial liabilities or Indebtedness at the fair value thereof, and (ii) the term “unqualified opinion” as used herein to refer to opinions or reports provided by accountants shall mean an opinion or report that is (A) unqualified, and (B) does not include any explanation, supplemental comment, or other comment concerning the ability of the applicable Person to continue as a going concern or concerning the scope of the audit.

1.4 Rounding. Any financial ratios required to be maintained by Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

ARTICLE 2 CREDIT FACILITY

2.1 Revolving Loans.

(a) Subject to, and upon the terms and conditions contained herein, each Lender agrees to make revolving credit loans to Borrower from time to time during the term of this Agreement in an amount not to exceed such Lender’s Pro Rata Share of such advances. The Pro Rata Share of the Revolving Loan of any Lender shall not at any time exceed its separate Revolving Loan Commitment. The obligations of each Lender hereunder shall be several and not joint. Until the Termination Date, after giving effect to such Revolving Loans, the aggregate principal amount of the Revolving Loans outstanding shall not exceed the lesser of the Borrowing Base at such time or the Maximum Credit. Subject to the terms and conditions hereof, Borrower may from time to time borrow, prepay and reborrow Revolving Loans; provided that if the aggregate amount of Revolving Loans at any time shall exceed the Borrowing Base at such time, as a result of an Eligible Debt Investment no longer being eligible for reasons that were unanticipated by the Borrower, the Borrower shall have fifteen (15) days to repay the Revolving Loans to the extent required to eliminate such excess or present to the Agent and Lenders a plan to repay Revolving Loans to the extent required to eliminate such excess, that is acceptable to the Required Lenders.

(b) The Borrower shall execute and deliver to each Revolving Lender a Revolving Note to evidence the Revolving Loan Commitment of that Revolving Lender. Each Revolving Note shall be in the principal amount of the Revolving Loan Commitment of the applicable Revolving Lender, dated the Closing Date and substantially in the form of Schedule 2.1(b) (each, a “Revolving Note” and collectively, the “Revolving Notes”). Each Revolving Note shall represent the obligation of the Borrower to pay the amount of the Revolving Lender’s

Revolving Loan Commitment or, if less, such Revolving Lender’s Pro Rata Share of the aggregate unpaid principal amount of all Revolving Loans to Borrower, together with interest thereon as prescribed in Section 3.1.

2.2 Requests for Borrowings.

(a) To request a Revolving Loan, Borrower shall notify Agent (for prompt further notification from Agent to Lenders) of such request by telephone not later than 11:00 a.m. (New York time) on the same Business Day as the date of the proposed Revolving Loan. Each such telephonic request shall be irrevocable and to the extent required by Agent, shall be confirmed promptly by hand delivery or facsimile to Agent of a written request in a form approved by Agent and signed by a Responsible Officer of Borrower. Each such telephonic and written request shall specify the following information:

(i) the aggregate amount of such Revolving Loan;

(ii) the date of such Revolving Loan, which shall be a Business Day; and

(iii) the Deposit Account of Borrower specified on Schedule 8.10 or any other account with Agent that shall be specified in a written notice signed by a Responsible Officer of Borrower and delivered to and approved by Agent (such approval not to be unreasonably withheld).

(b) All Revolving Loans under this Agreement shall be conclusively presumed to have been made to, and at the request of and for the benefit of, Borrower when deposited to the credit of Borrower or otherwise disbursed or established in accordance with the instructions of Borrower or in accordance with the terms and conditions of this Agreement. Except in Agent’s discretion, or as otherwise provided herein, the aggregate amount of the Revolving Loans outstanding at any time shall not exceed the lesser of the Maximum Credit or the Borrowing Base.

2.3 Incremental Facility.

(a) So long as no Default or Event of Default has occurred and are continuing, the Borrower may request, by written notice to the Agent, at any time the Lenders increase the existing Commitments (any such increase, the “New Commitments”) by an amount such that the amount of the Maximum Credit does not exceed Eighty Five Million Dollars ($85,000,000) in the aggregate (or such lesser amount, provided, however, the New Commitments shall be at least Five Million Dollars ($5,000,000)). Each such notice shall specify the date (each, an “Increased Amount Date”) on which the Borrower proposes that the New Commitments shall be effective, which shall be a date not less than ten (10) Business Days after the date on which such notice is delivered to the Agent. Borrower and Agent shall first offer to the existing Lenders at that time such New Commitments (if an existing Lender agrees to an increase, they shall be an “Increasing Lender”). In the event the existing Lenders decline to increase their Commitments to the full amount of New Commitments requested by the Borrower, Agent agrees to arrange such New Commitments and the Agent and the Borrower shall mutually agree on one or more acceptable Qualified Assignees (each, a “New Lender”) to provide the remaining amount of the New Commitments. If the Agent is unable to identify any acceptable New Lenders, then Borrower

shall be permitted to approach potential New Lenders identified to the Agent and approved in writing by the Agent (which approval shall not be unreasonably withheld or delayed). Borrower acknowledges the Agent is under no obligation to identify and obtain New Commitments from New Lenders. Borrower shall upon request of Agent provide such updated information as the Agent deems necessary to syndicate the New Commitments and such other information as the Lenders and any New Lender shall request. Any New Lender approached by the Agent or Borrower to provide all or a portion of the New Commitments may elect or decline, in its sole discretion, to provide a New Commitment. Such New Commitments shall become effective as of such Increased Amount Date; provided, that (A) no Default or Event of Default shall exist on such Increased Amount Date before or after giving effect to such New Commitments; (B) the New Commitments shall be effected pursuant to one or more Supplemental Agreements executed and delivered by the Borrower, such Increasing Lender (if applicable), such New Lenders (if applicable) and the Agent, and each of which shall be recorded in the Register and each New Lender shall be bound by and subject to the terms and conditions of this Agreement; (C) the Borrower shall make any payments required pursuant to this Agreement and the Fee Letter in connection with the New Commitments and shall pay any other required fees in connection with the New Commitments; and (D) the Borrower shall deliver or cause to be delivered any legal opinions, certificates, promissory notes or other customary closing documents (substantially consistent with the documents set forth in Section 6 of this Agreement) reasonably requested by Agent, an Increasing Lender (if applicable) or a New Lender (if applicable) in connection with such transaction.

(b) On any Increased Amount Date on which New Commitments are effected, subject to the satisfaction of the foregoing terms and conditions, (i) each of the existing Lenders shall assign to each of the Increasing Lender or New Lenders, as applicable, and each of the Increasing Lender or New Lenders, as applicable, shall purchase from each of the existing Lenders, at the principal amount thereof (together with accrued interest and fees), such interests in the Revolving Loans outstanding on such Increased Amount Date as shall be necessary in order that, after giving effect to all such assignments and purchases, such Revolving Loans will be held by the existing Lenders Increasing Lender or New Lenders, as applicable, ratably in accordance with their Commitments after giving effect to the addition of such New Commitments to the Commitments, (ii) each New Commitment shall be deemed, for all purpose, a Commitment, and each Revolving Loan made thereunder shall be deemed, for all purposes, a Revolving Loan under this Agreement, (iii) each New Lender if applicable, shall become a Lender with respect to the Commitments and all matters relating thereto and (iv) the Borrower shall execute one or more new Revolving Note(s), as required by the Agent, and deliver it to the Increasing Lenders or New Lenders, as applicable.

(c) The Agent shall notify the Lenders promptly upon receipt of the Borrower’s notice of each Increased Amount Date and in respect thereof (i) the New Commitments and the identities of the Increasing Lenders and New Lenders, as applicable, and (ii) in the case of each notice to any Lender, the respective interests in such Lender’s Loans, in each case subject to the assignments contemplated by this Section 2.3.

(d) The terms and provisions of the New Loans shall be identical to the Revolving Loans made hereunder. Each Supplemental Agreement may, without the consent of any other Lenders, effect such amendments to this Agreement and the other Loan Documents as

may be necessary or appropriate, in the Agent’s Permitted Discretion, and consented to by the Borrower (such consent not to be unreasonably withheld), to effect the provisions of this Section 2.3.

ARTICLE 3 INTEREST AND FEES

3.1 Rates and Payment of Interest.

(a) All Obligations (including, to the extent permitted by law, interest not paid when due) shall bear interest at the following rates: (i) with respect to Prime Rate Loans, at a rate per annum equal to the Prime Rate plus the Applicable Margin; and (ii) with respect to LIBOR Loans, at a rate per annum equal to the LIBOR Rate plus the Applicable Margin, except as otherwise provided in this Section 3 below. At any time an Event of Default exists or has occurred and is continuing (and the Agent has sent, or the Required Lenders have directed the Agent to send, the Borrower written notice thereof) the Obligations shall bear interest at the Default Rate from the date of such increase (whether before or after any judgment). Agent may, at its option (or at the direction of Required Lenders, shall), after written notice to the Borrower, increase the Interest Rate to the Default Rate from the date of such increase for Revolving Loans during any time that the principal amount of Revolving Loans outstanding is in excess of the Borrowing Base (in each case whether or not such excess (es) arise or are made with or without the knowledge or consent of Agent and whether made before or after an Event of Default).

(b) Interest shall accrue from the date a Revolving Loan is made or Obligation is incurred or payable until paid in full by Borrower. If a Revolving Loan is repaid on the same day made, one day’s interest shall accrue. Interest accrued on the Revolving Loans shall be due and payable in arrears, (i) on the first day of each month and (ii) on the Termination Date. Interest accrued on any other Obligations shall be due and payable on each Interest Payment Date. Notwithstanding the foregoing, interest accrued at the Default Rate shall be due and payable on demand.

3.2 Computation of Interest and Fees. Interest and fees calculated on a per annum basis shall be calculated on the basis of a three hundred sixty (360) day year and actual days elapsed. The interest rate on non-contingent Obligations shall increase or decrease as of the first day of each LIBOR Period by an amount equal to each increase or decrease in the LIBOR Rate since its determination for the prior LIBOR Period and shall remain in effect until the end of the then current LIBOR Period (except that in the case of any Prime Rate Loans, the interest rate shall increase or decrease effective on the date any change in such Prime Rate and by an amount equal to each increase or decrease in the Prime Rate). Each determination by Agent of any interest, fees or interest rate hereunder shall be final, conclusive and binding for all purposes, absent manifest error. All fees shall be fully earned when due and shall not be subject to rebate, refund or proration.

3.3 Unused Line Fee. Borrower shall pay to Agent for the ratable benefit of Agent and Lenders an unused line fee on a monthly basis at a rate equal to three-quarters of one percent (.75%) (on a per annum basis) multiplied by the amount by which the Maximum Credit exceeds the average daily principal balance of the outstanding Revolving Loans during the immediately

preceding calendar month (or part thereof) so long as any Obligations are outstanding. Such fees shall be payable on the first day of each month in arrears.

3.4 Termination Fee. If Borrower prepays the Revolving Loans and reduces or terminates the amount of the Maximum Credit, whether voluntarily or involuntarily and whether before or after acceleration of the Obligations, or if any of the Revolving Loan Commitments are otherwise terminated, Borrower shall pay to Agent, for the benefit of Lenders as liquidated damages and compensation for the costs of being prepared to make funds available hereunder an amount equal to the Applicable Percentage (as defined below) multiplied by the amount of the reduction of the Maximum Credit. As used herein, the term “Applicable Percentage” shall mean (x) two percent (2%), in the case of a permanent reduction or termination on or prior to the first anniversary of the Closing Date, (y) one percent (1%), in the case of a permanent reduction or termination after the first anniversary of the Closing Date but on or prior to the second anniversary thereof and (z) one-half of one percent (.5%), in the case of a permanent reduction or termination after the second anniversary of the Closing Date but on or prior to the third anniversary thereof. The Borrower agrees that the Applicable Percentages are a reasonable calculation of Lenders’ lost profits in view of the difficulties and impracticality of determining actual damages resulting from an early reduction of the Maximum Credit or termination of the Revolving Loan Commitments.

3.5 Commitment Fee. Borrower shall pay to the Lenders a commitment fee in an amount equal to Five Hundred Thousand Dollars ($500,000), to be allocated among the Lenders based on their respective Pro Rata Shares as of the Closing Date). The entire commitment fee shall be deemed fully earned by the Lenders and shall be due and payable in full on the Closing Date. In the event of an increase in the Commitments, the Borrower shall pay (i) to Agent for the benefit of the Increasing Lenders or New Lenders, as applicable, a commitment fee in such amount as shall be agreed upon by Agent, the Increasing Lenders, New Lenders and Borrower and (ii) to the Agent, individually, such fee, if any, specified in that certain fee letter of even date herewith between the Borrower and the Agent, at the time specified for payment therein. All such fees shall be deemed fully earned by the Agent, Increasing Lenders and/or New Lenders and shall be due and payable in full as agreed upon by Agent, the Increasing Lenders, New Lenders and Borrower.

3.6 Agency Fee. Borrower shall pay to Agent, individually, the fee specified in that certain fee letter of even date herewith between Borrower and Agent, at the times specified for payment therein.

3.7 Inability to Determine Applicable Interest Rate. If Agent shall determine in good faith (which determination shall, absent manifest error, be final and conclusive and binding on Borrower) that on any date by reason of circumstances affecting the London interbank market adequate and fair means do not exist for ascertaining the interest rate applicable to LIBOR Loans on the basis provided for in the definition of LIBOR Rate, Agent shall on such date give notice to Borrower of such determination. Upon such date no Revolving Loans may be made as LIBOR Loans until such time as Agent notifies Borrower that the circumstances giving rise to such notice no longer exist and any Revolving Loans shall be made as Prime Rate Loans.

3.8 Illegality. Notwithstanding anything to the contrary contained herein, if (a) any Change in Law makes it unlawful for Lenders to make or maintain a LIBOR Loan or to maintain any Commitment with respect to a LIBOR Loan or (b) Agent determines in good faith (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto) that it has become impracticable as a result of a circumstance that adversely affects the London interbank market or the position of Lenders in such market, then Agent shall give notice thereof to Borrower and may (i) declare that LIBOR Loans will not thereafter be made by Lenders, such that any Revolving Loans made shall be a Prime Rate Loan unless Agent’s declaration has been withdrawn (and it shall be withdrawn promptly upon the cessation of the circumstances described in clause (a) or (b) above and (ii) require that all outstanding LIBOR Loans made by Lenders be converted to Prime Rate Loans immediately, in which event all outstanding LIBOR Loans shall be so converted.

3.9 Increased Costs. If any Change in Law shall: (a) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, Agent or Lenders; (b) subject Agent or Lenders to any tax of any kind whatsoever with respect to this Agreement or any LIBOR Loan made by it, or change the basis of taxation of payments to Agent or Lenders in respect thereof (except for Taxes or Other Taxes covered by Section 4.7 and the imposition of, or any change in the rate of, any taxes payable by Agent or Lenders described in Section 4.7); or (c) impose on Agent or Lenders or the London interbank market any other condition, cost or expense affecting this Agreement or LIBOR Loans made by Agent or Lenders or participation therein, and the result of any of the foregoing shall be to increase the cost to Agent or Lenders of making or maintaining any LIBOR Loan (or of maintaining their obligation to make any such LIBOR Loan), or to increase the cost to Agent or Lenders or to reduce the amount of any sum received or receivable by Agent or Lenders hereunder (whether of principal, interest or any other amount) then, upon request of Agent, Borrower will pay to Agent or Lenders, as the case may be, such additional amount or amounts as will compensate Agent or Lenders, as the case may be, for such additional costs incurred or reduction suffered.

3.10 Capital Requirements. If Agent determines that any Change in Law affecting Agent or Lenders or any lending office of Lenders or Lender’s holding company, if any, regarding capital requirements has or would have the effect of reducing the rate of return on Agent’s or Lender’s capital or on the capital of Agent’s or Lender’s holding company, if any, as a consequence of this Agreement, the Commitments of Lenders or the Revolving Loans made by Agent or Lenders to a level below that which Agent or Lenders or Lender’s holding company could have achieved but for such Change in Law (taking into consideration Agent’s or Lender’s policies and the policies of Agent’s or Lender’s holding company with respect to capital adequacy), then from time to time Borrower will pay to Agent or Lenders, as the case may be, such additional amount or amounts as will compensate Agent or Lenders or Agent’s or Lender’s holding company for any such reduction suffered.

3.11 Certificates for Reimbursement. A certificate of Agent or Lenders setting forth the amount or amounts necessary to compensate Agent or Lenders or their holding companies, as the case may be, as specified in Sections 3.9 or 3.10 and delivered to Borrower shall be conclusive absent manifest error. Borrower shall pay Agent or Lenders, as the case may be, the amount shown as due on any such certificate within thirty (30) days after receipt thereof.

3.12 Delay in Requests. Failure or delay on the part of Agent or Lenders to demand compensation pursuant to Sections 3.9 or 3.10 shall not constitute a waiver of Agent’s or Lender’s right to demand such compensation, provided that Borrower shall not be required to compensate Agent or Lenders pursuant to this Section for any increased costs incurred or reductions occurring more than ninety (90) days prior to the date that Agent or Lenders, as the case may be, becomes aware of the event giving rise to Agent’s or Lenders’ claim for compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the ninety (90) day period referred to above shall be extended to include the period of retroactive effect thereof).

3.13 Maximum Interest. Notwithstanding anything to the contrary contained in this Agreement or any of the other Loan Documents, in no event whatsoever shall the aggregate of all amounts that are contracted for, charged or received by Agent or Lenders pursuant to the terms of this Agreement or any of the other Loan Documents and that are deemed interest under applicable law exceed the Maximum Interest Rate (including, to the extent applicable, the provisions of Section 5197 of the Revised Statutes of the United States of America as amended, 12 U.S.C. Section 85, as amended). In the event any interest is charged or received in excess of the Maximum Interest Rate (“Excess”), Borrower acknowledge and stipulate that any such charge or receipt shall be the result of an accident and bona fide error, and that any Excess received by Agent or Lender shall be applied, first, to the payment of the then outstanding and unpaid principal hereunder; second to the payment of the other Obligations then outstanding and unpaid; and third, returned to Borrower. All monies paid to Agent and Lender hereunder or under any of the other Loan Documents, whether at maturity or by prepayment, shall be subject to any rebate of unearned interest as and to the extent required by applicable law.

ARTICLE 4 PAYMENTS AND ADMINISTRATION

4.1 Payments Generally, Allocation of Proceeds.

(a) All payments of Obligations shall be made in Dollars, without offset, counterclaim or defense of any kind, free and clear of (and without deduction for) any Taxes, and in immediately available funds, not later than 2:00 P.M. (New York time) on the due date. Any payment after such time shall be deemed made on the next Business Day. If any payment is due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day. All Obligations shall be made by payment to the Agent or such other place as Agent may designate in writing to Borrower from time to time.

(b) Subject to the other terms and conditions contained herein, Agent and Lenders shall apply payments received or collected from Borrower or for the account of Borrower (including the monetary proceeds of collections or of realization upon any Collateral) as follows: first, ratably, to the payment in full of any fees, indemnities, or expense reimbursements then due to Agent and Lenders from Borrower; second, ratably, to the payment in full of interest due in respect of any Revolving Loans; third, ratably, to the payment in full of principal in respect of the Revolving Loans and the Bank Product Obligations then due (but as to Bank Product Obligations, only up to the amount of any then effective Reserve established in respect of such Bank Product Obligations), and fourth, to pay or prepay any other Obligations, whether or not then due, in such order and manner as Agent directs. All references to the term

“ratably” as used in this Section 4.1 means pro rata on the basis of the amount owing to any one Person in relationship to the amounts owing to all Persons of the same category of Obligations within the same level of priority.

(c) Notwithstanding anything to the contrary contained in this Agreement, to the extent Borrower uses any proceeds of the Revolving Loans to acquire rights in or the use of any Collateral or to repay any Indebtedness used to acquire rights in or the use of any Collateral, payments in respect of the Obligations shall be deemed applied first to the Obligations arising from Revolving Loans that were not used for such purposes and second to the Obligations arising from Revolving Loans the proceeds of which were used to acquire rights in or the use of any Collateral in the chronological order in which Borrower acquired such rights in or the use of such Collateral.

(d) At the election of Agent, all payments of principal, interest, fees, expenses and other amounts payable under the Loan Documents may be paid from the proceeds of Revolving Loans made hereunder in accordance with the terms and conditions hereof whether made following a request by Borrower or a deemed request as provided in this Section or may be deducted from any Deposit Account of Borrower maintained with Agent and Lenders. Borrower is hereby irrevocably deemed to request that, and authorize Agent and Lenders to (i) make a Revolving Loan for the purpose of paying each payment of principal, interest, fees, expenses and other amounts as it becomes due hereunder or under any other Loan Document and agrees that all such amounts charged shall constitute Revolving Loans and (ii) charge any Deposit Account of Borrower maintained with the Agent or the Lenders for each payment of principal, interest, fees, expenses and other amounts due hereunder or under any other Loan Document. Agent shall be entitled to charge the loan account of Borrower that it maintains for any sum due and payable by Borrower to Agent and Lenders hereunder or under any of the other Loan Documents.

(e) For purposes of calculating the amount of the Revolving Loans available to Borrower, such payments will be applied (conditional upon final collection) to the Obligations on the Business Day of receipt by Lenders of immediately available funds provided such payments and notice thereof are received in accordance with Agent’s usual and customary practices as in effect from time to time and within sufficient time to credit the applicable loan account on such day, and if not, then on the next Business Day. For purposes of calculating interest only, credit for payments shall be given no earlier than one (1) Business Day after payment is made and shall be conditional upon final payment of the item.

4.2 Indemnity for Returned Payments. If after receipt of any payment of, or proceeds of Collateral applied to the payment of, any of the Obligations, Agent or Lenders are required to surrender or return such payment or proceeds to any Person for any reason, then the Obligations intended to be satisfied by such payment or proceeds shall be reinstated and continue and this Agreement shall continue in full force and effect as if such payment or proceeds had not been received by Agent or Lenders. Borrower shall be liable to pay to Agent and Lenders, and do hereby agree to indemnify and hold Agent and Lenders harmless for the amount of any payments or proceeds surrendered or returned. This Section 4.2 shall remain effective notwithstanding any contrary action which may be taken by Agent or Lenders in reliance upon such payment or proceeds. The preceding two sentences of this Section 4.2 shall survive the payment of the Obligations and the termination of this Agreement.

4.3 Repayments. Revolving Loans shall be due and payable in full on the Maturity Date, unless payment is sooner required hereunder. Revolving Loans may be repaid from time to time, without penalty or premium. All Obligations other than Revolving Loans and fees and reimbursement for expenses, shall be paid by Borrower as provided herein and in the other Loan Documents or, if no payment date is specified, on demand. Borrower shall make payment in full of the Obligations on the Maturity Date or any other effective date of termination of the Commitment.

4.4 Prepayments.

(a) Subject to the payment of the Termination Fee, Borrower may permanently reduce the Maximum Credit, in whole or in part, at any time upon five (5) Business Days’ prior written notice to Agent.

(b) In the event that (i) the aggregate principal amount of the Revolving Loans outstanding at any time exceeds the Maximum Credit, or (ii) the aggregate principal amount of the Revolving Loans outstanding exceeds the Borrowing Base, such event shall not limit, waive or otherwise affect any rights of Agent and Lenders in such circumstances or on any future occasions and Borrower shall, upon the earlier of (x) demand by Agent which may be made at any time or from time to time, or (y) the date that is fifteen (15) days after such occurrence (or such later date as the Required Lenders in their discretion may agree) repay to Agent and Lenders the entire amount of any such excess(es) for which payment is demanded without premium or penalty on such excess amount.

(c) Any payment made pursuant to this Section 4.4 shall first be applied to accrued interest on the principal amount being paid to the date of payment.

4.5 Statements. Agent shall render to Borrower each month a statement setting forth the balance in the Borrower’s loan account(s) maintained by Agent for Borrower pursuant to the provisions of this Agreement, including principal, interest, fees, costs and expenses. Each such statement shall be subject to subsequent adjustment by Agent but shall, absent manifest errors or omissions, be considered correct and deemed accepted by Borrower and conclusively binding upon Borrower as an account stated except to the extent that Agent receives a written notice from Borrower of any specific exceptions of Borrower thereto within thirty (30) days after the date such statement has been received by Borrower. Until such time as Agent shall have rendered to Borrower a written statement as provided above, the balance in Borrower’s loan account(s) shall be presumptive evidence of the amounts due and owing to Agent and Lenders by Borrower, absent manifest error.

4.6 Borrower’s Loan Account; Evidence of Debt. Agent shall maintain in accordance with its usual practice an account or accounts evidencing the Obligations of Borrower to Agent and Lenders, including the amounts of the Revolving Loans made by it and each repayment and prepayment in respect thereof, including the amounts of principal and interest payable and paid to Agent and Lenders from time to time hereunder. Any such records shall be presumptively correct, absent manifest error, provided, that, the failure to make any entry or any error in such records, shall not affect any of the Obligations in respect of any applicable Revolving Loans. The Revolving Loans made by the Lenders shall be evidenced by a promissory note in the form

of Exhibit F hereto. Borrower shall execute and deliver to Agent a promissory note payable to the order of each Lender (or, if requested by a Lender, to its registered assigns). Thereafter, the Revolving Loans evidenced by such promissory note and interest thereon shall at all times be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

4.7 Taxes.

(a) Withholding of Taxes; Gross-Up. Any and all payments by or on account of any obligation of Borrower under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable law. If any applicable law (as determined in the good faith discretion of an applicable withholding agent) requires the deduction or withholding of any Tax from any such payment by a withholding agent, then the applicable withholding agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by Borrower shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 4.7) the Agent or Lenders receive an amount equal to the sum they would have received had no such deduction or withholding been made.

(b) Payment of Other Taxes by Borrower. Borrower shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of Agent timely reimburse it for, Other Taxes.

(c) Evidence of Payments. As soon as practicable after any payment of Taxes by Borrower to a Governmental Authority pursuant to this Section 4.7, Borrower shall deliver to 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 Agent.

(d) Indemnification by Borrower. Borrower shall indemnify Agent and Lenders, within thirty (30) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by Agent and Lenders or required to be withheld or deducted from a payment to Agent and Lenders and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to Borrower by Agent shall be conclusive absent manifest error.

(e) Treatment of Certain Refunds. If Agent determines, in its sole discretion, exercised in good faith, that Agent or Lenders have received a refund of any Taxes as to which they has been indemnified pursuant to this Section 4.7 (including by the payment of additional amounts pursuant to this Section 4.7), they shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 4.7 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including

Taxes) of Agent or Lenders and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of Agent, shall repay to Agent and Lenders the amount paid over pursuant to this Section 4.7(e) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that Agent or Lenders are required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this Section 4.7(e), in no event will Agent and Lenders be required to pay any amount to an indemnifying party pursuant to this Section 4.7 the payment of which would place Agent and Lenders in a less favorable net after-Tax position than Agent and Lenders would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts giving rise to such refund had never been paid. This Section 4.7(e) shall not be construed to require Agent and Lenders to make available their Tax returns (or any other information relating to its Taxes that they deem confidential) to the indemnifying party or any other Person.

(f) Survival. Each party’s obligations under this Section 4.7 shall survive the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.

ARTICLE 5 SECURITY INTEREST

5.1 Grant of Security Interest.

(a) As collateral security for the payment and performance in full of all of the Obligations, each Credit Party hereby pledges and grants to Agent, for the ratable benefit of Agent, the Lenders and Bank Product providers, a Lien on and security interest in and to all of the right, title and interest of such Credit Party in, to and under all of the Collateral.

(b) Notwithstanding anything to the contrary contained in this Agreement, the security interest created hereby shall not extend to, and the term “Collateral” shall not include, any Excluded Collateral and the Borrower shall from time to time at the request of Agent give written notice to Agent identifying in reasonable detail the Excluded Collateral and shall provide to Agent such other information regarding the Excluded Collateral as Agent may from time to time reasonably request; provided, that, if and when any property shall cease to be Excluded Collateral, a security interest in and Lien on such property shall automatically and without further action be deemed granted therein under this Agreement. Borrower hereby represents and warrants that the Excluded Collateral (excluding the Third Party Pledged Equity Interests, any Equity Interests in Portfolio Companies formed outside the United States, the Equity Interests in Portfolio Companies listed on Schedule 5.1(b) hereto, and the JPM Letter of Credit Deposit Account), when taken as a whole, is not material to the business operations or financial condition of Borrower.

5.2 Financing Statement Filings.

(a) Each Credit Party hereby irrevocably authorizes Agent at any time and from time to time to authenticate and file in any relevant jurisdiction any financing statements (including fixture filings) and amendments thereto that contain the information required by

Article 9 of the Uniform Commercial Code of each applicable jurisdiction for the filing of any financing statement or amendment relating to the Collateral, including, without limitation, (i) whether such Credit Party is an organization, the type of organization and any organizational identification number issued to such Credit Party, (ii) a description of the Collateral as “all assets of the Debtor, wherever located, whether now owned or hereafter acquired” and (iii) in the case of a financing statement filed as a fixture filing, a sufficient description of the real property to which such Collateral relates. Each Credit Party agrees to provide all information described in the immediately preceding sentence to Agent promptly upon request.

(b) Each Credit Party hereby further authorizes Agent to file with the United States Patent and Trademark Office and the United States Copyright Office (and any successor office and any similar office in any United States state or other country) this Agreement, each Intellectual Property Security Agreement, and other documents for the purpose of perfecting, confirming, continuing, enforcing or protecting the security interest granted by such Credit Party hereunder, without the signature of such Credit Party where permitted by law, and naming such Credit Party as debtor, and Agent as secured party.

(c) Each Credit Party hereby further authorizes Agent at any time and from time to time, with respect to all motor vehicles covered by a certificate of title law of any state, to file in any relevant jurisdiction with the registrar of motor vehicles or other appropriate Governmental Authority in such jurisdiction an application or other document requesting the notation or other indication of the security interest created hereunder on such certificate of title.

(d) Each Credit Party hereby ratifies its prior authorization for Agent to file in any relevant jurisdiction any financing statements or amendments thereto relating to the Collateral if filed prior to the date hereof.

ARTICLE 6 CONDITIONS PRECEDENT

6.1 Conditions Precedent to Effectiveness of Agreement to Make Initial Revolving Loans. The agreement of Lenders to make the Revolving Loans shall become effective upon the satisfaction, or waiver, immediately prior to or concurrently therewith of each of the conditions precedent set forth on Schedule 6.1.

6.2 Conditions Precedent to All Revolving Loans. The obligation of Lenders to make the Revolving Loans, including the initial Revolving Loans, is subject to the further satisfaction of, or waiver of, immediately prior to or concurrently with the making of each such Revolving Loan of each of the following conditions precedent:

(a) All representations and warranties contained herein and in the other Loan Documents that are qualified as to materiality or Material Adverse Effect shall be true and correct and the representations and warranties that are not so qualified shall be true and correct in all material respects, in each case with the same effect as though such representations and warranties had been made on and as of the date of the making of each such Revolving Loan and after giving effect thereto, except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been

true and correct to the extent required hereunder or under the other Loan Documents on and as of such earlier date).

(b) As of the date of any such Revolving Loan or the use of the proceeds thereof, and after giving effect to any of the foregoing, no Default or Event of Default shall exist or have occurred and be continuing.

(d) As of the date of any such Revolving Loan or the use of the proceeds thereof, and after giving effect to any of the foregoing, no event, condition or circumstance that has or individually or in the aggregate could reasonably be expected to have a Material Adverse Effect shall have occurred.

(e) As of the date of any such Revolving Loan or the use of the proceeds thereof, and after giving effect to any of the foregoing, the aggregate principal amount of the Revolving Loans shall not exceed the lesser of the Maximum Credit or the Borrowing Base.

Each request for a Revolving Loan (including any request for the conversion of a Revolving Loan to a LIBOR Loan or a Prime Rate Loan) submitted by Borrower shall be deemed to be a representation and warranty by Borrower that the conditions specified in Section 6.2 have been satisfied on and as of the date of the applicable Revolving Loan. The making of any Revolving Loan shall not be deemed a modification or waiver by Agent or Lenders of any of the terms of this Agreement or any Default or Event of Default.

ARTICLE 7 REPRESENTATIONS AND WARRANTIES

Each Credit Party hereby represents and warrants to Agent and each Lender the following:

7.1 Organization; Powers. Each of the Credit Parties is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted and is qualified to do business, and is in good standing in, every jurisdiction where such qualification is required.

7.2 Authorization; Enforceability. The execution, delivery and performance by each of the Credit Parties of the Loan Documents to which it is a party have been duly authorized by all necessary organizational actions and, if required, actions by equity holders. Each Loan Document to which such Credit Party is a party has been duly executed and delivered by such Credit Party and constitutes a legal, valid and binding obligation of such Credit Party, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

7.3 No Conflicts. The execution, delivery, and performance by each of the Credit Parties of the Loan Documents to which it is a party do not and will not (a) violate any material provision of Federal, State, or local law or regulation applicable to the Credit Parties, the

Organization Documents of each of the Credit Parties, or any order, judgment, or decree of any court or other Governmental Authority binding on the Credit Parties or their property, (b) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material agreement of the Credit Parties where any such conflict, breach or default could individually or in the aggregate reasonably be expected to have a Material Adverse Effect, (c) result in the creation or imposition of, or require or give rise to any obligation to grant, any Lien, security interest, charge or other encumbrance upon any property of the Credit Parties, other than Permitted Liens, or (d) require any approval of any holder of Equity Interests of the Credit Parties or any approval or consent of any Person under any material agreement of the Credit Parties, other than consents or approvals that have been obtained and that are still in force and effect and except, in the case of material agreements, for consents or approvals, the failure to obtain could not individually or in the aggregate reasonably be expected to cause a Material Adverse Effect.

7.4 Governmental Approvals. The execution, delivery, and performance by the Credit Parties of the Loan Documents to which the Credit Parties are a party and the consummation of the transactions contemplated by the Loan Documents do not and will not require any registration with, consent, or approval of, or notice to, or other action with or by, any Governmental Authority, other than registrations, consents, approvals, notices, or other actions that have been obtained and that are still in force and effect and except for filings and recordings with respect to the Collateral to be made, or otherwise delivered to Agent for filing or recordation, as of the Closing Date.

7.5 Financial Statements; No Material Adverse Effect; Solvent. The consolidated balance sheets, and related statements of income, cash flow and shareholders’ equity, of Borrower and its Subsidiaries that have been and are hereafter delivered to Agent, have been prepared in accordance with GAAP as applicable to a business development company as defined in the Investment Company Act (except, in the case of unaudited financial statements, for the lack of footnotes and being subject to year-end audit adjustments) and present fairly in all material respects, the financial condition of Borrower and its Subsidiaries as of the date thereof and results of operations for the period then ended. Since January 31, 2015, no event, circumstance, or change has occurred that has or could reasonably be expected to have a Material Adverse Effect with respect to Borrower and its Subsidiaries, taken as a whole. No financial statement delivered to Agent at any time contains any untrue statement of a material fact, nor fails to disclose any material fact necessary to make such statement not materially misleading. Projections delivered to Agent have been prepared in light of the past operations of the businesses of Borrower and its Subsidiaries and are based upon estimates and assumptions stated therein, all of which Borrower and its Subsidiaries believe to be reasonable and fair in light of the then current conditions and current facts and reflect the good faith and reasonable estimates of Borrower and its Subsidiaries of the future financial performance of Borrower and its Subsidiaries and of the other information projected therein for the periods set forth therein. It being recognized by Agent and the Lenders that any projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by such projections may differ from the projected results and that such differences may be material. The Credit Parties, taken as a whole, are Solvent and will continue to be Solvent after the creation of the Obligations, the security interests of Agent and the other transaction contemplated hereunder.

7.6 Assets; No Liens. Each Credit Party has good and marketable title or the contractual right to use or possess its assets sufficient for the conduct of its business and none of such assets is subject to any Lien except for Permitted Liens.

7.7 Litigation. Except as set forth on Schedule 7.7, there are no actions, suits, proceedings or investigations pending or, to best of Borrower’s knowledge, threatened against the Credit Parties, or their business or assets, that (a) relate to any Loan Documents or transactions contemplated thereby or (b) either individually or in the aggregate has or could reasonably be expected to have a Material Adverse Effect.

7.8 Compliance with Laws. Each of the Credit Parties is in compliance with the requirements of all applicable laws, rules, regulations, executive orders or codes (including Environmental Laws) and all final judgments, orders, writs, injunctions, decrees, rules or regulations of any court or any Governmental Authority, in each case where the failure to comply individually or in the aggregate has or could reasonably be expected to have a Material Adverse Effect. There have been no citations, notices or orders of material noncompliance issued to the Credit Parties under any applicable laws, rules, regulations, executive orders or codes.

7.9 Environmental Condition. Except as set forth on Schedule 7.9, (a) the Credit Parties’ assets have not been used by the Credit Parties, or by previous owners or operators in the disposal of, or to produce, store, handle, treat, release, or transport, any Hazardous Materials, where such disposal, production, storage, handling, treatment, release or transport was in violation, in any material respect, of any applicable Environmental Law, (b) the Credit Parties’ assets have not been designated or identified in any manner pursuant to any environmental protection statute as a Hazardous Materials disposal site, (c) the Credit Parties have not received notice that a security interest, Lien or other encumbrance arising under any Environmental Law has attached to any assets of the Credit Parties, and (d) the Credit Parties and their assets are not subject to any outstanding written order, consent decree, or settlement agreement with any Person relating to any Environmental Law or liability thereunder that, individually or in the aggregate, has or could reasonably be expected to have a Material Adverse Effect.

7.10 No Defaults. No event or circumstance has occurred or exists that constitutes a Default or Event of Default.

7.11 Material Contracts. Borrower has filed with the SEC true, correct and complete copies of its Material Contracts that are in effect as of the date hereof. The Credit Parties are not in breach or in default in any material respect under any Material Contract and have not received any notice of the intention of any other party thereto to terminate any Material Contract.

7.12 Restrictive Agreements. None of the Credit Parties are party to any agreement or other arrangement that prohibits, restricts or imposes any condition on the ability of the Credit Parties to pay dividends or make other distributions or pay any Indebtedness owed by or to the Credit Parties or make loans or advances, or guaranty Indebtedness, or grant security interests in or Liens on any of their assets or transfer any of their assets, other than (a) this Agreement, (b) such agreements or other arrangements (i) in effect on the Closing Date and listed on Schedule 7.12, or (ii) relating to secured Indebtedness permitted hereunder, as long as the restrictions

apply only to collateral for such Indebtedness, and (c) customary restrictions on assignment in leases and other contracts as set forth on Schedule 7.12.

7.13 Taxes. The Credit Parties have timely filed or caused to be filed all Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes required to have been paid by them, except (a) Taxes that are being contested in good faith by appropriate proceedings and for which the Credit Parties have set aside on their books adequate reserves or (b) to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect. No tax Liens have been filed and no claims are being asserted with respect to any such Taxes.

7.14 ERISA. Neither Borrower nor any ERISA Affiliate of Borrower (other than any Portfolio Company that may be considered an ERISA Affiliate) has, or during the past three (3) years had, or is reasonably expected to have an ERISA Event with respect to a Multiemployer Plan, and when taken together with any other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to have a Material Adverse Effect. To the extent a Portfolio Company may be considered an ERISA Affiliate, any ERISA Events at such Portfolio Companies shall not be expected to have 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 Accounting 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 Accounting 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.

7.15 Insurance. Schedule 7.15 sets forth a description of all insurance maintained by or on behalf of the Credit Parties as of the date hereof. As of the date hereof, all premiums in respect of such insurance have been paid. The Credit Parties maintain with financially sound and reputable insurance companies, insurance on all of their property in such amounts, subject to such deductibles and self-insurance retentions and covering such properties and risks as are adequate and customarily maintained by companies engaged in the same or similar businesses operating in the same or similar locations.

7.16 Capitalization and Subsidiaries. Schedule 7.16 sets forth (a) a correct and complete list of the name and relationship to Borrower of each Subsidiary, (b) a true and complete listing of each class of each of Subsidiary’s authorized Equity Interests, all of which issued shares are validly issued, outstanding, fully paid and non-assessable, and owned beneficially and of record by the Persons identified on Schedule 7.16, and (c) the type of entity of Borrower and each Subsidiary. There are no outstanding commitments or other obligations of Borrower to issue, and no options, warrants or other rights of any Person to acquire, any shares of any class of capital stock or other equity interests of Borrower.

7.17 Security Interest in Collateral. This Agreement creates a legal and valid security interests in the Collateral in favor of Agent for the benefit of Agent and Lenders, and such security interests constitute perfected and continuing security interests on the Collateral, securing the Obligations, enforceable against the Credit Parties and having priority over all other security

interests, Liens or other encumbrances on the Collateral except (a) Permitted Liens, to the extent any such Permitted Liens would have priority over the security interests of Agent for the benefit of Agent and Lenders pursuant to any applicable law or agreement and (b) security interests perfected only by possession or the notation of the security interest on the certificate of title with respect thereto to the extent Agent for the benefit of Agent and Lenders has not obtained or does not maintain possession of such Collateral or has not had its security interest noted on the certificate of title.

7.18 Brokers. Except for amounts payable by the Borrower to JMP Securities at or the time of the Closing, there are no brokerage commissions, finder’s fees or investment banking fees payable by the Credit Parties in connection with any transactions contemplated by the Loan Documents. For the avoidance of doubt, the parties acknowledge that brokerage commissions, finder’s fees and/or referral fees may be payable by Borrower in connection with Investments made by Borrower after the Closing Date and this Section 7.18 is not intended to constitute a representation or warranty with respect to, or to otherwise limit the Borrower from paying, any such brokerage commissions, finder’s fees and/or referral fees. The Credit Parties acknowledge and agree that the Agent and the Lenders do not have any responsibility or liability for any such brokerage commissions, finder’s fees and/or referral fees referred to in this Section 7.18.

7.19 Intellectual Property. Each of the Credit Parties owns, or is licensed to use, all Intellectual Property necessary to its business as currently conducted, a correct and complete list of which, as of the date of this Agreement, is set forth on Schedule 7.19, and the use thereof by Credit Parties does not infringe on the rights of any other Person, and except as set forth on such Schedule, the Credit Parties’ rights thereto are not subject to any licensing agreement or similar arrangement. No material trademark, servicemark, copyright or other material Intellectual Property at any time used by the Credit Parties which is owned by another person, or owned by the Credit Parties subject to any security interest, Lien or other encumbrance in favor of any person other than Agent, is used by the Credit Parties, except to the extent permitted under the terms of the license agreements listed on Schedule 7.19.

7.20 Reserved.

7.21 Labor Relations. Except as described on Schedule 7.21, none of the Credit Parties are party to or bound by any collective bargaining agreement, management agreement or consulting agreement. There are no material grievances, disputes or controversies with any union or other organization of the Credit Parties’ employees or any threatened strikes, work stoppages or demands for collective bargaining.

7.22 Payable Practices. Borrower has not made any material change in its historical accounts payable practices from those in effect on the Closing Date.

7.23 Margin Stock. Neither the Borrower nor any of its Subsidiaries is engaged principally in the business of purchasing or carrying any Margin Stock.

7.24 Investment Company Act; Regulated Investment Company.

(a) Borrower is an “investment company” that has elected to be regulated as a “business development company” within the meaning of the Investment Company Act and

qualifies as a regulated investment company under Subchapter M, Section 851 of the Internal Revenue Code.

(b) Borrower conducts its business and other activities in compliance in all material respects with the applicable provisions of the Investment Company Act and any applicable rules, regulations or orders issued by the SEC thereunder.

(c) The business and other activities of the Credit Parties, including, but not limited to, the incurrence by the Credit Parties of the Obligations hereunder, the application of the proceeds and the repayment thereof by Credit Parties and the consummation of the transactions contemplated by this Agreement do not violate in any material respect, with respect to Borrower, the provisions of the Investment Company Act or any rules, regulations or orders issued by the SEC thereunder.

7.25 Anti-Terrorism Laws; Anti-Money Laundering Laws. None of the Credit Parties are, and after making due inquiry no Person who owns a controlling interest in or otherwise controls the Credit Parties is, (i) listed on the Specially Designated Nationals and Blocked Persons List maintained by OFAC, and/or on any other similar list (collectively, the “Lists”) maintained by the OFAC pursuant to any authorizing statute, Executive Order or regulation (collectively, “OFAC Laws and Regulations”); or (ii)a Person (a “Designated Person”) either (A)included within the term “designated national” as defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515, or (B)designated under Sections 1(a), 1(b), 1(c) or 1(d) of Executive Order No. 13224, 66 Fed. Reg. 49079 (published September 25, 2001) or similarly designated under any related enabling legislation or any other similar Executive Orders (collectively, the “Executive Orders”).

(a) Neither the Borrower or its Subsidiaries (i) is a Person or entity with which Agent or any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law or (ii) is a Person or entity that commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Orders or (iii) is affiliated or associated with a Person or entity listed in the preceding clause (i) or clause (ii). To the knowledge of Borrower, none of the Credit Parties or their Affiliates, nor any brokers or other agents acting in any capacity in connection with the Revolving Loans hereunder (A) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Orders or (B) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.

(b) To the best of the knowledge of the Borrower after due inquiry, none of the Borrower or its Subsidiaries nor any holder of a direct or indirect interest in the Borrower or any of its Subsidiaries (i) is under investigation by any governmental authority for, or has been charged with, or convicted of, money laundering under 18 U.S.C. §§ 1956 and 1957, drug trafficking, terrorist-related activities or other money laundering predicate crimes, or any violation of the BSA, (ii) has been assessed civil penalties under any Anti-Money Laundering Laws, or (iii) has had any of its funds seized or forfeited in an action under any Anti-Money Laundering Laws.

7.26 Equity Investments and Debt Investments.

(a) Schedules 7.26(a) and 7.26(c) are complete and correct lists of the name, jurisdiction of organization and ownership of each Portfolio Company in which Borrower owns any Equity Interests on the date hereof. Schedule 7.26(a) lists the Equity Interests in the Portfolio Companies that are pledged to the Agent for the benefit of the Agent and the Lenders. At the time of acquisition by the Borrower, to the knowledge of the Borrower, all of the issued and outstanding Equity Interests of Borrower in each Portfolio Company were validly issued and fully paid and non-assessable. Borrower is the owner and holder of the Equity Interests in each Portfolio Company (except to the extent that Agent’s Bailee may be in possession of any certificates or other tangible evidence thereof for the Equity Investments). Borrower is the sole owner, free and clear of all Liens (except for the Liens granted in the favor of Agent for the benefit of Agent and Lenders and Permitted Liens) of all Equity Investments and Remaining Equity Interests.

(b) Schedule 7.26(b) is a complete and correct list of the name, jurisdiction of organization, the original amount and current outstanding balance of each Debt Investment. All of the issued and outstanding Debt Investments of Borrower has been validly issued by the Debt Investment Obligors and fully funded, and Borrower is the owner and holder thereof (except to the extent that Agent’s Bailee may be in possession of any promissory notes or other tangible evidence thereof). Borrower is the sole owner, free and clear of all Liens (except for the Liens granted in the favor of Agent for the benefit of Agent and Lenders and Permitted Liens) of all of the Debt Investments. Except as described on Schedule 7.26(b), there are no outstanding debt securities of any Debt Investment Obligors or any debt or equity securities of any Debt Investment Obligors and no outstanding obligations of a Debt Investment Obligor or any of its Subsidiaries, in each case, convertible into or exchangeable for, or warrants, options or other rights for the purchase or acquisition from such Debt Investment Obligor or any of its Subsidiaries, or other obligations of Debt Investment Obligor or any of its Subsidiaries to issue, directly or indirectly, any shares of Equity Interests of such Debt Investment Obligor or any of its Subsidiaries. Schedule 7.26(b) sets forth all of the Indebtedness of each Debt Investment Obligor.

(c) With respect to each Debt Investment of Borrower in a Debt Investment Obligor, except as specifically disclosed on the most recent Borrowing Base Certificate received by Agent or other collateral report delivered to Agent, (i) each Debt Investment and all related Debt Investment Loan Documents represent Debt Investments acquired in the ordinary course of Borrower’s business, (ii) each Debt Investment has been documented in accordance with the Credit Policy and Investment Ratings Policy, (iii) there are no setoffs, claims or disputes existing or asserted with respect to such Debt Investment, (iv) Borrower has not made any agreement with the Debt Investment Obligor or other owners or holders of Equity Interests in such Debt Investment Obligor for any extension of time for the payment or performance of any obligations at any time owing or payable by such Debt Investment Obligor to Borrower, any compromise or settlement for less than the full amount thereof, any release from liability therefor, or any deduction therefrom, except, in each case, such as may be granted by Borrower in the ordinary course of its business, (v) there are no facts, events or occurrences that in any way impair the validity or enforceability of any Debt Investments at any time owing or payable by such Debt Investment Obligor to Borrower thereof or could reasonably be expected to reduce any amounts

that may be payable by such Debt Investment Obligor to Borrower, (vi) Borrower has not received any notice of proceedings or actions that are threatened or pending against any Debt Investment Obligor that would reasonably be expected to result in a Debt Investment Obligor Material Adverse Effect as to such Debt Investment Obligor, and including, without limitation, notice of any actual or imminent Insolvency Proceedings with respect to such Debt Investment Obligor, (vii) Borrower has not received notice of any actual or threatened litigation regarding the validity or enforceability of any Debt Investment, (viii) each Debt Investment Obligor is Solvent and (ix) no event of default has occurred and is continuing under the applicable Debt Investment Loan Documents or any other agreements, documents or instruments relating to any Indebtedness of such Debt Investment Obligor.

(d) With respect to each of the Equity Documents, Debt Investment Loan Documents and each document executed in connection therewith as to any Investment of Borrower in a Portfolio Company or a Debt Investment Obligor, (i) such agreement or document has been duly authorized, executed and delivered to Borrower by the Portfolio Company or Debt Investment Obligor party thereto, and is enforceable in accordance with its terms, and (ii) all amounts at any time payable or owing by the Portfolio Company or Debt Investment Obligor party thereto or any other party thereto under or pursuant to such Equity Documents, Debt Investment Loan Documents or related documents are payable without defense, setoff or counterclaim; (iii) such Documents relating to each Eligible Investment and such Debt Investment Loan Documents relating to each Debt Investment do not contain any condition, restriction, limitation or prohibition with respect to the right of Borrower or any subsequent assignee to sell, transfer, assign, pledge, encumber and/or grant a security interest in, or to assign as collateral, to any other Person any of Borrower’s right, title and interest in and to the Investments subject to such Equity Documents and Debt Investment Loan Documents, except as set forth on Schedules 7.26(a), 7.26(b) and 7.26(c).

(e) The amounts reflected on all records and reports that may be delivered to the Agent with respect to such Debt Investments are correct and complete and each Debt Investment reflected in the computations included in any Borrowing Base Certificate satisfies the criteria established therefor in this Agreement.

7.27 Credit and Compliance Policies. Exhibit G is a true and complete list of all the MVC Capital Debt Investing Guidelines, Borrower’s Compliance Manual and Tokarz Group Compliance Manual in full force and effect as of the Closing Date, copies of which have been delivered to the Agent.

7.28 Pledge Agreement. Upon delivery to Agent of any original certificates evidencing certain Equity Interests of the Subsidiaries of Borrower that are listed on Schedule 7.28 that are included within the Collateral together with the filing of applicable UCC financing statements as to other uncertificated Equity Interests of the Subsidiaries of Borrower, the Pledge Agreement will be sufficient to create in favor of Agent, for the benefit of itself and Lenders, a legal, valid and enforceable security interest in the Equity Interests of the Subsidiaries of Borrower that are included within the Collateral secured thereby.

7.29 Complete Disclosure. No Loan Document contains any untrue statement of a material fact, nor fails to disclose any material fact necessary to make the statements contained

therein not materially misleading. There is no fact or circumstance, when taken as a whole, that the Credit Parties have failed to disclose to Agent in writing that has, or could reasonably be expected to have, a Material Adverse Effect.

ARTICLE 8 AFFIRMATIVE COVENANTS

8.1 Financial Statements, Borrowing Base Certificate and Other Information. Borrower (a) will deliver to Agent and Lenders each of the financial statements, reports, and other items set forth on Schedule 8.1 no later than the times specified therein, provided, however, notwithstanding the forgoing, for the avoidance of doubt, Agent agrees that the Borrower shall have until March 11, 2016 to file its Form 10-Qs for the fiscal quarters ending July 31, 2015 and January 31, 2016 and its Form 10-K for the year ending October 31, 2015, (b) maintain a system of accounting that enables Borrower and its Subsidiaries to produce financial statements in accordance with GAAP, and (c) will (i) keep a reporting system that shows all Investments, and (ii) maintain systems and practices substantially as in effect as of the Closing Date and shall only make material modifications thereto with notice to, and with the consent of, Agent.

8.2 Notices of Material Events. Borrower will promptly notify Agent (with reasonably prompt further notification from Agent to Lenders) in writing of: (a) the occurrence of any Default or Event of Default; (b) any Debt Investment Obligor Material Adverse Effect, (c) any matter that has, or could reasonably be expected to have, a Material Adverse Effect; (d) any default under, a Material Contract or with respect to Material Indebtedness of the Credit Parties thereof; (e) any material dispute, litigation, investigation, proceeding or suspension between the Credit Parties and any Governmental Authority or the commencement of, or any material development in, any litigation or proceeding affecting the Credit Parties, including pursuant to any applicable Environmental Laws; (f) the occurrence of any ERISA Event; (g) any material change in accounting policies or financial reporting practices of the Credit Parties or any Debt Investment Obligor; (h) any change in Tokarz Group or Borrower’s senior executive officers; (i) the discharge by Borrower of their independent accountants or any withdrawal or resignation by such accountants; (j) any collective bargaining agreement or other labor contract to which the Credit Parties become a party, or the application for the certification of a collective bargaining agent; (k) the filing of any Lien for unpaid Taxes against the Credit Parties; (l) any loss, damage, or destruction to, or commencement of any action or proceeding for the taking under eminent domain, condemnation or similar proceeding, of Collateral, whether or not covered by insurance; and (m) any transaction occurring after the Closing Date consisting of: (i) the entry into a Material Contract, (ii) the incurrence of Material Indebtedness, (iii) the voluntary or involuntary grant of any Lien other than a Permitted Lien upon any property of the Credit Parties; (iv) the making of any Permitted Investments, notify Agent at the same time as the next Borrowing Base Certificate to be delivered to Agent); provided, that, each such notice under these clauses (i), (ii), (iii) (as to a voluntary grant), or (iv) shall be received by Agent not less than five (5) Business Days prior thereto, together with such other information with respect thereto as Agent may request. Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer of Borrower setting forth details of the occurrence referred to therein and stating what action Borrower has taken and proposes to take with respect thereto.

8.3 Existence; Business Development Company; Regulated Investment Company.

(a) Each of the Credit Parties (other than MVC PE Fund) will do or cause to be done all things reasonably necessary to preserve, renew and keep in full force and effect its legal existence and the rights, qualifications, licenses, permits, franchises, governmental authorizations, intellectual property rights, licenses and permits material to the conduct of its business, and maintain all requisite authority to conduct its business in each jurisdiction in which its business is conducted.

(b) Borrower shall maintain and not revoke the election of Borrower to be a business development company under the Investment Company Act, and its qualification as a regulated investment company under Subchapter M, Section 851 of the Internal Revenue Code, and will conduct its business and other activities in compliance with the applicable provisions of the Investment Company Act and any applicable rules, regulations or orders issued by the SEC thereunder.

8.4 Payment of Obligations. Each of the Credit Parties will pay or discharge all Material Indebtedness and all other material liabilities and obligations, including Taxes, 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 Credit Parties have set aside on their 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; provided, that, the Credit Parties will remit withholding taxes and other payroll taxes to the appropriate Governmental Authority as and when claimed to be due, notwithstanding the foregoing exceptions.

8.5 Maintenance of Properties. Each of the Credit Parties will keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted.

8.6 Compliance with Laws. Each Credit Party will (a) comply in all material respects with all laws, rules, regulations, licenses, approvals and orders applicable to it and duly observe all requirements of any foreign, Federal, State or local Governmental Authority applicable to it or its property (including without limitation Environmental Laws) and (b) perform in all material respects its obligations under Material Contracts to which it is a party in each case, where the failure to do so, individually or in the aggregate, has or could reasonably be expected to have a Material Adverse Effect.

8.7 Insurance. Each of the Credit Parties will maintain with financially sound and reputable carriers insurance in such amounts (with no greater risk retention) and against such risks and such other hazards, as is customarily maintained by companies of established repute engaged in the same or similar businesses operating in the same or similar locations. Borrower will from time to time upon Agent’s request furnish to Agent information in reasonable detail as to the insurance so maintained.

8.8 Inspection Rights; Field Examinations; Valuations. Upon the request of Agent after reasonable prior notice to Borrower, the Credit Parties will permit Agent or a firm engaged by Agent for such purpose to (a) conduct field examinations, including, without limitation, with respect to the Credit Parties’ practices in the calculation of the Borrowing Base and the assets

included in the Borrowing Base and related financial information such as, but not limited to, valuations, investments, payables, accruals and reserves, (b) conduct valuations of the Collateral for not less than seventy-five percent (75%) of the Eligible Debt Investments and (c) have access to any and all of the Credit Parties’ monitoring tools, including but not limited to valuations by third parties and the Borrower’s Audit Committee’s risk ratings. Upon the request of Agent, after reasonable prior notice to Borrower, the Credit Parties will permit representatives and other professionals (including investment bankers, consultants, accountants, and lawyers) engaged by Agent for such purpose to visit and inspect any of their properties, to examine their corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss their affairs, finances and accounts with their directors, officers, and accountants, all at the expense of Borrower and at such reasonable times during normal business hours and as often as may be reasonably desired. Prior to the occurrence of a Default or an Event of Default, the Borrower shall bear the cost and expenses of four (4) such examinations per year, provided however, in the event the average Liquidity exceeds Twenty Five Million Dollars ($25,000,000) for one hundred twenty (120) consecutive days, the Borrower shall bear the cost and expenses of three (3) such examinations per year. Prior to the occurrence of an Event of Default, the Borrower shall bear the cost and expenses of two (2) such valuations per year. After the occurrence of an Event of Default, the Borrower shall bear the cost and expense of all such examinations and valuations and they shall be at such times and upon such notice as the Agent shall determine in its discretion.

8.9 Use of Proceeds. Borrower shall use the initial proceeds of the Revolving Loans hereunder only for: (a) payments to each of the persons listed in the pay proceeds letter furnished by Borrower to Agent on or about the date hereof and (b) costs, expenses and fees in connection with the preparation, negotiation, execution and delivery of this Agreement and the other Loan Documents for the Agent and the Lenders. All other Revolving Loans made shall be used by Borrower (a) to fund current and future Investment opportunities of Borrower and (b) for working capital and other proper corporate purposes not prohibited hereunder.

8.10 Cash Management; Collection of Proceeds of Collateral.

(a) The Credit Parties shall establish and maintain, at their expense, Deposit Accounts and cash management services of a type and on terms, with the banks, set forth on Schedule 8.10 and, subject to Section 8.10(b) below, such other banks as the Credit Parties may hereafter select (such other banks, together with the banks set forth on Schedule 8.10, collectively, the “Cash Management Banks” and individually, a “Cash Management Bank”). The Credit Parties have designated the Agent as the Cash Management Bank and shall maintain their Deposit Accounts with the Agent. In addition the Borrower shall be permitted to maintain Deposit Accounts (i) with the Lenders for the Pledged Cash, (ii) with BB&T as otherwise permitted in this Agreement, and (iii) with U.S. Bank National Association (limited to no more Five Hundred Thousand Dollars ($500,000) for each of Borrower and each other Credit Party, provided, the aggregate amount does not exceed One Million Dollars ($1,000,000) at any time, provided, further, that the Borrower shall be permitted to have on deposit up to Ten Million Dollars ($10,000,000) in cash for no more than ten (10) days (with respect to any particular Investment) with U.S. Bank National Association in connection with the funding of new Investments permitted under this Agreement). Borrower shall deliver, or cause to be delivered to Agent, a Control Agreement with respect to each of their Deposit Accounts (other than Excluded

Deposit Accounts), including, without limitation, U.S. Bank National Association, duly authorized, executed and delivered by each Cash Management Bank where a Deposit Account is maintained (other than Excluded Deposit Accounts), U.S. Bank National Association. Borrower shall direct all Debt Investment Obligors and Portfolio Companies in respect of any amounts payable to Borrower to make payment of all such amounts to the Borrower’s Deposit Account maintained with the Agent and otherwise take all reasonable actions to cause such payments to be made to the Borrower’s Deposit Account maintained with the Agent. Each of the Borrower and its respective employees, agents and Subsidiaries (other than MVC PE Fund) shall, acting as trustee for Agent, receive, as the property of Borrower, any monies, checks, notes, drafts or any other payment relating to and/or proceeds of Debt Investments, Equity Interests or other Collateral which come into its possession or under its control and promptly upon receipt thereof, shall deposit or cause the same to be deposited in the Borrower’s Deposit Account maintained with the Agent.

(b) So long as no Default or Event of Default exists or has occurred and is continuing, upon not less than five (5) Business Days’ prior written notice to Agent, Borrower may amend Schedule 8.10 to add or replace a Deposit Account and shall upon such addition or replacement provide to Agent an amended Schedule 8.10; provided, that, prior to the time of the opening of such Deposit Account (other than Excluded Deposit Accounts) Borrower and such prospective depository bank shall have executed and delivered to Agent a Control Agreement. Such Deposit Accounts shall be subject to the limitations set forth in this Agreement. Borrower shall close any of its Deposit Accounts (other than Excluded Deposit Accounts) (and establish replacement Deposit Accounts in accordance with the foregoing sentence) as promptly as practicable and in any event within forty-five (45) days after notice from Agent that the operating performance, funds transfer, or availability procedures or performance of the depository bank with respect to Deposit Accounts (other than Excluded Deposit Accounts) or Agent’s liability under any Control Agreement with such depository bank is no longer satisfactory to Agent in Agent’s reasonable judgment.

8.11 Additional Collateral; Further Assurances.

(a) In the case of the formation or acquisition by the Credit Parties of any Subsidiary after the date hereof, as to any such Subsidiary, (i) such Credit Party shall cause such Subsidiary to execute and deliver to Agent, in form and substance satisfactory to Agent, a joinder agreement to the Loan Documents in order to make such Subsidiary a party to this Agreement as a Guarantor and a Guaranty Agreement and shall cause it to execute and deliver such other agreements, documents or instruments and to deliver other consents, waivers, acknowledgments and other agreements from third persons which Agent may deem reasonably necessary or desirable in order to permit, protect and perfect its security interests in and Liens upon the assets of such Subsidiary and the Equity Interests of such Credit Party in such Subsidiary, corporate resolutions and other organization and authorizing documents of such Person, and favorable opinions of counsel to such person and (ii) such Credit Party shall execute and deliver to Agent, a pledge and security agreement, in form and substance satisfactory to Agent, granting to Agent for the benefit of Agent and Lenders a first pledge of and Lien on all of the issued and outstanding shares of Equity Interests of any such Subsidiary, such other agreements, documents and instruments as Agent may require in connection with the documents referred to above,

including, but not limited to, supplements and amendments hereto, corporate resolutions and other organization and authorizing documents and favorable opinions of counsel to such person.

(b) Without limiting the foregoing, Borrower will, and will cause each Subsidiary (other than the MVC PE Fund) to, execute and deliver, or cause to be executed and delivered, to Agent such documents, agreements and instruments, and take or cause to be taken such further actions (including the filing and recording of financing statements, fixture filings, mortgages, deeds of trust and other documents and such other actions or deliveries of the type required by Section 6.1, as applicable), which Agent may, from time to time, reasonably request to carry out the terms and conditions of this Agreement and the other Loan Documents and to ensure perfection and priority of the security interests and Liens created or intended to be created hereunder, all in form and substance reasonably satisfactory to Agent and at the expense of Borrower.

8.12 End of Fiscal Years; Fiscal Quarters. Borrower and its Subsidiaries shall, for financial reporting purposes, cause their fiscal year to end on October 31 of each year, and fiscal quarters to end on the last day of each of January, April, July and October of each year.

8.13 Required Pledged Cash Amount. Borrower shall at all times maintain Pledged Cash in the Required Pledged Cash Deposit Accounts in an aggregate amount equal to or exceeding the Required Pledged Cash Amount. The amount of Cash held in each Required Pledged Cash Deposit Account maintained by each Lender shall equal or exceed such Lenders’ Pro Rata Share of the Required Pledged Cash Amount. Notwithstanding anything herein to the contrary, the Borrower shall have ten (10) Business Days from the Closing Date to open and deposit the Required Pledged Cash Amount in the Required Pledged Cash Deposit Account with Wintrust Bank.

8.14 Investment Documents. The Borrower shall maintain all Equity Documents and Debt Investment Loan Documents (other than Equity Documents and Debt Investment Loan Documents which have been delivered to Agent or to Agent’s Bailee) in a secure manner in a location with fire, casualty and theft protection reasonably satisfactory to Agent. Borrower will provide to Agent true, correct and complete copies of any Equity Documents, Debt Investment Loan Documents and Investment Books as Agent may from time to time request, together with any agreements, documents or instruments relating to the Indebtedness of any Portfolio Company, Debt Investment Loan Documents, Investment Books and related matters.

8.15 Maintenance of Current Administrative Procedures. The Borrower shall maintain, at its own cost and expense, the current procedures of Borrower for monitoring and administering the interests of Borrower in the Debt Investment Obligors and Portfolio Companies and exercising all of its rights under or pursuant to the Debt Investment Loan Documents and Equity Documents with respect to any of the Investments.

8.16 Credit Policy. The Borrower shall comply in all material respects with the Credit Policy and furnish to Agent, prior to its effective date, prompt notice of any material modification to the Credit Policy and not modify the Credit Policy in any material respect, without the prior written consent of Agent.

8.17 Investments. With respect to the Investments of Borrower: (i) Borrower shall be the sole owner, free and clear of all Liens (except for the Liens granted in the favor of Agent for the benefit of Agent and Lenders and Permitted Liens), and shall be fully authorized with respect to each Investment to sell, transfer, assign, pledge, encumber and/or grant a security interest in, or to assign as collateral, to any other Person any of Borrower’s right, title and interest in and to the Investments; (ii) none of the transactions underlying or giving rise to any of the Investments shall violate any applicable State or Federal laws or regulations, and all of the Documents or any other documents relating thereto shall be legally enforceable under such laws in accordance with their terms; (iii) all agreements, instruments and other documents relating to any of the Investments shall be true and correct and in all material respects what they purport to be; and (iv) shall maintain the Investment Books and any other books and records pertaining to the Investments in such detail, form and scope as Agent shall reasonably require.

8.18 Subordination. The Borrower shall cause all Indebtedness and other obligations now or hereafter owed by it to any of its Affiliates to be subordinated in right of payment and security to the Indebtedness and other Obligations owing to Agent and Lenders and promptly upon the request of Agent or Required Lenders, deliver to Agent a Subordination Agreement in form and substance satisfactory to Agent and Required Lenders duly authorized, executed and delivered by Borrower and its Affiliates.

8.19 Costs and Expenses. Borrower shall pay to Agent and Lenders on demand all reasonable costs, expenses, filing fees and taxes paid or payable in connection with the preparation, negotiation, execution, delivery, recording, syndication, administration, collection, liquidation, enforcement and defense of the Obligations, Agent’s, for the benefit of Agent and Lenders, rights in the Collateral, this Agreement, the other Loan Documents and all other documents related hereto or thereto, including any amendments, supplements or consents which may hereafter be contemplated (whether or not executed) or entered into in respect hereof and thereof, including: (a) all costs and expenses of filing or recording (including UCC financing statement filing taxes and fees, documentary taxes, intangibles taxes and mortgage recording taxes and fees, if applicable), (b) costs and expenses and fees for insurance premiums, environmental audits, title insurance premiums, surveys, assessments, engineering reports and inspections, appraisal fees and search fees, background checks, costs and expenses of remitting loan proceeds, collecting checks and other items of payment, together with Agent’s customary charges and fees with respect thereto; (c) actual costs and expenses of preserving and protecting the Collateral; (d) actual costs and expenses paid or incurred in connection with obtaining payment of the Obligations, enforcing the security interests and Liens of Agent in the Collateral, selling or otherwise realizing upon the Collateral, and otherwise enforcing the provisions of this Agreement and the other Loan Documents or defending any claims made or threatened against Agent and Lenders arising out of the transactions contemplated hereby and thereby (including preparations for and consultations concerning any such matters); (e) all out-of-pocket expenses and costs heretofore and from time to time hereafter incurred by Agent during the course of periodic field examinations, plus a per diem charge at Agent’s then standard rate for Agent’s examiners in the field and office (which rate as of the date hereof is One Thousand Dollars ($1,000) per person per day); (f) all out-of-pocket expenses and costs heretofore and from time to time hereafter incurred by Agent during the course of periodic external valuations to be performed at the Agent’s discretion for not less than seventy-five percent (75%) of the Eligible Debt Investments, and (g) the reasonable fees and disbursements of counsel (including legal

assistants) to Agent in connection with any of the foregoing and after the occurrence of an Event of Default, the reasonable fees and disbursements of counsel (including legal assistants) to Lenders in connection with any of the foregoing.

ARTICLE 9 NEGATIVE COVENANTS

9.1 Indebtedness. The Credit Parties shall not incur, create, assume, become or be liable in any manner with respect to, or permit to exist, any Indebtedness, or guarantee, assume, endorse, or otherwise become responsible for (directly or indirectly), the Indebtedness, performance, obligations or dividends of any other Person, except for the Permitted Indebtedness.

9.2 Liens. The Credit Parties shall not create, incur, assume or suffer to exist any security interest, mortgage, pledge, Lien, charge or other encumbrance of any nature whatsoever on any of their assets or properties, including the Collateral, or file or permit the filing of, or permit to remain in effect, any financing statement or other similar notice of any security interest or Lien with respect to any such assets or properties, except Permitted Liens.

9.3 Fundamental Changes. The Credit Parties shall not, directly or indirectly, (a) change their name or conduct business under any fictitious name; (b) change their tax, charter or other organizational identification number; (c) change their form or state of organization; (d) suspend operations, wind up, liquidate or dissolve; or (e) merge, combine or consolidate with any Person, whether in a single transaction or in a series of related transactions.

9.4 Asset Sales. The Credit Parties shall not sell, issue, assign, lease, license, transfer, abandon or otherwise dispose of any Equity Interests, including, without limitation, Equity Interests of the Borrower, or any of their assets to any other Person, except for Permitted Dispositions or agree to do any of the foregoing, except to the extent that such agreement contains a condition requiring the consent of Agent if the agreement to do any of the foregoing is otherwise prohibited by the terms hereof.

9.5 Loans, Advances, Investments, Etc. The Credit Parties shall not make, directly or indirectly, any Investments or purchase or repurchase Investments or all or a substantial part of the assets or property of any person, or form or acquire any Subsidiaries, or agree to do any of the foregoing, or permit any Subsidiary to do any of the foregoing, except:

(a) loans existing on the date hereof as set forth on Schedule 7.26(b) hereto;

(b) Investments consisting of loans by Borrower to another Borrower, provided, that, the Indebtedness arising pursuant to any such loan shall constitute Subordinated Indebtedness;

(d) dividends, redemptions, repurchases and other distributions permitted under Section 9.9 hereof.

9.6 Investments. Except for (a) Permitted Investments, (b) the Investments set forth on Schedule 7.26(a), 7.26(b) and 7.26(c) and (c) as otherwise permitted in this Agreement, the Credit Parties shall not, directly or indirectly, purchase, hold or acquire (including pursuant to any merger with any Person that was not a wholly owned Subsidiary immediately prior to such merger) any Equity Interests, Debt Investments or other securities (including any option, warrant or other right to acquire any of the foregoing) of, make or permit to exist any loans or advances to, or make or permit to exist any capital contribution or other investment or any other interest in, any other Person, or purchase or otherwise acquire (in one transaction or a series of transactions) any assets of any other Person constituting a business unit or all or a substantial part of the assets or property of any other Person (whether through purchase of assets, merger or otherwise), or form or acquire any Subsidiaries, or agree to do any of the foregoing (each of the foregoing an “Investment”). The Credit Parties shall not transfer to the Excluded Deposit Accounts any funds in excess of those necessary for the then current expenses that are to be paid from the Excluded Deposit Accounts.

9.7 Transactions with Affiliates. The Credit Parties shall not, directly or indirectly, purchase, acquire or lease any property from, or sell, transfer or lease any property to, any officer, director or other Affiliates of the Credit Parties, except pursuant to the reasonable requirements of the Credit Parties’ business and upon fair and reasonable terms no less favorable to the Credit Parties than the Credit Parties would obtain in a comparable arm’s length transaction with an unaffiliated person, except for the following: (a) any management, investment, employment or compensation arrangement or agreement, employee benefit plan or arrangement, officer or director indemnification agreement or any similar arrangement or other compensation arrangement entered into by the Credit Parties in the ordinary course of business and payments, issuance of securities or awards pursuant thereto, and including the grant of stock options, restricted stock, stock appreciation rights, phantom stock awards or similar rights to employees and directors in each case approved by the board of directors or equivalent governing body of the Credit Parties, and (b) Restricted Payments permitted under Section 9.9 hereof.

9.8 Change in Business. The Credit Parties shall not engage in any business other than the business of the Credit Parties on the date hereof and any business reasonably related, ancillary or complimentary to the business in which the Credit Parties are engaged on the date hereof.

9.9 Restricted Payments. The Credit Parties shall not declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment other than Permitted Restricted Payments.

9.10 Restrictive Agreements. The Credit Parties shall not, directly, or indirectly, create or otherwise cause or suffer to exist any agreement or other arrangement that prohibits, restricts or imposes any condition on the ability of the Credit Parties to pay dividends or make other distributions or pay any Indebtedness owed by or to the Credit Parties or make loans or advances or grant security interests in or Liens on any of their assets or transfer any of their assets, except such an agreement or other arrangement that (a) is in effect on the Closing Date, (b) relates to secured Indebtedness permitted hereunder, as long as the restrictions apply only to collateral for such Indebtedness or (c) constitute customary restrictions on assignment in leases and other contracts.

9.11 Certain Payments of Indebtedness, Etc. The Credit Parties shall not make or agree to make, directly or indirectly, any payment or other distribution (whether in cash, securities or other property) of or in respect of principal of or interest on any Indebtedness, or any payment or other distribution (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Indebtedness, except: (a) payment of the Obligations; (b) payment of regularly scheduled principal and interest payments, and other mandatory payments, as and when due in respect of any Permitted Indebtedness, other than payments in respect of Subordinated Debt prohibited by the subordination provisions thereof; (c) payments in respect of Permitted Indebtedness in each case with proceeds of Refinancing Indebtedness with respect thereto to the extent permitted under the definition of Permitted Indebtedness; (d) payment of secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness to the extent such sale or transfer is permitted under Section 9.4 and (e) Permitted Restricted Payments.

9.12 Amendment of Material Documents. None of the Credit Parties shall amend, modify or waive any of the terms of: (a) its Organization Documents except for amendments, modifications or other changes that do not affect the rights and privileges of Credit Parties and do not affect the ability of such Credit Party to amend, modify, renew or supplement the terms of this Agreement or any of the other Loan Documents, or otherwise affect the interests of Agent and Lenders and so long as at the time of any such amendment, modification or waiver, no Default or Event of Default shall exist or have occurred and be continuing, (b) the Credit Policy, (c) the Investment Ratings Policy or (d) any agreement, document or instrument evidencing or governing any Material Indebtedness, except, that, the Borrower may, after prior written notice to Agent, amend or modify the terms thereof to forgive, or cancel any portion of such Indebtedness (other than pursuant to payments thereof), or to reduce the interest rate or any fees in connection therewith, or to make the terms thereof less restrictive or burdensome to Borrower.

9.13 Sale and Leasebacks. None of the Credit Parties shall 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 hereafter 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 (a “Sale and Leaseback Transaction”), except for any such sale of any fixed or capital assets by the Credit Parties that is made for cash consideration in an amount not less than the fair value of such fixed or capital asset and is consummated within ninety (90) days after the Credit Parties acquires or completes the construction of such fixed or capital asset and the obligations of the Credit Parties under such lease constitute Permitted Indebtedness.

ARTICLE 10 FINANCIAL COVENANTS

10.1 Maximum Balance Sheet Leverage. Commencing with the quarterly fiscal period ending April 30, 2016 and for each quarterly fiscal period thereafter, Borrower and its Subsidiaries shall have a Balance Sheet Leverage Ratio not greater than 0.2 to 1.

10.2 Minimum Interest Coverage Ratio. Commencing with the quarterly fiscal period ending July 31, 2016 and for each quarterly fiscal period thereafter, if average Liquidity for the most recent quarterly fiscal period is less than Thirty Million Dollars ($30,000,000), then

Borrower and its Subsidiaries shall have a Minimum Interest Coverage Ratio of not less than the following amounts:

Period to be tested (if required to be		Minimum Interest
tested)		Coverage Ratio
For the quarterly fiscal period ending on July 31, 2016		1.00 to 1
For the trailing six month period ending on October 31, 2016		1.25 to 1
For the trailing nine month period ending on January 31, 2017		1.25 to 1
For the trailing twelve month period ending on April 30, 2017 and at the end of each quarterly fiscal period thereafter		1.25 to 1

10.3 Financial Covenant Cure Provisions. In the event Borrower and its Subsidiaries fail to comply with either of the financial covenants set forth in Section 10.1 or 10.2 (the “Financial Covenants”) as of the last day of any quarterly fiscal period (a “Relevant Quarterly Period”), the Borrower and its Subsidiaries shall have the right to cure (the “Cure Right”) such failure (such failure being referred to herein as a “Financial Covenant Default”) by selling any Investment or receiving proceeds of equity issued by Borrower, in each case, after the last day of such Relevant Quarterly Period and on or prior to the day that is thirty (30) days following the delivery of the Compliance Certificate for such Relevant Quarterly Period (the “Cure Period”), and including in the calculation of Net Income and shareholders’ equity, solely for the purposes of determining compliance with the Financial Covenants for such Relevant Quarterly Period (the proceeds of the sale of such Investment or any such equity contribution, a “Cure Contribution”); provided that

(a) notice of the intent to exercise its Cure Right with respect to any Financial Covenant Default (a “Cure Notice”) shall be delivered concurrently with the delivery by the Borrower to the Agent of the Compliance Certificate for the Relevant Quarterly Period;

(b) such Cure Contribution may be treated as Net Income for such Relevant Quarterly Period only to the extent necessary to cure the relevant Financial Covenant Default; and Cure Contributions treated as Net Income for such Relevant Quarterly Period shall be treated as Net Income for the following three (3) fiscal quarters in addition to such Relevant Quarterly Period;

(c) such Cure Contribution shall be included in the calculation of shareholders’ equity for the Relevant Quarterly Period and all subsequent quarterly fiscal periods; and

(d) the Borrower shall have the right to exercise the Cure Right not more than three (3) times during the term of this Agreement and provided that in each consecutive four (4) fiscal quarterly period there will be at least two (2) consecutive fiscal quarters in which no Cure Contribution is made;

Upon the receipt of evidence satisfactory to the Agent of Borrower’s receipt of the Cure Contribution, the Financial Covenants shall be recalculated after giving effect to the increase in Net Income and shareholders’ equity; provided that nothing herein shall constitute a waiver of any Default or Event of Default that exists as a result of the failure of the Borrower to satisfy the Financial Covenants until such recalculation. If, after giving effect to such recalculation, the Borrower shall be in compliance with the Financial Covenants, the Borrower shall be deemed to have satisfied the requirements of the Financial Covenants for the Relevant Quarterly Period with the same effect as though there had been no failure to comply therewith. So long as the Borrower is entitled to make a Cure Contribution pursuant to the foregoing terms and provisions of this Section 10.3, from the date of the Cure Notice until the expiration of the earlier to occur of the expiration of the Cure Period and the date on which the Agent is notified that the Cure Contribution will not be made, neither the Agent nor any Lender shall impose Default Interest, accelerate the Obligations or exercise any enforcement remedy against any Loan Party solely on the basis of the applicable Defaults or Events of Default arising from the Loan Parties failure to satisfy the Financial Covenants; provided (i) until timely receipt of the Cure Contribution, a Default or Event of Default shall be deemed to exist for all other purposes of this Agreement, and any term or provision of any Loan Document which prohibits any action to be taken by a Loan Party or any of its Subsidiaries during the existence of a Default or Event of Default; (ii) notwithstanding the foregoing, upon a deemed cure pursuant to this Section 10.3, the requirements of the applicable Financial Covenants shall be deemed to have been satisfied as of the applicable test date for the Relevant Quarterly Period with the same effect as though there had been no Financial Covenant Default at such date or thereafter; and (iii) at the request of the Required Lenders, Agent shall have the right to charge Default Interest retroactively from applicable test day for the Relevant Quarterly Period for which such Financial Covenant default first occurred, if, for any reason, the Cure Contribution shall not have been made by the earlier of the expiration of the Cure Period and the date on which the Agent is notified that the Cure Contribution will not be made.

ARTICLE 11 EVENTS OF DEFAULT AND REMEDIES

11.1 Events of Default. The occurrence or existence of any one or more of the following events are referred to herein individually as an “Event of Default”, and collectively as “Events of Default”:

(a) (i) Borrower fails to make any principal payment hereunder when due or fails to pay interest, fees or any of the other Obligations, (ii) any Credit Party fails to perform any of the covenants contained in Sections 8.1, 8.13, 9 and 10, (iii) any Credit Party fails to perform any of the covenants contained in Sections 8.2, 8.7 or 8.10, and such failure shall continue for five (5) Business Days or (iv) any Credit Party fails to perform any of the terms, covenants, conditions or provisions contained in this Agreement or any of the other Loan Documents other than those described in Sections 11.1(a)(i), 11.1(a)(ii) and 11.1(a)(iii) above and such failure shall continue for thirty (30) days;

(b) any representation, warranty or statement of fact made by the Credit Parties to Agent and Lenders in this Agreement, the other Loan Documents or any other written agreement, schedule, confirmatory assignment or otherwise that are qualified as to materiality or Material Adverse Effect shall when made or deemed made be incorrect, false or misleading and any other such representation, warranty or statement of fact made by the Credit Parties to Agent shall when made or deemed made be incorrect, false or misleading in any material respect;

(c) any judgment for the payment of money is rendered against the Credit Parties in excess of Two Million Five Hundred Thousand Dollars ($2,500,000) in the aggregate (to the extent not covered by independent third party insurance where the insurer has not declined or disputed coverage) and shall remain undischarged or unvacated for a period in excess of thirty (30) consecutive days or execution shall at any time not be effectively stayed, or any judgment other than for the payment of money, or injunction, attachment, garnishment or execution is rendered against any Credit Party or any of the Collateral having a value in excess of Two Million Five Hundred Thousand Dollars ($2,500,000);

(d) One of the Credit Parties makes an assignment for the benefit of creditors;

(e) a case or proceeding under the bankruptcy laws of the United States of America now or hereafter in effect or under any insolvency, reorganization, receivership, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction now or hereafter in effect (whether at law or in equity) is filed against one of the Credit Parties or all or any part of their properties and such petition or application is not dismissed within sixty (60) days after the date of their filing or such Credit Party shall file any answer admitting or not contesting such petition or application or indicates their consent to, acquiescence in or approval of, any such action or proceeding or the relief requested is granted sooner;

(f) a case or proceeding under the bankruptcy laws of the United States of America now or hereafter in effect or under any insolvency, reorganization, receivership, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction now or hereafter in effect (whether at law or equity) is filed by one of the Credit Parties or for all or any part of their property;

(g) any default in respect of any Material Contract or Material Indebtedness, including, without limitation, a default under the Senior Notes, which default continues for more than the applicable cure period contained in the subject agreement, if any, with respect thereto, or the subordination provisions contained in any agreement related to any Subordinated Debt shall cease to be in full force and effect or to give Agent for the benefit of Agent and Lenders the rights, powers and privileges purported to be created thereby,

(h) any material provision hereof or of any of the other Loan Documents shall for any reason cease to be valid, binding and enforceable with respect to any party hereto or thereto (other than Agent and Lenders) in accordance with its terms, or any such party shall challenge the enforceability hereof or thereof, or shall assert in writing, or take any action or fail to take any action based on the assertion that any provision hereof or of any of the other Loan Documents has ceased to be or is otherwise not valid, binding or enforceable in accordance with its terms, or any security interest provided for herein or in any of the other Loan Documents shall

cease to be a valid and perfected first priority security interest in any of the Collateral purported to be subject thereto (except as otherwise permitted herein or therein);

(i) an ERISA Event shall occur which results in or could be expected to result in liability of the Credit Parties in an aggregate amount in excess of Two Million Five Hundred Thousand Dollars ($2,500,000);

(j) the Credit Parties shall be prohibited or otherwise restrained from conducting the business theretofore conducted by them in any manner that has or could reasonably be expected to result in a Material Adverse Effect by virtue of any determination, ruling, decision, decree or order of any court or Governmental Authority of competent jurisdiction;

(k) failure of the Borrower to provide the Lender with copies of interim, management prepared financial statements for the fiscal year ending October 31, 2015 no later than January 31, 2016;

(l) failure of the Borrower to file its Form 10-Qs for the fiscal quarters ending July 31, 2015 and January 31, 2016 and its Form 10-K for the year ending October 31, 2015 on or before March 11, 2016; and

(m) any Change of Control.

11.2 Remedies.

(a) At any time an Event of Default exists or has occurred and is continuing, and after the applicable cure period, if any, has passed, and Agent has provided the Borrower with a Notice of Acceleration, Agent and the Lenders shall have all rights and remedies provided in this Agreement, the other Loan Documents, the UCC and other applicable law, all of which rights and remedies may be exercised without further notice to or consent by the Credit Parties, except as such notice or consent is expressly provided for hereunder or required by applicable law. All rights, remedies and powers granted to Agent and Lenders hereunder, under any of the other Loan Documents, the UCC or other applicable law, are cumulative, not exclusive and enforceable, in Agent’s and Lenders’ discretion, alternatively, successively, or concurrently on any one or more occasions, and shall include, without limitation, the right to apply to a court of equity for an injunction to restrain a breach or threatened breach by the Credit Parties of this Agreement or any of the other Loan Documents. Agent may (and at the written request of the Required Lenders shall) at any time or times an Event of Default exists or has occurred and is continuing, and the Agent has provided a Notice of Acceleration, proceed directly against the Credit Parties to collect the Obligations without prior recourse to the Collateral.

(b) Without limiting the generality of the foregoing, at any time an Event of Default exists or has occurred and is continuing, and after the applicable cure period, if any, has passed, and upon the Agent’s delivery of a Notice of Acceleration, with the written approval of Required Lenders (which approval (x) shall be deemed to have been given if no response is received by Agent within three (3) Business Days of such approval being requested and (y) shall not be required if Agent determines in its Permitted Discretion that exigent circumstances exist that require the taking of action prior to approval from Required Lenders) Agent may, and at the

written request of the Required Lenders, Agent shall (i) accelerate the payment of all Obligations and demand immediate payment thereof to Agent and Lenders (provided, that, upon the occurrence of any Event of Default described in Sections 11.1(e) and 11.1(f), all Obligations shall automatically become immediately due and payable), (ii) terminate the commitment of Lenders to make Revolving Loans hereunder whereupon the obligation of Lenders to make any Revolving Loan shall immediately terminate (provided, that, upon the occurrence of any Event of Default described in Sections 11.1(e) and 11.1(f), the commitments and any other obligation of Agent or Lenders hereunder shall automatically terminate), (iii) cease making Revolving Loans or reduce the lending formulas or amounts of Revolving Loans available to Borrower, (iv) establish such Reserves as Agent determines, without limitation or restriction, notwithstanding anything to the contrary contained herein and/or (v) require the Borrower to replace the portfolio manager and Chief Executive Officer of the Borrower with Persons acceptable to the Agent, in its Permitted Discretion.

ARTICLE 12 ASSIGNMENTS AND PARTICIPATIONS; APPOINTMENT OF AGENT

12.1 Assignment and Participations.

(a) Subject to the terms of this Section 12.1, any Lender may make an assignment to a Qualified Assignee of, at any time or times, the Loan Documents, Revolving Loans and any Commitment or any portion thereof or interest therein, including any Lender’s rights, title, interests, remedies, powers or duties thereunder. Any assignment by a Lender shall: (i) require the consent of Agent (which consent shall not be unreasonably withheld or delayed with respect to a Qualified Assignee) and the execution of an Assignment Agreement in form and substance reasonably satisfactory to, and acknowledged by, Agent; (ii) be conditioned on such assignee Lender representing to the assigning Lender and Agent that it is purchasing the applicable Revolving Loans to be assigned to it for its own account, for investment purposes and not with a view to the distribution thereof; (iii) except for an assignment to an Affiliate of such Lender, after giving effect to any such partial assignment the assignee Lender shall have Commitments in an amount at least equal to Five Million Dollars ($5,000,000) and the assignor Lender shall have Commitments in an amount at least equal to Five Million Dollars ($5,000,000); (iv) with respect to any assignment of the Revolving Loan Commitment and the Revolving Loan, be for a ratable portion of the assigning Lender’s interest in the Revolving Loan Commitment Amount and the Revolving Loan; (v) include a payment to Agent of an assignment fee of three thousand five hundred dollars ($3,500) by assignee Lender; (vi) so long as no Event of Default has occurred and is continuing, require the consent of Borrower, which shall not be unreasonably withheld or delayed; provided that no such consent shall be required for an assignment to a Qualified Assignee; and (vii) unless such an assignment is to an Affiliate of such Lender, Lender shall give notice to the other Lenders of any intent to assign and such other Lenders shall be permitted to purchase such assignment on terms agreed to by assignor Lender and assignee Lender. After the occurrence of a Default or an Event of Default, any Lender may make an assignment to a non-Qualified Assignee with the consent of the Agent (not to be unreasonably withheld or delayed). If more than one Lender wishes to purchase Revolving Loans or Commitments from the assigning Lender, such assignments to Lenders will be allocated on a pro-rata basis. In the case of an assignment by a Lender under this Section 12.1, the assignee shall have, to the extent of such assignment, the same rights, benefits and obligations as all other Lenders hereunder. The assigning Lender shall be relieved of its

obligations hereunder with respect to its Commitments or assigned portion thereof from and after the date of such assignment. The Credit Parties hereby acknowledge and agree that any assignment shall give rise to a direct obligation of the Credit Parties to the assignee and that the assignee shall be considered to be a “Lender”. In all instances, each Lender’s agreement to make Revolving Loans hereunder shall be several and not joint and shall be limited to such Lender’s Pro Rata Share of the applicable Commitment. In the event Agent or any Lender assigns or otherwise transfers all or any part of the Obligations, Agent or any such Lender shall so notify Borrower and Borrower shall, upon the request of Agent or such Lender, execute new Revolving Notes in exchange for the Revolving Notes, if any, being assigned. Notwithstanding the foregoing provisions of this Section 12.1(a), any Lender may at any time pledge the Obligations held by it and such Lender’s rights under this Agreement and the other Loan Documents to a Federal Reserve Bank; provided, that, no such pledge to a Federal Reserve Bank shall release such Lender from such Lender’s obligations hereunder or under any other Loan Document. The Agent shall maintain at its address referred to in Section 13.1(a) a copy of each Assignment Agreement delivered to and accepted by it and a register of the recordation of the names and addresses of the Lenders and the Commitments, and principal amounts thereunder owing to, each Lender from time to time (the “Register”). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Agent and the Lenders shall treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice. Notwithstanding anything to the contrary set forth herein, prior to the occurrence of a Consent Rights Trigger Event, the Lenders shall not assign any portion of their Commitments, Revolving Loans, rights or responsibilities hereunder to any Disqualified Lender. After the occurrence of a Consent Rights Trigger Event, the Lenders shall be permitted to assign any portion of their Commitments, Revolving Loans, rights or responsibilities hereunder to any Person approved by Agent (such approval not to be unreasonably withheld or delayed).

(b) Subject to the terms of this Section 12.1, any Lender may sell to a Qualified Assignee participations in, at any time or times, the Loan Documents, Revolving Loans and any Commitment or any portion thereof or interest therein, including any Lender’s rights, title, remedies, powers or duties thereunder. Any participation by a Lender of all or any part of its Commitment shall be made with the understanding that all amounts payable by the Borrower hereunder shall be determined as if that Lender had not sold such participation, and that the holder of any such participation shall not be entitled to require such Lender to take or omit to take any action hereunder except actions directly affecting (i) any reduction in the principal amount of, or interest rate or fees payable with respect to, any Loan in which such holder participates, (ii) any extension of the scheduled amortization of the principal amount of any Loan in which such holder participates or the final maturity date thereof, and (iii) any release of all or substantially all of the Collateral (other than in accordance with the terms of this Agreement or the other Loan Documents). Solely for purposes of Section 12.8 (Setoff and Sharing of Payments), Section 3.9 (Increased Cost), Section 4.7 (Taxes), and Section 13.6 (Indemnification), the Borrower acknowledges and agrees that a participation shall give rise to a direct obligation of the Borrower to the participant and the participant shall be considered to be a “Lender”. Except as set forth in the preceding sentence the Borrower shall not have any obligation or duty to any participant. Neither Agent nor any Lender (other than the Lender selling a participation) shall have any duty to any participant and may continue to deal solely

with the Lender selling a participation as if no such sale had occurred. Notwithstanding anything to the contrary set forth herein, prior to the occurrence of a Consent Rights Trigger Event, the Lenders shall not grant any participations in any portion of their Commitments, Revolving Loans, rights or responsibilities hereunder to any Disqualified Lender. After the occurrence of a Consent Rights Trigger Event, the Lenders shall be permitted to grant participations in any portion of their Commitments, Revolving Loans, rights or responsibilities hereunder to any Person approved by Agent (such approval not to be unreasonably withheld or delayed).

(c) Except as expressly provided in this Section 12.1, no Lender shall, as between the Borrower and that Lender, or Agent and that Lender, be relieved of any of its obligations hereunder as a result of any sale, assignment, transfer or negotiation of, or granting of participation in, all or any part of the Revolving Loans, the Revolving Notes or other Obligations owed to such Lender.

(d) Borrower shall assist any Lender permitted to sell assignments or participations under this Section 12.1 as reasonably required to enable the assigning or selling Lender to effect any such assignment or participation, including the execution and delivery of any and all agreements, notes and other documents and instruments as shall be requested and, if requested by Agent, the preparation of informational materials for, and the participation of management in meetings with, potential assignees or participants. Borrower shall certify the correctness, completeness and accuracy of all descriptions of the Credit Parties and their affairs contained in any selling materials provided by Borrower and all other information provided by Borrower and included in such materials, except that any projections delivered by Borrower shall only be certified by Borrower as having been prepared by Borrower based upon any estimates or assumptions stated therein which Borrower believed to be reasonable and fair in light of the conditions and facts then known to Borrower and that such projections reflected Borrower’s good faith and reasonable estimates of the future financial performance of the Credit Parties and of the other information projected therein for the periods set forth therein.

(e) Any Lender may furnish any information concerning the Credit Parties in the possession of such Lender from time to time to assignees and participants (including prospective assignees and participants), provided, all such prospective assignees and participants shall have signed a confidentiality agreement in form and substance acceptable to Borrower and Agent. After the occurrence of an Event of Default, all such prospective assignees and participants shall have signed a confidentiality agreement in form and substance acceptable to Agent.

12.2 Appointment of Agents.

(a) Agent is hereby appointed to act on behalf of all Lenders as Agent under this Agreement and the other Loan Documents. The provisions of this Section 12.2 are solely for the benefit of Agent and Lenders and neither the Credit Parties nor any other Person shall have any rights as a third party beneficiary of any of the provisions hereof. In performing its functions and duties under this Agreement and the other Loan Documents, Agent shall act solely as an agent of Lenders and does not assume and shall not be deemed to have assumed any obligation toward or relationship of agency or trust with or for the Credit Parties or any other Person. Agent shall have no duties or responsibilities except for those expressly set forth in this

Agreement and the other Loan Documents. The duties of Agent shall be mechanical and administrative in nature and Agent shall not have, or be deemed to have, by reason of this Agreement, any other Loan Document or otherwise a fiduciary relationship in respect of any Lender. Except as expressly set forth in this Agreement and the other Loan Documents, Agent shall not have any duty to disclose, and shall not be liable for failure to disclose, any information relating to the Credit Parties, the Portfolio Companies or the Debt Investment Obligors that is communicated to or obtained by Agent in any capacity. Neither Agent nor any of its Affiliates nor any of their respective officers, directors, employees, agents or representatives shall be liable to any Lender for any action taken or omitted to be taken by it hereunder or under any other Loan Document, or in connection herewith or therewith, provided that Agent may be liable for damages resulting from a breach by Agent of its Obligations hereunder caused by its own gross negligence or willful misconduct.

If Agent shall request instructions from Required Lenders or all affected Lenders with respect to any act or action (including failure to act) in connection with this Agreement or any other Loan Document, then Agent shall be entitled to refrain from such act or taking such action unless and until Agent shall have received instructions from Required Lenders or all affected Lenders, as the case may be, and Agent shall not incur liability to any Person by reason of so refraining. Agent shall be fully justified in failing or refusing to take any action hereunder or under any other Loan Document (a) if such action would, in the reasonable opinion of Agent, be contrary to law or the terms of this Agreement or any other Loan Document, (b) if such action would, in the reasonable opinion of Agent, expose Agent to liability under any Environmental Law (as such term is defined in the Environmental Agreement) or (c) if Agent shall not first be indemnified to its reasonable satisfaction against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. Without limiting the foregoing, no Lender shall have any right of action whatsoever against Agent as a result of Agent acting or refraining from acting hereunder or under any other Loan Document in accordance with the instructions of Required Lenders or all affected Lenders, as applicable.

(b) Notwithstanding any other provision of this Agreement or any provision of any other Loan Document, the Syndication Agent is named as such for recognition purposes only, and in its capacity as such shall have no duties, responsibilities or liabilities with respect to this Agreement or any other Loan Document; it shall not be entitled to any additional fees as a result of such designation; it being understood and agreed that the Syndication Agent shall be entitled to all indemnification and reimbursement rights in favor of the Agent provided herein and in the other Loan Documents. Without limitation of the foregoing, the Syndication Agent in its capacity as such shall not, by reason of this Agreement or any other Loan Document, have any fiduciary relationship in respect of any Lender, Credit Party or any other Person.

12.3 Agent’s Reliance, Etc. Neither Agent nor any of its Affiliates nor any of their respective directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement or the other Loan Documents, except that Agent or its Affiliates, as applicable, may be liable for damages caused by its or their own gross negligence or willful misconduct. Without limiting the generality of the foregoing, Agent: (a) may treat the payee of any Revolving Note as the holder thereof until Agent receives written notice of the assignment or transfer thereof signed by such payee and in form reasonably satisfactory to Agent; (b) may consult with legal counsel, independent public

accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts; (c) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations made in or in connection with this Agreement or the other Loan Documents; (d) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or the other Loan Documents on the part of the Credit Parties or any Guarantor or to inspect the Collateral (including the books and records) of the Credit Parties or any Guarantor; (e) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; and (f) shall incur no liability under or in respect of this Agreement or the other Loan Documents by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopy, telegram, cable or telex) believed by it to be genuine and signed or sent by the proper party or parties.

12.4 Agent and Affiliates. With respect to its Commitments hereunder, Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any other Lender and may exercise the same as though it were not Agent; and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated, include Agent in its individual capacity. Agent and its Affiliates may lend money to, invest in, and generally engage in any kind of business with, the Credit Parties or any Guarantor, any of their Affiliates and any Person who may do business with or own securities of the Credit Parties or any such Affiliate, all as if Agent were not Agent and without any duty to account therefor to Lenders. Agent and its Affiliates may accept fees and other consideration from the Credit Parties or any Guarantor for services in connection with this Agreement or otherwise without having to account for the same to Lenders. Each Lender acknowledges the potential conflict of interest between Agent as a Lender holding disproportionate interests in the Revolving Loans and Agent as Agent. Each Lender acknowledges that it has not relied, and will not rely, on any of the Lenders so identified in deciding to enter into this Agreement or in taking or not taking action hereunder.

12.5 Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon Agent or any other Lender and based on the Financial Statements referred to in Section 7.5 and Section 8.1 and such other documents and information as it has deemed appropriate, made its own credit and financial analysis of the Credit Parties and its own decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon Agent 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 this Agreement. Each Lender acknowledges the potential conflict of interest of each other Lender as a result of Lenders holding disproportionate interests in the Revolving Loans, and expressly consents to, and waives any claim based upon, such conflict of interest.

12.6 Indemnification. Lenders agree to indemnify Agent (to the extent not reimbursed by the Borrower or Guarantors and without limiting the obligations of Borrower and Guarantors under the Loan Documents), ratably according to their respective Pro Rata Shares, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on,

incurred by, or asserted against Agent in any way relating to or arising out of this Agreement or any other Loan Document or any action taken or omitted to be taken by Agent in connection therewith; provided, that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from Agent’s gross negligence or willful misconduct. Without limiting the foregoing, each Lender agrees to reimburse Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including reasonable counsel fees) incurred by Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement and each other Loan Document, to the extent that Agent is not reimbursed for such expenses by Borrower or Guarantors and without limiting the obligations of Borrower and Guarantors under the Loan Documents.

12.7 Successor Agent. Agent may resign at any time by giving not less than 30 days’ prior written notice thereof to Lenders and Borrower. Upon any such resignation, the Required Lenders shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the resigning Agent’s giving notice of resignation, then the resigning Agent may, on behalf of Lenders, appoint a successor Agent, which shall be a Lender, if a Lender is willing to accept such appointment, or otherwise shall be a commercial bank or financial institution or a subsidiary of a commercial bank or financial institution if such commercial bank or financial institution is organized under the laws of the United States of America or of any State thereof and has a combined capital and surplus of at least Three Hundred Million Dollars ($300,000,000). If no successor Agent has been appointed pursuant to the foregoing, within 30 days after the date such notice of resignation was given by the resigning Agent, such resignation shall become effective and the Required Lenders shall thereafter perform all the duties of Agent hereunder until such time, if any, as the Required Lenders appoint a successor Agent as provided above. Any successor Agent appointed by Required Lenders hereunder shall be subject to the prior written approval of Borrower, such approval not to be unreasonably withheld or delayed; provided that such approval after the first 30 days after the notice of resignation by the Agent shall not be required if a Consent Rights Triggering Event has occurred and is continuing. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall succeed to and become vested with all the rights, powers, privileges and duties of the resigning Agent. Upon the earlier of the acceptance of any appointment as Agent hereunder by a successor Agent or the effective date of the resigning Agent’s resignation, the resigning Agent shall be discharged from its duties and obligations under this Agreement and the other Loan Documents, except that any indemnity rights or other rights in favor of such resigning Agent shall continue. After any resigning Agent’s resignation hereunder, the provisions of this Section 12 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was acting as Agent under this Agreement and the other Loan Documents.

12.8 Setoff and Sharing of Payments. In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, upon the occurrence and during the continuance of any Event of Default and subject to Section 12.9(f), each Lender is hereby authorized at any time or from time to time, without notice to Borrower or to any other Person, any such notice being hereby expressly waived, to offset and to appropriate and to apply any and all balances held by it at any of its offices for the account of Borrower or

any Guarantor (regardless of whether such balances are then due to Borrower or Guarantor) and any other properties or assets at any time held or owing by that Lender or that holder to or for the credit or for the account of Borrower or any Guarantor against and on account of any of the Obligations that are not paid when due. Any Lender exercising a right of setoff or otherwise receiving any payment on account of the Obligations in excess of its Pro Rata Share thereof shall purchase for cash (and the other Lenders or holders shall sell) such participations in each such other Lender’s or holder’s Pro Rata Share of the Obligations as would be necessary to cause such Lender to share the amount so offset or otherwise received with each other Lender or holder in accordance with their respective Pro Rata Shares (other than offset rights exercised by any Lender with respect to Section 3.9 (Increased Cost), Section 4.7 (Taxes), Section 13.6 (Indemnification)). The Credit Parties agree, to the fullest extent permitted by law, that (a) any Lender may exercise its right to offset with respect to amounts in excess of its Pro Rata Share of the Obligations and may sell participations in such amounts of offset to other Lenders and holders and (b) any Lender so purchasing a participation in the Revolving Loans made or other Obligations held by other Lenders or holders may exercise all rights of offset, bankers’ Lien, counterclaim or similar rights with respect to such participation as fully as if such Lender or holder were a direct holder of the Revolving Loans and the other Obligations in the amount of such participation. Notwithstanding the foregoing, if all or any portion of the offset amount or payment otherwise received is thereafter recovered from the Lender that has exercised the right of offset, the purchase of participations by that Lender shall be rescinded and the purchase price restored together with interest at such rate, if any, as such Lender is required to pay to Borrower or such other Person, without setoff, counterclaim or deduction of any kind.

12.9 Revolving Loans; Payments; Non-Funding Lenders; Defaulting Lenders; Information; Actions in Concert.

(a) Revolving Loans; Payments.

(i) Subject to the satisfaction of the funding conditions hereunder, each Lender shall make the amount of such Lender’s Pro Rata Share of each Revolving Loan available to Agent in same day funds by wire transfer to Agent’s account as set forth in Exhibit D not later than 2:00 p.m. (New York time) on the requested borrowing date. After receipt of such wire transfers (or, in the Agent’s sole discretion, before receipt of such wire transfers), subject to the terms hereof, Agent shall make the requested Revolving Loan to the Borrower on the borrowing date set forth in the applicable Notice of Borrowing. All payments by each Lender shall be made without setoff, counterclaim or deduction of any kind. To the extent that any Lender (a “Non-Funding Lender”) fails to fund such payments and Revolving Loans or fails to fund the purchase of any required participations, Agent shall be entitled to set off the funding short-fall against that Non-Funding Lender’s Pro Rata Share of all payments received from Borrower.

(ii) On the second Business Day of each calendar week or more frequently at Agent’s election (each, a “Reporting Date”), Agent shall report to each Lender by telephone, electronic mail, or telecopy of the amount of such Lender’s Pro Rata Share of Revolving Loans funded by such Lender since the previous Reporting Date and the amount of principal, interest and fees paid for the benefit of Lenders with respect to the Obligations.

(b) Availability of Lenders’ Pro Rata Share. Each Lender’s obligation to make its Pro Rata Share of each Revolving Loan shall be absolute and unconditional and shall not be affected by any circumstance, other than an inability of Borrower to satisfy the conditions precedent to borrowing set forth in this Agreement at any time. If such Pro Rata Share is not, in fact, paid to Agent by such Lender when due, Agent will be entitled to recover such amount on demand from such Lender. If any Lender fails to pay the amount of its Pro Rata Share forthwith upon Agent’s demand, Agent shall promptly notify Borrower and Borrower shall immediately repay such amount to Agent. Nothing in this Section 12.9(b) or elsewhere in this Agreement or the other Loan Documents shall be deemed to require Agent to advance funds on behalf of any Lender or to relieve any Revolving Lender from its obligation to fulfill its Commitments hereunder or to prejudice any rights that Borrower may have against any Lender as a result of any default by such Lender hereunder. To the extent that Agent advances funds to Borrower on behalf of any Lender and is not reimbursed therefor on the same Business Day as such Revolving Loan is made, Agent shall be entitled to retain for its account all interest accrued on such Revolving Loan until reimbursed by the applicable Lender.

(i) If Agent pays an amount to a Lender under this Agreement in the belief or expectation that a related payment has been or will be received by Agent from Borrower and such related payment is not received by Agent, then Agent will be entitled to recover such amount from such Lender on demand without setoff, counterclaim or deduction of any kind.

(ii) If Agent determines at any time that any amount received by Agent under this Agreement must be returned to Borrower or paid to any other Person pursuant to any insolvency law or otherwise, then, notwithstanding any other term or condition of this Agreement or any other Loan Document, Agent will not be required to distribute any portion thereof to any Lender. In addition, each Lender will repay to Agent on demand any portion of such amount that Agent has distributed to such Lender, together with interest at such rate, if any, as Agent is required to pay to Borrower or such other Person, without setoff, counterclaim or deduction of any kind.

(d) Non-Funding Lenders; Defaulting Lenders.

(i) The failure of any Non-Funding Lender to make any Revolving Loan or any payment required by it hereunder shall not relieve any other Lender (each such other Lender, an “Other Lender”) of its obligations to make such Revolving Loan or purchase such participation on such date, but neither any Other Lender nor Agent shall be responsible for the failure of any Non-Funding Lender to make a Revolving Loan, purchase a participation or make any other payment required hereunder.

(ii) Notwithstanding anything set forth herein to the contrary, a Defaulting Lender shall not have any voting or consent rights under or with respect to any Loan Document or constitute a “Lender” (or be included in the calculation of “Required Lenders” hereunder) for any voting or consent rights under or with respect to any Loan Document. At Borrower’s request, Agent or a Person reasonably acceptable to Agent shall have the right with Agent’s consent and in Agent’s sole discretion (but shall have no obligation) to purchase from

any Defaulting Lender, and each Defaulting Lender agrees that it shall, at Agent’s request, sell and assign to Agent or such Person, all of the Commitments of that Defaulting Lender for an amount equal to the principal balance of all Revolving Loans held by such Defaulting Lender and all accrued interest and fees with respect thereto through the date of sale, such purchase and sale to be consummated pursuant to an executed Assignment Agreement. Notwithstanding anything herein to the contrary, with respect to a Lender that is a Defaulting Lender, the Agent may, but shall not be obligated to, obtain a substitute Lender and execute an Assignment on behalf of such Defaulting Lender at any time with three (3) Business Days’ prior notice to such Defaulting Lender (unless notice is not practicable under the circumstances) and cause such Lender’s Revolving Loans and Commitments to be sold and assigned, in whole or in part, at par.

(e) Dissemination of Information. Agent shall use reasonable efforts to provide Lenders with any notice of Default or Event of Default received by Agent from, or delivered by Agent to, Borrower, with notice of any Event of Default of which Agent has actually become aware and with notice of any action taken by Agent following any Event of Default; provided, that Agent shall not be liable to any Lender for any failure to do so, except to the extent that such failure is attributable to Agent’s gross negligence or willful misconduct. Lenders acknowledge that Borrower is required to provide financial statements, collateral reports and other information to Lenders in accordance with Section 8.1 and agree that Agent shall have no duty to provide the same to Lenders.

(f) Actions in Concert. Anything in this Agreement to the contrary notwithstanding, each Lender hereby agrees with each other Lender that no Lender shall take any action to protect or enforce its rights arising out of this Agreement or the Revolving Notes (including exercising any rights of setoff) without first obtaining the prior written consent of Agent and Required Lenders as applicable, it being the intent of Lenders that any such action to protect or enforce rights under this Agreement and the Revolving Notes shall be taken in concert and at the direction or with the consent of Agent or Required Lenders, as applicable, in accordance with the terms hereof.

12.10 Amendments and Waivers.

(a) The Credit Parties and, with the written consent of the Required Lenders, the Agent may, from time to time, enter into written (but not oral) amendments, supplements or modifications hereto for the purpose of adding any provisions to this Agreement, the Revolving Notes or any other Loan Documents or changing in any manner the rights of the Lenders or of any other party hereunder or thereunder, and with the consent of the Required Lenders, the Agent may execute and deliver to the Borrower a written instrument waiving, on such terms and conditions as the Agent or the Required Lenders may specify in such instrument, any of the requirements of this Agreement, the Revolving Notes or any other Loan Document; provided, however, that no such waiver and no such amendment, supplement or modification shall (i) extend either the Maturity Date or the maturity of any Revolving Note or any installment thereof, or reduce the principal amount thereof, or change the rate or extend the time of payment of interest thereon, or change the amount or extend the time of payment of any fee payable to all of the Lenders hereunder, or change the amount of any Lender’s commitment to grant Revolving Loans, or amend, modify or waive any provision of Section 4.1(b), Section 8.1 or Section 11 or this Section 12.10, or any changes or modifications to the definition of Required Lenders or

modify the definitions of “Availability Block”, “Borrowing Base”, “Eligible Debt Investments”, “Eligible Senior Debt Investments” or “Eligible Subordinate Debt Investments” or consent to the assignment or transfer by Borrower of any of its rights and obligations under this Agreement, or release, or subordinate the Liens under the Loan Documents in, any Collateral in excess of Ten Million Dollars ($10,000,000), or release any Guarantors from their obligations under any Guaranty Agreements, or consent to any prepayment of the Senior Notes, in each case without the written consent of all the Lenders, (ii) amend, modify or waive any provision of Section 12 without the written consent of the Agent and any Lenders affected by such waiver, amendment or modification or (iii) amend, modify or waive any provision requiring the consent of all of the Lenders, without the written consent of all of the Lenders.

(b) In the event a Lender does not consent to an amendment request requiring the consent of all Lenders (the “Non-Consenting Lender”), but such request is approved by the Required Lenders (the “Consenting Lenders”), the Agent, with the consent of the Borrower if occurring prior to the occurrence of a Default or an Event of Default, shall be permitted to (i) replace the Non-Consenting Lender by the Consenting Lenders increasing their Commitments (ii) with a Lender acceptable to the Agent and with the consent of the Borrower if occurring prior to the occurrence of a Default or an Event of Default, or (iii) terminate the Non-Consenting Lenders Commitment subject to the repayment, without any prepayment fee or penalty, of the Non-Consenting Lender’s Pro Rata Share of the outstanding Revolving Loans.

(c) Any such written waiver and any such written amendment, supplement or modification shall apply equally to each of the Lenders and shall be binding upon the Borrower, the Lenders, the Agent and all future holders of the Revolving Notes. In the case of any waiver, the Borrower, the Lenders and the Agent shall be restored to their former position and rights hereunder and under the outstanding Revolving Notes, and any Default or Event of Default waived shall be deemed to be cured and not continuing; provided, however, no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereto. An Event of Default shall be deemed to be continuing unless waived by the Agent or the requisite number of Lenders in accordance with this Section 12.10.

ARTICLE 13 JURY TRIAL WAIVER;

OTHER WAIVERS; CONSENTS; GOVERNING LAW

13.1 Obligations and Liabilities of Lender. Neither the Agent nor the Lenders shall be deemed to have assumed any liability or responsibility to the Credit Parties or any other Person for the correctness, validity or genuineness of any instruments or documents that may be released or endorsed to the Credit Parties by the Agent and/or the Lenders (which shall automatically be deemed to be without recourse to the Lenders in any event), or for the existence, character, quantity, quality, condition, value or delivery of any goods purporting to be represented by any such documents; and the Agent and the Lenders, by accepting such Lien in the Collateral, or by releasing any Collateral to the Borrower, shall not be deemed to have assumed any obligation or liability to any supplier, Debt Investment Obligor or to any other Person, and the Credit Parties agree to indemnify and defend the Agent and the Lenders and hold them harmless in respect to any claim or proceeding arising out of any matter referred to in this Section 13.1.

13.2 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.

(a) The validity, interpretation and enforcement of this Agreement and the other Loan Documents (except as otherwise provided therein) and any dispute arising out of the relationship between the parties hereto, whether in contract, tort, equity or otherwise, shall be governed by the internal laws of the State of New York but excluding any principles of conflicts of law or other rule of law that would cause the application of the law of any jurisdiction other than the laws of the State of New York.

(b) The Credit Parties, Agent, and Lenders irrevocably consent and submit to the non-exclusive jurisdiction of the of the Supreme Court of the State of New York, New York County and the United States District Court for the Southern District of New York, whichever Agent may elect, and waive any objection based on venue or forum non conveniens with respect to any action instituted therein arising under this Agreement or any of the other Loan Documents or in any way connected with or related or incidental to the dealings of the parties hereto in respect of this Agreement or any of the other Loan Documents or the transactions related hereto or thereto, in each case whether now existing or hereafter arising, and whether in contract, tort, equity or otherwise, and agree that any dispute with respect to any such matters shall be heard only in the courts described above (except that Agent shall have the right to bring any action or proceeding against Credit Parties or their property in the courts of any other jurisdiction which Agent deems necessary or appropriate in order to realize on the Collateral or to otherwise enforce its rights against Credit Parties or their property).

(c) The Credit Parties hereby waive personal service of any and all process upon them and consent that all such service of process may be made by certified mail (return receipt requested) directed to their address set forth herein and service so made shall be deemed to be completed five (5) days after the same shall have been so deposited in the U.S. mails, or, at Agent’s option, by service upon the Credit Parties in any other manner provided under the rules of any such courts. Within forty-five (45) days after such service, the Credit Parties shall appear in answer to such process, failing which the Credit Parties shall be deemed in default and judgment may be entered by Agent against the Credit Parties for the amount of the claim and other relief requested.

(d) THE CREDIT PARTIES, AGENT, AND LENDERS EACH HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. THE CREDIT PARTIES, AGENT, AND LENDERS EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE CREDIT PARTIES, AGENT, OR LENDERS MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

(e) Agent and Lenders shall not have any liability to the Credit Parties (whether in tort, contract, equity or otherwise) for losses suffered by the Credit Parties in connection with, arising out of, or in any way related to the transactions or relationships contemplated by this Agreement, or any act, omission or event occurring in connection herewith, unless it is determined by a final and non-appealable judgment or court order binding on Agent and Lenders that the losses were the result of a breach by Agent or such Lender of its obligations hereunder or an act or omission of Agent or such Lender constituting gross negligence or willful misconduct. The Credit Parties: (i) certify that neither Agent, Lenders, nor any representative, agent or attorney acting for or on behalf Agent or Lenders has represented, expressly or otherwise, that Agent and Lenders would not, in the event of litigation, seek to enforce any of the waivers provided for in this Agreement or any of the other Loan Documents and (ii) acknowledges that in entering into this Agreement and the other Loan Documents, Agent and Lenders are relying upon, among other things, the waivers and certifications set forth in this Section 13.2 and elsewhere herein and therein.

13.3 Waiver of Notices. The Credit Parties hereby expressly waive demand, presentment, protest and notice of protest and notice of dishonor with respect to any and all instruments and chattel paper, included in or evidencing any of the Obligations or the Collateral, and any and all other demands and notices of any kind or nature whatsoever with respect to the Obligations, the Collateral and this Agreement, except such as are expressly provided for herein or required by applicable law and cannot be waived thereunder. No notice to or demand on the Credit Parties which Agent may elect to give shall entitle the Credit Parties to any other or further notice or demand in the same, similar or other circumstances.

13.4 Amendments and Waivers. Neither this Agreement nor any other Loan Document nor any terms hereof or thereof may be amended, waived, discharged or terminated unless such amendment, waiver, discharge or termination is in writing signed by Agent, and as to amendments to any of the Loan Documents, by the Credit Parties, as applicable, and such amendment, waiver, discharge or termination shall be effective and binding as to Agent and Lenders only in the specific instance and for the specific purpose for which given. Agent and Lenders shall not, by any act, delay, omission or otherwise be deemed to have expressly or impliedly waived any of its or their rights, powers and/or remedies unless such waiver shall be in writing and signed as provided herein. Any such waiver shall be enforceable only to the extent specifically set forth therein. A waiver by Agent or Lenders of any right, power and/or remedy on any one occasion shall not be construed as a bar to or waiver of any such right, power and/or remedy which Agent or Lenders would otherwise have on any future occasion, whether similar in kind or otherwise.

13.5 Waiver of Counterclaims. The Credit Parties waive all rights to interpose any claims, deductions, setoffs or counterclaims of any nature (other than compulsory counterclaims) in any action or proceeding with respect to this Agreement, the Obligations, the Collateral or any matter arising therefrom or relating hereto or thereto.

13.6 Indemnification. The Credit Parties shall indemnify and hold Agent and Lenders, and their respective officers, directors, agents, employees, advisors and counsel and their respective Affiliates (each such person being an “Indemnitee”), harmless from and against any and all losses, claims, damages, penalties, liabilities, costs or expenses (including attorneys’ fees

and expenses) imposed on, incurred by or asserted against any of them in connection with any litigation, investigation, claim or proceeding commenced or threatened related to the negotiation, preparation, execution, delivery, enforcement, performance or administration of this Agreement, any other Loan Documents, or any undertaking or proceeding related to any of the transactions contemplated hereby or any act, omission, event or transaction related or attendant thereto, including amounts paid in settlement, court costs, and the fees and expenses of counsel except the Credit Parties shall not have any obligation under this Section 13.6 to indemnify an Indemnitee with respect to (i) a matter covered hereby resulting from a breach by such Indemnitee of its obligations hereunder which are the result of the gross negligence or willful misconduct of such Indemnitee as determined pursuant to a final, non-appealable order of a court of competent jurisdiction (but without limiting the obligations of the Credit Parties as to any other Indemnitee) or (ii) any dispute between any two (2) or more Indemnitees which is not the result of any act or failure to act by the Credit Parties. To the extent that the undertaking to indemnify, pay and hold harmless set forth in this Section may be unenforceable because it violates any law or public policy, Borrower shall pay the maximum portion which they are permitted to pay under applicable law to Agent and Lenders in satisfaction of indemnified matters under this Section. To the extent permitted by applicable law, the Credit Parties shall not assert, and the Credit Parties hereby waive, any claim against any Indemnitee, on any theory of liability for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any of the other Loan Documents or any undertaking or transaction contemplated hereby. No Indemnitee referred to above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or any of the other Loan Documents or the transaction contemplated hereby or thereby. All amounts due under this Section shall be payable upon demand. The foregoing indemnity shall survive the payment of the Obligations and the termination or non-renewal of this Agreement.

ARTICLE 14 NOTICES; MISCELLANEOUS

14.1 Notices.

(a) Except in the case of notices and other communications expressly permitted to be given by telephone or electronic method of transmission (and subject in each case to clause (c) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile or electronic transmission (as provided in Section 14.1(c) below), as follows:

If to Borrower: MVC CAPITAL, INC.

287 Bowman Ave # 241

Purchase, NY 10577

Attention: Scott J. Schuenke

Telephone No.: 914-701-0301

Telecopy No. 914-701-0315

Email: sschuenke@mvccapital.com

With a copy to: Locke Lord LLP

111 South Wacker Drive

Chicago, Illinois 60606

Attention: John L. Eisel, Esq.

Telephone No.: 312-201-2613

Telecopy No. 855-577-8443

Email: john.eisel@lockelord.com

If to Agent or Lenders: SANTANDER BANK, N.A.

830 Morris Turnpike, 3rd Floor

Short Hills, NJ 07078

Attention: Mr. Gregory R. Russano

Telephone No.: 973-232-8349

Telecopy No. 973-379-4175

Email: grussano@santander.us

With a copy to: Otterbourg P.C.

230 Park Avenue

New York, New York 10169

Attention: Jeffrey M. Rosenthal, Esq.

Telephone No.: 212-905-3634

Telecopy No. 212-682-6104

Email: jrosenthal@otterbourg.com

If to Wintrust Bank: Wintrust Commercial Banking

at Wintrust Bank

231 S. LaSalle Street

2nd Floor

Chicago, IL 60604

Attention: Mr. John Paul Hills

Telephone No.: 312-291-2941

Telecopy No. 866-862-9548

Email: jhills@wintrust.com

With a copy to: Goldberg Kohn LTD.

55 East Monroe

Suite 3300 Chicago, IL 60603

Attention: Michael C. Hainen, Esq.

Telephone No.: 312-201-3913

Telecopy No. 312-863-7413

Email: michael.hainen@goldbergkohn.com

Any party hereto may change its address, facsimile number or e-mail address for notices and other communications hereunder by notice to the other parties hereto.

(b) All such notices and other communications (i) sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received, (ii) sent by facsimile shall be deemed to have been given when sent, provided that if not given during normal business hours of the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient or (iii) delivered through an electronic method of transmission to the extent provided in clause (c) below shall be effective as provided in such clause.

(c) Notices and other communications to Agent hereunder may be delivered or furnished by e-mail or any internet or extranet-based site providing for access to data protected by passcodes or other security systems approved by Agent for such purpose and in each case to the extent that Agent may approve pursuant to procedures approved by the Agent; provided, that, the foregoing shall not apply to notices pursuant to Section 2 or Section 8.2 or such other notices as Agent may specifically hereafter agree. Unless otherwise specified by Agent, all such notices and other communications (i) 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 not given during the normal business hours of the recipient, such notice or communication shall be deemed to have been given at the opening of business on the next Business Day for the recipient, and (ii) posted to an internet or extranet-based site 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; provided that, for both clauses (i) and (ii) above, if such notice, e-mail 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 of the recipient.

14.2 Partial Invalidity. If any provision of this Agreement is held to be invalid or unenforceable, such invalidity or unenforceability shall not invalidate this Agreement as a whole, but this Agreement shall be construed as though it did not contain the particular provision held to be invalid or unenforceable and the rights and obligations of the parties shall be construed and enforced only to such extent as shall be permitted by applicable law.

14.3 Successors. This Agreement, the other Loan Documents and any other document referred to herein or therein shall be binding upon and inure to the benefit of and be enforceable by Agent, Lenders and the Credit Parties and their respective successors and assigns, except that the Credit Parties may not assign their rights under this Agreement, the other Loan Documents and any other document referred to herein or therein without the prior written consent of Agent. Any such purported assignment without such express prior written consent shall be void. The terms and provisions of this Agreement and the other Loan Documents are for the purpose of defining the relative rights and obligations of the Credit Parties, Agent and Lenders with respect

to the transactions contemplated hereby and there shall be no third party beneficiaries of any of the terms and provisions of this Agreement or any of the other Loan Documents.

14.4 Entire Agreement. This Agreement, the other Loan Documents, any supplements hereto or thereto, and any instruments or documents delivered or to be delivered in connection herewith or therewith represents the entire agreement and understanding concerning the subject matter hereof and thereof between the parties hereto, and supersede all other prior agreements, understandings, negotiations and discussions, representations, warranties, commitments, proposals, offers and contracts concerning the subject matter hereof, whether oral or written. In the event of any inconsistency between the terms of this Agreement and any schedule or exhibit hereto, the terms of this Agreement shall govern.

14.5 USA Patriot Act. Agent hereby notifies Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub.L. 107-56 (signed into law October 26, 2001) (the “Act”), it is required to obtain, verify and record information that identifies each person or corporation who opens an account and/or enters into a business relationship with it, which information includes the name and address of the Credit Parties and other information that will allow Agent to identify such persons in accordance with the Act and any other applicable law. The Credit Parties are hereby advised that any Revolving Loans hereunder are subject to satisfactory results of such verification.

14.6 Counterparts, Etc. This Agreement or any of the other Loan Documents may be executed in any number of counterparts, each of which shall be an original, but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Agreement or any of the other Loan Documents by telefacsimile or other electronic method of transmission shall have the same force and effect as the delivery of an original executed counterpart of this Agreement or any of such other Loan Documents. Any party delivering an executed counterpart of any such agreement by telefacsimile or other electronic method of transmission shall in a timely manner also deliver an original executed counterpart, but the failure to do so shall not affect the validity, enforceability or binding effect of such agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, Agent, Lenders, Borrower and Guarantors have caused these presents to be duly executed as of the day and year first above written.

	BORROWER:

	MVC CAPITAL, INC.


	By:	/s/ Michael T. Tokarz
		Name: Michael T. Tokarz
		Title:


	GUARANTORS:

	MVC FINANCIAL SERVICES, INC.

	By:	/s/ Michael T. Tokarz
		Name: Michael T. Tokarz
		Title:


	MVC CAYMAN

	By:	/s/ Michel T. Tokarz
		Name: Michel T. Tokarz
		Title:


	MVC GP II, LLC

	By:
		Name:
		Title:


	MVC PARTNERS LLC

	By:	/s/ Michael T. Tokarz
		Name: Michael T. Tokarz
		Title:

[SIGNATURES CONTINUED ON NEXT PAGE]

Credit and Security Agreement

IN WITNESS WHEREOF, Agent, Lenders, Borrower and Guarantors have caused these presents to be duly executed as of the day and year first above written.

	BORROWER:

	MVC CAPITAL, INC.


	By:
		Name:
		Title:


	GUARANTORS:

	MVC FINANCIAL SERVICES, INC.

	By:
		Name:
		Title:


	MVC CAYMAN

	By:
		Name:
		Title:


	MVC GP II, LLC

	By:	/s/ James Pinto
		Name: James Pinto
		Title: Manager, Chief Executive Officer

	MVC PARTNERS LLC

	By:
		Name:
		Title:

[SIGNATURES CONTINUED ON NEXT PAGE]

Credit and Security Agreement

[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

	SANTANDER BANK, N.A., as Agent


	By:	/s/ Gregory R. Russano
		Name: Gregory R. Russano
		Title: Senior Vice President


	SANTANDER BANK, N.A., as Lender


	By:	/s/ Gregory R. Russano
		Name: Gregory R. Russano
		Title: Senior Vice President

[SIGNATURES CONTINUED ON NEXT PAGE]

Credit and Security Agreement

[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

	Wintrust Bank,
	as Lender


	By:	/s/ John Paul Hills
		Name: John Paul Hills
		Title: VP

[SIGNATURES CONTINUED ON NEXT PAGE]

Credit and Security Agreement

EXHIBIT A

CREDIT AND SECURITY AGREEMENT

Form of Borrowing Base Certificate

See attached

A-1

MVC CAPITAL, INC.

BORROWING BASE CERTIFICATE

(Computation of Availability as of 12/08/2015)

This Certificate is being delivered to Santander Bank, N.A. (the “Agent”) pursuant to Section 8.1 of that certain Credit Agreement dated December 8, 2015, as amended thereafter (the “Agreement”) by and among MVC Capital Credit Corporation (the “Borrower”), the lenders party or signatory to the Agreement from time to time (the “Lenders”) and the Agent. Terms used in this Certificate and not otherwise defined shall have the meanings assigned to them in the Agreement.

The undersigned hereby certifies to the Agent that the following information, including without limitation, information relating to Eligible First Lien Loans Receivable and Eligible Second Lien Loans Receivable, is true and correct as of the date of computation set forth above in this Certificate. The undersigned further certifies that all representations and warranties of the Borrower in the Agreement continue to be true and correct as of the date hereof (except those representations that speak as of a specific date), and no Event of Default exists under the Agreement.

					Security Value of Eligible
COMPONENTS OF BORROWING BASE:	Security Value		Advance Rate		Loans Receivable

Eligible First Lien Loans Receivable (see Attachment 1)	$	22,054,428.50	65	%	$	14,335,378.53

Eligible Second Lien Loans Receivable (see Attachment 1)	$	68,635,284.06	50	%	$	34,317,642.03

Unsecured Loan Receivable (see Attachment 1)	$	6,167,220.05	0	%	$	—

Net Formula availability	$	96,856,932.61			$	48,653,020.55

Less: Minimum Excess Availability					$	(5,000,000.00	)

Reserves, if any, under Section 2.1(a) of Agreement	$	—			$	—

TOTAL BB AVAILABILITY					$	43,653,020.55

Revolving Commitment:					$	65,000,000.00

Borrowing Availability (lesser of Revolving Commitment or Total BB Availability); minus:					$	43,653,020.55

Outstanding Revolving Loans as of computation date:					$	—

EXCESS BORROWING AVAILABILITY (Total Borrowing Availability minus Outstanding Revolving Loans):					$	43,653,020.55

REQUESTED ADVANCE					$	—
INTEREST AND FEES COLLECTIONS					$	—

NEW OUTSTANDING					$	—
NEW EXCESS ELIGIBILITY					$	43,653,020.55

MVC CAPITAL INC


By:
	Name:
	Title:


Note:

MVC Borrowing Base

Summary

10/31/2015

Internal

External

Original Loan

Origination

Risk

Financial Data

Valuation

Adj. Senior

Adj. 2nd

Adj. Total

Adj. Lev.

Company

Cash

PIK

Amount

Date

Industry

MVC Loan

Rating

As of:

Mark

Date

Lev.

Lien Lev.

Lev.

Thru MVC

Adj. FCCR

Biogenic Reagents

12.0

4.0

14,500,000

7/21/2013

Specialty Chemical

1st Lien

4.90

8/31/2015

100.43

99.48

10/31/2015

-2.65x

-6.04x

-2.65x

-5.45x

Inland Environmental

12.0

0.0

12,292,467

4/17/2014

Environmental Services

1st Lien

6.89

9/30/2015

55.15

93.90

4/30/2015

28.14x

28.94x

28.14x

0.14x

US Spray Drying

12.0

0.0

1,500,000

5/2/2014

Specialty Chemical

1st Lien

3.98

8/31/2015

100.00

99.35

10/31/2015

0.00x

1.39x

3.49x

United States Technologies

10.5

0.0

5,000,000

7/17/2015

Industrial Manufacturing

1st Lien

2.14

9/30/2015

100.00

100.55

10/31/2015

1.15x

1.26x

1.15x

2.69x

Agri-Carriers Group

12.0

3.0

11,774,486

12/31/2014

Transportation

2nd Lien

2.93

9/30/2015

100.00

99.40

10/31/2015

2.75x

4.46x

3.33x

Custom Alloy Corporation

7.3

3.7

23,000,000

10/31/2014

Pipe Fitting

2nd Lien

3.89

9/30/2015

99.36

99.45

10/31/2015

1.46x

3.00x

3.29x

3.00x

1.31x

Initials, Inc.

12.0

3.0

4,750,000

6/23/2015

Consumer Services

2nd Lien

2.64

9/30/2015

100.00

100.20

10/31/2015

1.10x

3.42x

1.17x

Legal Solutions

12.0

2.0

8,705,000

12/30/2014

Business Process Outsourcing

2nd Lien

2.81

9/30/2015

100.00

100.75

10/31/2015

1.83x

2.81x

1.22x

Morey’s Seafood

6.0

9.0

15,500,000

8/13/2013

Food Services

2nd Lien

4.69

9/30/2015

89.56

99.65

4/30/2015

3.69x

6.51x

1.25x

RX Innovation

12.0

4.0

10,300,000

12/30/2014

Software

2nd Lien

3.54

9/30/2015

100.00

99.45

10/31/2015

1.80x

5.03x

1.15x

Thunderdome Group

12.0

0.0

2,040,000

6/10/2015

Food Services

2nd Lien

2.00

10/31/2015

100.00

100.70

10/31/2015

0.39x

1.19x

3.29x

Turf Products

7.0

4.0

7,500,000

11/30/2005

Distribution

2nd Lien

4.27

9/30/2015

99.17

100.20

10/31/2015

1.47x

2.98x

3.11x

2.98x

1.42x

U.S. Gas & Electric

13.0

0.0

7,500,000

7/26/2007

Energy Services

2nd Lien

2.83

9/30/2015

100.00

0.07x

0.31x

0.46x

0.31x

7.80x

Vestal Manufacturing

12.0

3.0

6,250,000

5/29/2015

Industrial Manufacturing

2nd Lien

2.38

9/30/2015

100.00

100.35

10/31/2015

1.67x

3.15x

3.79x

Custom Alloy Corporation

12.0

0.0

14,000,000

9/18/2007

Pipe Fitting

Unsecured

3.89

9/30/2015

100.00

100.20

10/31/2015

1.46x

3.00x

3.29x

3.39x

1.31x

U.S. Gas & Electric

10.0

4.0

3,000,000

5/30/2014

Energy Services

Unsecured

2.83

9/30/2015

100.00

0.07x

0.31x

0.46x

0.41x

7.80x

MVC Borrowing Base

Summary

10/31/2015

				AVAILABILITY SCREENING
									Maximum				Industry
	Loan Amount (Min of			Under 15%		Covenant			Applicable			Partially Eligible	Concentration	Net Eligible x
Company	Par or Internal Mark)	% of BB		threshold	Risk Rating	Compliant	FCC		Leverage	Overall	Eligible Loans	Loans	Adjustment	Advance Rate
Biogenic Reagents	15,554,429	12.5	%	Yes	Yes	Yes	Yes		Yes	Yes	15,554,429	—	—	10,110,379

Inland Environmental	3,000,000	2.4	%	Yes	No	No	No		Yes	No	—	—	—	—

US Spray Drying	1,500,000	1.2	%	Yes	Yes	Yes	Yes		Yes	Yes	1,500,000	—	—	975,000

United States Technologies	5,000,000	4.0	%	Yes	Yes	Yes	Yes		Yes	Yes	5,000,000	—	—	3,250,000

Agri-Carriers Group	11,774,486	9.5	%	Yes	Yes	Yes	Yes		Yes	Yes	11,774,486	—	—	5,887,243

Custom Alloy Corporation	23,638,469	19.0	%	No	Yes	Yes	Yes		Yes	Yes	18,661,020	—	—	9,330,510

Initials, Inc.	4,750,000	3.8	%	Yes	Yes	No	Yes		Yes	No	—	—	—	—

Legal Solutions	8,705,000	7.0	%	Yes	Yes	Yes	Yes		Yes	Yes	8,705,000	—	—	4,352,500

Morey’s Seafood	14,371,830	11.6	%	Yes	Yes	No	Yes		No	No	—	—	—	—

RX Innovation	10,300,000	8.3	%	Yes	Yes	Yes	Yes		No	Partial	—	9,849,412	—	4,924,706

Thunderdome Group	1,965,251	1.6	%	Yes	Yes	Yes	Yes		Yes	Yes	1,965,251	—	—	982,626

Turf Products	3,864,879	3.1	%	Yes	Yes	Yes	Yes		Yes	Yes	3,864,879	—	—	1,932,439

U.S. Gas & Electric	7,500,000	6.0	%	Yes	Yes	Yes	Yes		Yes	Yes	7,500,000	—	—	3,750,000

Vestal Manufacturing	6,315,236	5.1	%	Yes	Yes	Yes	Yes		Yes	Yes	6,315,236	—	—	3,157,618

Custom Alloy Corporation	3,000,000	2.4	%	Yes	Yes	Yes	Yes		Yes	Yes	3,000,000	—	—	—

U.S. Gas & Electric	3,167,220	2.5	%	Yes	Yes	Yes	Yes		Yes	Yes	3,167,220	—	—	—

	Total Loan									Total Eligible:	87,007,521	9,849,412	Total Available:	48,653,021
	124,406,800

				Eligibility & Advance Rate Assumptions:
				Minimum Fixed Charge Coverage:			1.00X
				Max Applicable Leverage			4.50X
				Minimum Risk Rating			5.00
				1st Lien Advance Rate			65.0	%
				2nd Lien Advance Rate			50.0	%
				Unsecured Advance Rate			0.0	%
				Partial Loan Amount for failed Lev Test			0.0	%

				Total Credit Exposure		124,406,800
				Total Eligible Loans		96,856,933
				Initial Availability:		48,653,021
				Initial Availability Less $5MM:		43,653,021

EXHIBIT B

CREDIT AND SECURITY AGREEMENT

Form of Compliance Certificate

To: SANTANDER BANK, N.A.,

830 Morris Turnpike, 3rd Fl.

Short Hills, NJ 07078

Attention: Portfolio Manager for MVC CAPITAL, INC.

Telephone No. 973-232-8349

Telecopy No. 973-379-4175

Ladies and Gentlemen:

I hereby certify to you pursuant to Section 8.1 of the Credit Agreement (as defined below) as follows:

1. I am the duly elected Chief Financial Officer of MVC CAPITAL, INC. and its Subsidiaries (“Borrower”). Capitalized terms used herein without definition shall have the meanings given to such terms in the Credit and Security Agreement, dated December 9, 2015, by and between SANTANDER BANK, N.A. (“Agent”), and the lenders that are parties thereto, and Borrower and the Guarantors that are parties thereto (as such Credit and Security Agreement is amended, modified or supplemented, from time to time, the “Credit Agreement”).

2. I have reviewed the terms of the Credit Agreement, and have made, or have caused to be made under my supervision, a review in reasonable detail of the transactions and the financial condition of Borrower and its Subsidiaries, during the immediately preceding fiscal .

3. The review described in Section 2 above did not disclose the existence during or at the end of such fiscal quarter, and I have no knowledge of the existence and continuance on the date hereof, of any condition or event which constitutes a Default or an Event of Default, except as set forth on Schedule I attached hereto. Described on Schedule I attached hereto are the exceptions, if any, to this Section 3 listing, in detail, the nature of the condition or event, the period during which it has existed and the action which Borrower and its Subsidiaries have taken, are taking, or propose to take with respect to such condition or event.

4. I further certify that, based on the review described in Section 2 above, Borrower and its Subsidiaries have not at any time during or at the end of such fiscal quarter, except as specifically described on Schedule II attached hereto or as permitted by the Loan Agreement, done any of the following:

(a) Permitted or suffered to exist any security interest in or Liens on any of their properties, whether real or personal, other than as specifically permitted in the Loan Documents; or

B-1

(b) Become aware of, obtained knowledge of, or received notification of, any breach or violation by the Credit Parties of any material covenant contained in any instrument or agreement in respect of Indebtedness for money borrowed.

5. Attached hereto as Schedule III are the calculations used in determining, as of the end of such quarterly fiscal period whether Borrower and its Subsidiaries are or would be in compliance with the covenant set forth in Section 10 of the Credit Agreement for such quarterly fiscal period, whether or not such compliance is required under the terms thereof.

6. [To be included only in the fiscal year end Compliance Certificate] I further certify that Borrower and its Subsidiaries are in good standing or the substantive equivalent thereof in the jurisdiction of incorporation, formation or organization for the Borrower and its Subsidiaries.

The foregoing certifications are made and delivered this day of , 20 .

	MVC CAPITAL, INC.


	By:
		Title:

B-2

EXHIBIT C

CREDIT AND SECURITY AGREEMENT

Form of Assignment and Assumption Agreement

See attached

FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

This ASSIGNMENT AND ACCEPTANCE AGREEMENT (“Assignment Agreement”) is entered into as of , 20 between (“Assignor”) and (“Assignee”). Reference is made to the Credit Agreement described in Annex I hereto (as the same now exists or may hereafter be amended, amended and restated, modified, supplemented, extended, renewed, restated or replaced, the “Credit Agreement”). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Credit Agreement.

1. In accordance with the terms and conditions of Section 12.1 of the Credit Agreement, the Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, that interest in and to the Assignor’s rights and obligations under the Loan Documents as of the date hereof with respect to the Obligations owing to the Assignor, and Assignor’s portion of the Commitments, all to the extent specified on Annex I.

2. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim and (ii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment Agreement and to consummate the transactions contemplated hereby; (b) makes no representation or warranty and assumes no responsibility with respect to (i) any statements, representations or warranties made in or in connection with the Loan Documents, or (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any other instrument or document furnished pursuant thereto; (c) makes no representation or warranty and assumes no responsibility with respect to the financial condition of Borrower or any Guarantor or the performance or observance by Borrower or any Guarantor of any of their respective obligations under the Loan Documents or any other instrument or document furnished pursuant thereto, and (d) represents and warrants that the amount set forth as the Purchase Price on Annex I represents the amount owed by Borrower to Assignor with respect to Assignor’s share of the Revolving Loans assigned hereunder, as reflected on Assignor’s books and records.

3. The Assignee (a) confirms that it has received copies of the Credit Agreement and the other Loan Documents, together with copies of the financial statements referred to therein and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment Agreement; (b) agrees that it will, independently and without reliance upon Agent, Assignor, or any other Lender, based upon such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking any action under the Loan Documents; (c) [confirms that it is an Qualified Assignee]; (d) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to Agent by the terms thereof, together with such powers as are reasonably incidental thereto; and (e) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

4. Following the execution of this Assignment Agreement by the Assignor and Assignee, the Assignor will deliver this Assignment Agreement to the Agent for recording by the Agent. The effective date of this Assignment (the “Settlement Date”) shall be the latest to occur of (a) the date of the execution and delivery hereof by the Assignor and the Assignee, (b) the receipt by Agent for its sole and separate account an assignment fee in the amount of $3,500, (c) the receipt of any required consents of the Agent and the Borrower, and (d) the date specified in Annex I.

5. As of the Settlement Date (a) the Assignee shall be a party to the Credit Agreement and, to the extent of the interest assigned pursuant to this Assignment Agreement, have the rights and obligations of a Lender thereunder and under the other Loan Documents, and (b) the Assignor shall, to the extent of the interest assigned pursuant to this Assignment Agreement, relinquish its rights and be released from its obligations under the Credit Agreement and the other Loan Documents, provided, however, that nothing contained herein shall release any assigning Lender from obligations that survive the termination of this Agreement, including such assigning Lender’s obligations under Article 11 of the Credit Agreement and be bound by the provisions thereof.

6. Upon the Settlement Date, Assignee shall pay to Assignor the Purchase Price (as set forth in Annex I). From and after the Settlement Date, Agent shall make all payments that are due and payable to the holder of the interest assigned hereunder (including payments of principal, interest, fees and other amounts) to Assignor for amounts which have accrued up to but excluding the Settlement Date and to Assignee for amounts which have accrued from and after the Settlement Date. On the Settlement Date, Assignor shall pay to Assignee an amount equal to the portion of any interest, fee, or any other charge that was paid to Assignor prior to the Settlement Date on account of the interest assigned hereunder and that are due and payable to Assignee with respect thereto, to the extent that such interest, fee or other charge relates to the period of time from and after the Settlement Date.

7. This Assignment Agreement may be executed in counterparts and by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. This Assignment Agreement may be executed and delivered by telecopier or other facsimile or electronic transmission all with the same force and effect as if the same were a fully executed and delivered original manual counterpart.

8. THIS ASSIGNMENT AGREEMENT SHALL BE SUBJECT TO THE PROVISIONS REGARDING CHOICE OF LAW AND VENUE, JURY TRIAL WAIVER, AND JUDICIAL REFERENCE SET FORTH IN ARTICLE 13 OF THE CREDIT AGREEMENT, AND SUCH PROVISIONS ARE INCORPORATED HEREIN BY REFERENCE, MUTATIS MUTANDIS.

[Remainder of This Page Intentionally Left Blank]

IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement and Annex I hereto to be executed by their respective officers, as of the first date written above.

				[NAME OF ASSIGNOR]
				as Assignor


				By:
				Name:
				Title:


				[NAME OF ASSIGNEE]
				as Assignee


				By:
				Name:
				Title:


ACCEPTED THIS DAY OF
, 20

SANTANDER BANK, N.A.,
as Agent

By:
Name:
Title:


By:
Name:
Title:

ANNEX FOR ASSIGNMENT AND ACCEPTANCE

ANNEX I

	(a) Borrower:

	2.	Name and Date of Credit Agreement:

			Credit and Security Agreement, dated as of December , 2015, by and among the lenders identified on the signature pages thereto (“Lenders”), SANTANDER BANK, N.A., as agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, “Agent”), MVC CAPITAL, INC., a Delaware corporation (“Borrower”), and MVC FINANCIAL SERVICES, INC., a Delaware corporation, MVC CAYMAN, an exempted company incorporated under the laws of the Cayman Islands, MVC GP II, LLC, a Delaware limited liability company, and MVC PARTNERS LLC, a Delaware limited liability company.

	3.	Date of Assignment Agreement:

	4.	Amounts:

(A)	Assigned Amount of Revolving Loan Commitment				$

		b. Assigned Amount of Revolving Loans				$

	5.	Settlement Date:

	6.	Purchase Price				$

	7.	Notice and Payment Instructions, etc.

		Assignee:		Assignor:

8.	Agreed and Accepted:

	[ASSIGNOR]	[ASSIGNEE]


	By:	By:
	Name:	Name:
	Title:	Title:


Accepted:

SANTANDER BANK, N.A.,
as Agent

By:
Name:
Title:

EXHIBIT D

CREDIT AND SECURITY AGREEMENT

Wire Instructions

Name of Borrower MVC Capital Inc.
Account: 8507191500		ABA #: 231372691

ATTN:		Participations
Account Name:		Commercial Loan Operations
Street Address		601 Penn St
City, State and Zip Code		Reading PA 19601

EXHIBIT E

CREDIT AND SECURITY AGREEMENT

Supplemental Agreement

See Attached

FORM OF SUPPLEMENTAL AGREEMENT

This SUPPLEMENTAL AGREEMENT, dated , 20 , (this “Agreement”), is by and among (“New Lender”), MVC CAPITAL, INC. (“Borrower”) and SANTANDER BANK, N.A. (“Agent”), as agent for the Lenders, and is being delivered pursuant to that certain Credit and Security Agreement dated as of December 9, 2015 (as from time to time amended, supplemented or otherwise modified in accordance with the terms thereof, the “Credit Agreement”) among Borrower, MVC FINANCIAL SERVICES, INC., a corporation formed under the laws of the State of Delaware, MVC CAYMAN, an exempted company incorporated under the laws of the Cayman Islands, MVC GP II, LLC, a limited liability company formed under the laws of the State of Delaware, and MVC PARTNERS LLC, a limited liability company formed under the laws of the State of Delaware, (collectively and individually, the “Guarantors”), Lenders, Agent, and WINTRUST BANK, as syndication agent.

W I T N E S S E T H:

WHEREAS, pursuant to Section 2.3 of the Credit Agreement, the Borrower has the right, subject to the terms and conditions thereof, to request from time to time, an increase in the Maximum Credit under the Credit Agreement by requesting one or more new lenders to join the Credit Agreement and provide a New Commitment; and

WHEREAS, the Borrowers have given a request to the Agent and the Agent has elected to arrange such New Commitments to increase the Maximum Credit pursuant to, and subject to the provisions of, Section 2.3 of the Credit Agreement; and

WHEREAS, subject to the approval of Agent, the undersigned New Lender desires to become a party to the Credit Agreement and make Revolving Loans thereunder by executing and delivering this Agreement to the Borrower and Agent;

NOW, THEREFORE, each of the parties hereto hereby agrees as follows:

1. New Lender agrees to be bound by the provisions of the Credit Agreement and agrees that it shall, on the date of this Agreement, become a Lender for all purposes of the Credit Agreement, to the same extent as if originally a party thereto, with a Revolving Loan Commitment with respect to Revolving Loans of $ .

2. New Lender (a) represents and warrants that it is legally authorized to enter into this Agreement; (b) confirms that it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to the Credit Agreement, and has reviewed such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Agreement; (c) agrees that it will, independently and without reliance upon the Agent 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 Agreement or any other instrument or document furnished pursuant hereto or thereto; (d) appoints and authorizes the

Agent to take such action as an agent on New Lender’s behalf and to exercise such powers and discretion under the Credit Agreement or any other Loan Documents as are delegated to Agent by the terms thereof, together with such powers as are incidental thereto; and (e) agrees that it will be bound by the provisions of the Credit Agreement and will perform in accordance with its terms all the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender.

3. New Lender’s address for notices for the purposes of the Credit Agreement is as follows:

[ ]

4. Capitalized terms not defined herein shall be deemed to have the definition given to such capitalized terms in the Credit Agreement.

5. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.

6. This Agreement may be executed in any number of counterparts and by different parties thereto in separate 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 document.

[Signature Page Follows]

IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be executed and delivered by a duly authorized officer on the date first above written.

	[NEW LENDER]


	By:
	Name:
	Title:

Accepted and agreed to by:

SANTANDER BANK, N.A.,

as Agent

By:
Name:
Title:

MVC CAPITAL, INC.,

as Borrower

By:
Name:
Title:

EXHIBIT F

CREDIT AND SECURITY AGREEMENT

Form of Revolving Note

See Attached

REVOLVING NOTE

$ , ,

New York, NY

December , 2015

FOR VALUE RECEIVED, MVC CAPITAL, INC., a Delaware corporation, (the “Borrower”), hereby promises to pay to the order of , (“Lender”), at the offices of Agent (as defined below) at 830 Morris Turnpike, Short Hills, New Jersey 07078, or at such other place as the Agent may designate from time to time in writing, in lawful money of the United States of America and in immediately available funds, the principal amount of DOLLARS ($ ) or, if less, the aggregate unpaid amount of all Revolving Loans made to the undersigned under the “Credit Agreement” (as hereinafter defined), plus interest on the unpaid balance as provided in the Credit Agreement. All capitalized terms used but not otherwise defined herein have the meanings given to them in the Credit Agreement.

This Revolving Note is issued pursuant to that certain Credit and Security Agreement of even date herewith by and among Borrower, MVC CAPITAL, INC., a Delaware corporation, MVC FINANCIAL SERVICES, INC., a Delaware corporation, MVC CAYMAN, a Cayman Islands exempted company, MVC GP II, LLC, a Delaware limited liability company, and MVC PARTNERS LLC, a Delaware limited liability company, (collectively, the “Guarantors”), Lender, the other financial institutions or entities from time to time parties thereto, and Santander Bank, N.A., as agent (in such capacity, the “Agent”) (including all annexes, exhibits and schedules thereto, and as from time to time amended, restated, supplemented or otherwise modified, the “Credit Agreement”), and is entitled to the benefit and security of the Credit Agreement and all of the other Loan Documents defined therein. Reference is hereby made to the Credit Agreement for a statement of all of the terms and conditions under which the Revolving Loans evidenced hereby are made and are to be repaid. The date and amount of each Revolving Loan made by Lender to Borrower, the rates of interest applicable thereto, and each payment made on account of the principal thereof, shall be recorded by Lender on its books; provided that the failure of Lender to make any such recordation shall not affect the obligations of Borrower to make a payment when due of any amount owing under the Credit Agreement or this Revolving Note in respect of the Revolving Loans made by Lender to Borrower.

The principal amount of the indebtedness evidenced hereby shall be payable in the amounts and on the dates specified in the Credit Agreement, the terms of which are hereby incorporated herein by reference. Interest thereon shall be paid until such principal amount is paid in full at such interest rates and at such times, and pursuant to such calculations, as are specified in the Credit Agreement.

If any payment on this Revolving Note becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension.

Upon the occurrence and during the continuation of any Event of Default, this Revolving Note may, when and as provided in the Credit Agreement, and without demand, prior notice or legal process of any kind, be declared, and immediately shall become, due and payable.

Time is of the essence of this Revolving Note. Demand, presentment, protest and notice of nonpayment and protest are hereby waived by Borrower.

THIS REVOLVING NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE. BORROWER HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF, BASED ON OR PERTAINING TO THIS REVOLVING NOTE.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

	MVC CAPITAL, INC.

	By:
		Name:
		Title:

Signature Page to Revolving Note

SCHEDULE 1.1

Lenders’ Commitment Amounts

Lender	Commitment Amount	Commitment Percentage
Santander Bank, N.A.	35,000,000.00	70	%
Wintrust Bank	15,000,000.00	30	%
TOTAL	50,000,000.00	100	%

SCHEDULE 5.1(b)

Certain Equity Interests in Portfolio Companies

FOLIOfn, Inc.

MVC Private Equity Fund, L.P.

NPWT Corporation

RuMe Inc.

Turf Products

U.S. Spray Drying Holding Company

SCHEDULE 6.1

Conditions Precedent to Initial Revolving Loans

The obligation of Lenders to make the initial Revolving Loans on the Closing Date is subject to the satisfaction of the conditions precedent to all Revolving Loans provided for in Section 6.2 and each of the following conditions precedent:

(a) Credit Agreement and other Loan Documents. Agent shall have received each of the following documents, in form and substance reasonably satisfactory to Agent, duly executed and delivered, and each such document shall be in full force and effect and the Credit Parties shall be in compliance with the terms thereof:

(i) the Agreement;

(ii) the Revolving Notes;

(iii) the Pledge Agreements;

(iv) the Intellectual Property Security Agreement;

(v) the Control Agreements, together with evidence satisfactory to Agent that certificates or other tangible evidence of the Equity Investments and Debt Investment Loan Documents are held by the Agent’s Bailee;

(vi) the deposit of not less than the Required Pledged Cash Amount in the Required Pledged Cash Deposit Accounts maintained with the Lenders;

(vii) the Perfection Certificate;

(viii) the BB&T Intercreditor Agreement;

(ix) the Subordination Agreements;

(x) a pay proceeds letter executed and delivered by Borrower to Agent regarding the extensions of credit to be made on the Closing Date;

(xi) opinion letter of counsel to the Credit Parties with respect to the Loan Documents and such other matters as Agent may reasonably request;

(xii) the Guaranty Agreement(s);

(xiii) Form U-1;

(xiv) a fully executed engagement letter with the Borrower’s auditors in form and substance acceptable to the Agent in its Permitted Discretion;

(xv) a Custodial Agreement for each of the Lenders;

(xvi) the Joinder Agreements; and

(xvii) the Equity Investment Side Letter.

(b) Closing Excess Availability. The Excess Availability as of the Closing Date shall be not less than Twenty Five Million Dollars ($25,000,000) after giving effect to the initial Revolving Loans made or to be made in connection with the initial transactions hereunder, after deducting payment of all fees and expenses payable on the Closing Date.

(c) Field Examination. Agent shall have conducted, or received the final report of a firm engaged by Agent to conduct, a field examination of the Collateral, the books and records and other matters relating to the operation of the business of the Credit Parties the results of which are satisfactory to Agent, and Agent (or a firm engaged by Agent for such purpose) shall have completed an updated field review of the books and records of the Credit Parties and such other updated information with respect to the Debt Investments as Agent may require to determine the amount of Revolving Loans available to Borrower (including, without limitation, roll-forwards of Debt Investments), with results as of a date not more than five (5) days prior to the Closing Date (or such earlier date as may be acceptable to Agent), the results of which shall be reasonably satisfactory to Agent.

(d) Valuations. Agent shall have received the final report of a third party with respect to not less than seventy five percent (75%) of the Debt Investments of Borrower, in form and containing assumptions and methods satisfactory to Agent by a third party acceptable to Agent.

(e) Know Your Customer; Patriot Act. Agent and Lenders shall have received at least five (5) Business Days prior to the Closing Date all documentation and information as is requested by Agent and Lenders that is required by regulatory authorities under applicable “know your customer” and anti-money-laundering rules and regulations, including, without limitation, the Patriot Act, in each case to the extent requested in writing at least seven (7) Business Days prior to the Closing Date.

(f) Financial Statements; Projections. Agent shall have received at least ten (10) Business Days prior to the Closing Date:

(i) projected balance sheets, income statements, statements of cash flows and availability of the Credit Parties on a monthly basis for the period through the fiscal quarterly period of the Borrower and its Subsidiaries ending after the first anniversary of the Closing Date and on an annual basis thereafter for each fiscal year of the Borrower and its Subsidiaries for the term of the Agreement, in each case with the results and assumptions in such projections in form and substance reasonably satisfactory to Agent, and an opening pro forma balance sheet for Borrower and its Subsidiaries in form and substance reasonably satisfactory to Agent,

(ii) any updates or modifications to the projected financial statements of Borrower and its Subsidiaries previously received by Agent, in each case in form and substance reasonably satisfactory to Agent,

(iii) audited financial statements and Form 10-K of Borrower and its Subsidiaries for each of the three fiscal years immediately preceding the Closing Date, in form and substance acceptable to the Agent,

(iv) interim unaudited financial statements of Borrower and its Subsidiaries and Form 10-Q for the quarterly fiscal periods ending January 31, 2015 and April 30, 2015,

(v) management prepared interim unaudited financial statements of Borrower and its Subsidiaries and draft Form 10-Q for the quarterly fiscal periods ending July 31, 2015,

(g) Legal Due Diligence. Agent and its counsel shall have completed all legal due diligence, the results of which shall be satisfactory to Agent.

(h) Borrowing Base Certificate and Request. Agent shall have received a borrowing request and a Borrowing Base Certificate which calculates the Borrowing Base as of the end of the month immediately preceding the Closing Date completed in a manner reasonably satisfactory to Agent and duly authorized, executed and delivered by a Responsible Officer of Borrower and it shall indicate Excess Availability of not less than Twenty Five Million Dollars ($25,000,000).

(i) Solvency Certificate. Agent shall have received a solvency certificate signed by a Responsible Officer of Borrower in form and substance reasonably satisfactory to Agent and as of the Closing Date and after giving effect to the Agreement and the transactions contemplated thereby, Borrower shall not be insolvent or become insolvent as a result thereof.

(j) Good Standing Certificates. Agent shall have received, if applicable, a certificate of status with respect to the Credit Parties, dated within ten (10) days of the Closing Date, such certificate to be issued by the appropriate officer of the jurisdiction of organization of Credit Parties, which certificate shall indicate that Credit Parties are in good standing in such jurisdiction.

(k) Certificate of Directors’ Resolutions, Incumbency, Etc. Agent shall have received a certificate of a Responsible Officer of Borrower, in form and substance satisfactory to it, certifying (i) that attached copies of the Organization Documents of Borrower and its Subsidiaries are true and complete, and in full force and effect, without amendment except as shown; (ii) that an attached copy of resolutions authorizing execution, delivery and performance of the Loan Documents is true and complete, and that such resolutions are in full force and effect, were duly adopted, have not been amended, modified or revoked, and constitute all resolutions adopted with respect to this Credit Facility; and (iii) to the title, name and signature of each Person authorized to sign the Loan Documents.

(l) Closing Certificate. Agent shall have received a certificate, signed by a Responsible Officer of Borrower, dated as of the Closing Date, stating (i) that no Default or Event of Default exists or has occurred and is continuing, (ii) all of the conditions to the closing of the Credit Facility have been satisfied, (iii) the representations and warranties contained in the Loan Documents are true and correct, (iv) the Credit Parties have complied with all agreements

and conditions to be satisfied by them under the Loan Documents as of the Closing Date and (iv) certifying any other factual matters as may be reasonably requested by Agent.

(m) Lien Searches. Agent shall have received the results of a recent lien search in each jurisdiction where the Credit Parties are organized and where the assets of the Credit Parties are located, and such search shall reveal no security interests, liens or other encumbrances on any of the assets of the Credit Parties except for Permitted Liens or security interests, liens or other encumbrances to be discharged on or prior to the Closing Date pursuant to a pay-off letter or other documentation satisfactory to Agent.

(n) Pay-Off Letter. Agent shall have received pay-off letters, in form and substance satisfactory to Agent, for all existing Indebtedness to be repaid from the proceeds of the initial Revolving Loans confirming that all security interests and liens upon any of the property of the Credit Parties constituting Collateral will be terminated concurrently with such payment.

(o) Pledged Equity Interests; Stock Powers; Pledged Notes. Agent or Agent’s Bailee shall have received (i) the original certificates representing Equity Interests pledged pursuant to the Pledge Agreement, together with an undated stock power for each such certificate executed in blank by a duly authorized officer of the pledgor thereof and (ii) each original promissory note (if any) pledged to Agent for the benefit of Agent and Lenders pursuant to this Agreement endorsed (without recourse) in blank (or accompanied by an executed transfer form in blank) by the pledgor thereof.

(p) Insurance. Agent shall have received evidence of insurance coverage in form, scope and substance reasonably satisfactory to Agent, and loss payee endorsements, in form and substance reasonably satisfactory to Agent, and certificates of insurance policies and/or endorsements naming Agent for the benefit of Agent and Lenders as lender loss payee and additional insured and an assignment of credit insurance in an amount acceptable to the Agent.

(q) Tax Withholding. Agent shall have received a properly completed and signed IRS Form W-8 or W-9, as applicable, for the Credit Parties.

(r) Cash Management. Borrower shall have established a cash management system as provided in this Agreement.

(s) Perfected Security Interest. Agent shall have received evidence, in form and substance reasonably satisfactory to Agent, that Agent for the benefit of Agent and Lenders has a valid perfected first priority security interest in the Collateral (except as to priority, subject to the liens permitted under clauses (b), (c), (i), (j) and (m) of the definition of Permitted Liens, to the extent that such liens have priority over the liens of Agent for the benefit of Agent and Lenders under applicable law and except for such items of Collateral as Agent may determine not to perfect its security interest in and none of the Collateral shall be subject to any other pledges, security interests, mortgages or assignments as security, except for Permitted Liens.

(t) Engagement of new auditors. Agent shall have received a copy of a fully executed engagement letter for Grant Thornton LLP as the auditors for the Borrower and the other Credit Parties.

(u) No Material Adverse Change. No material adverse change in the business, operations, profits, assets or condition (financial or otherwise) of Borrower and its Subsidiaries, taken as a whole, shall have occurred since January 31, 2015 (other than as disclosed in Borrower’s public SEC filings to date).

(v) Closing Date: The Closing Date shall have occurred on or before December 9, 2015.

SCHEDULE 7.7

Litigation

As of August 2014, U.S. Gas and Electric, Inc. (“USG&E”) and Borrower are named defendants in a lawsuit filed by a former USG&E employee, Brian Rose (“Rose”). USG&E is a portfolio company of Borrower. The lawsuit, case number CACE-14-015788, is pending in the Circuit Court of the Seventeenth Judicial Circuit, In and For Broward County, Florida. Rose asserts claims against USG&E and MVC for breach of their alleged oral agreement to grant Rose a 1.75% equity interest in USG&E, and for a constructive trust and specific performance to enforce the alleged oral agreement. Rose also asserts a claim against USG&E for breach of contract, asserting that USG&E breached his employment agreement when he resigned by failing to pay him: $65,000 of a $165,000 bonus, 12 months of his base salary, his health insurance premiums, disability insurance benefits and accrued, unused vacation time. Finally, Rose is seeking a declaratory judgment from the court stating that his non-compete agreement is unenforceable. USG&E and MVC have strong defenses to each of Rose’s claims. The parties are engaged in discovery which is ongoing and believe they are likely to prevail in this matter.

SCHEDULE 7.9

Environmental Matters

None.

SCHEDULE 7.12

Restrictive Agreements

Secured Revolving Credit Agreement, dated as of July 31, 2013, between MVC Capital, Inc., as borrower, and Branch Banking and Trust Company, as lender, as amended.

SCHEDULE 7.15

Insurance

MVC Capital Inc.

SCHEDULE OF INSURANCE AS OF DECEMBER, 2015

COVERAGE AND LOCATION	AMOUNT INSURED	CARRIER	POLICY NO:	TERM	PREMIUM
DIRECTORS & OFFICERS LIABILITY		Illinois National Insurance Company (AIG)	01-425-31-83	8/14/2014 - 12/31/2015	$356,393
Policy Aggregate Limit	$10,000,000
				Premium	$255,416
Retention:				TRIA	$2,554
Directors & Officers - Retention	$500,000			Extension Premium to 10/31/2015	$55,205
Employment Practices - Retention	$500,000			Total	$313,175
All Other - Retention	$500,000
				Extension Premium to 12/31/2015	$43,218
Continuity Date: 02/14/2003

EXCESS DIRECTORS & OFFICERS LIABILITY		XL Specialty Insurance Company	ELU135505-14	8/14/2014 - 12/31/2015	$125,671
Policy Aggregate Limit	$5,000,000
				Premium	$91,000
				Extension Premium to 10/31/2015	$19,474
				Total	$110,474

				Extension Premium to 12/31/2015	$15,197

FIDELITY BOND		National Union Fire Insurance Co. of Pittsburgh, PA	01-425-35-20	8/14/2014 - 12/31/2015	$22,768
Fidelity - No Deductible	$5,000,000
Audit Expense	$100,000			Premium	$16,505
On Premises	$5,000,000			Extension Premium to 10/31/2015	$3,502
In Transit	$5,000,000			Total	$20,007
Forgery or Altercation	$5,000,000
Securities	$5,000,000			Extension Premium to 12/31/2015	$2,761
Counterfeit Currency	$5,000,000
Stop Payment	$100,000
Uncollectible Items of Deposit	$100,000
Computer Systems	$5,000,000
Unauthorized Signatures	$100,000

Deductible(s)
Single Loss Deductible	$100,000
Except: Audit Expense, Stop Payment, Uncollectible Items of Deposit and Unauthorized Signatures	$5,000

SCHEDULE 7.16

Subsidiaries

Name	Type and Jurisdiction	Authorized and Issued	Owner/Percentage Owned
MVC Financial Services, Inc.	Delaware corporation	100 common shares, par value $0.01 per share	Borrower (100%)
MVC Cayman	Cayman Islands company	1 share, par value US$1.00	Borrower (100%)
MVC GP II, LLC (f/k/a MVC Financial Services, LLC)	Delaware limited liability company	membership interest	MVC Financial Services, Inc. (100%)
MVC Partners LLC	Delaware limited liability company	membership interest	MVC Cayman (100%)
MVC Private Equity Fund, L.P.	Delaware limited partnership	general partner and limited partnership interests	MVC GP II, LLC (0.48% - GP interest) and MVC Partners LLC (18.9% - LP interest)

MVC Capital, Inc. (Borrower) is a Delaware corporation whose stock is publicly traded on the New York Stock Exchange. As of October 20, 2015, MVC Capital had 22,702,821 shares outstanding and approximately 5,976 shareholders.

SCHEDULE 7.19

Intellectual Property

United States of America

“MVC” Registered: April 20, 2010; Reg. No. 3,778,612; Filed Dec 21 2007; Ser. No. 77358154; Renewal April 20, 2020

Class 36

Services: Business development services, namely, providing long-term equity and debt investment capital to fund growth, acquisitions and recapitalizations of small and middle-market companies; venture capital investment management; financial investment in the field of private equity and private lending funds; financial portfolio management in the field of private equity and debt funds; investment management; investment of funds for others; management of investments of others through preferred and common stock, subordinated debt, term loans, warrants or rights to acquire equity interests, senior and subordinated loans, or convertible securities; purchase of securities and other financial instruments for others; investment services, namely, asset acquisition, development and management services

“MVC CAPITAL” Registered: June 20, 2006; Reg. No. 3,107,427; Filed December 10, 2002; Ser. No. 76978091; Renewal: June 20, 2026.

Class 36

Services: Management of private equity and private lending funds, financial investment in the field of private equity and private lending funds, financial portfolio management in the field of private equity and debt funds

Canada

“MVC CAPITAL” Filed: June 30 2014; Application No. 1683333 Pending/Advertised for Opposition

Services: Business development services, namely providing long-term equity and debt investment capital to fund growth, acquisitions and recapitalizations of small and middle-market companies; venture capital investment management; financial investment in the field of private equity and private lending funds; financial portfolio management in the field of private equity and debt funds; investment management; investment of funds for others; management of investments of others through preferred and common stock, subordinated debt, term loans, warrants or rights to acquire equity interests, senior and subordinated loans, or convertible securities; private financial placement of securities and derivatives for others; investment services, namely asset acquisition, development and management services. (2) Management of private equity and private lending funds, financial investment

in the field of private equity and private lending funds, financial portfolio management in the field of private equity and debt funds.

SCHEDULE 7.21

Collective Bargaining Agreements

None

SCHEDULE 7.26(a)

Equity Investments

Fair Value/

Market

Company

Industry

Investment

Principal

Cost

Value

Schedule 7.26(a)

Actelis Networks, Inc.

Technology Investment

Preferred Stock (150,602 shares) (d, i)

5,000,003

—

FOLIOfn, Inc.

Technology Investment - Financial Services

Preferred Stock (5,802,259 shares) (d, i)

15,000,000

5,596,000

MainStream Data, Inc.

Technology Investment

Common Stock (5,786 shares) (d, i)

3,750,000

—

NPWT Corporation

Medical Device Manufacturer

Series B Common Stock (281 shares) (d)

1,231,638

2,000

Series A Convertible Preferred Stock (5,000 shares) (d)

—

36,000

1,231,638

38,000

Advantage Insurance Holdings LTD

Insurance

Preferred Stock (750,000 shares) (d, e)

7,500,000

8,015,165

Biovation Acquisition CO.

Manufacturer of Laminate Material and Composites

Common Stock (90 shares)

784,622

555,869

Centile Holdings B.V.

Software

Common Equity Interest (d, e)

3,524,376

4,905,000

JSC Tekers Holdings	Real Estate Management	Common Stock (3,201 shares) (d, e)	4,500	4,000
		Preferred Stock (9,159,085 shares) (d, e)	11,810,188	5,045,700
			11,814,688	5,049,700

Security Holdings B.V.	Electrical Engineering	Common Equity Interest (d, e)	52,846,140	45,300,000

SGDA Europe B.V.	Environmental Services	Common Equity Interest (d, e)	28,544,800	6,020,000

Equus Total Return, Inc.	Regulated Investment Company	Common Stock (4,444,644 shares) (d)	10,030,272	7,644,788

MVC Automotive Group GmbH	Automotive Dealerships	Common Equity Interest (a, d, e)	48,457,838	16,376,000

MVC Private Equity Fund LP	Private Equity	Limited Partnership Interest (a, d, j)	13,838,539	21,939,744
		General Partnership Interest (a, d, j)	353,024	552,016
			14,191,563	22,491,760

RuMe Inc.	Consumer Products	Common Stock (5,297,548 shares) (a, d)	924,475	924,475
		Series C Preferred Stock (23,896,634 shares) (a, d)	3,410,694	6,467,772
		Series B-1 Preferred Stock (4,999,076 shares) (a, d)	999,815	1,667,753
			5,334,984	9,060,000

SIA Tekers Invest	Port Facilities	Common Stock (68,800 shares) (a, d, e)	2,300,000	342,000

U.S. Spray Drying	Specialty Chemicals	Class B Common Stock (784 shares)

Holding Company				5,488,000		5,875,000

Turf Products, LLC	Distributor - Landscaping and	Limited Liability Company Interest (a, d)		3,535,694		3,991,794
	Irrigation Equipment	Guarantee (a)	1	—		(41,034		)

Vestal Manufacturing Enterprises, Inc.	Iron Foundries	Common Stock (5,610 shares) (a, d)		250,000		250,000
		Warrants		—		—
				250,000		250,000

			Total	$	219,584,618	$	141,470,042

SCHEDULE 7.26(b)

Debt Investments

							Fair Value/
							Market
Company	Industry	Investment	Principal		Cost		Value
Agri-Carriers Group, Inc.	Transportation	Senior Subordinated Debt 12.0000% Cash, 3.0000% PIK, 07/20/2017 (a, b)	$	11,774,486	$	11,787,114	$	11,774,486

Biogenic Reagents	Renewable energy	Senior Note 12.0000% Cash, 4.0000% PIK, 07/21/2018 (b)	5,463,002		5,463,002		5,463,002
		Senior Convertible Note 12.0000% Cash, 4.0000% PIK, 07/21/2018 (b)	4,916,702		4,916,702		4,983,082
		Senior Note 12.0000% Cash, 4.0000% PIK, 09/30/2015 (b)	4,165,169		4,165,169		4,165,169
		Senior Subordinated Note 12.0000% Cash, 4.0000% PIK, 09/30/2015 (b)	1,009,556		1,009,556		1,009,556
		Warrants (d)	2		620,077		1,660,689
					16,174,506		17,281,498

Biovation Holdings, Inc.	Manufacturer of Laminate Material and Composites	Bridge Loan 6.0000% Cash, 6.0000% PIK, 10/31/2014 (b)	1,079,325		1,079,325		—
		Warrants (d)	3		397,677		—
					1,477,002		—

Custom Alloy Corporation	Manufacturer of Pipe Fittings	Second Lien Loan, 7.3000% Cash, 3.7000% PIK, 04/30/2020	23,791,903		23,791,903		23,638,469
		Unsecured Subordinated Loan 12.0000% Cash, 09/04/2016	3,000,000		3,000,000		3,000,000
					26,791,903		26,638,469

G3K Display, Inc.	Retail Store Fixtures	Senior Lien Loan 13.0000% Cash, 04/11/2019 (h)	5,625,000		5,625,000		—
		Warrants (d)	1		—		—

				5,625,000	—

Initials Inc	Consumer Products	Senior Subordinated Debt 12.0000% Cash, 3.0000% PIK, 06/22/2020 (a, b)	4,750,000	4,750,000	4,750,000

Inland Environmental & Remediation LP	Environmental Services	Senior Secured Loan 12.0000% Cash, 04/17/2019	15,000,000	14,506,835	8,000,000
		Warrants (d)	1	713,000	—
				15,219,835	8,000,000

Legal Solutions Holdings, Inc.	Business Services	Senior Subordinated Debt 12.0000% Cash, 2.0000% PIK, 07/01/2016 (a, b)	8,705,000	8,718,402	8,705,000

Morey’s Seafood International, LLC	Food Services	Second Lien Loan 10.0000% Cash, 3.0000% PIK, 08/12/2018 (b)	16,047,333	16,047,333	14,371,830

The Results Companies, LLC	Business Services	Senior Subordinated Debt 13.0000% Cash, 2.5000% PIK, 07/01/2016 (a, b)	9,000,000	9,008,330	9,000,000

RX Innovation, Inc.	Software	Senior Subordinated Debt 12.0000% Cash, 4.0000% PIK, 03/01/2016 (a, b)	10,300,000	10,307,845	10,300,000

Thunderdome Restaurants LLC	Restaurants	Second Lien Loan 12.0000% Cash, 06/10/2020	1,965,251	1,965,251	1,965,251

U.S. Spray Drying Holding Company	Specialty Chemicals	Secured Loan 12.0000% Cash, 05/02/2019	1,500,000	1,500,000	1,500,000

Turf Products, LLC	Distributor - Landscaping and	Senior Subordinated Debt 7.0000% Cash, 4.0000% PIK, 11/01/2018 (a, b)	3,895,262	3,895,262	3,862,994
		Warrants (a, d)	150	—	—
				3,895,262	3,862,994

United States Technologies Inc.	Electronis Manufacturer and Repais	Second Lien Loan 10.5000% Cash, 07/17/2020	5,000,000	5,000,000		5,000,000

Vestal Manufacturing Enterprises, Inc.	Iron Foundries	Senior Subordinated Debt 12.0000% Cash 3.0000% PIK, 11/28/2021	6,315,236	6,315,236		6,315,236

			Total	$	144,583,019	$	129,464,764

SCHEDULE 7.26(a)

Remaining Equity Interests

							Fair Value/Market
(a) Company	Industry	Investment	Principal		Cost		Value
Ohio Medical Corporation	Medical Device Manufacturer	Common Stock (8,512 shares) (a, d)			$	15,763,637	$	—
		Series A Convertible Preferred Stock 16.0000% PIK (31,346 shares) (a, b)			30,000,000		6,050,797
		Series C Convertible Preferred Stock 16.0000% PIK (9,927shares) (a, b)			22,618,466		32,479,292
					68,382,103		38,530,089

U.S. Gas & Electric, Inc.	Energy Services	Second Lien Loan, 13.0000% Cash, 07/01/2019	$	7,500,000	7,500,000		7,500,000
		Unsecured Loan 10.0000% Cash, 4.0000% PIK , 07/01/2018 (b)	3,167,220		3,167,220		3,167,220
		Convertible Series I Preferred Stock (32,200 shares) (d, k)			500,000		83,667,607
		Convertible Series J Preferred Stock (8,216 shares) (d)			—		—
					11,167,220		94,334,827

			Total		$	79,549,323	$	132,864,916

SCHEDULE 8.1

Financial and Collateral Reporting

Borrower shall deliver, or cause to be delivered to Agent (and Lenders as to (a), (b), (c) and (d) herein below) each of the following:

(a) Annual Financial Statements. As soon as available, but in any event within one hundred twenty (120) days after the end of each fiscal year of Borrower and its Subsidiaries, their filed Form 10-K together with their audited consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, and the accompanying notes thereto, all in reasonable detail, fairly presenting in all material respects the financial position and results of operations of Borrower and its Subsidiaries;

(b) Quarterly Financial Statements. As soon as available, but in any event within forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year of Borrower and its Subsidiaries, their filed Form 10-Q together with their consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for such fiscal quarter, all in reasonable detail, fairly presenting in all material respects the financial position and the results of the operations of Borrower and its Subsidiaries as of the end of and through such fiscal month, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, subject to normal year-end audit adjustments and the absence of footnotes;

(c) Year End Financial Statements. As soon as available, but in any event within forty-five (45) days after the end of each fiscal year of Borrower and its Subsidiaries, their unaudited consolidated balance sheet and related statements of operations, stockholders’ equity, and cash flows as of the end of and for such year (without any footnotes) and availability projections for the quarterly periods for the current fiscal year, all in reasonable detail, fairly presenting in all material respects the financial position and the results of the operations of Borrower and its Subsidiaries as of the end of and through such fiscal periods, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, subject to normal year-end audit adjustments and the absence of footnotes;

(d) Accountant’s Certificate. Concurrently with the delivery of the financial statements referred to in clause (a) above: (i) the unqualified opinion of independent certified public accountants with respect to the audited combined financial statements, which independent accounting firm shall be selected by Borrower and reasonably acceptable to Agent, that such audited combined financial statements have been prepared in accordance with GAAP, and present fairly in all material respects the results of operations and financial condition of Borrower and its Subsidiaries as of the end of and for the fiscal year then ended, and (ii) a separate statement certifying that, in making the examination necessary therefor no knowledge

was obtained of any Default or Event of Default, or if any such Default or Event of Default shall exist, stating the nature and status of such event;

(e) Compliance Certificate. Concurrently with the delivery of the financial statements referred to in clauses (a) and (b) above, a Compliance Certificate by Responsible Officer of Borrower, (i) certifying, in the case of the financial statements delivered under clause (b), as presenting fairly in all material respects the financial condition and results of operations of Borrower and its Subsidiaries on a combined basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes, (ii) certifying as to whether an Event of Default has occurred and, if an Event of Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (iii) setting forth reasonably detailed calculations demonstrating compliance with Section 10 and (iv) stating whether any change in GAAP or in the application thereof has occurred since the date of the audited financial statements referred to in clause (a) above and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate;

(f) Borrowing Base Certificate. As soon as possible after the end of each calendar month (but in any event within thirty (30) days after the end thereof), or more frequently as Agent may require at any time that the Borrower has Excess Availability of less than Five Million Dollars ($5,000,000), a Borrowing Base Certificate setting forth the calculation of the Borrowing Base as of the last Business Day of the immediately preceding calendar month, duly completed and executed by a Responsible Officer of Borrower (and nothing contained in any Borrowing Base Certificate shall be deemed to limit, impair or otherwise affect the rights of Agent and Lenders contained herein and in the event of any conflict or inconsistency between the calculation of the Borrowing Base as set forth in any Borrowing Base Certificate and as determined by Agent in good faith, the determination of Agent shall govern and, absent manifest error, be conclusive and binding upon Borrower) together with a worksheet of calculations prepared by Borrower to determine Eligible Debt Investments, such worksheets detailing the Debt Investments excluded from Eligible Debt Investments and the reason for such exclusion and sales and collection data for the prior calendar month;

(g) Collateral Reports. As soon as possible after the end of each calendar month (but in any event within thirty (30) Days after the end thereof), or more frequently as Agent may require at any time that the Borrower has Excess Availability of less than Five Million Dollars ($5,000,000):

(i) a schedule detailing the Investments, in form satisfactory to Agent, indicating who has possession of the loan documents or certificates evidencing such Investments, by industry;

(ii) Borrower’s standard form of Portfolio Review Sheet with respect to each Debt Investment;

(iii) a detailed loan delinquency report prepared in a manner reasonably acceptable to Agent;

(iv) a summary of all Deposit Accounts not maintained with the Agent, including month end balances and all deposits and withdrawals for the prior month;

(v) a reconciliation of the loan balance per Borrower’s general ledger to the loan balance under this Agreement; and

(vi) such other reports as the Agent may require.

(h) MVC Purchases and Sales Journal. As soon as possible after the end of each calendar month (but in any event within thirty (30) Days after the end thereof), or more frequently as Agent may require at any time, a detailed report of all Portfolio Company acquisitions and sales, all prepared in a manner reasonably acceptable to Agent;

(i) Tax Returns. As soon as possible and in any event within twenty (20) days of filing thereof, copies of all tax returns filed by Borrower and all Guarantors;

(j) Public Information. Promptly after the same are available, copies of each annual report, proxy or annual or quarterly financial statement or other report or communication sent to the equity holders of Borrower, and copies of all annual, regular, periodic and special reports and registration statements which Borrower may file or be required to file with the Securities and Exchange Commission under Section 13 or 15(d) of the Securities Exchange Act of 1934;

(k) Management Letters, Etc. Promptly after any request by Agent, copies of any detailed audit reports, management letters or recommendations submitted to the board of directors or equivalent governing body (or the audit committee of the board of directors or such equivalent governing body) of Borrower by independent accountants in connection with the accounts or books of Borrower and its Subsidiaries, or any audit of any of them;

(l) Notices of Investigations. Promptly, and in any event within five (5) Business Days after receipt thereof by Borrower, copies of each notice or other correspondence received from the Securities and Exchange Commission (or comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation or possible investigation or other inquiry by such agency regarding financial or other operational results of the Credit Parties;

(m) Insurance. Concurrently with the delivery of the financial statements referred to in clause (a) above, a certificate by a Responsible Officer of Borrower attaching the insurance binder or other evidence of insurance for any insurance coverage of Borrower that was renewed, replaced or modified during the period covered by such financial statements.

(n) Within ten (10) Business Days of receipt thereof by the Borrower, notice of any material issues that impact the Borrower and its operations which are cited in the Borrower’s compliance and similar reports regarding the operations and affairs of the Borrower prepared by third parties, including, without limitation, the US Bancorp Fund Services, LLC quarterly Fund Compliance Report and summary of compliance statistics and the U.S. Bancorp Fund Services Risk Management/Compliance Review of Compliance Controls; and

(o) Additional Information. As soon as possible after the end of each calendar month (but in any event within ten (10) Business Days after the end thereof), in any month when any of the following events occurs or upon the written request of the Agent,

(i) a certificate by a Responsible Officer of Borrower consisting of a report of any new Deposit Account established or used by Borrower with any bank or other financial institution and any existing Deposit Account currently established or used by Borrower with any bank or other financial institution that is at any time identified after the date hereof and was not set forth in the Perfection Certificate, including in each case, the account number, the name and address of the financial institution at which such account is maintained, the purpose of such account and, if any, the amount held in such account on or about the date of such report,

(ii) true, correct and complete copies of all agreements, documents or instruments evidencing or otherwise related to Indebtedness that Agent has not otherwise received; and

(p) Additional Debt Investments Information. As soon as possible, and in any event within ten (10) Business days after the Borrower’s Chief Executive Officer or Chief Financial Officer obtaining knowledge thereof, a written notice from the Borrower describing their knowledge of a Debt Investment Obligor Material Adverse Effect, the acceleration of any Debt Investment and any event or circumstance which, to the best of any Borrower’s knowledge, would cause Agent to consider any then existing Debt Investment as no longer constituting an Eligible Debt Investment;

(q) Additional Portfolio Company Information. As soon as possible, and in any event within ten (10) Business days after the Borrower’s Chief Executive Officer or Chief Financial Officer obtaining knowledge thereof, a written notice from the Borrower describing their knowledge of a Portfolio Company Material Adverse Effect, a material decrease in the value of any Equity Interest in any Portfolio Company; and

(r) General. Promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of Borrower or compliance with the terms of this Agreement, as Agent may reasonably request.

SCHEDULE 8.5

Permitted Investments

None

SCHEDULE 8.10

Bank Accounts

(a) Credit Party	Bank Name	Account #

MVC Financial Services, Inc.	US Bank	190006154100

MVC Financial Services, Inc.	US Bank	190006154100A

MVC Financial Services, Inc.	US Bank	190006154100B

MVC Capital, Inc.	JPMorgan	W46795006

MVC Capital, Inc.	US Bank	19-5290

MVC Capital, Inc.	US Bank	19-5290A

MVC Capital, Inc.	US Bank	19-5290B

MVC Capital, Inc.	US Bank	19-5290D

MVC Capital, Inc.	US Bank	19-5290E

MVC Cayman	US Bank	19-5291

MVC Capital, Inc.	BB&T	1182001102

MVC Capital, Inc.	BB&T	1182000648

MVC Capital, Inc.	BB&T	1182000602

MVC Capital, Inc.	BB&T	30689144

SCHEDULE 9.1

Permitted Indebtedness

None

SCHEDULE 9.2

Permitted Liens

None

SCHEDULE 12.1(b)

Disqualified Lenders

Highland Capital Management, L.P.,

Longroad Asset Management, LLC,

Black Diamond Capital Management, L.L.C.

and any known Affiliate of any of the foregoing.

EXHIBIT 31

RULE 13a-14(a) CERTIFICATIONS

I, Michael Tokarz, certify that:

1. I have reviewed this quarterly report on Form 10-Q of MVC Capital, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	/s/ Michael Tokarz
Date: 1/29/16	Michael Tokarz

	In the capacity of the officer who performs the functions of Principal Executive Officer of MVC Capital, Inc.

I, Scott Schuenke, certify that:

1. I have reviewed this quarterly report on Form 10-Q of MVC Capital, Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: 1/29/16	/s/ Scott Schuenke
	Scott Schuenke

	In the capacity of the officer who performs the functions of Principal Financial Officer of MVC Capital, Inc.

EXHIBIT 32

CERTIFICATIONS PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Michael Tokarz, in the capacity of the officer who performs the functions of Principal Executive Officer of MVC Capital, Inc., a Delaware corporation (the “Registrant”), certifies that:

1. The Registrant’s Quarterly Report on Form 10-Q for the period ended July 31, 2015 (the “Form 10-Q”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

In the capacity of the officer who performs the functions
of Principal Executive Officer for
MVC Capital, Inc.

/s/ Michael Tokarz
Michael Tokarz

Date: 1/29/16

Scott Schuenke, in the capacity of the officer who performs the functions of Principal Financial Officer, of MVC Capital, Inc., a Delaware corporation (the “Registrant”), certifies that:

2. The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

In the capacity of the officer who performs the functions
of Principal Financial Officer for
MVC Capital, Inc.

/s/ Scott Schuenke
Scott Schuenke

Date: 1/29/16