Exhibit 10.1

STOCK PURCHASE AND TRANSACTION AGREEMENT

by and between

TRIANGLE CAPITAL CORPORATION

and

BARINGS LLC

 

 

DATED AS OF APRIL 3, 2018

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STOCK PURCHASE AND TRANSACTION AGREEMENT

STOCK PURCHASE AND TRANSACTION AGREEMENT, dated as of April 3, 2018 (this
“Agreement”), by and between Triangle Capital Corporation, a Maryland
corporation (“Company”), and Barings LLC, a Delaware limited liability company
(“Buyer”). Each of the Company and Buyer may, from time to time, be referred to
individually herein as a “Party” and collectively as the “Parties.” Capitalized
terms used but not otherwise defined herein shall have the meanings ascribed to
such terms in Article I.

RECITALS:

WHEREAS, the Company is currently an internally managed business development
company subject to the Investment Company Act of 1940, as amended, and the rules
and regulations promulgated thereunder (a “BDC” and the “Investment Company
Act,” respectively);

WHEREAS, Buyer is currently registered with the Securities and Exchange
Commission (“SEC”) as an investment adviser under the Investment Advisers Act of
1940, as amended, and the rules and regulations promulgated thereunder (the
“Investment Advisers Act”);

WHEREAS, contemporaneously herewith, the Company and BSP Asset Acquisition I,
LLC (“Asset Buyer”) are entering into an Asset Purchase Agreement (the “Asset
Purchase Agreement”) pursuant to which Asset Buyer will, immediately prior to
closing of the Contemplated Transactions, acquire the Company’s investment
portfolio for cash, as described in the Asset Purchase Agreement (the “Asset
Purchase”);

WHEREAS, the Parties desire to enter into a series of transactions pursuant to
which, following the Asset Purchase, Buyer will (i) enter into the Management
Agreements with the Company, (ii) make a payment in cash to the holders of
record of issued and outstanding Company Common Stock as of the Closing Date and
immediately prior to the Closing, (iii) acquire directly from the Company shares
of common stock, par value $0.001 per share, of the Company (“Company Common
Stock”) in a private transaction that is exempt from registration under
Section 4(a)(2) of the Securities Act and Regulation D thereunder, and
(iv) commit to purchase shares of Company Common Stock in the open market,
subject to certain limitations regarding the timing and amount of such
purchases, in each case on the terms, and subject to the conditions, set forth
in this Agreement (the foregoing (i) through (iv), as more specifically
described below, are referred to collectively as the “Contemplated
Transactions”);

WHEREAS, the board of directors of the Company (the “Company Board”) has
determined that the Contemplated Transactions are advisable and in the best
interests of the Company and the holders of Company Common Stock (the “Company
Stockholders”);

WHEREAS, the Parties desire to make certain representations, warranties and
agreements in connection with the Contemplated Transactions and to prescribe
certain conditions to the Contemplated Transactions.

 

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NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained in this Agreement, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the Parties agree as
follows:

ARTICLE I

DEFINED TERMS

1.1 For purposes of this Agreement, the following terms shall have the meanings
set forth below:

“Acceptable Confidentiality Agreement” has the meaning set forth in
Section 7.8(d).

“Administration Agreement” means the Administration Agreement substantially in
the form of Exhibit A attached hereto, to be entered into between the Company
and Buyer, as administrator, in accordance with Section 2.1.

“Adverse Recommendation Change” has the meaning set forth in Section 7.3(b).

“Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with such Person.
For the avoidance of doubt, for purposes of this Agreement, (i) Buyer shall not
be deemed an “Affiliate” of Asset Buyer or any of Asset Buyer’s Affiliates, and
Asset Buyer shall not be deemed an “Affiliate” of Buyer or any of Buyer’s
Affiliates, and (ii) no Portfolio Company of the Company shall be deemed to be
an “Affiliate” of the Company.

“Agreement” has the meaning set forth in the preamble to this Agreement.

“Applicable Law” means, with respect to a specified Person, any federal, state,
local, municipal, or foreign constitution, treaty, law (including the common
law), statute, code, ordinance, rule, administrative interpretation, regulation,
directive (including those of any SRO), judgment, order, writ, decree or
injunction applicable to the specified Person.

“Asset Buyer” has the meaning set forth in the Recitals to this Agreement.

“Asset Purchase” has the meaning set forth in the Recitals to this Agreement.

“Asset Purchase Agreement” has the meaning set forth in the Recitals to this
Agreement.

“Asset Purchase Stockholder Approval” means the approval of the Company
Stockholders of the Asset Purchase in accordance with the Asset Purchase
Agreement.

“Bankruptcy and Equity Exception” has the meaning set forth in Section 4.3(a).

“BB&T” means Branch Banking and Trust Company, in its capacity as administrative
agent for the Lenders under the Company Loan Documents, and its successors and
permitted assigns in such capacity.

 

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“BDC” has the meaning set forth in Section 2(a)(48) of the Investment Company
Act.

“Borrowers” means those Persons who constitute “borrowers” (or any similarly
defined entity) under the Purchased Loan Documents.

“Business Day” means a day, other than Saturday, Sunday or other day on which
commercial banks in New York, New York are authorized or required by Applicable
Law to close.

“Buyer” has the meaning set forth in the preamble to this Agreement.

“Buyer Board” means the board of directors of Buyer.

“Buyer Contracts” has the meaning set forth in Section 5.2(b).

“Buyer Disclosure Schedule” means that certain disclosure schedule delivered by
Buyer to the Company prior to the execution of this Agreement.

“Buyer Expenses” means an amount equal to Buyer’s documented out of pocket costs
and expenses paid or payable to third parties (including legal, accounting, tax,
regulatory, operations, advisory, management, human resources (including
pension), consulting, insurance, audit, search, asset appraisal, title, surveys,
financing, filing, compensation, travel and other similar fees, costs and
expenses) and incurred or accrued by or on behalf of Buyer or its Affiliates in
connection with this Agreement and the Contemplated Transactions including
Buyer’s or its Affiliates’ due diligence investigation of the Company and its
Subsidiaries and the preparation, negotiation, execution and delivery of
definitive agreements in connection with the Contemplated Transactions, but
subject to a maximum of $3,000,000. For the avoidance of doubt, in no event
shall Buyer Expenses include any internally allocated costs of Buyer.

“Buyer Regulatory Agreement” has the meaning set forth in Section 5.4.

“Buyer Regulatory Approvals” has the meaning set forth in Section 5.3(a).

“Claim” means any claim, action, suit or legal, administrative, arbitral or
other proceeding, whether civil, criminal or administrative.

“Closing” has the meaning set forth in Section 3.1.

“Closing Date” has the meaning set forth in Section 3.1.

“COBRA Coverage” has the meaning set forth in Section 7.12.

“Code” means the United States Internal Revenue Code of 1986, as amended.

“Company” has the meaning set forth in the preamble to this Agreement.

“Company Articles” means the articles of incorporation of the Company, as
amended, supplemented, corrected and/or restated through the date hereof.

“Company Benefit Plans” has the meaning set forth in Section 4.11(a).

 

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“Company Board” has the meaning set forth in the Recitals to this Agreement.

“Company Board Recommendation” has the meaning set forth in Section 4.3(a).

“Company Bylaws” means the bylaws of the Company, as amended and/or restated
through the date hereof.

“Company Common Stock” has the meaning set forth in the Recitals to this
Agreement.

“Company Contracts” has the meaning set forth in Section 4.3(b).

“Company Disclosure Schedule” means that certain disclosure schedule delivered
by the Company to Buyer prior to the execution of this Agreement.

“Company Employees” has the meaning set forth in Section 4.11(a).

“Company Financing Documents” means, collectively, the Company Loan Documents,
the Indenture, the SBA Debentures, and all other documents that provide for the
rights and obligations relating to the Credit Facility, the SBA Debentures and
the Retail Notes.

“Company Loan Agents” mean, collectively, BB&T and ING.

“Company Loan Documents” means, collectively, the (i) Third Amended and Restated
Credit Agreement, among the Company, Branch Banking and Trust Company, Fifth
Third Bank, Morgan Stanley Bank, N.A., ING Capital LLC, Bank of North Carolina,
Everbank Commercial Finance, Inc., First Tennessee Bank National Association,
Newbridge Bank, Yadkin Bank, CommunityOne Bank, NA, Park Sterling Bank, Paragon
Commercial Bank, Raymond James Bank, N.A. and Stifel Bank & Trust, dated May 4,
2015; (ii) First Amendment to Third Amended and Restated Credit Agreement, dated
May 1, 2017, among the Company, Branch Banking and Trust Company, ING Capital
LLC, Fifth Third Bank, Morgan Stanley Bank, N.A., Bank of North Carolina,
EverBank Commercial Finance, Inc., First Tennessee Bank National Association,
First National Bank of Pennsylvania, Capital Bank Corporation, Park Sterling
Bank, Paragon Commercial Bank, Raymond James Bank, N.A. and Stifel Bank & Trust;
(iii) Second Amended and Restated General Security Agreement between the
Company, ARC Industries Holdings, Inc., Brantley Holdings, Inc., Energy Hardware
Holdings, Inc., Minco Holdings, Inc., Peaden Holdings, Inc., Technology Crops
Holdings, Inc. and Branch Banking and Trust Company, dated May 4, 2015; (iv)
Second Amended and Restated Equity Pledge Agreement between the Company, ARC
Industries Holdings, Inc., Brantley Holdings, Inc., Energy Hardware Holdings,
Inc., Minco Holdings, Inc., Peaden Holdings, Inc. Technology Crops Holdings,
Inc. and Branch Banking and Trust Company, dated May 4, 2015; (v) Supplement and
Joinder Agreement for Triangle Capital Corporation Credit Agreement dated
July 31, 2017; (vi) Supplement and Joinder Agreement for Triangle Capital
Corporation Credit Agreement dated September 29, 2017; and (vii) each amendment
to the foregoing (i) through (vi).

“Company Matters” means, collectively, the approval of (i) the Investment
Advisory Agreement in accordance with Section 15 of the Investment Company Act
(the “New IMA Matter”), (ii) the approval of the application of the reduced
asset coverage requirement in accordance with, and as set forth in,
Section 61(a)(2)(D)(i)(II) of the Investment Company Act

 

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(the “Reduced Asset Coverage Matter”), (iii) the issuance of shares of Company
Common Stock to Buyer in accordance with, and under the circumstances set forth
in, Sections 2.3 and 2.7 hereof to the extent required by any shareholder
approval rules or listing standards of any national securities exchange
(including the NYSE) that are applicable to the Company (the “Stock Issuance
Approval Matter”), (iv) any required proposal relating to “say on pay,” “golden
parachutes” and similar matters and (v) any other matters required by Applicable
Law to be approved or adopted by the Company Stockholders to effect the
Contemplated Transactions and the Asset Purchase.

“Company Regulatory Agreement” has the meaning set forth in Section 4.5(b).

“Company Regulatory Approvals” has the meaning set forth in Section 4.4(a).

“Company Restricted Shares” means each restricted share of Company Common Stock
outstanding and not previously forfeited under the Company Stock Plan.

“Company SEC Reports” has the meaning set forth in Section 4.5(c).

“Company Stock Plan” means the Triangle Capital Corporation Omnibus Incentive
Plan.

“Company Stockholder Approval” has the meaning set forth in Section 4.3(a).

“Company Stockholder Meeting” has the meaning set forth in Section 4.4(a).

“Company Stockholders” has the meaning set forth in the Recitals to this
Agreement.

“Company Transaction Expenses” means an amount equal to the Company’s and its
Subsidiaries’ out of pocket expenses incurred in connection with this Agreement,
the Contemplated Transactions, the Asset Purchase Agreement and the Asset
Purchase (including, without limitation, all reasonable outside attorneys’,
accountants’, consultants’ and investment bankers’ fees and expenses, severance
(including any severance triggered but not immediately payable as of the
Closing), bonus and other compensation payments, the costs to repay the
Company’s and its Subsidiaries’ outstanding indebtedness and the cost of any
directors’ and officers’ “tail” insurance policy obtained pursuant to
Section 7.5(c)).

“Company Voting Debt” means bonds, debentures, notes or other indebtedness of
the Company having the right to vote on any matters on which shareholders of the
Company may vote.

“Competing Proposal” means any inquiry, proposal or offer made by any Third
Party: (a) to purchase or otherwise acquire, directly or indirectly, in one
transaction or a series of transactions (including any merger, consolidation,
tender offer, exchange offer, stock acquisition, asset acquisition, binding
share exchange, business combination, recapitalization, liquidation,
dissolution, joint venture or similar transaction), (i) beneficial ownership (as
defined under Section 13(d) of the Exchange Act) of twenty percent (20%) or more
of any class of equity securities of the Company or (ii) any one or more assets
or businesses of the Company or its Subsidiaries that constitute twenty percent
(20%) or more of the revenues or assets of the Company and its Subsidiaries,
taken as a whole; or (b) any other transaction not covered in the foregoing
(a) involving a restructuring or any other change in the operations of the
Company that would result in the Company converting from an internally managed
BDC to an externally managed BDC, whether or not such transaction is coupled
with a capital infusion or purchase of shares of the Company, or (c) any
liquidation of the Company, in each case other than the Contemplated
Transactions and the Asset Purchase.

 

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“Confidentiality Agreement” has the meaning set forth in Section 7.2(c).

“Contemplated Transactions” has the meaning set forth in the Recitals to this
Agreement.

“Continuing Company Employees” means the Company Employees included in a notice
to be provided by Buyer to the Company no later than five (5) Business Days
prior to Closing.

“Credit Facility” means the credit facility evidenced by the Company Loan
Documents.

“Direct Purchase Shares” has the meaning set forth in Section 2.3(a).

“Director Class” has the meaning in Section 8.2(h).

“DOJ” means the Antitrust Division of the United States Department of Justice.

“Employment Agreements” has the meaning set forth in Section 4.11(a).

“Environmental Laws” means, collectively, with respect to a specified Person,
any and all environmental, health or safety matters or any private or
governmental environmental, health or safety investigations or remediation
activities of any nature with respect to any real property owned by the
specified Person or its Subsidiaries seeking to impose, or that are reasonably
likely to result in, any liability or obligation of the specified Person or any
of its Subsidiaries arising under any local, state or federal environmental,
health or safety statute, regulation, ordinance, or other requirement of any
Governmental Entity, including the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, and any similar state laws.

“Equity Governing Documents” means, with respect to a Purchased Equity Interest,
the certificate or articles of incorporation, certificate of formation or
partnership, limited liability company or partnership agreement, stockholders
agreement, option or warrant agreement, registration rights agreement, buy-sell
arrangement and any other document that governs or otherwise affects the terms
of any Purchased Equity Interest.

“Equity Interest Schedule” has the meaning set forth in the Asset Purchase
Agreement.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate” has the meaning set forth in Section 4.11(a).

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Fraud” means any knowing or intentional misrepresentation by a Party of a
material fact with the intent (i) to deceive the other Party, and (ii) to cause
such other Party to rely on such fact, coupled with such other Party’s
detrimental reliance on such fact under circumstances that constitute common law
fraud under Applicable Law.

 

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“FTC” means the United States Federal Trade Commission.

“GAAP” means United States generally accepted accounting principles consistently
applied during the periods involved.

“Governmental Entity” means any federal, state or local government or any court,
administrative or regulatory agency or commission or other governmental
authority or agency, domestic or foreign.

“Houlihan Lokey” means Houlihan Lokey Capital, Inc.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.

“Indemnified Parties” has the meaning set forth in Section 7.5(a).

“Indenture” means, collectively, (i) the Indenture, dated March 2, 2012 between
the Company and the Bank of New York Mellon Trust Company, N.A.; (ii) the Second
Supplemental Indenture, dated October 19, 2012 between the Company and the Bank
of New York Mellon Trust Company, N.A.; and (iii) the Third Supplemental
Indenture, dated February 6, 2015 between the Company and the Bank of New York
Mellon Trust Company, N.A.

“ING” means ING Capital LLC, in its capacity as multicurrency agent for the
Lenders under the Company Loan Documents, and its successors and permitted
assigns in such capacity.

“Intellectual Property Rights” means, collectively, all trademarks, trade names,
patent rights, copyrights, domain names, licenses, approvals, trade secrets,
software and other similar rights.

“Interim Pro Forma ICTI” has the meaning set forth in Section 7.14(a)(ii).

“Interim Pro Forma NAV” has the meaning set forth in Section 7.14(a)(ii).

“internal controls” has the meaning set forth in Section 4.6(c).

“Investment Advisers Act” has the meaning set forth in the Recitals to this
Agreement.

“Investment Advisory Agreement” means the Investment Advisory Agreement
substantially in the form of Exhibit B attached hereto, to be entered into
between the Company and Buyer, as investment adviser, in accordance with
Section 2.1.

“Investment Company Act” has the meaning set forth in the Recitals to this
Agreement.

“IRS” means the United States Internal Revenue Service.

“June 30 Pro Forma ICTI” has the meaning set forth in Section 7.14(a)(i).

“June 30 Pro Forma NAV” has the meaning set forth in Section 7.14(a)(i).

 

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“Lenders” means, collectively, each Person designated as a “Lender” under the
Company Loan Documents.

“Liens” means liens, pledges, charges, claims and security interests and similar
encumbrances.

“Loan Repayment” has the meaning set forth in Section 2.6(a).

“Management Agreements” means, collectively, the Investment Advisory Agreement
and the Administration Agreement.

“Material Adverse Effect” means any occurrence, change, event, effect or
development that, individually, or taken together with all other occurrences,
changes, events, effects or developments, has or would reasonably be likely to
have, a material adverse effect on (a) with respect to the Company, the
financial condition, results of operations, assets, liabilities, or business of
the Company and its Subsidiaries taken as a whole (provided, however, that, with
respect to this subsection (a), the determination of whether a “Material Adverse
Effect” exists or has occurred shall not include effects attributable to
(i) changes, after the date hereof, in GAAP or regulatory accounting
requirements applicable generally to companies in the industry in which the
Company and its Subsidiaries operate, (ii) changes, after the date hereof, in
laws, rules or regulations of general applicability to companies in the industry
in which the Company and its Subsidiaries operate, (iii) actions or omissions
taken with the prior express written consent of Buyer, (iv) changes, after the
date hereof, in global or national political conditions or general economic or
market conditions generally affecting other companies in the industry in which
the Company and its Subsidiaries operate, (v) conditions arising out of acts of
terrorism, war, weather conditions or other force majeure events, (vi) any legal
proceedings made or brought by any of the current or former Company Stockholders
(on their own behalf or on behalf of the Company) in connection with Agreement
or any of the Contemplated Transactions (except to the extent that any conduct
by the Company or its officers and directors forming the basis for such
litigation is determined by a court of competent jurisdiction to have violated
Applicable Law), (vii) the public disclosure of this Agreement or the
Contemplated Transactions, or (viii) the consummation of the Asset Purchase
substantially on the terms set forth in the Asset Purchase Agreement, except,
with respect to clauses (i), (ii), (iv) and (v), to the extent that the effects
of such change disproportionately impact the financial condition, results of
operations, assets, liabilities or business of the Company and its Subsidiaries,
taken as a whole, as compared to other companies in the industry in which the
Company and its Subsidiaries operate) or (b) with respect to Buyer or the
Company, the ability of Buyer or the Company, as applicable, to timely
consummate the Contemplated Transactions.

“Material Company Contracts” has the meaning set forth in Section 4.13(a)(ix).

“MGCL” means the Maryland General Corporation Law.

“New IMA Matter” has the meaning set forth in the definition of “Company
Matters.”

“Notice of Adverse Recommendation” has the meaning set forth in Section 7.8(f).

“Notice of Superior Proposal” has the meaning set forth in Section 7.8(f).

 

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“NYSE” means the New York Stock Exchange.

“Organizational Documents” means, with respect to a Person other than a natural
person, (i) the articles or certificate of incorporation and the bylaws of a
corporation; (ii) the certificate of formation and operating agreement of a
limited liability company, (iii) the partnership agreement and any statement of
partnership of a general partnership; (iv) the limited partnership agreement and
the certificate of limited partnership of a limited partnership; (v) any charter
or similar document adopted or filed in connection with the creation, formation,
or organization of any other Person; (vi) any stockholder or similar agreement
among holders of securities of an issuer, and (vii) any amendment to any of the
foregoing.

“Outside Date” has the meaning set forth in Section 9.1(c).

“Party” and “Parties” have the meaning set forth in the preamble to this
Agreement.

“Payment Agent” has the meaning set forth in Section 3.3.

“Payment Agent Agreement” has the meaning set forth in Section 3.3.

“Payment Fund” has the meaning set forth in Section 3.3.

“Payoff Letter” has the meaning set forth in Section 2.6(a).

“Permit” means any license, permit, variance, exemption, franchise, consent,
approval, authorization, qualification, or order of any Governmental Entity.

“Permitted Liens” means (i) Liens for Taxes and other statutory Liens securing
payments not yet due and payable, (ii) Liens arising under the Company Loan
Documents, (iii) easements, rights of way, and other similar encumbrances that
do not materially impact the value of or materially affect the use of the
properties or assets subject thereto or affected thereby or otherwise materially
impair business operations at such properties and (iv) such imperfections or
irregularities of title or Liens as do not materially affect the use of the
properties or assets subject thereto or affected thereby or otherwise materially
impair business operations at such properties.

“Per-Share Price” means an amount equal to the net asset value per-share of
Company Common Stock, as determined in accordance with Section 2.4.

“Per-Share Price Estimate” has the meaning set forth in Section 2.4.

“Person” means an individual, corporation, partnership, limited liability
company, association, joint venture, estate, trust, sole proprietorship,
unincorporated organization, other entity, organization, group (as defined in
Section 13(d) of the Exchange Act), or any other business entity or any
Governmental Entity, including a government or political subdivision or an
agency or instrumentality thereof.

“Portfolio Company” means any entity in which the Company or any of its
Subsidiaries has made, makes or proposes to make a debt or equity investment
that is or would be reflected in the Schedule of Investments included in the
Company’s quarterly or annual reports.

 

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“Pro Forma ICTI” means, collectively, the June 30 Pro Forma ICTI, the Interim
Pro Forma ICTI and the September 30 Pro Forma ICTI.

“Pro Forma NAV” means, collectively, the June 30 Pro Forma NAV, the Interim Pro
Forma NAV and the September 30 Pro Forma NAV.

“Proxy Statement” has the meaning set forth in Section 4.4(a).

“Purchased Assets” means the assets to be purchased by Asset Buyer pursuant to
the Asset Purchase Agreement.

“Purchased Equity Interests” means the equity interests to be purchased by Asset
Buyer pursuant to the Asset Purchase Agreement.

“Purchased Loan Collateral” means the assets and properties securing payment of
outstanding obligations of Borrowers under the Purchased Loan Documents.

“Purchased Loan Documents” means the credit and financing agreements,
guarantees, subordination agreements, Purchased Loan Notes, mortgages, deeds of
trust, security agreements (including pledge and control agreements), financing
statements, intercreditor agreements, and other instruments and documents
affecting the Company’s and its Subsidiaries’ ownership, economic or other
rights with respect to the Purchased Loans or in which the Company or its
Subsidiaries has an interest, in connection with the Purchased Loans.

“Purchased Loan Notes” means the original executed promissory notes (or copies,
to the extent that only copies of such promissory notes are in the Company’s or
its Subsidiaries’ possession or control) issued to the order of the Company or
its Subsidiaries, or copies of a “master” note if no such note was issued to the
Company or its Subsidiaries or an allonge endorsing a note in favor of the
Company or its Subsidiaries, evidencing indebtedness owing to the Company or its
Subsidiaries under a Purchased Loan.

“Purchased Loan Schedule” has the meaning set forth in the Asset Purchase
Agreement.

“Purchased Loans” means the loans to be purchased by Asset Buyer pursuant to the
Asset Purchase Agreement.

“Reduced Asset Coverage Matter” has the meaning set forth in the definition of
“Company Matters.”

“Registration Rights Agreement” means the Registration Rights Agreement attached
hereto as Exhibit C.

“Retail Notes” means, collectively, (i) the Company’s unsecured 6.375% Notes due
December 15, 2022, and (ii) the Company’s unsecured 6.375% Notes due March 15,
2022.

“Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002, as amended, and the
rules and regulations promulgated thereunder.

 

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“SBA” means the United States Small Business Administration.

“SBA Approval” has the meaning set forth in Section 7.1(b)(iii).

“SBA Debentures” means, collectively, all debentures issued by the SBIC
Subsidiaries to the SBA.

“SBIC” has the meaning set forth in Section 4.12(b).

“SBIC Subsidiaries” means, collectively, TMFL, TMF SBIC and TMF III.

“SEC” has the meaning set forth in the Recitals to this Agreement.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

“September 30 Pro Forma ICTI” has the meaning set forth in Section 7.14(a)(iii).

“September 30 Pro Forma NAV” has the meaning set forth in Section 7.14(a)(iii).

“SRO” has the meaning set forth in Section 4.4(a).

“Stock Issuance Approval Matter” has the meaning set forth in the definition of
“Company Matters.”

“Stock Purchase” has the meaning set forth in Section 2.3(a).

“Stock Purchase Price” means cash in an amount equal to $100,000,000; provided,
however, that such amount shall be subject to adjustment in accordance with
Section 2.3 as it relates to fractional shares of Company Common Stock.

“Stockholder Payment” has the meaning set forth in Section 2.2.

“Stockholder Payment Record Date” has the meaning set forth in Section 2.2.

“Subsidiary”, when used with respect to a Party, means any corporation,
partnership, limited liability company or other organization, whether
incorporated or unincorporated, (i) that, in the case where the specified Party
is an SEC-reporting company, is consolidated with such Party for financial
reporting purposes under GAAP and, to the extent applicable, Article 6 of the
SEC’s Regulation S-X, and (ii) in the case where the specified Party is not an
SEC-reporting company, whose securities or other interests having the power to
elect a majority of the relevant entity’s board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of the relevant entity, are held by the specified Party or by one or
more other Subsidiaries of such Party or by such Party and one or more other
Subsidiaries of such Party; provided, however, that in no event shall a
Portfolio Company of the Company shall be deemed to be an “Affiliate” of the
Company.

 

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“Superior Proposal” means a bona fide written Competing Proposal made by a Third
Party that the Company Board determines in good faith, after consultation with
its outside financial advisors and legal advisors, and taking into account the
terms and conditions of such proposal, the party making such proposal, and the
likelihood and anticipated timing of consummation of such Competing Proposal,
and all other all legal, financial, regulatory and other aspects of such
Competing Proposal, (a) is reasonably likely to be consummated without undue
delay relative to the Contemplated Transactions and the Asset Purchase, taking
into account all financial, legal, regulatory and other aspects of such offer,
and (b) is more favorable to the Company Stockholders from a financial point of
view than the Contemplated Transactions and the Asset Purchase, taken as a whole
(including any revisions to the terms of this Agreement committed to by Buyer to
the Company in writing in response to such Competing Proposal made to the
Company under the provisions of Section 7.6(f)) and any similar revisions to the
terms of the Asset Purchase Agreement committed to by Asset Buyer to the Company
in writing in response to such Competing Proposal in accordance with the Asset
Purchase Agreement; provided however, for these purposes, to the extent relevant
to the Competing Proposal in question, all percentages in subsections (a)(i) and
(a)(ii) of the definition of Competing Proposal shall be increased to fifty
percent (50%).

“Takeover Statutes” has the meaning set forth in Section 4.17.

“Tax” or “Taxes” means (i) all federal, state, local, and foreign income,
excise, gross receipts, gross income, ad valorem, profits, gains, property,
capital, sales, transfer, use, payroll, employment, severance, withholding,
duties, intangibles, franchise, backup withholding, value added and other taxes,
charges, levies or like assessments together with all penalties and additions to
tax and interest thereon and (ii) any liability for Taxes described in clause
(i) above under Treasury Regulation Section 1.1502-6 (or any similar provision
of state, local or foreign law).

“Tax Return” means, with respect to a Person, a report, return or other
information (including any amendments) required to be supplied to a Governmental
Entity with respect to Taxes including, where permitted or required, combined or
consolidated returns for any group of entities that includes the Person or any
of its Subsidiaries.

“Termination Fee” has the meaning set forth in Section 9.4(a).

“Third Party” means a third party (or group of Persons) not affiliated with the
Company, Buyer or the Asset Buyer.

“TMF III” means Triangle Mezzanine Fund III LP, a Delaware limited partnership.

“TMF SBIC” means Triangle Mezzanine Fund SBIC II LP, a Delaware limited
partnership.

“TMFL” means Triangle Mezzanine Fund LLLP, a North Carolina limited liability
limited partnership.

“Trading Plan” has the meaning set forth in Section 2.7.

“Welfare Plan” has the meaning set forth in Section 4.11(f).

 

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ARTICLE II

TRANSACTIONS

2.1 Management Agreements. Immediately following the Asset Purchase, subject to,
and effective upon, the occurrence of the Closing (including receipt of the
Company Stockholder Approval), and immediately prior to the transactions
described in Sections 2.2 and 2.3, the Company and Buyer shall enter into the
Management Agreements.

2.2 Stockholder Payment. At the Closing, immediately following the execution of
the Management Agreements and immediately prior to the transactions described in
Section 2.3, Buyer shall pay to the Payment Agent, in trust for payment to the
Company Stockholders of record as of the Closing Date, after giving effect to
the Asset Purchase but not the purchase of Company Common Stock contemplated
hereby, cash in an amount equal to $85,000,000 (the “Stockholder Payment”).
Following delivery of the Stockholder Payment to the Payment Agent, the Payment
Agent shall promptly deliver the Stockholder Payment to Company Stockholders in
the manner described in Section 3.3. For all purposes under this Agreement, the
right to receive a pro rata share of the Stockholder Payment shall inure only to
the benefit of the holders of record as of the Closing Date, but prior to
issuance of the Direct Purchase Shares (the “Stockholder Payment Record Date”).

2.3 Stock Purchase.

(a) Immediately following the Stockholder Payment Record Date and the delivery
of the Stockholder Payment to the Payment Agent, Buyer shall purchase from the
Company, and the Company shall, upon receipt by the Company of the Stock
Purchase Price in accordance with Section 3.1 below, issue to Buyer, a number of
newly issued shares of Company Common Stock equal to (a) the Stock Purchase
Price, divided by (b) the Per-Share Price; provided, however, that no fraction
of a share of Company Common Stock resulting from the foregoing calculation
shall be issued in exchange for payment of the Stock Purchase Price, in which
case the Stock Purchase Price shall be reduced by an amount equal to the product
of (x) the relevant fraction of a share of Company Common Stock resulting from
the foregoing calculation, multiplied by (y) the Per-Share Price. The purchase
of shares of Company Common Stock, and the shares of Company Common Stock to be
so issued, are referred to herein as the “Stock Purchase” and the “Direct
Purchase Shares”, respectively.

(b) Buyer agrees that it shall not transfer any Direct Purchase Shares (or
solicit any offers in respect of any transfer of any Direct Purchase Shares),
except to its Affiliates, in compliance with the Securities Act, any other
applicable securities or “blue sky” laws, and the terms and conditions of this
Agreement. In addition to the foregoing, Buyer agrees that, from and after the
Closing, it shall not transfer any Direct Purchase Shares, other than to its
employees, Affiliates and any employees of its Affiliates (so long as each such
transferee agrees to be bound by the holding period set forth in this
Section 2.3(b)), until the second anniversary of the Closing.

(c) Prior to and subject to the Closing, the Company Board shall approve and
authorize the use of not less than $50,000,000 of proceeds from the Stock
Purchase for the Company to implement one or more issuer tender offers to
repurchase for cash its outstanding shares of Company Common Stock at a price
per share up to and including the net asset value per

 

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share of the Company Common Stock, which may be effected through a Dutch tender
offer, and otherwise on terms and conditions determined by the Company Board at
the time of such issuer tender offers. The first such issuer tender offer shall
occur immediately following the Closing, and subsequent issuer tender offers
shall occur at successive approximately semi-annual intervals thereafter until
the entire $50,000,000 has been utilized to repurchase shares of Company Common
Stock in connection therewith.

2.4 Calculation of Per-Share Price. Promptly following the close of business on
the fifth (5th) Business Day immediately preceding the closing of the Asset
Purchase, the Company Board shall calculate, and the Company shall deliver to
Buyer, the Company Board’s estimate of the net proceeds to the Company of the
Asset Purchase, and the corresponding Per-Share Price, after giving effect to
the Asset Purchase and the transactions contemplated thereby, including the
receipt of proceeds therefrom by the Company, the lapsing of restrictions on the
Company Restricted Shares in accordance with the Asset Purchase Agreement, and
the payment of Company Transaction Expenses (the “Per-Share Price Estimate”)
along with reasonable supporting documentation for the amounts set forth
therein, including reasonable detail as to the computations thereof, and shall
be prepared in good faith in consultation with Buyer. Buyer will review the
Per-Share Price Estimate and, if Buyer disagrees with any item set forth in such
estimate, it may provide comments to the Company, and the Company and Buyer will
attempt to resolve in good faith any such disagreements prior to the Closing.
Promptly following the closing of the Asset Purchase and immediately prior to
the Closing, the Company shall either (i) deliver to Buyer written confirmation
that the Per-Share Price reflected in the Per-Share Price Estimate is final, or
(ii) provide Buyer with an updated calculation of the Per-Share Price, together
with the information regarding any differences between the Per-Share Price
Estimate and the revised calculations of the Per-Share Price. The Per-Share
Price, as finally determined in accordance with the foregoing, shall constitute
the Per-Share Price for all purposes under this Agreement.

2.5 Directors and Officers.

(a) Except as otherwise directed in writing by Buyer, the directors and officers
of the Company and its Subsidiaries immediately prior to the Closing shall
submit their resignations to be effective as of the Closing Date and in
accordance with Section 8.2(g). From and after the Closing, (i) the directors of
the Company shall be the directors identified by Buyer to the Company in writing
prior to the initial filing of the Proxy Statement with the SEC and approved by
the Company Board, with each such director approved as a director to be
appointed to a Director Class in accordance with Sections 8.2(h) and (i), prior
to the filing of such Proxy Statement, such appointment to be effective as of
the Closing Date, and (ii) the officers of the Company identified by Buyer to
the Company in writing and approved by the Company Board at Closing, in each
case, until their successors shall have been duly elected, appointed or
qualified or until their earlier death, resignation or removal in accordance
with the Company Articles.

(b) On or prior to the Closing, the Company Board shall adopt resolutions
approving Buyer and its Affiliates as interested stockholders pursuant to the
Contemplated Transactions and exempting Buyer and its Affiliates from
applicability of the Maryland Business Combination Act, Title 3, Section 6 of
the Maryland General Corporation Law.

 

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2.6 Treatment of Outstanding Indebtedness.

(a) Between the date hereof and Closing, the Company shall, and shall cause
Asset Buyer to, take all such steps as may be necessary to pay or cause to be
paid the full amount of principal and accrued interest, and any and all of the
fees, costs, expenses, penalties and other amounts payable under the Company
Loan Documents upon consummation of the Asset Purchase (the “Loan Repayment”),
and shall instruct Asset Buyer to deliver such required portion of the purchase
price under the Asset Purchase Agreement to such account or accounts as required
by the Company Loan Agents in connection with the repayment of the Credit
Facility. In connection with the foregoing, the Company shall deliver to Buyer a
draft copy of a customary payoff letter (subject to delivery of funds by Buyer
to the administrative agent at or prior to the Closing) relating to the
repayment of the Credit Facility under the Company Loan Documents which shall
include a release of related Liens (the “Payoff Letter”). On or prior to the
Closing Date, the Company shall deliver to Buyer an executed copy of each Payoff
Letter to be effective upon the Closing.

(b) Unless the SBA has approved under SBA regulations of the Contemplated
Transactions so that the SBA Debentures remain outstanding in accordance with
their respective terms, the Company shall, in accordance with all applicable SBA
regulations, take all actions in connection with the closing of the Asset
Purchase in order to pay, or make provision for the repayment of, the full
amount of principal and accrued interest, and any and all of the fees, costs,
expenses, penalties and other amounts due and payable under the SBA Debentures
as of the closing of the Asset Purchase and at least three (3) Business Days
prior to the Closing, the Company shall deliver to Buyer a draft copy of any
payoff letter or other documentation evidencing the repayment of the SBA
Debentures effective as of the Closing. In connection with the repayment of the
SBA Debentures, the Company shall cause the SBIC Subsidiaries to surrender their
respective SBA licenses to the SBA in accordance with SBA regulations and to
take such other actions as may be required by the SBA in connection with the
surrender and termination of such licenses.

(c) Effective as of the Closing, the Company shall, and shall cause Asset Buyer
to, take all such steps as may be necessary to pay or cause to be paid, or to
provide adequate security (in the form of funds deposited with the trustee, as
required under the Indenture for discharge or defeasance of the indebtedness
under the Retail Notes) for the repayment of, the full amount of principal and
accrued interest, and any and all of the fees, costs, expenses, penalties and
other amounts payable under the Retail Notes upon consummation of the Asset
Purchase, and shall instruct Asset Buyer to deliver such required portion of the
purchase price under the Asset Purchase Agreement to such account or accounts as
required by the Retail Notes in connection with the repayment of the Retail
Notes and shall deliver evidence satisfactory to Buyer of the repayment and
cancellation, or adequate security (in the form of funds deposited into an
escrow account with the trustee, as required under the Indenture) with respect
to repayment, of such notes.

2.7 Open Market Stock Purchase. Subject to the terms and conditions hereof,
Buyer shall, immediately prior to the Closing Date, enter into a binding
contract (the “Trading Plan”) reasonably acceptable to the Company with a
reputable third-party brokerage firm pursuant to which Buyer shall commit to
purchase $50,000,000 of shares of Company Common Stock in open market
transactions in accordance with the terms thereof. The Trading Plan shall
(a) have a term commencing on the Closing Date and ending on the second (2nd)
anniversary of the Closing Date, (b) require that purchases be made under the
Trading Plan at any time that Company Common

 

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Stock is trading on the NYSE (or any successor stock exchange thereto) at a
price not greater than the net asset value per share at the time of purchase,
subject to the volume and other limitations set forth in Rule 10b-18 under the
Exchange Act and (c) prohibit the termination of the Trading Plan by Buyer
unless approved by the “required majority” (as defined in Section 57(o) of the
Investment Company Act) of the Company Board. In the event that Buyer does not
purchase $50,000,000 of shares of Company Common Stock pursuant to the Trading
Plan prior to the termination or expiration of the Trading Plan (whether
pursuant to its terms or otherwise), then, within five (5) Business Days
thereof, Buyer agrees to purchase, at the greater of the then current net asset
value of Company Common Stock and the market price of the Company Common Stock
on the NYSE (or any successor stock exchange thereto), an aggregate amount of
shares of Company Common Stock from the Company equal to the difference between
(x) $50,000,000 and (y) the aggregate dollar amount of shares of Company Common
Stock purchased by Buyer pursuant to the Trading Plan prior to the termination
or expiration thereof. Prior to Closing, Buyer shall provide a copy of the
Trading Plan to the Company for its review and approval (which shall not be
unreasonably withheld, conditioned or delayed).

ARTICLE III

CLOSING; CLOSING DELIVERIES

3.1 Closing. On the terms and subject to the conditions set forth in this
Agreement, the closing of the Contemplated Transactions (the “Closing”) shall
take place at 10:00 a.m. on a date and at a place to be specified by the
Parties, which date shall be no later than three (3) Business Days after the
satisfaction or waiver (subject to Applicable Law) of the latest to occur of the
conditions set forth in Article VIII (other than those conditions that by their
nature are to be satisfied or waived at the Closing), unless extended by mutual
agreement of the Parties (the “Closing Date”).

3.2 Closing Deliveries. At the Closing,

(a) The Company shall deliver or cause to be delivered to Buyer:

(i) copies of the Management Agreements, duly executed by the Company;

(ii) certificates representing the Direct Purchase Shares;

(iii) the officer certificates contemplated by Section 8.2(a) and (b);

(iv) the Registration Rights Agreement, duly executed by the Company;

(v) the Payoff Letter, pursuant to Section 2.6(a);

(vi) evidence of the repayment and cancellation of the SBA Debentures, if
required pursuant to Section 2.6(b), reasonably satisfactory to Buyer;

(vii) evidence of the repayment and cancellation of, or adequate security (in
the form of funds deposited into an escrow account with the trustee, as required
under the Indenture) for the repayment of, the Retail Notes, reasonably
satisfactory to Buyer;

 

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(viii) resignation letters duly executed by each director and officer of the
Company and its Subsidiaries;

(ix) the certificate required pursuant to Section 7.14; and

(x) such other documents as may be reasonably required to effect the intentions
of the Parties, executed by the Company.

(b) Buyer shall deliver or cause to be delivered to the Company:

(i) copies of the Management Agreements, duly executed by Buyer;

(ii) the Stockholder Payment to the Payment Agent in accordance with
Section 3.3;

(iii) the Stock Purchase Price, payable by wire transfer to an account or
accounts specified by the Company at least two (2) Business Days prior to the
Closing Date;

(iv) the Registration Rights Agreement, duly executed by Buyer;

(v) the officer certificates contemplated by Section 8.3(a) and (b);

(vi) a copy of the Trading Plan; and

(vii) such other documents as may be reasonably required to effect the
intentions of the Parties, executed by Buyer.

3.3 Payment Agent; Deposit of Stockholder Payment. Prior to the Closing, Buyer
shall appoint a bank or trust company reasonably acceptable to the Company, or
the Company’s transfer agent, pursuant to an agreement (the “Payment Agent
Agreement”) to act as payment agent (the “Payment Agent”) with respect to the
Stockholder Payment to be made hereunder. At or prior to the Closing, Buyer
shall deposit, or cause to be deposited with, the Payment Agent sufficient cash
to pay the aggregate Stockholder Payment to holders of record of Company Common
Stock as of as of the Stockholder Payment Record Date, after giving effect to
the Asset Purchase but not the Stock Purchase, (the “Payment Fund”). Promptly
following Closing, Buyer shall instruct the Payment Agent to promptly deliver to
each holder of record of Company Common Stock as of the Stockholder Payment
Record Date, such holder’s pro rata share of the Stockholder Payment.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as disclosed in (i) the Company SEC Reports (as defined in Section 4.5(c)
below) filed prior to the date of this Agreement (without giving effect to any
amendment or supplement to any Company SEC Report filed on or after the date of
this Agreement and excluding any general cautionary, predictive or
forward-looking statements contained therein), or (ii) the Company Disclosure
Schedule, the Company hereby represents and warrants to Buyer as follows:

 

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4.1 Corporate Organization.

(a) The Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Maryland. The Company has the requisite
corporate power and corporate authority to own or lease all of its properties
and assets and to carry on its business as it is now being conducted.

(b) The Company is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed or qualified would not, individually or in the aggregate, have a
Material Adverse Effect on the Company.

(c) True, complete and correct copies of the Company Articles and the Company
Bylaws have previously been made available to Buyer. The Company is not in
violation of the Company Articles or the Company Bylaws.

(d) Except as set forth in Section 4.1(d) of the Company Disclosure Schedule,
the Company has no Subsidiaries. Each of the Subsidiaries of the Company (i) is
duly formed and validly existing and in good standing under the laws of the
state of its formation, (ii) has the requisite limited partnership or other
organizational power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted and (iii) is
duly licensed or qualified to do business in each jurisdiction in which the
nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company. True, complete and correct copies of the Organizational Documents
of each Subsidiary of the Company have previously been made available to Buyer.
No Subsidiary of the Company is in violation of its Organizational Documents.

4.2 Capitalization. (a) The authorized capital stock of the Company consists of
150,000,000 shares of stock, initially designated as common stock, par value
$0.001 per share, of which, as of the date of this Agreement, 48,024,614 shares,
including all Company Restricted Shares, were issued and outstanding. As of the
date of this Agreement, no shares of preferred stock were issued and
outstanding. As of the date of this Agreement, 891,424 Company Restricted Shares
were issued and outstanding and subject to restrictions and no shares of Company
Common Stock were reserved for issuance except for 1,985,685 shares of Company
Common Stock reserved for issuance under the Company Stock Plan. All of the
issued and outstanding shares of Company Common Stock have been, and at Closing
the Direct Purchase Shares will be, duly authorized and validly issued and are
fully paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. No Company Voting Debt is issued
or outstanding. Except pursuant to this Agreement or Section 4.2(a) of the
Company Disclosure Schedule, and other than the Company Restricted Shares, the
Company does not have and is not bound by any outstanding subscriptions,
options, warrants, calls, rights, commitments or agreements of any

 

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character calling for the purchase or issuance of, or the payment of any amount
based on, any shares of Company Common Stock, Company preferred stock, Company
Voting Debt or any other equity securities of the Company or any securities
representing the right to purchase or otherwise receive any shares of Company
Common Stock, Company preferred stock, Company Voting Debt or other equity
securities of the Company. Except as it relates to cashless settlement of
Company Restricted Shares to satisfy tax withholding requirements related to the
vesting thereof, there are no contractual obligations of the Company or any of
its Subsidiaries (A) to repurchase, redeem or otherwise acquire any shares of
capital stock of the Company or any equity security of the Company or its
Subsidiaries or any securities representing the right to purchase or otherwise
receive any shares of capital stock or any other equity security of the Company
or its Subsidiaries or (B) pursuant to which the Company or any of its
Subsidiaries is or could be required to register shares of Company capital stock
or other securities under the Securities Act.

(b) Except as set forth in Section 4.2(b) of the Company Disclosure Schedule,
all of the issued and outstanding shares of capital stock or other equity
ownership interests of each Subsidiary of the Company are owned, directly or
indirectly, by the Company, free and clear of any Liens, and all of such shares
or equity ownership interests are duly authorized and validly issued and are
fully paid, nonassessable and free of preemptive rights. No Subsidiary of the
Company has or is bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character calling for the purchase or
issuance of any shares of capital stock or any other equity security of such
Subsidiary or any securities representing the right to purchase or otherwise
receive any shares of capital stock or any other equity security of such
Subsidiary.

(c) Except for the Retail Notes and amounts outstanding under the Company Loan
Documents, the Company has no indebtedness for borrowed money. Except for the
SBA Debentures, no Subsidiary of the Company has any indebtedness for borrowed
money; provided, however, that certain of the Company’s Subsidiaries are
guarantors of the Credit Facility.

4.3 Authority; No Violation. (a) The Company has full corporate power and
authority to execute and deliver this Agreement and to consummate the
Contemplated Transactions. The execution and delivery of this Agreement, the
Management Agreements and the Registration Rights Agreement and the consummation
of the Contemplated Transactions and the transactions contemplated thereby have
been duly and validly approved by the Company Board. The Company Board has
determined that this Agreement and the Contemplated Transactions are advisable
and in the best interests of the Company and the Company Stockholders, approved
this Agreement and the Contemplated Transactions, recommended that the Company
Stockholders approve the Contemplated Transactions, and directed that the
Company Matters be submitted to the Company Stockholders for approval and
adoption at a duly held meeting of such Company Stockholders, together with the
recommendation of the Company Board that the Company Stockholders approve and
adopt the Company Matters (the “Company Board Recommendation”) and has adopted a
resolution to the foregoing effect. Except for the approval and adoption of
(i) the New IMA Matter by the affirmative vote of the holders of the lesser of
(A) 67% or more of the shares present at the Company Stockholder Meeting
entitled to vote at such meeting and (B) a majority of the outstanding shares of
Company Common Stock and (ii) the Stock Issuance Approval Matter by the
affirmative vote of a majority of the shares of Company Common Stock cast at
such meeting (such approval, the “Company Stockholder Approval”), no other
corporate proceedings on the part of the Company are necessary to approve this
Agreement or the Contemplated Transactions;

 

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provided, however, that the Company Board shall also recommend that the Company
Stockholders approve the Reduced Asset Coverage Matter, it being understood that
the definition of “Company Stockholder Approval” shall not include approval of
the Reduced Asset Coverage Matter, and approval thereof shall not be a condition
to Closing. This Agreement has been duly and validly executed and delivered by
the Company and (assuming due authorization, execution and delivery by Buyer)
constitutes the valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except as may be limited by
bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization or
similar laws of general applicability relating to or affecting the rights of
creditors generally and subject to general principles of equity (the “Bankruptcy
and Equity Exception”).

(b) Neither the execution and delivery of this Agreement by the Company nor the
consummation by the Company of the Contemplated Transactions, nor compliance by
the Company with any of the terms or provisions of this Agreement, will
(i) violate any provision of the Company Articles or Company Bylaws, or
(ii) assuming that the consents, approvals and filings referred to in
Section 4.4 are duly obtained and/or made, (A) violate any Applicable Law
applicable to the Company or any of its Subsidiaries, properties or assets, or
(B) except as would not, individually or in the aggregate, be material to the
Company, and its Subsidiaries, taken as a whole, violate, conflict with, result
in a breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of the respective properties or
assets of the Company or any of its Subsidiaries under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, franchise, agreement or other instrument or obligation to which
the Company or any of its Subsidiaries is a party or by which any of them or any
of their respective properties or assets is bound (collectively, the “Company
Contracts”).

4.4 Consents and Approvals.

(a) Except for (i) the filing with the SEC of a proxy statement in definitive
form (the “Proxy Statement”) relating to the special meeting of the Company
Stockholders to be held in order to obtain the Company Stockholder Approval (the
“Company Stockholder Meeting”), (ii) any notices, consents, authorizations,
approvals, filings or exemptions in connection with compliance with the rules
and regulations of the NYSE, or any other applicable self-regulatory
organization (“SRO”), (iii) any notices or filings under the HSR Act, (iv) such
filings and approvals as are required to be made or obtained under the
securities or “Blue Sky” laws of various states in connection with the issuance
of the Direct Purchase Shares pursuant to this Agreement, (v) compliance with
the Investment Company Act, and the rules and regulations promulgated
thereunder, or (vi) as set forth on Section 4.4(a) of the Company Disclosure
Schedule (the foregoing (i) through (vi) referred to collectively as the
“Company Regulatory Approvals”), no other consents, authorizations, approvals,
or exemptions from, or notices to, or filings with, any Governmental Entity are
necessary in connection with the execution and delivery by the Company of this
Agreement or the consummation by the Company of Contemplated Transactions.

 

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(b) Except for (i) receipt of the Company Stockholder Approval, (ii) receipt of
the relevant releases under the Company Loan Documents in connection with the
Loan Repayment, (iii) receipt of the SBA Approval (but subject to Section 2.6(b)
and Section 7.1(b)(iii)), (iv) consents under Company Contracts set forth on
Section 4.4(b) of the Company Disclosure Schedule, and (v) matters covered in
the immediately preceding Section 4.4(a), no consents or approvals of any Person
are necessary in connection with the execution and delivery by Company of this
Agreement or the consummation by the Company of the Contemplated Transactions.

4.5 Reports; Regulatory Matters.

(a) The Company and each of its Subsidiaries have timely filed all reports,
registration statements and certifications, together with any amendments
required to be made with respect thereto, that they were required to file since
December 31, 2015 with (i) the SEC, (ii) the NYSE, and (iii) any other
applicable SRO or Governmental Entity, and all other reports and statements
required to be filed by them since December 31, 2015, including any report or
statement required to be filed pursuant to the laws, rules or regulations of the
United States, any state, any foreign entity, or any SRO or Governmental Entity,
and have paid all fees and assessments due and payable in connection therewith.
Except for normal examinations of the Company and its Subsidiaries conducted by
a SRO or Governmental Entity in the ordinary course of the business, no SRO or
Governmental Entity has initiated since December 31, 2016 or has pending any
proceeding, enforcement action or, to the knowledge of the Company,
investigation into the business, disclosures or operations of the Company or any
of its Subsidiaries. Except as set forth in Section 4.5(a) of the Company
Disclosure Schedule, since December 31, 2016, no SRO or Governmental Entity has
resolved any proceeding, enforcement action or, to the knowledge of the Company,
investigation into the business, disclosures or operations of the Company or any
of its Subsidiaries. There is no unresolved, or, to the Company’s knowledge,
threatened comment or stop order by any SRO or Governmental Entity with respect
to any report or statement relating to any examinations or inspections of the
Company or any of its Subsidiaries. Since December 31, 2016, there have been no
formal or informal inquiries by, or disagreements or disputes with, any SRO or
Governmental Entity with respect to the business, operations, policies or
procedures of the Company or any of its Subsidiaries (other than normal
examinations conducted by a SRO or Governmental Entity in the Company’s ordinary
course of business consistent with past practice). The Company has made
available to Buyer all correspondence with the SEC, the NYSE and any other SRO
or Governmental Entity since December 31, 2015.

(b) Neither the Company nor any of its Subsidiaries is subject to any
cease-and-desist or other order or enforcement action issued by, or is a party
to any written agreement, consent agreement or memorandum of understanding with,
or is a party to any commitment letter or similar undertaking to, or is subject
to any order or directive by, or has been ordered to pay any civil money penalty
by, or has been since December 31, 2015 a recipient of any supervisory letter
from, or since December 31, 2015 has adopted any policies, procedures or board
resolutions at the request or suggestion of, any SRO or Governmental Entity that
currently restricts in any material respect the conduct of its business (or to
the Company’s knowledge that, upon consummation of the Contemplated
Transactions, would restrict in any material respect the conduct of the business
of Buyer or any of its Subsidiaries), or that in any material manner relates to
its credit, risk management or compliance policies, its internal controls, its
management or its business (each item in this sentence, a “Company Regulatory
Agreement”), nor has the Company or any of its Subsidiaries been advised since
December 31, 2015 by any SRO or Governmental Entity that it is considering
issuing, initiating, ordering, or requesting any such Company Regulatory
Agreement.

 

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(c) The Company has filed on the SEC’s EDGAR system each (i) final registration
statement, prospectus, report, schedule and definitive proxy statement filed
with or furnished to the SEC by the Company or any of its Subsidiaries pursuant
to the Securities Act or the Exchange Act since December 31, 2015 (the “Company
SEC Reports”) and prior to the date of this Agreement and (ii) communication
mailed by the Company to the Company Stockholders since December 31, 2015 and
prior to the date of this Agreement. No such Company SEC Report or
communication, at the time filed, furnished or communicated (and, in the case of
registration statements and proxy statements, on the dates of effectiveness and
the dates of the relevant meetings, respectively), contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading, except
that information as of a later date (but before the date of this Agreement)
shall be deemed to modify information as of an earlier date. As of their
respective dates, all Company SEC Reports complied as to form in all material
respects with the published rules and regulations of the SEC with respect
thereto. No executive officer of the Company has failed in any respect to make
the certifications required of him or her under Section 302 or 906 of the
Sarbanes-Oxley Act. As of the date of this Agreement, there are not outstanding
or unresolved comments from the SEC with respect to any Company SEC Report and,
as of the date of this Agreement, no Company SEC Report is subject to any
ongoing review by the SEC.

4.6 Financial Statements.

(a) The consolidated financial statements of the Company and its Subsidiaries
included in the Company SEC Reports (including the related notes, where
applicable) (i) have been prepared from, and are in accordance with, the books
and records of the Company and its Subsidiaries, (ii) fairly present in all
material respects the consolidated results of operations, cash flows, changes in
stockholders’ equity and consolidated financial position of the Company and its
Subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth (subject in the case of unaudited statements to recurring
year-end audit adjustments immaterial in nature and amount), (iii) complied as
to form, as of their respective dates of filing with the SEC, in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto and (iv) have been prepared in
accordance with GAAP consistently applied during the periods involved, except,
in each case, as indicated in such statements or in the notes thereto.

(b) Neither the Company nor any of its Subsidiaries has any material liability
or obligation of any nature whatsoever required by GAAP to be reserved for in a
balance sheet (whether absolute, accrued, contingent or otherwise and whether
due or to become due), except for those liabilities that are reflected or
reserved against on the consolidated balance sheet of the Company included in
its Annual Report on Form 10-K for the annual period ended December 31, 2017
(including any notes thereto) and for liabilities and obligations incurred in a
commercially reasonable manner since the date of such balance sheet.

(c) The Company has implemented and maintains disclosure controls and procedures
(as defined in Rule 13a-15(e) of the Exchange Act) to ensure that material
information relating to the Company, including its consolidated Subsidiaries,
required to be disclosed by the Company in the reports that it files under the
Exchange Act is recorded, processed, summarized

 

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and reported within the time periods specified in the rules and regulations of
the SEC, and that all such material information is accumulated and communicated
to the principal executive officer and the chief financial officer of the
Company by others within those entities in connection with the reports the
Company is required to file under the Exchange Act to allow timely decisions
regarding required disclosure and to make the certifications required pursuant
to Sections 302 and 906 of the Sarbanes Oxley Act. For purposes of the preceding
sentence, “principal executive officer” and “principal financial officer” shall
have the meanings given to such terms in the Sarbanes-Oxley Act. The records,
systems, controls, data and information of the Company and its consolidated
Subsidiaries are recorded, stored, maintained and operated under means
(including any electronic, mechanical or photographic process, whether
computerized or not) that are under the exclusive ownership and direct control
of the Company or its consolidated Subsidiaries (including all means of access
thereto and therefrom), except for any nonexclusive ownership and nondirect
control that has not had and would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company. The
Company and its consolidated Subsidiaries have established and maintained a
system of internal controls over financial reporting (as defined in Rule 13a-15
under the Exchange Act) (“internal controls”). Such internal controls are
sufficient to provide reasonable assurance regarding the reliability of the
Company’s financial reporting and the preparation of the Company’s financial
statements for external purposes in accordance with GAAP. The Company has
disclosed, based on its most recent evaluation of internal controls prior to the
date of this Agreement, to the Company’s auditors and audit committee (i) any
significant deficiencies and material weaknesses in the design or operation of
internal controls which are reasonably likely to adversely affect the Company’s
ability to record, process, summarize and report financial information and
(ii) any fraud, whether or not material, that involves management or other
employees who have a significant role in internal controls. Each of the Company
and its consolidated Subsidiaries has substantially addressed any such
deficiency, material weakness or fraud. As of the date hereof, there is no
reason to believe that the Company’s outside auditors, chief executive officer
and chief financial officer will not be able to give the certifications and
attestations required pursuant to the rules and regulations adopted pursuant to
Section 404 of the Sarbanes-Oxley Act, without qualification, when required.
Neither the Company nor any of its consolidated Subsidiaries has any outstanding
“extensions of credit” or has arranged any outstanding “extensions of credit” to
directors or executive officers in violation of Section 402 of the
Sarbanes-Oxley Act and the rules and regulations of the SEC promulgated
thereunder.

(d) Since December 31, 2015, the principal executive officer and the principal
financial officer of the Company have complied in all material respects with
(i) the applicable provisions of the Sarbanes-Oxley Act and under the Exchange
Act and (ii) the applicable listing and corporate governance rules and
regulations of the NYSE. The principal executive officer and the principal
financial officer of the Company have made all certifications required by
Sections 302 and 906 of the Sarbanes-Oxley Act with respect to each Company SEC
Document filed by the Company, and the statements contained in such
certifications were true and correct on the date such certifications were made.
For purposes of the preceding sentence, “principal executive officer” and
“principal financial officer” shall have the meanings given to such terms in the
Sarbanes-Oxley Act.

 

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4.7 Broker’s Fees. Except for the fees of Houlihan Lokey, neither the Company
nor any of its Subsidiaries has utilized any broker, finder or financial advisor
or incurred any liability for any broker’s fees, commissions or finder’s fees in
connection with the Contemplated Transactions.

4.8 Absence of Certain Changes or Events. Except as set forth in Section 4.8 of
the Company Disclosure Schedules, since December 31, 2017, (a) the respective
businesses of the Company and its Subsidiaries have been conducted in the
ordinary course of business consistent with past practice, (b) none of the
Company nor any Subsidiary has taken any action that, if taken after the date of
this Agreement, would result in a breach of the covenants set forth in
Section 6.2, and (c) no event or events have occurred that have had or would
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect on the Company.

4.9 Legal Proceedings. (a) Except as set forth in Section 4.9 of the Company
Disclosure Schedule and except as would not, individually or in the aggregate,
be material to the Company and its Subsidiaries, taken as a whole, neither the
Company nor any of its Subsidiaries is a party to any, and there are no pending
or, to the best of the Company’s knowledge, threatened, legal, administrative,
arbitral or other proceedings, claims, actions, suits or governmental or
regulatory investigations of any nature against the Company or any of its
Subsidiaries or to which any of their assets are subject or against or into any
officers or directors of the Company or its Subsidiaries in such capacities.

(b) Except as would not be material to the Company and its Subsidiaries, taken
as a whole, there is no judgment, settlement agreement, order, injunction,
decree or regulatory restriction (other than those of general application that
apply to similarly situated companies or their Subsidiaries) imposed upon the
Company, any of its Subsidiaries or the assets of the Company, any of its
Subsidiaries.

4.10 Taxes and Tax Returns.

(a) Each of the Company and its Subsidiaries (i) has duly and timely filed
(including all applicable extensions) all federal, state, local and foreign
income and other material Tax Returns required to be filed by it on or prior to
the date of this Agreement and all such Tax Returns are accurate and complete,
(ii) has paid all Taxes shown thereon as due and (iii) has duly paid or made
provision for the payment of all Taxes that have been incurred or are due or
claimed to be due from it by the IRS or any other federal, state, foreign or
local taxing authorities other than Taxes that are not yet delinquent or are
being contested in good faith, have not been finally determined and have been
adequately reserved against under GAAP. There are no material disputes pending,
or written claims asserted, for Taxes or assessments upon the Company or any
Subsidiary for which the Company does not have reserves that are adequate under
GAAP. Neither the Company nor any Subsidiary is a party to or is bound by any
Tax sharing, allocation or indemnification agreement or arrangement (other than
such an agreement or arrangement exclusively between or among the Company and
its Subsidiaries as described in the Company Disclosure Schedule).

(b) Effective for the year ending December 31, 2007, the Company made a valid
election under Subchapter M of Chapter 1 of the Code to be taxed as a regulated
investment company. The Company has qualified as a regulated investment company
at all times subsequent to such election, and expects to qualify as such for its
current taxable year. With respect to each taxable year, the Company has
satisfied the distribution requirements imposed on a regulated investment
company under Section 852 of the Code and will satisfy the distribution
requirements for its current taxable year.

 

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(c) The Company and its Subsidiaries have complied in all material respects with
all Applicable Laws relating to the payment and withholding of Taxes and have,
within the time and in the manner prescribed by Applicable Law, withheld from
and paid over all amounts required to be so withheld and paid over under
Applicable Laws.

(d) There are no Liens for Taxes upon the assets of the Company or any of the
Subsidiaries, except for Liens for Taxes not yet due and payable and Liens for
Taxes that are both being contested in good faith and adequately reserved for in
accordance with GAAP.

(e) Neither the Company nor any Subsidiary has granted any waiver, extension, or
comparable consent regarding the application of the statute of limitations with
respect to any Taxes or Tax Return that is outstanding, nor any request for such
waiver or consent has been made.

(f) No Subsidiary of the Company is a “specified foreign corporation” as defined
in Section 965(e) of the Code.

4.11 Employee Matters.

(a) Section 4.11(a) of the Company Disclosure Schedule sets forth a true,
complete and correct list of each “employee benefit plan” as defined in
Section 3(3) of ERISA, and each incentive, deferred compensation, paid-time-off,
equity-based, phantom equity, severance, separation, termination, retention,
change-of-control, pension, profit-sharing, retirement, leave of absence,
layoff, vacation, day or dependent care, legal services, cafeteria, life,
health, medical, dental, vision, welfare, accident, disability, workmen’s
compensation or other insurance, collective bargaining, material fringe benefit,
or other similar plan, program, agreement, practice, policy, arrangement or
commitment for the benefit of any employee, former employee, director or former
director of the Company or any of its Subsidiaries (collectively, “Company
Employees”) or any independent contractor or former independent contractor of
the Company or any of its Subsidiaries, entered into, maintained or contributed
to, or required to be maintained or contributed to by the Company, any of its
Subsidiaries or any Person that, together with the Company or any of its
Subsidiaries, is treated as a single employer under Section 414(b), (c), (m) or
(o) of the Code, (each such Person, an “ERISA Affiliate”), whether written or
oral, and whether or not subject to ERISA (such plans, programs, agreements,
practices, policies, arrangements and commitments, herein referred to as the
“Company Benefit Plans”). In addition, Section 4.11(a) of the Company Disclosure
Schedule sets forth a true, complete and correct list of each employment
agreement or independent contractor agreement for substantial personal services,
other than oral agreements that can be terminated on prior notice of 30 days’ or
less, without continuing obligation or penalty (such agreements herein referred
to as the “Employment Agreements”).

(b) With respect to each Company Benefit Plan, the Company has made available to
Buyer true, complete and correct copies of the following (as applicable): (i)
the written document evidencing such Company Benefit Plan (including any related
trust agreements or other funding arrangements) and any amendment thereto or,
with respect to any such plan that is not in

 

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writing, a written description of the material terms thereof, (ii) the current
summary plan description, and all summaries of material modifications thereto,
(iii) the two (2) most recent Form 5500s, annual reports, financial statements
and/or actuarial reports, (iv) the most recent IRS determination, opinion or
advisory letter, and (v) all material written communications provided to
employees in the last twelve (12) months relating to such Company Benefit Plans
and all other material written communications with any governmental agency in
the last thirty-six (36) months relating to such Company Benefit Plans,
including any materials relating to any government investigation or audit or any
submissions under any voluntary compliance procedure. The Company has made
available to Buyer true, complete and correct copies of any written Employment
Agreements including all amendments thereto and, with respect to any Employment
Agreement that is not in writing, a written description of the material terms
thereof.

(c) (i) Each Company Benefit Plan (including any related trust) has been
maintained, operated and administered (including with respect to reporting and
disclosure) in accordance with its terms in all material respects, (ii) all
Company Benefit Plans are in compliance with the applicable provisions of ERISA,
the Code and all other Applicable Laws, including Section 409A of the Code, in
each case in all material respects, (iii) to the Company’s knowledge no
non-exempt “prohibited transaction” (as defined in Section 4975 of the Code or
Section 406 of ERISA) has occurred with respect to any Company Benefit Plan
which would result in a material penalty, (iv) all contributions to, and
payments from, the Company Benefit Plans have been made in accordance with the
terms of the Company Benefit Plans, ERISA, the Code and all other Applicable
Laws in all material respects, (v) there are no current or, to the Company’s
knowledge, threatened investigations by any Governmental Entity, termination
proceedings, or other claims by any Person (except routine claims for benefits)
with respect to the Company Benefit Plans or, to the Company’s knowledge, any
fiduciary thereof and (vi) none of the Company, any Subsidiary, or any ERISA
Affiliate currently sponsors, contributes to, maintains or has any liability
(whether contingent or otherwise under) (A) an employee benefit plan that is or
was subject to Title IV of ERISA or Section 412 of the Code or Section 302 of
ERISA, (B) a “multiemployer plan” (as defined in Section 3(37) of ERISA), (C) a
“multiple employer plan” (within the meaning of Section 413 of the Code) or
(D) a “multiple employer welfare arrangement” (within the meaning of
Section 3(40) of ERISA), nor, in each case, have any of them ever done so.

(d) Except as set forth in Section 4.11(d) of the Company Disclosure Schedule,
(i) the Company and each of its Subsidiaries and, to the Company’s knowledge,
each other party to each Employment Agreement has duly performed all obligations
required to be performed by it to date under such agreement, and (ii) to the
Company’s knowledge, no event or condition exists that constitutes or, after
notice or lapse of time or both, will constitute, a breach, violation or default
on the part of the Company or any of its Subsidiaries or, to the Company’s
knowledge, any other party thereto under any such Employment Agreement.

(e) Each Company Benefit Plan intended to be qualified under Section 401(a) of
the Code (including each related trust intended to be exempt from taxation under
Section 501(a) of the Code) has received an IRS determination letter or is
comprised of a master and prototype or volume submitter plan that has received a
favorable opinion or advisory letter from the IRS. Since the date of each such
determination, opinion or advisory letter, no event has occurred and no
condition exists that would result in the revocation of any such determination,
opinion or advisory letter or that would adversely affect the qualified status
of any such Company Benefit Plan (or the tax-exempt status of any such trust).

 

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(f) Except as set forth on Section 4.11(f) of the Company Disclosure Schedule,
no Company Benefit Plan that is a “welfare benefit plan” as defined in
Section 3(1) of ERISA (each, a “Welfare Plan”) or Employment Agreement provides
for continuing benefits or coverage for any participant or beneficiary or
covered dependent of a participant after such participant’s termination of
employment, except to the extent required by law. Each Welfare Plan which
provides medical, dental, health or long-term disability benefits (except a
flexible spending account) is fully insured and claims with respect to any
participant or covered dependent under such Welfare Plan could not result in any
uninsured liability to the Company, any Subsidiary or Buyer (except a flexible
spending account).

(g) The Company and each of its Subsidiaries have properly classified for all
purposes (including for all Tax purposes and for purposes of determining
eligibility to participate in any employee benefit plan) all employees, leased
employees and independent contractors, and have withheld and paid all applicable
Taxes and made all appropriate filings in connection with services provided by
such Persons to the Company and any Subsidiary.

(h) Except as set forth in Section 4.11(h)(i) of the Company Disclosure
Schedule, the execution of this Agreement and the Asset Purchase Agreement and
the consummation of the Contemplated Transactions do not constitute a triggering
event under any Company Benefit Plan, Employment Agreement, policy, arrangement,
statement, commitment or agreement, whether or not legally enforceable, which
(either alone or upon the occurrence of any additional or subsequent event) will
or may result in any “parachute payment” (as defined in Section 280G of the
Code). Except as set forth on Section 4.11(h)(ii) of the Company Disclosure
Schedule, no Company Benefit Plan or Employment Agreement provides for the
payment of severance, termination, change-in-control or any similar type of
payments or benefits. None of the Company, any of its Subsidiaries or Buyer will
have any liability under the Workers Adjustment and Retraining Notification Act,
as amended from time to time, with respect to any events occurring or conditions
existing on or prior to the Closing.

4.12 Compliance with Applicable Law.

(a) The Company and each of its Subsidiaries hold all Permits necessary for the
lawful conduct of their respective businesses, and have complied in all respects
with and are not in default in any respect under any, any Permit or Applicable
Law, except for such failures, non-compliance or defaults that would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.

(b) Each of the SBIC Subsidiaries is licensed to operate as a Small Business
Investment Company (“SBIC”) by the SBA. Each of the SBIC Subsidiaries’
respective SBIC license is in good standing with the SBA and no adverse
regulatory findings contained in any examinations reports prepared by the SBA
regarding any of the SBIC Subsidiaries are outstanding or unresolved.

 

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4.13 Certain Contracts. (a) Except as set forth in Section 4.13 of the Company
Disclosure Schedule or as expressly contemplated by this Agreement, neither the
Company nor any of its Subsidiaries is a party to or bound by any Company
Contract that is:

(i) a “material contract” (as such term is defined in Item 601(b)(10) of
Regulation S-K of the SEC) to be performed after the date of this Agreement that
has not been filed or incorporated by reference in the Company SEC Reports filed
prior to the date hereof or that is material to the Company and its
Subsidiaries, taken as a whole, or their financial condition or results of
operations;

(ii) except with respect to investments set forth in the Company SEC Reports and
other than any arrangement regarding a Portfolio Company, a joint venture,
alliance or partnership agreement;

(iii) other than any arrangement regarding any Portfolio Company, a loan,
guarantee of indebtedness or credit agreement, note, mortgage, indenture or
other binding commitment (other than those between or among the Company and any
of its Subsidiaries) relating to indebtedness for borrowed money in an amount in
excess of $2,500,000 individually;

(iv) an investment advisory agreement or collateral management agreement
providing for collateral management, investment advisory or other management or
advisory fees payable to the Company or any of its Subsidiaries;

(v) a non-competition or non-solicitation contract or agreement that purports to
limit the manner in which, or the localities in which, the business of the
Company and its Subsidiaries, taken as a whole, is conducted or the types of
businesses that the Company and its Subsidiaries, taken as a whole, conduct;

(vi) is a contract or agreement requiring expenditures by the Company, and/or
any of its Subsidiaries in excess of $1,000,000 in the aggregate on or after the
date of this Agreement or under which the Company and/or any of its Subsidiaries
is entitled to receive in excess of $1,000,000 in the aggregate on or after the
date of this Agreement, in each case, excluding payments received related to
Portfolio Company investments;

(vii) is an order or consent of a Governmental Entity to which the Company or
any of its Subsidiaries is subject;

(viii) is a contract or agreement that obligates the Company or any of its
Subsidiaries to conduct any material business on an exclusive basis with any
Third Party; or

(ix) is a contract or agreement relating to the acquisition or disposition of
any business or operations (whether by merger, sale of stock, sale of assets or
otherwise) that has not yet been consummated (all Company Contracts described in
clauses (i) through (ix) provided to Buyer prior to the date hereof,
collectively, the “Material Company Contracts”).

 

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(b) Except as set forth in Section 4.13 of the Company Disclosure Schedule,
(i) each Material Company Contract is valid and binding on the Company or its
applicable Subsidiary and, to the knowledge of the Company, the other parties
thereto, enforceable against it in accordance with its terms (subject to the
Bankruptcy and Equity Exception), and is in full force and effect, (ii) the
Company and each of its Subsidiaries and, to the Company’s knowledge, each other
party thereto has duly performed all obligations required to be performed by it
to date under each Material Company Contract and (iii) no event or condition
exists that constitutes or, after notice or lapse of time or both, will
constitute, a breach, violation or default on the part of the Company or any of
its Subsidiaries or, to the Company’s knowledge, any other party thereto under
any such Material Company Contract.

4.14 Property. Except as set forth on Section 4.14 of the Company Disclosure
Schedule, the Company or one of its Subsidiaries (a) has good and marketable
title to all the properties and assets reflected in the latest audited balance
sheet included in such Company SEC Reports as being owned by the Company or one
of its Subsidiaries or acquired after the date thereof (except properties sold
or otherwise disposed of since the date thereof in the ordinary course of
business), free and clear of all Liens of any nature whatsoever, except
Permitted Liens, and (b) is the lessee of all leasehold estates reflected in the
latest audited financial statements included in such Company SEC Reports or
acquired after the date thereof (except for leases that have expired by their
terms since the date thereof), free and clear of all Liens of any nature
whatsoever, except for Permitted Liens, and is in possession of the properties
purported to be leased thereunder, and each such lease is valid without default
thereunder by the lessee or, to the Company’s knowledge, the lessor.

4.15 Intellectual Property. The Company and its Subsidiaries own or have the
right to use in the manner currently used all Intellectual Property Rights
material to the respective businesses of the Company and its Subsidiaries as now
conducted and as described in the Company SEC Reports, and the expected
expiration of any of such Intellectual Property Rights would not be material to
the Company and its Subsidiaries, taken as a whole. The Company and its
Subsidiaries own no patents.

4.16 Cyber Security and Data Protection. Any and all collection, acquisition,
use, storage, processing, disclosure or transfer by the Company or any of its
Subsidiaries of any Third Party data are, and have in the last three (3) years
been, in compliance with all Applicable Laws. In the last two (2) years, there
have not been any actual or suspected incidents of data security breaches or
unauthorized intrusions, access or use of any information systems or data of the
Company or its Subsidiaries, or unauthorized acquisition, destruction, damage,
disclosure, loss, corruption, alteration or use thereof.

4.17 State Takeover Laws. The Company Board has unanimously approved this
Agreement and the Contemplated Transactions as required to render inapplicable
to this Agreement and such transactions the restrictions on “business
combinations” set forth in Section 3-601 et seq. of the MGCL or any other
“moratorium,” “control share,” “fair price,” “takeover” or “interested
stockholder” law (any such laws, “Takeover Statutes”).

 

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4.18 Company Information. The information relating to the Company and its
Subsidiaries that is provided by the Company or its representatives for
inclusion in the Proxy Statement, or in any application, notification or other
document filed with any other SRO or Governmental Entity in connection with the
Contemplated Transactions, will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in light of the circumstances in which they are made, not misleading. The Proxy
Statement as it relates to the Company and its Subsidiaries and other portions
within the reasonable control of the Company and its Subsidiaries will comply in
all material respects with the provisions of the Exchange Act and the rules and
regulations thereunder.

4.19 Insurance. The Company and its Subsidiaries maintain, or are covered by,
policies of insurance in such amounts and against such risks as are customary in
the industries in which the Company and its Subsidiaries operate. The Company
and its Subsidiaries have paid, or caused to be paid, all premiums due under all
insurance policies of the Company and its Subsidiaries and have not received
written notice that they are in default with respect to any material obligations
under such policies. None of the Company nor any of its Subsidiaries has
received any written notice of cancellation or termination with respect to any
existing material insurance policy that is held by, or for the benefit of, the
Company or its Subsidiaries, other than as would not, individually or in the
aggregate, be material to the Company and its Subsidiaries, taken as a whole.
Except as would not be material to the Company and its Subsidiaries, taken as a
whole, all such insurance policies are in full force and effect and will not in
any way be affected by, or terminate or lapse by reason of, the execution (but
not the performance) of this Agreement.

4.20 Environmental Matters. Except as would not, individually or in the
aggregate, be material to the Company and its Subsidiaries, taken as a whole,
there are no legal, administrative, arbitral or other proceedings, claims,
actions, causes of action or notices with respect to any Environmental Laws,
pending or threatened against the Company or any of its Subsidiaries. Neither
the Company nor any of its Subsidiaries is subject to any agreement, order,
judgment, decree, letter or memorandum by or with any Governmental Entity or
third party imposing any liability or obligation with respect to any of the
foregoing.

4.21 Purchased Loan Documents and Equity Governing Documents. Except as set
forth in Section 4.21 of the Company Disclosure Schedule:

(a) Each Purchased Loan Document to which the Company or any Subsidiary is a
party constitutes the legal, valid and binding obligations of the Company or
such Subsidiary and, to the knowledge of the Company, each Borrower party
thereto, enforceable against the Company or such Subsidiary and, to the
knowledge of the Company, each Borrower party thereto, in accordance with their
respective terms (subject to the Bankruptcy and Equity Exception). The Company
is not, and, to the knowledge of the Company, each Borrower party thereto is
not, in breach or default in any material respect of its obligations under any
of such Purchased Loan Documents.

(b) The Purchased Loan Schedule is accurate in all material respects as of
5:00 p.m. (New York, New York time) on December 31, 2017 and will be accurate in
all material respects as of 5:00 p.m. (New York, New York time) on the second
Business Day immediately prior to the closing date under the Asset Purchase
Agreement.

 

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(c) Complete and correct copies of all the Purchased Loan Documents in the
possession of the Company, including all material modifications, amendments and
supplements thereto, have been made available to Buyer or will be made available
to Buyer prior to the Closing. Except as set forth in such documents provided to
the Buyer, (1) the Purchased Loan Documents (A) have not been modified in any
material respect, satisfied or canceled in whole or in part (except for
repayments occurring after the date of the Purchased Loan Schedule), or
subordinated to any other indebtedness of the applicable Borrower and (B) are
not subject to any release or compliance waiver that is currently in effect as
to any provision thereof (or, if such release or compliance waiver exists, was
made available to Buyer), except for any such release or compliance waiver that
is not material to the Company, and (2) except to the extent permitted under the
terms of the applicable Purchased Loan Documents, (I) no underlying obligor with
respect to the Purchased Loan Documents has been released from liability, and
(II) no Purchased Loan Collateral has been released from the Liens granted under
the Purchased Loan Documents.

(d) None of the Purchased Loan Notes has any marks or notations indicating that
it has been pledged, assigned or otherwise conveyed to any Person other than the
Company.

(e) As of the date hereof, except as set forth on Section 4.21(e) of the Company
Disclosure Schedule, (i) no Purchased Loan is more than thirty (30) days
delinquent in the payment of interest or principal therein and (ii) to the
knowledge of the Company, no Borrower party thereto is subject to (x) any
bankruptcy or insolvency proceeding or (y) any continuing event of default under
the applicable Purchased Loan Documents.

(f) Each Equity Governing Document to which the Company or any Subsidiary is a
party constitute the legal, valid and binding obligations of the Company or such
Subsidiary, enforceable against the Company or such Subsidiary in accordance
with their respective terms (subject to the Bankruptcy and Equity Exception).
The Company is not in breach or default in any material respect of its
obligations under any of such Equity Governing Documents.

(g) The Equity Interest Schedule is accurate in all material respects as of
5:00 p.m. (New York, New York time) on December 31, 2017 and will be accurate in
all material respects as of 5:00 p.m. (New York, New York time) on the second
Business Day immediately prior to the closing date under the Asset Purchase
Agreement.

4.22 Purchased Assets; Title to Purchased Assets.

(a) Except as set forth in Section 4.22(a) of the Company Disclosure Schedule,
to the Company’s knowledge, there are no actions, suits or proceedings pending
in which one of the Borrowers has (i) filed, or consented (by answer or
otherwise) to the filing against it, of a petition for relief under any
bankruptcy or insolvency law of any jurisdiction, (ii) made an assignment for
the benefit of its creditors, (iii) consented to the appointment of a custodian,
receiver, trustee, liquidator or other judicial officer with similar power over
itself or any substantial part of its property, (iv) been adjudicated by a court
to be insolvent, or (v) taken corporate or partnership action for the purpose of
authorizing any of the foregoing. Neither the Company nor, to the Company’s
knowledge, any Borrower is in breach of or under default pursuant to the terms,
conditions or provisions of, any Purchased Loan Documents or Equity Governing
Documents. No event or condition exists that constitutes or, after notice or
lapse of time or both, will constitute, a breach, violation or default on the
part of the Company or any of its Subsidiaries or, to the Company’s knowledge,
any other party thereto under any Purchased Loan Document. There are no disputes
pending or, to the Company’s knowledge, threatened with respect to any Purchased
Loan Document or Equity Governing Document.

 

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(b) Except as set forth in Section 4.22(b) of the Company Disclosure Schedule,
the Company or its relevant Subsidiary is the sole owner and holder of the
Purchased Assets and the Company or its relevant Subsidiary has good and
marketable title and all legal and beneficial interest in and to all of the
Purchased Assets, free and clear of any Liens (but subject to the Purchased Loan
Documents and Equity Governing Documents and Liens arising under Applicable
Law). Except as set forth in Section 4.22(b) of the Company Disclosure Schedule,
none of the Purchased Loans are subject to a participation or other
participating or other interest of any nature whatsoever pursuant to which the
Company has participated its interests (or sold a participating or other
interest) in such Purchased Loan.

(c) Except as set forth in Section 4.22(c) of the Company Disclosure Schedule,
each Purchased Loan complies in all material respects, and did comply as of the
date on which it was originated, with applicable federal and state laws.

(d) The obligations of each Borrower with respect to the applicable Purchased
Loans are not subject to any right of rescission, setoff, counterclaim or
defense, including the defense of usury, and the operation of any of the terms
of any of the Purchased Loan Documents, or the exercise of any right thereunder,
will not render such Purchased Loan Document unenforceable in whole or in part
or subject to any right of rescission, setoff, counterclaim or defense,
including the defense of usury, and the Company has not received written notice
of the assertion of any such right of rescission, setoff, counterclaim or
defense asserted with respect thereto.

4.23 No Other Representations or Warranties. Except in the case of Fraud and
except for the representations and warranties contained in this Article IV or
any certificate delivered pursuant to this Agreement, neither the Company nor
any other Person on behalf of the Company makes any express or implied
representation or warranty with respect to the Company, any of its Subsidiaries,
any investment assets or Portfolio Company, or any other information provided to
Buyer in connection with the Contemplated Transactions, including the accuracy,
completeness or timeliness thereof. Except in case of Fraud, neither the Company
nor any other Person will have or be subject to any claim, liability or
indemnification obligation to Buyer or any other Person resulting from the
distribution or failure to distribute to Buyer, or Buyer’s use of, any such
information, including any information, documents, projections, estimates,
forecasts or other material made available to Buyer in the electronic data room
maintained by the Company for purposes of the Contemplated Transactions or
management presentations in expectation of the Contemplated Transactions, unless
and to the extent any such information is expressly included in a representation
or warranty contained in this Article IV or in any certificate delivered
pursuant to this Agreement.

 

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ARTICLE V

REPRESENTATIONS AND WARRANTIES OF BUYER

Except as disclosed in the Buyer Disclosure Schedule, Buyer hereby represents
and warrants to the Company as follows:

5.1 Corporate Organization.

(a) Buyer is a limited liability company duly formed, validly existing and in
good standing under the laws of the State of Delaware. Buyer has the requisite
limited liability company power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted.

(b) Buyer is a limited liability company duly licensed or qualified to do
business in each jurisdiction in which the nature of the business conducted by
it or the character or location of the properties and assets owned or leased by
it makes such licensing or qualification necessary, except where the failure to
be so licensed or qualified would not, individually or in the aggregate, have a
Material Adverse Effect on Buyer.

5.2 Authority; No Violation. (a) Buyer has full limited liability company power
and authority to execute and deliver this Agreement and to consummate the
Contemplated Transactions and the transactions contemplated thereby. The
execution and delivery of this Agreement, and the consummation of the
Contemplated Transactions, have been duly and validly approved by the Buyer
Board. No other limited liability company proceedings on the part of Buyer are
necessary to approve the Contemplated Transactions. This Agreement has been duly
and validly executed and delivered by Buyer and (assuming due authorization,
execution and delivery by the other Parties thereto) constitute the valid and
binding obligations of Buyer, enforceable against Buyer in accordance with its
terms (subject to the Bankruptcy and Equity Exception).

(b) Neither the execution and delivery of this Agreement by Buyer nor the
consummation by Buyer of the Contemplated Transactions, nor compliance by Buyer
with any of the terms or provisions of this Agreement, will (i) violate any
provision of Buyer’s limited liability company agreement, or (ii) assuming that
the consents, approvals and filings referred to in Section 5.3 are duly obtained
and/or made, (A) violate any Applicable Law applicable to Buyer or any of its
properties or assets, or (B) except as would not, individually or in the
aggregate, have a Material Adverse Effect on Buyer, violate, conflict with,
result in a breach of any provision of or the loss of any benefit under,
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of the respective properties or
assets of Buyer under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, franchise, agreement
or other instrument or obligation to which Buyer or any of its Subsidiaries is a
party or by which any of them or any of their respective properties or assets is
bound (collectively, the “Buyer Contracts”).

 

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5.3 Consents and Approvals.

(a) Except for (i) the filing with the SEC of the Proxy Statement, (ii) any
notices, consents, authorizations, approvals, filings or exemptions in
connection with compliance with the rules and regulations of the NYSE or any
other SRO, (iii) any notices or filings under the HSR Act, and (iv) compliance
with the Investment Company Act and the rules and regulations promulgated
thereunder (the foregoing (i) through (iv) referred to collectively as the
“Buyer Regulatory Approvals”), no other consents, authorizations, approvals, or
exemptions from, or notices to, or filings with, any Governmental Entity are
necessary in connection with the execution and delivery by Buyer of this
Agreement or the consummation by Buyer of the Contemplated Transactions.

(b) Except for (i) receipt of the SBA Approval (but subject to Section 2.6(b)
and Section 7.1(b)(iii)) and (ii) matters covered in the immediately preceding
Section 5.3(a), no consents or approvals of any Person are necessary in
connection with the execution and delivery by Buyer of this Agreement or the
consummation by Buyer of the Contemplated Transactions.

5.4 Regulatory Matters. Buyer is not subject to any cease-and-desist or other
order or enforcement action issued by, or is a party to any written agreement,
consent agreement or memorandum of understanding with, or is a party to any
commitment letter or similar undertaking to, or is subject to any order or
directive by, or has been ordered to pay any civil money penalty by, or has been
a recipient of any supervisory letter from, or has adopted any policies,
procedures or board resolutions at the request or suggestion of, any SRO or
Governmental Entity that currently restricts in any material respect the conduct
of its business, or that in any material manner relates to its credit, risk
management or compliance policies, its internal controls, its management or its
business, or would in any way adversely affect the Contemplated Transactions
(each item in this sentence, a “Buyer Regulatory Agreement”), nor has Buyer been
advised by any SRO or Governmental Entity that it is considering issuing,
initiating, ordering, or requesting any such Buyer Regulatory Agreement.

5.5 Broker’s Fees. Except for the fees of Wells Fargo & Company, none of Buyer
or any of its Subsidiaries, nor any of their respective officers or directors,
has employed any broker or finder or incurred any liability for any broker’s
fees, commissions or finder’s fees in connection with the Contemplated
Transactions.

5.6 Legal Proceedings.

(a) Except as would not, individually or in the aggregate, have a Material
Adverse Effect on Buyer, neither Buyer nor any of its Subsidiaries is a party to
any, and there are no pending or, to the best of Buyer’s knowledge, threatened,
legal, administrative, arbitral or other proceedings, claims, actions, suits or
governmental or regulatory investigations of any nature against Buyer or any of
its Subsidiaries or to which its assets are subject.

(b) Except as would not, individually or in the aggregate, have a Material
Adverse Effect on Buyer, there is no judgment, settlement agreement, order,
injunction, decree or regulatory restriction imposed upon Buyer or any of its
Subsidiaries or any of their respective assets (or that, upon consummation of
the Contemplated Transactions, would apply to the Company or any of its
Subsidiaries).

 

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5.7 State Takeover Laws.

(a) Neither Buyer nor any of its respective Affiliates or associates (as defined
in Section 3-601 of the MGCL) has been, at any time during the five (5) years
preceding the date hereof, an “interested stockholder” of the Company, as
defined in Section 3-602 of the MGCL. As of the date of this Agreement, neither
Buyer nor any of its Affiliates or associates owns (directly or indirectly,
beneficially or of record) any Company Common Stock and neither Buyer nor any of
its Affiliates holds any rights to acquire any Company Common Stock except
pursuant to this Agreement.

(b) No Takeover Statute under the laws of the State of Maryland applies to Buyer
in connection with the Contemplated Transactions.

5.8 Buyer Information. The information relating to Buyer that is provided by
Buyer or its representatives for inclusion in the Proxy Statement, or in any
application, notification or other document filed with any other SRO or
Governmental Entity in connection with the Contemplated Transactions, will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances in which
they are made, not misleading.

5.9 No Financing Condition. At Closing, Buyer will have sufficient immediately
available funds in cash or cash equivalents, or available under lines of credit
in effect as of the Closing, in each case as necessary to pay the full amount of
the Stock Purchase Price, the Stockholder Payment and all other amounts required
to be paid by Buyer under this Agreement.

5.10 No Arrangements with Management or Stockholders. Other than this Agreement,
as of the date hereof, there are no binding contracts, undertakings,
commitments, agreements or obligations or understandings, whether written or
oral, between Buyer or any of its Affiliates, on the one hand, and any member of
the Company’s management or the Company Board, or any Company Stockholder, on
the other hand, relating to the Contemplated Transactions or the operations of
the Company following Closing.

5.11 Securities Laws Matters.

(a) Buyer is an “Accredited Investor” as defined in Rule 501(a) of Regulation D
promulgated under the Securities Act. The Direct Purchase Shares will be
acquired by Buyer for its own account, not as a nominee or agent, and not with a
view to or in connection with the public sale or public distribution of any part
thereof, without prejudice, however, to Buyer’s right at all times to sell or
otherwise dispose of all or any part of the Direct Purchase Shares at any time
after the second anniversary of the Closing pursuant to an effective
registration statement under the Securities Act and applicable state securities
laws, or under an exemption from such registration available under the
Securities Act and other applicable state securities laws. Buyer is not acting
as an agent, representative, intermediary, nominee, derivative counterparty or
in a similar capacity for any other Person, nominee account or beneficial owner,
whether a natural person or entity.

 

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(b) Buyer understands that the Direct Purchase Shares being purchased hereunder
are restricted securities within the meaning of Rule 144 under the Securities
Act; and that the Direct Purchase Shares are not registered and must be held
indefinitely unless they are subsequently registered or an exemption from such
registration is available.

(c) Buyer further understands that each certificate representing the Direct
Purchase Shares shall be stamped or otherwise imprinted with a legend
substantially in the following form:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATES.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT AS PERMITTED UNDER THE ACT
AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO AN EFFECTIVE REGISTRATION
OR AN EXEMPTION FROM REGISTRATION WHICH, IN THE OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY, IS AVAILABLE. INVESTORS SHOULD BE AWARE THAT THEY
MAYBE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE
PERIOD OF TIME. THIS SECURITY IS ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER AS SET FORTH IN THE STOCK PURCHASE AND TRANSACTION AGREEMENT DATED AS
OF APRIL 3, 2018, COPIES OF WHICH MAY BE OBTAINED UPON REQUEST FROM TRIANGLE
CAPITAL CORPORATION OR ANY SUCCESSOR THERETO.

The legend set forth above shall be removed by the Company from any certificate
evidencing Direct Purchase Shares upon delivery to the Company of an opinion by
counsel, reasonably satisfactory to the Company, that a registration statement
under the Securities Act is at that time in effect with respect to the legend
security or that such security can be freely transferred in a public sale
without such a registration statement being in effect and that such transfer
will not jeopardize the exemption or exemptions from registration pursuant to
which the Company issued the Direct Purchase Shares.

5.12 Investigation. Buyer has conducted its own independent review and analysis
of the businesses, assets, condition, operations and prospects of the Company
and its Subsidiaries and has been provided access to the properties, premises
and records of the Company and its Subsidiaries for this purpose. In entering
into this Agreement, Buyer has relied solely upon its own investigation and
analysis, and Buyer acknowledges that, except for the representations and
warranties of the Company in Article IV and in any certificate delivered
pursuant to this Agreement, none of the Company or its Subsidiaries nor any of
their respective officers, directors, employees, agents or representatives makes
any representation or warranty, either express or implied, as to the accuracy or
completeness of any of the information provided or made available to Buyer or
its officers, directors, employees, agents or representatives. Without limiting
the generality of the foregoing, except in the case of Fraud, none of the
Company or its Subsidiaries

 

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nor any of their respective officers, directors, employees, agents or
representatives or any other Person has made a representation or warranty to
Buyer or its officers, directors, employees, agents or representatives with
respect to (a) any projections, estimates or budgets for the Company or its
Subsidiaries or (b) any material, documents or information relating to the
Company or its Subsidiaries made available to Buyer or its officers, directors,
employees, agents or representatives in any “data room,” confidential
information memorandum or otherwise, except as expressly and specifically
covered by a representation or warranty in Article IV or in any certificate
delivered pursuant to this Agreement.

5.13 Certain Regulatory Matters.

(a) Buyer is duly registered with the SEC as an investment adviser under the
Investment Advisers Act and is not prohibited by such act or the Investment
Company Act from acting as the investment adviser of the Company under the
Investment Advisory Agreement. There does not exist any proceeding or, to
Buyer’s knowledge, any facts or circumstances the existence of which would be
reasonably adversely affect the registration of Buyer with the SEC or the
ability of Buyer to perform its obligations under the Investment Advisory
Agreement.

(b) No “affiliated person” (as defined under the Investment Company Act) of
Buyer has been subject to disqualification to serve in any capacity contemplated
by the Investment Company Act under Sections 9(a) and 9(b) of the Investment
Company Act, unless, in each case, such Person has received exemptive relief
from the SEC with respect to any such disqualification.

(c) Buyer is not relying on Section 3(c)(1) or Section 3(c)(7) of the 1940 Act
for an exclusion from the definition of “investment company” under the 1940 Act.

(d) The Investment Advisory Agreement has been duly authorized and, at Closing,
will be duly executed and delivered by Buyer and, upon execution and delivery by
the Company, and the occurrence of the Closing, will be in full force and
effect. The Administration Agreement has been duly authorized and, at Closing,
will be executed and delivered by Buyer and, upon execution and delivery by the
Company, and the occurrence of the Closing, will be in full force and effect. At
Closing, each of the Investment Advisory Agreement and the Administration
Agreement will constitute valid and legally binding agreements of Buyer,
enforceable against Buyer in accordance with its respective terms, subject to
the Bankruptcy and Equity Exception.

ARTICLE VI

COVENANTS RELATING TO CONDUCT OF BUSINESS

6.1 Conduct of Businesses Prior to the Closing. Except as expressly contemplated
by or permitted by this Agreement or the Asset Purchase Agreement or with the
prior written consent of the other Parties, during the period from the date of
this Agreement to the Closing, (a) each of the Company and Buyer shall, and each
Party shall cause each of its respective Subsidiaries to, (i) conduct its
business in the ordinary course, as such business is being conducted as of the
date hereof, (ii) use reasonable best efforts to maintain and preserve intact
its business organization and advantageous business relationships and retain the
services of its key officers and key employees and (iii) not take or omit to
take any action that would reasonably be expected to have a Material Adverse
Effect on the Company and its Subsidiaries, and (b) each of the Company and
Buyer shall,

 

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and shall cause each of its respective Subsidiaries to, take no action that is
intended to or would reasonably be expected to adversely affect or delay the
ability of the Company, Buyer either to obtain any necessary approvals of any
SRO or Governmental Entity required for the Contemplated Transactions or to
perform its covenants and agreements under this Agreement or to consummate the
Contemplated Transactions.

6.2 Company Forbearances. During the period from the date of this Agreement to
the Closing, except as expressly contemplated or permitted by this Agreement or
as provided on Schedule 6.2, the Company shall not, and shall not permit any of
its Subsidiaries to, without the prior written consent of Buyer (which consent
shall not be unreasonably withheld, conditioned or delayed):

(a) other than in the ordinary course of business consistent with past practice,
incur any indebtedness for borrowed money, assume, guarantee, endorse or
otherwise as an accommodation become responsible for the obligations of any
other individual, corporation or other entity, or, make any loan or advance or
capital contribution to, or investment in, any person;

(b) (i) adjust, split, combine or reclassify any of its capital stock;

(ii) make, declare or pay any dividend, other than (A) its regularly quarterly
dividend consistent with past practice, and (B) dividends paid by any of the
Subsidiaries of the Company to the Company or to any of its wholly-owned
Subsidiaries;

(iii) make any other distribution on, or directly or indirectly redeem, purchase
or otherwise acquire, any shares of its capital stock or any securities or
obligations convertible (whether currently convertible or convertible only after
the passage of time or the occurrence of certain events) into or exchangeable
for any shares of its capital stock; or

(iv) grant any stock options or restricted shares under the Company Stock Plan
or otherwise, or grant any individual, corporation or other entity any right to
acquire any shares of its capital stock, or issue any additional shares of
capital stock or other securities (in each case excluding, for the avoidance of
doubt, the vesting of restrictions on Company Restricted Shares pursuant to
their terms or as contemplated by this Agreement and the issuance of restricted
shares to directors as part of their annual director fees, consistent with past
practice);

(c) except as required under any Company Contract or Company Benefit Plan
existing as of the date hereof or Applicable Law, (i) increase in any material
manner the compensation or benefits of any of the Company Employees, (ii) become
a party to, establish, amend, commence participation in, terminate or commit
itself to the adoption of any Company Benefit Plan or plan, agreement or
arrangement which would be a Company Benefit Plan if in effect on the date
hereof, or (iii) hire any senior management employee or terminate the employment
of any senior management employee other than for cause;

(d) sell, transfer, pledge, lease, license, mortgage, encumber or otherwise
dispose of any material amount of its properties or assets (including pursuant
to securitizations) to any individual, corporation or other entity other than a
Subsidiary or cancel, release or assign any material amount of indebtedness to
any such Person or any claims held by any such Person, in each case other than
pursuant to contracts in force at the date of this Agreement;

 

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(e) amend the Company Articles or the Company Bylaws or the Organizational
Documents of any Subsidiary of the Company, or take any action to exempt any
person or entity (other than Buyer or its Subsidiaries) or any action taken by
any person or entity from any Takeover Statute or similarly restrictive
provisions of its Organizational Documents;

(f) take any action or willfully fail to take any action that is intended or may
reasonably be expected to result in any of the conditions to the Contemplated
Transactions set forth in Article VIII not being satisfied;

(g) incur any capital expenditures that would exceed $50,000 individually or
$300,000 in the aggregate;

(h) commence or settle any material Claims;

(i) amend, terminate, cancel, renew or agree to any material amendment of, or
change in or waiver under any Material Company Contract;

(j) make any material change to its principles, practices or methods of
accounting, except (i) as required by GAAP (or any interpretation), (ii) as
required by a change in Applicable Law, or (iii) recommended by the Audit
Committee of the Company Board; make, change, or rescind any material Tax
election; settle or compromise, or consent to any extension or waiver of the
statute of limitations applicable to, any material claim, notice, audit report
or assessment in respect of Taxes; file any amendment to a material Tax Return;
surrender any right to claim a material Tax refund;

(k) enter into any material transaction other than in the ordinary course of
business consistent with past practice; or

(l) not make any New Investments (as defined in the Asset Purchase Agreement) or
commit to make any New Investments;

(m) agree, resolve to or commit to do, or publicly announce an intention to do,
any of the foregoing.

Notwithstanding anything to the contrary contained in Section 6.2, in no event
shall the Company be required to take any action, or be limited or restricted
from taking any action, or be required to refrain from taking any action to the
extent an agreement to take such action, or to be so limited or restricted, or
such requirement to refrain, would be inconsistent with, conflict with, or
result in a violation or default of, or otherwise be restricted by, the Company
Financing Documents or Applicable Law, and if and to the extent necessary, this
Section 6.2 shall be deemed to be automatically modified to the extent necessary
to ensure compliance with the Company Financing Documents and Applicable Law. In
the event the Company takes any action without Buyer’s consent in reliance on
this paragraph, the Company shall notify Buyer of the taking of such action
(x) prior to the taking of such action, if reasonably practicable in the
circumstances, or (y) promptly following the taking of such action.

 

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ARTICLE VII

ADDITIONAL AGREEMENTS

7.1 Regulatory and Other Matters.

(a) The Parties shall cooperate with each other and use their respective
commercially reasonable efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, to
obtain as promptly as practicable all Permits of all third parties and
Governmental Entities that are necessary or advisable to consummate the
Contemplated Transactions and defend any lawsuits or other Claims challenging
this Agreement or the consummation of the Contemplated Transactions, and to
comply with the terms and conditions of all such Permits of all such third
parties or Governmental Entities. The Company and Buyer shall have the right to
review in advance, and, to the extent practicable, each will consult with the
other on, in each case subject to Applicable Laws relating to the
confidentiality of information, all information relating to the Company, Buyer,
as the case may be, and any of their respective Subsidiaries, that appear in any
filing made with, or written materials submitted to, any third party or any
Governmental Entity in connection with the Contemplated Transactions. In
exercising the foregoing right, each of the Parties shall act reasonably and as
promptly as reasonably practicable. The Parties shall consult with each other
with respect to the obtaining of all Permits of all third parties and
Governmental Entities necessary or advisable to consummate the Contemplated
Transactions and each Party will keep the other apprised of the status of
matters relating to completion of the Contemplated Transactions.

(b) Without in any way limiting the foregoing Section 7.1(a):

(i) As promptly as reasonably practicable after the date of this Agreement, the
Company shall prepare (with Buyer’s reasonable cooperation), and use its
commercially reasonable efforts to file, within fifteen (15) Business Days
following the date of this Agreement, the preliminary Proxy Statement with the
SEC (which the Parties acknowledge and agree will include the relevant proposals
relating to the Asset Purchase). No filing of, or amendment or supplement to,
the Proxy Statement as it relates to Buyer or the Contemplated Transactions will
be made by the Company without providing Buyer a reasonable opportunity to
review and comment thereon which comments the Company will consider for
inclusion in good faith. In connection with the foregoing, each of Buyer and the
Company shall, upon request, furnish, and cause its accountants and other agents
and service providers to furnish to the other and the other’s agents, all
information concerning itself, its Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with the Proxy Statement. The Company will advise Buyer promptly
after it receives any oral or written request by the SEC for amendment of the
Proxy Statement or comments thereon and responses thereto or requests by the SEC
for additional information, in each case to the extent related to Buyer or the
Contemplated Transactions, and will promptly provide Buyer with copies of any
written communication from the SEC or any state securities commission and a
reasonable opportunity to participate in the responses thereto. If, at any time
prior to the Closing, any information relating to the Company or Buyer, or any
of their respective Affiliates, officers or directors, should be discovered by
the Company or Buyer that should be set forth in an amendment or supplement to
the Proxy Statement, so that the Proxy Statement would not

 

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contain any misstatement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, the Party that discovers such information
shall promptly notify the other Party hereto and an appropriate amendment or
supplement describing such information shall promptly be filed with the SEC and,
to the extent required under applicable law, disseminated to Company
Stockholders; provided that the delivery of such notice and the filing of any
such amendment or supplement shall not affect or be deemed to modify any
representation or warranty made by either Party hereunder or otherwise affect
the remedies available hereunder to either Party.

(ii) Each of Buyer and the Company shall, if and to the extent required, file
with the FTC and the DOJ a Notification and Report Form relating to this
Agreement and the Contemplated Transactions as required by the HSR Act as soon
as reasonably practicable following the execution and delivery of this
Agreement. Each of Buyer and the Company shall (i) cooperate and coordinate with
the other in the making of such filings (if required), (ii) supply the other
with any information that may be required in order to make such filings,
(iii) supply any additional information that reasonably may be required or
requested by the FTC or the DOJ, and (iv) take all action reasonably necessary
to cause the expiration or termination of any applicable waiting period under
the HSR Act applicable to the Contemplated Transactions as soon as practicable.
Each of Buyer and the Company shall promptly inform the other of any
communication from any Governmental Entity regarding any of the Contemplated
Transactions in connection with such filings. If any Party hereto or Affiliate
thereof shall receive a request for additional information or documentary
material from any Governmental Entity with respect to the Contemplated
Transactions pursuant to the HSR Act, then such Party shall make (or cause to be
made), as soon as reasonably practicable and after consultation with the other
Parties, an appropriate response in compliance with such request.

(iii) Promptly following the date hereof, the Company shall (i) inform the SBA
of the Contemplated Transactions and the Asset Purchase, (ii) seek the SBA’s
guidance regarding the continued effectiveness of the SBA licenses held by the
Company or the SBIC Subsidiaries, and (iii) take such actions and, in accordance
with SBA regulations and guidelines, make such filings, as may be reasonably
necessary to obtain the SBA’s approval of the Contemplated Transactions and the
Asset Purchase and the continued effectiveness of the SBA licenses held by the
Company or the SBIC Subsidiaries (the “SBA Approval”); provided, however, that
receipt of the SBA Approval shall not be a condition to Closing and, in the
event the SBA Approval has not been obtained by the date on which all other
conditions to Closing have been satisfied (other than those conditions that can
only be satisfied at Closing), then the Parties shall take the steps set forth
in Section 2.6(b) with respect to the SBA Debentures and the surrender of the
SBIC licenses in accordance with SBA regulations. In connection with the
foregoing, the Company shall reasonably cooperate with each of Buyer and the
Asset Buyer to facilitate the obtaining of the SBA Approval and the related
transfer of the SBA licenses; provided, however, that (x) in no event shall the
Company be obligated to advocate on Buyer’s or Asset Buyer’s behalf in
connection with the SBA Approval, and (y) in no event shall the Company’s
cooperation with Buyer be deemed the failure to cooperate with Asset Buyer under
this Section 7.1(b)(iii), and vice versa.

 

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(c) Subject to Applicable Law, each of Buyer and the Company shall promptly
advise the other upon receiving any communication from any Governmental Entity
the consent or approval of which is required for consummation of the
Contemplated Transactions that causes such Party to believe that there is a
reasonable likelihood that any Buyer Regulatory Approval or Company Regulatory
Approval, respectively, will not be obtained or that the receipt of any such
approval may be materially delayed.

7.2 Access to Information. (a) Upon reasonable notice and subject to Applicable
Laws relating to the confidentiality of information, the Company shall, and
shall cause each of its Subsidiaries to, afford to the officers, employees,
accountants, counsel, advisors, agents and other representatives of Buyer,
reasonable access, during normal business hours during the period prior to the
Closing, to all its properties, books, contracts, commitments and records, and,
during such period, the Company shall, and shall cause its Subsidiaries to, make
available to Buyer (i) a copy of each report, schedule, registration statement
and other document filed or received by it during such period pursuant to the
requirements of federal securities laws (other than reports or documents that
the Company is not permitted to disclose under Applicable Law) and (ii) all
other information concerning its business, properties and personnel as Buyer may
reasonably request that is relevant to the Contemplated Transactions. Neither
the Company nor any of its Subsidiaries shall be required to provide access to
or to disclose information where such access or disclosure would jeopardize the
attorney-client privilege of the Company or its Subsidiaries or contravene any
Applicable Law, fiduciary duty or binding agreement entered into prior to the
date of this Agreement. The Parties shall make appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the preceding
sentence apply.

(b) The Company shall file all periodic reports required to be filed by it
between the date hereof and the Closing. Each such filing shall be prepared in
accordance with the applicable forms, rules and regulations of the SEC and shall
satisfy the standard set forth in Section 4.5(c) for Company SEC Reports.

(c) All information and materials provided pursuant to this Agreement shall be
subject to the provisions of the Confidentiality Agreement entered into between
the Parties as of December 11, 2017 (the “Confidentiality Agreement”).

(d) No investigation by a Party hereto or its representatives shall affect the
representations and warranties of the other Party set forth in this Agreement.

7.3 Company Stockholder Approval.

(a) Subject to the earlier termination of this Agreement in accordance with
Article IX, as promptly as reasonably practicable following the Company’s
receipt of notice from the SEC that the SEC has completed its review of the
Proxy Statement (or, if the SEC does not inform the Company that it intends to
review the Proxy Statement on or before the 10th calendar day following the
filing of the preliminary Proxy Statement pursuant to Rule 14a-6 under the
Exchange Act, as promptly as reasonably practicable following such 10th calendar
day), the Company, acting through the Company Board, shall duly call, give
notice of, convene and hold the Company Stockholder Meeting for the purpose of
obtaining the Company Stockholder Approval and the Asset Purchase Stockholder
Approval. In connection therewith, the Company

 

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Board shall be permitted to adjourn, delay or postpone the Company Stockholder
Meeting in accordance with Applicable Law (but not beyond the Outside Date),
after consultation with Buyer and Asset Buyer, (i) to the extent necessary to
allow reasonable additional time for the filing and mailing of any supplemental
or amended disclosure which the Company Board has determined in good faith after
consultation with outside counsel is reasonably likely to be necessary or
appropriate under Applicable Law and for such supplemental or amended disclosure
to be disseminated and reviewed by the Company Stockholders prior to the Company
Stockholder Meeting, (ii) if there are insufficient shares of Company Common
Stock represented (either in person or by proxy) to constitute a quorum
necessary to conduct the business of the Company Stockholder Meeting, or
(iii) to allow reasonable additional time to solicit additional proxies to the
extent the Company Board or any committee thereof reasonably believes necessary
in order to obtain the Company Stockholder Approval and the Asset Purchase
Stockholder Approval and the Company Board determines that such delay or
postponement is consistent with its fiduciary duties. In addition, the Company
Board shall, to the extent not inconsistent with its fiduciary duties under
Applicable Law, at the request of Buyer or Asset Buyer, adjourn, delay or
postpone the Company Stockholder Meeting in accordance with Applicable Law (but
not beyond the Outside Date) to allow reasonable additional time to solicit
additional proxies to the extent Buyer or Asset Buyer believes necessary in
order to obtain the Company Stockholder Approval or the Asset Purchase
Stockholder Approval. Unless the Company Board has made an Adverse
Recommendation Change, the Company shall, through the Company Board, make the
Company Board Recommendation, and shall include such Company Board
Recommendation in the Proxy Statement, and use its commercially reasonable
efforts to (x) solicit from Company Stockholders proxies in favor of the Company
Stockholder Approval, and (y) take all other action necessary or advisable to
secure the Company Stockholder Approval. In no event will the record date of the
Company Stockholder Meeting be changed without Buyer’s prior written consent,
unless required by Applicable Law.

(b) Except as expressly permitted in Section 7.8(e), neither the Company Board
nor any committee thereof shall, (i) withhold, withdraw or modify or qualify, or
propose publicly to withhold, withdraw or modify or qualify, in a manner adverse
to Buyer, the Company Board Recommendation as it relates to the IMA Matter,
(ii) fail to reaffirm the Company Board Recommendation as it relates to the IMA
Matter or fail to publicly state that the Contemplated Transactions and this
Agreement are in the best interests of the Company Stockholders, within fifteen
(15) Business Days after Buyer requests in writing that such action be taken,
(iii) fail to publicly announce, within fifteen (15) Business Days after a
tender offer or exchange relating to the securities of the Company shall have
been commenced, a statement disclosing that the Company Board recommends
rejection of such tender offer or exchange offer, (iv) take or resolve to take
any other action or make any other statement in connection with the Company
Stockholder Meeting inconsistent with the Company Board Recommendation as it
relates to the IMA Matter or (v) approve, determine to be advisable, or
recommend, or propose publicly to approve, determine to be advisable, or
recommend, any Competing Proposal (any of the foregoing (i) through (v) being
referred to as an “Adverse Recommendation Change”). To the extent not
inconsistent with its fiduciary duties under Applicable Law, the Company Board
shall not change or modify the Company Board Recommendation as it relates to the
Reduced Asset Coverage Matter.

 

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7.4 Post-Closing Employment Matters. Effective on the Closing Date, Buyer shall,
or shall cause its Affiliate to, employ each Continuing Company Employee. With
respect to any Buyer benefit plan in which such Continuing Company Employee will
participate, including for purposes of paid time off and severance, effective as
of the Closing Date (but subject to any otherwise applicable right thereafter to
amend or terminate the plan), Buyer shall recognize, for vesting and eligibility
purposes, and, in the case of severance and paid time-off, for accrual purposes
(but, for the avoidance of doubt, not for purposes of any equity incentive plan
and not for the purpose of benefit accruals under any defined benefit plan), all
years of service of the Continuing Company Employees with the Company and its
Subsidiaries as if such service were service with Buyer; provided, however, that
such service shall not be recognized to the extent that such recognition would
(i) not be permitted under any legal or tax-qualification requirement applicable
to a single-employer plan, (ii) require any other employee or other participant
or beneficiary to accrue or otherwise receive with any additional benefit or
credit of any kind in order for the plan to satisfy any legal or
tax-qualification requirement or (iii) result in a duplication of benefits.
Buyer or its Subsidiaries shall assume, except as may otherwise be agreed with
the respective applicable Continuing Company Employees, any obligations under
(a) the Employment Agreements or (b) any retention agreements or retention plan,
solely to the extent set forth on Section 4.11(a) of the Company Disclosure
Schedule to which any such Continuing Company Employee is a party or
beneficiary. Nothing in this Section 7.4 shall be deemed to (x) be a guarantee
to any Continuing Company Employee of employment or, without limiting the
express provisions of this Section 7.4, any specific term or condition of
employment, (y) create any right or benefit in any person other than the
signatories of this Agreement or (z) preclude the ability of Buyer to terminate
the employment of any Continuing Company Employee.

7.5 Indemnification; Directors’ and Officers’ Insurance.

(a) In the event of any threatened or actual Claim, including any such Claim in
which any individual who is now, or has been at any time prior to the date of
this Agreement, or who becomes prior to the Closing, a director or officer of
the Company or any of its Subsidiaries or who is or was serving at the request
of the Company or any of its Subsidiaries as a director or officer of another
Person (the “Indemnified Parties”), is, or is threatened to be, made a party
based in whole or in part on, or arising in whole or in part out of, or
pertaining to (i) the fact that he or she is or was a director or officer of the
Company or any of its Subsidiaries prior to the Closing or (ii) this Agreement
or any of the Contemplated Transactions, whether asserted or arising before or
after the Closing, the Parties shall cooperate and use their commercially
reasonable efforts to defend against and respond thereto. All rights to
indemnification and exculpation from liabilities for acts or omissions occurring
at or prior to the Closing now existing in favor of any Indemnified Party as
provided in their respective certificates or articles of incorporation or
by-laws (or comparable Organizational Documents), and any existing
indemnification agreements set forth in Section 7.5 of the Company Disclosure
Schedule, shall survive the Contemplated Transactions as a contractual
obligation of the Company and shall continue in full force and effect in
accordance with their terms for a period of six (6) years from the Closing Date,
and shall not be amended, repealed or otherwise modified in any manner that
would adversely affect the rights thereunder of such individuals for acts or
omissions occurring at or prior to the Closing or taken at the request of Buyer
pursuant to Section 7.8 hereof, it being understood that nothing in this
sentence shall require any amendment to the certificate of incorporation or
bylaws of Buyer.

 

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(b) For a period of six (6) years from the Closing, the Company shall, to the
fullest extent permitted by Applicable Law, indemnify, defend and hold harmless,
and provide advancement of expenses (subject to an undertaking, in such form as
may be required under Applicable Law as in effect at the time of the execution
thereof, to reimburse the portion (if any) of any expenses advanced to the
Indemnified Party relating to Claims as to which it shall ultimately be adjudged
that the statutory standard of conduct has not been met by the Indemnified Party
for entitlement to such indemnification) to, each Indemnified Party against all
losses, claims, damages, costs, expenses, liabilities or judgments or amounts
that are paid in settlement of or in connection with any Claim based in whole or
in part on or arising in whole or in part out of the fact that such Person is or
was a director or officer of the Company or any of its Subsidiaries, and
pertaining to any matter existing or occurring, or any acts or omissions
occurring, at or prior to the Closing, whether asserted or claimed prior to, or
at or after, the Closing (including matters, acts or omissions occurring in
connection with the approval of this Agreement and the consummation of the
Contemplated Transactions) or taken at the request of Buyer pursuant to
Section 7.6 hereof.

(c) The Company shall, at its sole cost, cause the individuals serving as
officers and directors of the Company or any of its Subsidiaries immediately
prior to the Closing to be covered for a period of six years from the Closing by
the directors’ and officers’ liability insurance policy maintained by the
Company through the purchase of so-called “tail” insurance (provided that the
Company may substitute therefor policies of at least the same coverage and
amounts containing terms and conditions that are not less advantageous than such
policy) with respect to acts or omissions occurring prior to the Closing that
were committed by such officers and directors in their capacity as such. In
connection with the foregoing, the Company shall not be required to expend in
the aggregate for the entire six-year period referred to above amount in excess
of 300% of the annual premiums currently paid by the Company for such insurance.

(d) The provisions of this Section 7.5 shall survive the Closing and are
intended to be for the benefit of, and shall be enforceable by, each Indemnified
Party and his or her heirs and representatives.

7.6 Additional Agreements. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement or
to vest Buyer with full title to all properties, assets, rights, approvals,
immunities and franchises of either Party, the proper officers and directors of
each Party and their respective Subsidiaries shall take all such necessary
action as may be reasonably requested by Buyer.

7.7 Advice of Changes. Each of Buyer and the Company shall promptly advise the
other of any change or event (i) having or reasonably likely to have a Material
Adverse Effect on it, (ii) that it believes would or would be reasonably likely
to cause or constitute a breach of any of its representations, warranties or
covenants contained in this Agreement that would result in the conditions to
Closing set forth in Article VIII not being satisfied or (iii) with respect to
the Company, that it believes would or would be reasonably likely to cause or
constitute a breach of any of its representations, warranties or covenants
contained in the Asset Purchase Agreement that would result in the conditions to
Closing set forth in Article VIII or any conditions to closing under the Asset
Purchase Agreement not being satisfied; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the Parties (or remedies with respect thereto) or the conditions
to the obligations of the Parties under this Agreement.

 

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7.8 No Solicitation.

(a) Subject to Section 7.8(d), the Company shall, and shall cause its
representatives to, (i) immediately cease and cause to be terminated any
existing solicitation of, or discussions or negotiations with, any Third Party
relating to any Competing Proposal or any inquiry, discussion, offer or request
that could reasonably be expected to lead to a Competing Proposal and
(ii) terminate any data room access (or other access to diligence) of any Third
Party relating to any Competing Proposal.

(b) Until the earlier of the Closing and termination of this Agreement, the
Company shall, as promptly as reasonably practicable, and in any event within
two (2) Business Days of receipt by the Company or any of its representatives of
any Competing Proposal or any inquiry that could reasonably be expected to lead
to a Competing Proposal that was not solicited in breach of Section 7.8(a),
deliver to Buyer a written notice setting forth: (A) the identity of the Third
Party making such Competing Proposal or inquiry and (B) the material terms and
conditions of any such Competing Proposal. The Company shall deliver to Buyer
concurrently with such notice unredacted copies of any documents in connection
with such Competing Proposal. The Company shall keep Buyer reasonably informed
of any amendment or modification of any such Competing Proposal on a prompt
basis, and in any event within two (2) Business Days.

(c) Except as otherwise provided in this Agreement (including Section 7.8(d)),
until the earlier of Closing and termination of this Agreement in accordance
with its terms, the Company and its Subsidiaries shall not, and the Company
shall cause its representatives not to, directly or indirectly, (i) initiate,
solicit, propose, induce or knowingly encourage, facilitate or assist the making
of any proposal or offer that constitutes, or could reasonably be expected to
lead to, a Competing Proposal, (ii) engage in negotiations or substantive
discussions with, or furnish any material nonpublic information to, or enter
into any agreement, arrangement or understanding with, any Third Party relating
to a Competing Proposal or any inquiry or proposal that could reasonably be
expected to lead to a Competing Proposal or (iii) approve, endorse or recommend
any proposal that constitutes, or could reasonably be expected to lead to, a
Competing Proposal; provided however, that notwithstanding the foregoing, the
Company (A) may inform Persons of the provisions contained in this Section 7.8,
and (B) grant a waiver of, or terminate, any “standstill” or similar obligation
of any Third Party with respect to the Company in order to allow such Third
Party to confidentially submit a Competing Proposal.

(d) Notwithstanding anything to the contrary contained in this Agreement, at any
time prior to the date that the Company Stockholder Approval is obtained, in the
event that the Company (or its representatives on the Company’s behalf) receives
a Competing Proposal from any Third Party, (i) the Company and its
representatives may contact such Third Party to clarify the terms and conditions
thereof (without the Company Board being required to make the determination in
clause (ii) of this Section 7.8(d)) and (ii) the Company and the Company Board
and its representatives may engage in negotiations or substantive discussions
with, or furnish any information and other access to, any Third Party making
such Competing Proposal and its representatives and Affiliates if the Company
Board determines in good faith (after consultation with its outside financial
advisors and legal counsel) that (A) such Competing Proposal either constitutes
a Superior Proposal or could reasonably be expected to lead to a Superior
Proposal and (B) failure to consider such Competing Proposal would reasonably be
expected to be inconsistent

 

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with the fiduciary duties of the directors of the Company under Applicable Law;
provided, that (x) such Competing Proposal did not result from any breach of any
of the provisions set forth in this Section 7.8, (y) prior to furnishing any
non-public information concerning the Company, the Company receives from such
Third Party, to the extent such Third Party is not already subject to a
confidentiality agreement with the Company, a confidentiality agreement
containing confidentiality terms, including “standstill provisions,” that are
not less favorable in the aggregate to the Company than those contained in the
Confidentiality Agreement (unless the Company offers to amend the
Confidentiality Agreement to reflect such more favorable terms) (an “Acceptable
Confidentiality Agreement”) and (z) the Company shall promptly provide or make
available to Buyer any material written non-public information concerning the
Company that it provides to any Third Party given such access that was not
previously made available to Buyer or its representatives concurrently with the
delivery of such material non-public information to such Third Party.

(e) Except as otherwise provided in this Agreement, (i) the Company Board shall
not effect an Adverse Recommendation Change, and (ii) the Company Board shall
not approve or recommend, or allow the Company to execute or enter into, any
letter of intent, memorandum of understanding or definitive merger or similar
agreement with respect to any Competing Proposal (other than an Acceptable
Confidentiality Agreement); provided however, that notwithstanding anything in
this Agreement to the contrary, at any time prior to the receipt of the Company
Stockholder Approval, the Company Board may (x) make an Adverse Recommendation
Change if the Company Board determines in good faith (after consultation with
its outside financial advisor and legal counsel) that failure to make an Adverse
Recommendation Change would reasonably be expected to be inconsistent with the
fiduciary duties of the Company Board under Applicable Law, or (y) if the
Company has received a Competing Proposal that the Company Board has determined
in good faith (after consultation with its outside financial advisor and legal
counsel) constitutes a Superior Proposal, authorize, adopt or approve such
Superior Proposal and cause or permit the Company to enter into a definitive
agreement with respect to such Superior Proposal concurrently with the
termination of this Agreement in accordance with Section 9.1(g), but in each
case only after providing the Notice of Adverse Recommendation or Notice of
Superior Proposal, as applicable, and entering into good faith negotiations as
required by Section 7.8(f).

(f) Notwithstanding anything to the contrary in this Agreement, no Adverse
Recommendation Change may be made and no termination of this Agreement pursuant
to Section 9.1(g) may be effected, in each case until 5:00 p.m. on 5th calendar
day following receipt of written notice from the Company to Buyer advising Buyer
that the Company intends to make an Adverse Recommendation Change (a “Notice of
Adverse Recommendation”) or terminate this Agreement pursuant to Section 9.1(g)
(a “Notice of Superior Proposal”) and specifying the reasons therefor,
including, if the basis of the proposed action is a Superior Proposal, the
material terms and conditions of any such Superior Proposal. At the option of
Buyer, the Parties shall negotiate in good faith during such period to amend
this Agreement in such a manner that the offer that was determined to constitute
a Superior Proposal no longer constitutes a Superior Proposal. In determining
whether to make an Adverse Recommendation Change or in determining whether a
Competing Proposal constitutes a Superior Proposal, the Company Board shall take
into account any revisions to the terms of this Agreement and the Asset Purchase
Agreement proposed in writing by the Buyer or the Asset Buyer, as applicable, in
response to a Notice of Adverse

 

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Recommendation, a Notice of Superior Proposal or otherwise. Any amendment to
such Superior Proposal shall require a new Notice of Superior Proposal and the
Company shall be required to comply again with the requirements of this
Section 7.8(f); provided, however, that the five (5) calendar day requirement
shall be changed to three (3) calendar days.

(g) Nothing in this Agreement shall restrict the Company from taking or
disclosing a position contemplated by Rules 14d-9 or 14e-2(a) under the Exchange
Act, or otherwise making disclosure to comply with Applicable Law (it being
agreed that a “stop, look and listen” communication by the Company Board to the
Company Stockholders pursuant to Rule 14d-9(f) under the Exchange Act or a
factually accurate public statement by the Company that describes the Company’s
receipt, as applicable, of a Competing Proposal and the operation of this
Agreement with respect thereto shall not be deemed to be an Adverse
Recommendation Change); provided that the foregoing shall in no way eliminate or
modify the effect that any such disclosure or communication would otherwise have
under this Agreement.

7.9 Takeover Statutes. The Parties shall use their respective commercially
reasonable efforts (a) to take all action necessary so that no Takeover Statute
is or becomes applicable to the Contemplated Transactions, and (b) if any such
Takeover Statute is or becomes applicable to any of the foregoing, to take all
action necessary so that the Contemplated Transactions may be consummated as
promptly as reasonably practicable on the terms contemplated by this Agreement
and otherwise to eliminate or minimize the effect of such Takeover Statute on
the Contemplated Transactions.

7.10 Stockholder Litigation. Between the date of this Agreement and the Closing,
the Company shall (i) provide prompt notice to Buyer of all stockholder
litigation relating to this Agreement or the Contemplated Transactions,
(ii) consult with Buyer regarding the defense and settlement of any litigation
outstanding as of the date of this Agreement and (iii) give Buyer the
opportunity to participate in the defense or settlement of any stockholder
litigation against the Company and/or its directors relating to the Contemplated
Transactions. The Company agrees that it shall not settle or offer to settle any
litigation commenced on or after the date hereof against the Company or any of
its directors or executive officers by any Company Stockholder relating to this
Agreement or the Contemplated Transactions or otherwise, without the prior
written consent of Buyer, which consent shall not be unreasonably withheld.

7.11 Asset Purchase Agreement. During the period commencing on the date of this
Agreement and ending on the Closing, the Company shall not approve any waiver,
amendment, consent, approval or other modification of the Asset Purchase
Agreement that would reasonably be expected to adversely affect the value of the
Company and the investment advisory rights set forth in the Investment Advisory
Agreement or the consummation, timing or certainty of the Contemplated
Transactions, in each case without obtaining the express prior written consent
of Buyer. The Company shall not, and shall not be permitted to, consummate the
transactions contemplated by the Asset Purchase Agreement (including the Asset
Purchase) without also consummating the Contemplated Transactions, unless
(i) each of the Company Stockholder Approval and the Asset Purchase Stockholder
Approval shall have been obtained, and (ii) one or more of the other conditions
to Closing set forth in Section 8.1 and Section 8.3 have not been satisfied. If
the Asset Buyer desires to acquire the equity interests of any of Arc Industries
Holdings, Inc., Energy Hardware Holdings, Inc., Emerald Waste Holdings, Inc.,
and Technology Crops Holdings, Inc., each of which is a Subsidiary of the
Company, in connection with the transfer to Asset Buyer pursuant to the Asset
Purchase Agreement of any assets held by such Subsidiary, then the Company shall
not transfer such equity interests without the prior written consent of the
Buyer.

 

 

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7.12 Company Benefit Plans. The Company shall deliver evidence reasonably
satisfactory to Buyer that each Company Benefit Plan has been terminated
effective as of immediately prior to the Closing. Effective on the Closing Date,
Buyer shall, or shall cause its Affiliate to, offer group major medical and
dental health coverage to each eligible person (including current Company
Employees and their covered dependents as well as all “qualified beneficiaries”
who have elected, or are entitled to elect as of the Closing Date, continued
coverage under Section 4980B of the Code) who participates in the Company’s
group major medical and/or dental coverage (as applicable) as of the Closing
Date (or are entitled under Code Section 4980B to elect continuation coverage as
of the Closing Date), which coverage shall (i) be substantially similar to the
coverage offered by Buyer as of the Closing Date to a similarly situated
employee of Buyer, in terms of cost to employee and coverage, and (ii) continue
for the period for which the Company would have had to have continued such
coverage under Code Section 4980B absent the Company’s termination of its group
health plans as of the Closing Date. For each employee who does not become a
Continuing Company Employee, the premiums of such continued coverage under
Section 4980B of the Code (“COBRA Coverage”) shall be borne by the Company for
the “severance period” set forth in the Employment Agreement or retention plan
for such employee. In the event the major medical COBRA Coverage offered by
Buyer does not offer a coverage option that is reasonably equivalent to the
major medical coverage offered by the Company prior to the Closing Date and a
former employee of the Company (or his or her dependent) who does not become a
Continuing Company Employee (i) selects Buyer’s major medical COBRA Coverage
option most comparable to the major medical coverage offered by the Company
prior to the Closing Date and (ii) incurs annual out-of-pocket costs during the
applicable “severance period” which are materially in excess of those
out-of-pocket costs which he would have incurred under the major medical plan
offered by the Company prior to the Closing Date, then Buyer shall cause the
Company to reimburse such excess expense for such employee. The premiums of
continued term life insurance coverage to be borne by the Company for the
“severance period” set forth in the Employment Agreement or retention plan for
any employee who does not become a Continuing Company Employee shall not be
required to exceed 150% of the term life insurance premium paid by the Company
prior to the Closing Date.

7.13 Transition Matters. Buyer hereby acknowledges that the Asset Purchase
Agreement includes a provision regarding post-Closing cooperation of the parties
thereto reasonably necessary to effect the transactions contemplated thereby,
and Buyer hereby covenants and agrees that it shall, in its capacity as
investment adviser of the Company following the Closing, cause the Company to
take such actions as may be reasonably necessary to satisfy any applicable
post-Closing cooperation or other covenant set forth in the Asset Purchase
Agreement. Without in any way limiting the foregoing, Buyer acknowledges and
agrees that, if any Restricted Asset (as defined in the Asset Purchase
Agreement) exists on the Closing Date, such Restricted Asset shall remain with
the Company unless and until the applicable consent is obtained. Buyer, in its
capacity as investment adviser of the Company after Closing, shall cause the
Company to cooperate with Asset Buyer in the manner and to the extent required
by the Asset Purchase Agreement in continuing efforts to obtain each consent
required in order to transfer the Restricted Asset to Asset

 

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Buyer to the extent required by the Asset Purchase Agreement. If any such
consent is obtained after the Closing Date, Buyer, in its capacity as investment
adviser to the Company, shall, solely to the extent required by the Asset
Purchase Agreement, cause the Company to convey, transfer, assign and deliver
the applicable Restricted Asset to Asset Buyer as soon as reasonably practicable
following receipt of the relevant consent. Pending the obtaining of any required
consent relating to any Restricted Asset, solely to the extent required by the
Asset Purchase Agreement, Buyer shall cause the Company to cooperate with Asset
Buyer to the extent and in the manner required by the Asset Purchase Agreement
to provide to Asset Buyer the full benefits (including economic) and rights of
ownership of the Restricted Assets. In addition, prior to the receipt of such
required consent, to the extent required by the Asset Purchase Agreement, Buyer
shall cause the Company to take action, refrain from taking action, vote or
abstain from voting with respect to any Restricted Asset, as directed by Asset
Buyer.

7.14 Calculations of Pro Forma Net Asset Value and Investment Company Taxable
Income.

(a) No later than five (5) Business Days prior to Closing, the Company shall
deliver to Buyer a certificate of a duly elected officer of the Company
certifying:

(i) if the Closing Date is on or prior to July 31, 2018, (A) a good faith
calculation, substantially in the form of the estimated calculation attached
hereto as Exhibit D, of the net asset value of the Company as of June 30, 2018,
which shall be prepared on a pro forma basis after giving effect to the
transactions contemplated by the Asset Purchase Agreement, the payment by the
Company of all Company Transaction Expenses and the other adjustments set forth
in Exhibit D (the “June 30 Pro Forma NAV”), and (B) a good faith calculation,
substantially in the form of the estimated calculation attached hereto as
Exhibit E, of the investment company taxable income of the Company as of
June 30, 2018, which shall be prepared on a pro forma basis after giving effect
to the transactions contemplated by the Asset Purchase Agreement, the payment by
the Company of all Company Transaction Expenses and the other adjustments set
forth in Exhibit E attached hereto (the “June 30 Pro Forma ICTI”); and

(ii) if the Closing Date is on or after August 1, 2018 but prior to October 1,
2018, (A) a good faith calculation, substantially in the form of the estimated
calculation attached hereto as Exhibit D, of the net asset value of the Company
as of the most recently completed calendar month, which shall be prepared on a
pro forma basis after giving effect to the transactions contemplated by the
Asset Purchase Agreement, the payment by the Company of all Company Transaction
Expenses and the other adjustments set forth in Exhibit D (the “Interim Pro
Forma NAV”), and (B) a good faith calculation, substantially in the form of the
estimated calculation attached hereto as Exhibit E, of the investment company
taxable income of the Company as of the most recently completed calendar month,
which shall be prepared on a pro forma basis after giving effect to the
transactions contemplated by the Asset Purchase Agreement, the payment by the
Company of all Company Transaction Expenses and the other adjustments set forth
in Exhibit E attached hereto (the “Interim Pro Forma ICTI”); and

 

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(iii) if the Closing Date is on or after October 1, 2018, (A) a good faith
calculation, substantially in the form of the estimated calculation attached
hereto as Exhibit D, of the net asset value of the Company as of September 30,
2018, which shall be prepared on a pro forma basis after giving effect to the
transactions contemplated by the Asset Purchase Agreement, the payment by the
Company of all Company Transaction Expenses and the other adjustments set forth
in Exhibit D (the “September 30 Pro Forma NAV”), and (B) a good faith
calculation, substantially in the form of the estimated calculation attached
hereto as Exhibit E, of the investment company taxable income of the Company as
of September 30, 2018, which shall be prepared on a pro forma basis after giving
effect to the transactions contemplated by the Asset Purchase Agreement, the
payment by the Company of all Company Transaction Expenses and the other
adjustments set forth in Exhibit E attached hereto (the “September 30 Pro Forma
ICTI”).

(b) Together with the certificate to be delivered by the Company to Buyer
pursuant to Section 7.14(a), the Company will provide Buyer with (i) reasonable
supporting documentation for the amounts and calculations set forth therein,
including reasonable detail as to the computations thereof and monthly financial
statements for the calendar months between the date of this Agreement and the
Closing, and (ii) reasonable access to the Company’s personnel and its
representatives and advisors in order to discuss such calculation. If Buyer
disagrees with any item set forth in such certificate, it may provide comments
to the Company, and the Company and Buyer will use their best efforts to resolve
in good faith any such disagreements prior to the Closing.

ARTICLE VIII

CONDITIONS PRECEDENT

8.1 Conditions to Each Party’s Obligation To Effect the Contemplated
Transactions. The respective obligations of the Parties to effect the
Contemplated Transactions shall be subject to the satisfaction at or prior to
the Closing of the following conditions:

(a) Stockholder Approvals. The Company Stockholder Approval and the Asset
Purchase Stockholder Approval shall have been obtained.

(b) Regulatory Approvals. Each Company Regulatory Approval listed on Schedule
8.1(b)(i) and each Buyer Regulatory Approval listed on Schedule 8.1(b)(ii) shall
have been obtained and shall remain in full force and effect and all statutory
waiting periods in respect thereof shall have expired.

(c) Registered Investment Adviser. Buyer shall be registered as an investment
adviser under the Investment Advisers Act.

(d) No Injunctions or Restraints; Illegality. No order, injunction or decree
issued by any court or agency of competent jurisdiction or other law preventing
or making illegal the consummation of the Contemplated Transactions shall be in
effect.

(e) HSR Act. Any applicable waiting period (and any extension thereof)
applicable to the Contemplated Transactions under the HSR Act shall have expired
or been terminated.

 

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(f) Asset Purchase. The closing under the Asset Purchase Agreement shall have
occurred.

(g) No Governmental Entity Litigation. There shall be no pending suit, action or
proceeding by any Governmental Entity, in each case that has a reasonable
likelihood of success, (i) challenging the Contemplated Transactions, seeking to
restrain or prohibit the consummation of the Contemplated Transactions or
seeking to obtain from the Company or Buyer any damages that are material in
relation to the Company and its Subsidiaries taken as a whole, or (ii) seeking
to prohibit Buyer or any of its Subsidiaries from effectively controlling in any
material respect the business or operations of the Company and its Subsidiaries.

8.2 Conditions to Obligations of Buyer. The obligation of Buyer to effect the
Contemplated Transactions is also subject to the satisfaction, or waiver by
Buyer, at or prior to the Closing, of the following conditions:

(a) Representations and Warranties. Subject to the standard set forth in
Section 8.4, and without giving effect to the impact of the consummation of the
Asset Purchase, the representations and warranties of the Company set forth in
this Agreement shall be true and correct as of the date of this Agreement and as
of the Closing as though made on and as of the Closing (except that
representations and warranties that by their terms speak specifically as of the
date of this Agreement or another date shall be true and correct as of such
date); and Buyer shall have received a certificate signed on behalf of the
Company by the Chief Executive Officer or the Chief Financial Officer of the
Company to the foregoing effect.

(b) Performance of Obligations of the Company. The Company shall have performed
in all material respects all obligations required to be performed by it under
this Agreement at or prior to the Closing Date (other than any obligations to be
performed by the Company under Section 7.8, which the Company shall have
performed in all respects); and Buyer shall have received a certificate signed
on behalf of the Company by the Chief Executive Officer or the Chief Financial
Officer of the Company to such effect.

(c) No Material Adverse Effect. Since the date of this Agreement, no Material
Adverse Effect or occurrence, change, event, effect or development that,
individually or in combination with any other occurrence, change, event, effect
or development, is or could reasonably be expected to result in, a Material
Adverse Effect shall have occurred.

(d) Payoff Letter. The Company shall have delivered to Buyer the Payoff Letter,
in form and substance reasonably satisfactory to Buyer.

(e) SBA Payoff. Unless the approval of the SBA has been obtained in connection
with the Contemplated Transactions in a manner that would allow the SBA
Debentures to remain outstanding in accordance with their respective terms, the
Company shall have delivered to Buyer evidence, in form and substance reasonably
satisfactory to Buyer, of the payoff of the SBA Debentures in accordance with
SBA regulations.

(f) Retail Notes. Buyer shall have received evidence of the repayment and
cancellation of, or adequate security (in the form of funds deposited into an
escrow account with the trustee, as required under the Indenture) for the
repayment of, the Retail Notes in form reasonably satisfactory to Buyer.

 

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(g) Board and Officer Resignations. The Company shall have received resignation
letters duly executed by each director and officer of the Company and its
Subsidiaries, to be effective as of the date of Closing, as members of the
Company Board or officers of the Company or its Subsidiaries, as applicable.

(h) Classified Board of Directors. The Company Board shall have approved and
otherwise taken all actions necessary under the MGCL and otherwise for the
Company Board, effective as of the Closing Date, to be divided into three equal,
or nearly equal, classes (each, a “Director Class”) of directors to hold office
for staggered terms of three years each.

(i) Board Elections. The Company Board shall have approved (i) the election of,
effective as of the Closing Date, the directors identified by Buyer to the
Company in writing prior to the initial filing of the Proxy Statement with the
SEC and (ii) the appointment or assignment of each such director to a Director
Class selected by Buyer.

(j) Change of Company Name. The Company Board shall have approved a change of
the name of the Company to Barings BDC, Inc. pursuant to Section 2-605(1) of the
MGCL.

(k) Pro Forma NAV. The applicable Pro Forma NAV shall be no less than
$545,000,000.

(l) Pro Forma ICTI. The applicable Pro Forma ICTI shall be no more than
$15,000,000.

(m) Management Agreements. The Company shall have entered into the Management
Agreements, effective as of the date of Closing.

8.3 Conditions to Obligations of Company. The obligation of the Company to
effect the Contemplated Transactions is also subject to the satisfaction or
waiver by the Company at or prior to the Closing of the following conditions:

(a) Representations and Warranties. Subject to the standard set forth in
Section 8.4, the representations and warranties of Buyer set forth in this
Agreement shall be true and correct as of the date of this Agreement and as of
the Closing as though made on and as of the Closing (except that representations
and warranties that by their terms speak specifically as of the date of this
Agreement or another date shall be true and correct as of such date); and the
Company shall have received a certificate signed on behalf of Buyer by the Chief
Executive Officers or the Chief Financial Officers of Buyer to the foregoing
effect.

(b) Performance of Obligations of Buyer. Buyer shall have performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing, and the Company shall have received a
certificate signed on behalf of Buyer by the Chief Executive Officers or the
Chief Financial Officers of Buyer to such effect.

 

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8.4 Standard. No representation or warranty of the Company contained in Article
IV or of Buyer contained in Article V shall be deemed untrue, inaccurate or
incorrect for purposes of Section 8.2(a) or 8.3(a), as applicable, under this
Agreement, as a consequence of the existence or absence of any fact,
circumstance or event unless such fact, circumstance or event, individually or
when taken together with all other facts, circumstances or events inconsistent
with any representations or warranties contained in Article IV, in the case of
the Company, or Article V, in the case of Buyer, has had or would reasonably be
expected to have a Material Adverse Effect with respect to the Company or Buyer,
as applicable (disregarding for purposes of this Section 8.4, except in the case
of Section 4.8, all qualifications or limitations set forth in any
representations or warranties as to “materiality,” “Material Adverse Effect” and
words of similar import). Notwithstanding the immediately preceding sentence,
the representations and warranties contained in (i) Sections 4.2(a) and
(b) shall be deemed untrue and incorrect if not true and correct except to a de
minimis extent (relative to Section 4.2(a) or (b), respectively, taken as a
whole), and (ii) Sections 4.1(a), 4.3(a), 4.3(b)(i), 4.7, and 4.17, in the case
of the Company, and Sections 5.1(a), 5.2(a), 5.3(b)(i) and 5.5, in the case of
Buyer, shall be deemed untrue and incorrect if not true and correct in all
respects.

8.5 Frustration of Closing Conditions. Neither the Company, on the one hand, nor
Buyer, on the other hand, may rely on the failure of any condition set forth in
Section 8.1, Section 8.2 or Section 8.3, as applicable, to be satisfied if such
failure was primarily caused by the Party relying on such failure to perform any
of its material obligations under this Agreement.

ARTICLE IX

TERMINATION AND AMENDMENT

9.1 Termination. This Agreement may be terminated at any time prior to the
Closing, whether before or after receipt of the Company Stockholder Approval:

(a) by mutual consent of the Company and Buyer, in a written instrument duly
authorized by the Company and Buyer;

(b) by either the Company or Buyer, if any Governmental Entity that must grant a
Company Regulatory Approval listed on Schedule 8.1(b)(i) or Buyer Regulatory
Approval listed on Schedule 8.1(b)(ii) has denied approval of the Contemplated
Transactions and such denial has become final and nonappealable or any
Governmental Entity of competent jurisdiction shall have issued a final and
nonappealable order, injunction or decree permanently enjoining or otherwise
prohibiting or making illegal the consummation of the Contemplated Transactions;

(c) by either the Company or Buyer, if the Contemplated Transactions shall not
have been consummated on or before October 5, 2018 (the “Outside Date”), unless
the failure of the Closing to occur by such date shall be due to the failure of
the Party seeking to terminate this Agreement to perform or observe the
covenants and agreements of such Party set forth in this Agreement;

(d) the Company or Buyer, at any time prior to the Closing, in the event that
the Company shall have failed to obtain the Company Stockholder Approval at the
Company Stockholder Meeting at which a vote is taken on the Company Matters; or

 

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(e) by either the Company or Buyer (provided that the terminating Party is not
then in material breach of any representation, warranty, covenant or other
agreement contained herein), if there shall have been a breach of any of the
covenants or agreements or any of the representations or warranties set forth in
this Agreement on the part of the Company, in the case of a termination by
Buyer, or Buyer, in the case of a termination by the Company, which breach,
either individually or in the aggregate, would result in, if occurring or
continuing on the Closing Date, the failure of the conditions set forth in
Section 8.2 or 8.3, as the case may be, and which is not cured within 30 days
following written notice to the Party committing such breach or by its nature or
timing cannot be cured within such time period; or

(f) by Buyer, (i) within ten (10) Business Days after the Company Board shall
have effected an Adverse Recommendation Change prior to receipt of the Company
Stockholder Approval, or (ii) in the event the Company Board has approved, or
authorized the Company or any of its Subsidiaries to enter into, a merger
agreement, letter of intent, acquisition agreement, purchase agreement or other
similar agreement with respect to a Competing Proposal.

(g) by the Company, in the event that:

(i) (A) the Company shall have received a Superior Proposal, (B) subject to the
Company’s obligations under Section 7.8(f), the Company Board or any authorized
committee thereof shall have authorized the Company to enter into a definitive
agreement to consummate the transaction contemplated by such Superior Proposal,
and (C) concurrently with the termination of this Agreement, the Company pays
Buyer the Termination Fee contemplated by Section 9.4 and enters into the
definitive agreement to consummate the transaction contemplated by such Superior
Proposal; provided, however, that the Company’s right to terminate this
Agreement pursuant to this Section 9.1(g) shall not be available unless the
Company simultaneously terminates the Asset Purchase Agreement; or

(ii) the Company Board or any authorized committee thereof shall have effected
an Adverse Recommendation Change in accordance with the terms of Section 7.8.

The Party desiring to terminate this Agreement pursuant to clause (b), (c), (d),
(e), (f) or (g) of this Section 9.1 shall give written notice of such
termination to the other Parties in accordance with Section 10.2, specifying the
provision or provisions hereof pursuant to which such termination is effected.

9.2 Effect of Termination. In the event of termination of this Agreement by
either the Company or Buyer, as provided in Section 9.1, this Agreement shall
become void and have no effect, and none of the Company, Buyer, any of their
respective Subsidiaries or any of the officers or directors of any of them shall
have any liability of any nature whatsoever under this Agreement, or in
connection with the Contemplated Transactions, except that (i) Sections 7.2(c),
9.2, 9.3, 9.4, and Article X shall survive any termination of this Agreement,
and (ii) except as provided in Section 10.9(c), neither Company nor Buyer shall
be relieved or released from any liabilities or damages arising out of its
knowing and intentional breach of any provision of this Agreement. For all
purposes of this Agreement, “knowing and intentional breach” means an act or
failure to act undertaken by the breaching party who had actual knowledge, or
should have had knowledge, and intention that such party’s act or failure to act
would, or would reasonably be expected to, result in or constitute a breach of
the Agreement.

 

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9.3 Fees and Expenses. All fees and expenses incurred in connection with the
Contemplated Transactions shall be paid by the Party incurring such fees or
expenses; provided, that the costs and expenses of preparing, filing, printing
and mailing the Proxy Statement (including reasonable legal, accounting and
other expenses of the Company), and all other filing fees and amounts paid to
the SEC in connection with the Contemplated Transactions, shall be split equally
by Buyer, Asset Buyer and the Company and the fees of any HSR Act filing shall
be borne by Buyer.

9.4 Termination Fee.

(a) In the event that this Agreement is terminated pursuant to Section 9.1(f) or
Section 9.1(g) then, provided that Buyer was not in material breach of its
representations, warranties, covenants or agreements hereunder at the time of
termination, the Company will pay to Buyer, or to its designee within (x) two
(2) Business Days in the event of termination pursuant to Section 9.1(f) or
(y) immediately prior to the time of termination by the Company in the event of
termination pursuant to Section 9.1(g), a fee in an amount equal to $6,000,000
(such amount, the “Termination Fee”) to an account or accounts designated in
writing by Buyer. The right of the Buyer to receive the Termination Fee under
this Section 9.4(a) shall be Buyer’s sole recourse in connection with
termination of this Agreement pursuant Section 9.1(f) or Section 9.1(g), except
in the circumstance where, at the time of termination of this Agreement under
Section 9.1(f) or Section 9.1(g), the Buyer had the legal right to terminate
this Agreement under Section 9.1(e) as a result of a knowing and intentional
breach of this Agreement by the Company.

(b) In the event that (i) a Competing Proposal shall have been made or proposed
to the Company (and publicly disclosed to the Company Stockholders) or otherwise
publicly announced, (ii) this Agreement is validly terminated by either Buyer or
the Company pursuant to Section 9.1(c) or (d) or is terminated by Buyer pursuant
to Section 9.1(e) (as a result of a material breach of any of the
representations, warranties, covenants or other agreements set forth in this
Agreement on the part of the Company), and (iii) within twelve (12) months
following the date of such termination, the Company enters into an agreement for
or relating to, and consummates, a Competing Proposal, or otherwise consummates
any Competing Proposal (whether or not such Competing Proposal is the same
Competing Proposal referred to in clause (i), but in each case for purposes of
this Section 9.4(b), the references “twenty percent (20%)” in the definition of
Competing Proposal shall be deemed references to “fifty percent (50%)”), the
Company will pay to Buyer, or to Buyer’s designee, the Termination Fee within
three (3) Business Days of the date on which the Company enters into such
agreement or consummates such Competing Proposal. The right of the Buyer to
receive the Termination Fee under this Section 9.4(b) shall be Buyer’s sole
recourse in connection with termination of this Agreement pursuant to
Section 9.1(c), (d) or (e) (as a result of a material breach of any of the
representations, warranties, covenants or other agreements set forth in this
Agreement on the part of the Company), except (x) in the case that Buyer has the
right to receive payment of Buyer Expenses in the circumstances described in
Section 9.4(c) (the full amount of which shall be offset against any Termination
Fee payable under this Section 9.4(b)), and (y) for termination of this
Agreement by Buyer pursuant to Section 9.1(e) as the result of a knowing and
intentional breach of this Agreement by the Company. For the avoidance of doubt,
in no event shall the Company be obligated to pay a Termination Fee on more than
one occasion.

 

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(c) In the event that this Agreement is terminated pursuant to Section 9.1(d) or
Section 9.1(e) (as a result of a material breach of any of the representations,
warranties, covenants or other agreements set forth in this Agreement on the
part of the Company), the Company shall pay to Buyer, or to its designee, within
two (2) Business Days of the termination of the Agreement an amount in cash
equal to that required to reimburse Buyer and its Affiliates for the Buyer
Expenses to an account or accounts designated in writing by Buyer; provided,
however, that if (i) Buyer is otherwise entitled to terminate the Agreement
pursuant to Section 9.1(f), or (ii) the Company is otherwise entitled to
terminate the Agreement pursuant to Section 9.1(g), this Section 9.4(c) shall
not be applicable, and the Termination Fee shall be payable pursuant to
Section 9.4(a). To the extent that Buyer Expenses are paid and the Termination
Fee is subsequently due pursuant to Section 9.4(b), the amount of Buyer Expenses
actually paid shall be deducted from the amount due pursuant to the Termination
Fee.

(d) The Parties acknowledge and hereby agree that in no event shall the Company
be required to pay a Termination Fee on more than one occasion, and that only a
single Termination Fee, if payable, shall be paid to Buyer.

(e) Each of the Parties acknowledges that (i) the agreements contained in this
Section 9.4 are an integral part of the Contemplated Transactions, (ii) the
Termination Fee is not a penalty, but is liquidated damages, in a reasonable
amount that will compensate Buyer, in the circumstances in which the Termination
Fee is payable, for the efforts and resources expended and opportunities
foregone while negotiating this Agreement and in reliance on this Agreement and
on the expectation of the consummation of the Contemplated Transactions, which
amount would otherwise be impossible to calculate with precision, (iii) without
these agreements, the Parties would not enter into this Agreement, and (iv) in
the event that the Company shall fail to pay the Termination Fee or the Buyer
Expenses pursuant to this Section 9.4 when due, and, in order to obtain such
payment, Buyer commences a suit that results in a final, non-appealable judgment
against the Company, the Company shall pay to Buyer costs and expenses
(including attorneys’ fees) in connection with such suit, together with interest
on the Termination Fee or Buyer Expenses (as applicable) at a rate equal to five
percent (5%) commencing on the date such payment was required to be made through
the date of payment.

9.5 Amendment. This Agreement may be amended by the Parties, by action taken or
authorized by the Buyer Board and the Company Board, at any time before or after
receipt of the Company Stockholder Approval; provided, however, that after
receipt of the Company Stockholder Approval, there may not be, without further
approval of such Company Stockholders, any amendment of this Agreement that
requires further approval under Applicable Law. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
Parties.

 

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9.6 Extension; Waiver. At any time prior to the Closing, the Parties, by action
taken or authorized by the Buyer Board and the Company Board, may, to the extent
legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other Parties, (b) waive any inaccuracies in
the representations and warranties contained in this Agreement or (c) waive
compliance with any of the agreements or conditions contained in this Agreement.
Any agreement on the part of a Party to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf of such Party,
but such extension or waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.

ARTICLE X

GENERAL PROVISIONS

10.1 Nonsurvival of Representations, Warranties and Agreements. None of the
representations, warranties, covenants and agreements set forth in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Closing, except for the matters set forth in Section 7.5 and for
those other covenants and agreements contained in this Agreement that by their
terms apply or are to be performed in whole or in part after the Closing.

10.2 Notices. All notices and other communications in connection with this
Agreement shall be in writing and shall be deemed given if delivered personally,
sent via facsimile (with confirmation), mailed by registered or certified mail
(return receipt requested) or delivered by an express courier (with
confirmation) to the Parties at the following addresses (or at such other
address for a Party as shall be specified by like notice):

(a) if to the Company, to:

Triangle Capital Corporation

3700 Glenwood Avenue, Suite 530

Raleigh, NC 27612

Attention: E. Ashton Poole

e-mail: apoole@tcap.com

with a copy to:

Eversheds Sutherland (US) LLP

700 Sixth St., NW

Washington, DC 20001    

Attention:

Harry Pangas, Esq.

e-mail: harrypangas@eversheds-sutherland.com

and

Douglas Leary, Esq.

e-mail: dougleary@eversheds-sutherland.com    

 

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and

(b) if to Buyer, to:

Barings LLC

300 S. Tryon Street, Suite 2500

Charlotte, NC 28202

Attention: Eric Lloyd

e-mail: eric.lloyd@barings.com

with a copy to:

Dechert LLP

1095 Avenue of the Americas

New York, New York 10036

Attention:

Carl de Brito, Esq.

e-mail: carl.debrito@dechert.com

and

Richard Goldberg, Esq.

e-mail: richard.goldberg@dechert.com

The Company shall provide a copy of any notices that it receives from or
delivers to Asset Buyer under the Asset Purchase Agreement to Buyer concurrently
with receipt or delivery of such notice, as applicable.

10.3 Interpretation. When a reference is made in this Agreement to Articles,
Sections, Exhibits or Schedules, such reference shall be to an Article or
Section of or Exhibit or Schedule to this Agreement unless otherwise indicated.
The table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words “include,” “includes” or “including” are used
in this Agreement, they shall be deemed to be followed by the words “without
limitation.” The Company Disclosure Schedule and the Buyer Disclosure Schedule,
as well as all other schedules and all exhibits hereto, shall be deemed part of
this Agreement and included in any reference to this Agreement. This Agreement
shall not be interpreted or construed to require any person to take any action,
or fail to take any action, if to do so would violate any Applicable Law.

10.4 Counterparts. This Agreement may be executed in two or more counterparts,
all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the Parties and
delivered to the other Parties, it being understood that each Party need not
sign the same counterpart.

 

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10.5 Entire Agreement. This Agreement (including the documents and the
instruments referred to in this Agreement), together with the Investment
Advisory Agreement, the Administration Agreement, the Registration Rights
Agreement and Confidentiality Agreement, constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
between the Parties with respect to the subject matter of this Agreement, other
than the Investment Advisory Agreement, the Administration Agreement, the
Registration Rights Agreement and the Confidentiality Agreement.

10.6 Governing Law; Jurisdiction. This Agreement shall be governed and construed
in accordance with the internal laws of the State of Maryland applicable to
contracts made and wholly-performed within such state, without regard to any
applicable conflicts of law principles. The Parties hereto agree that any suit,
action or proceeding brought by a Party to enforce any provision of, or based on
any matter arising out of or in connection with, this Agreement or the
Contemplated Transactions shall be brought in any federal or state court located
in the State of Maryland. Each of the Parties hereto submits to the jurisdiction
of any such court in any suit, action or proceeding seeking to enforce any
provision of, or based on any matter arising out of, or in connection with, this
Agreement or the Contemplated Transactions and hereby irrevocably waives the
benefit of jurisdiction derived from present or future domicile or otherwise in
such action or proceeding. Each Party hereto irrevocably waives, to the fullest
extent permitted by law, any objection that it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding in any such court or
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum.

10.7 Publicity. Neither the Company nor Buyer shall, nor shall they permit any
of their respective Subsidiaries to, issue or cause the publication of any press
release or other public announcement with respect to, or otherwise make any
public statement concerning, the Contemplated Transactions without the prior
consent (which consent shall not be unreasonably withheld) of Buyer, in the case
of a proposed announcement or statement by the Company, or the Company, in the
case of a proposed announcement or statement by Buyer; provided, however, that
any Party may, without the prior consent of the other Parties (but after prior
consultation with the other Parties to the extent practicable under the
circumstances) issue or cause the publication of any press release or other
public announcement to the extent required by law or by the rules and
regulations of the NYSE.

10.8 Assignment; Third Party Beneficiaries. Neither this Agreement nor any of
the rights, interests or obligations under this Agreement shall be assigned by
any Party (whether by operation of law or otherwise) without the prior written
consent of the other Parties; provided, however, that Buyer will have the right
to assign all or any portion of its rights and obligations pursuant to this
Agreement from and after the Closing to any of its Affiliates; provided,
further, that no such assignment shall relieve Buyer of its obligations
hereunder. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by each of the Parties and
their respective successors and assigns. Except as otherwise specifically
provided in Section 7.5, this Agreement (including the documents and instruments
referred to in this Agreement) is not intended to and does not confer upon any
person other than the Parties any rights or remedies under this Agreement.
Except as provided in Section 7.5 only, Buyer and the Company hereby agree that
their respective representations, warranties and covenants set forth herein are
solely for the benefit of the other Parties, in accordance with and subject to
the terms of this Agreement, and this Agreement is not intended to, and does
not, confer upon any person other than the Parties any rights or remedies
hereunder, including, without limitation, the right to rely upon such
representations and warranties set forth herein. The Parties further agree that
the rights of third

 

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party beneficiaries under Section 7.5 shall not arise unless and until the
Closing occurs. The representations and warranties in this Agreement are the
product of negotiations among the Parties and are for the sole benefit of the
Parties. In some instances, the representations and warranties in this Agreement
may represent an allocation among the Parties of risks associated with
particular matters regardless of the knowledge of any of the Parties.
Consequently, Persons other than the Parties may not rely upon the
representations and warranties in this Agreement as characterizations of actual
facts or circumstances as of the date of this Agreement or as of any other date.

10.9 Remedies.

(a) Except as otherwise provided in this Agreement, any and all remedies herein
expressly conferred upon a Party will be deemed cumulative with and not
exclusive of any other remedy conferred hereby, or by law or equity upon such
Party, and the exercise by a Party of any one remedy will not preclude the
exercise of any other remedy.

(b) The Parties hereby agree that irreparable damage would occur in the event
that any provision of this Agreement was not performed in accordance with its
specific terms or was otherwise breached, and that money damages or other legal
remedies would not be an adequate remedy for any such damages. Accordingly, the
Parties acknowledge and hereby agree that in the event of any breach or
threatened breach of any covenants or obligations set forth in this Agreement,
the Company shall be entitled to an injunction or injunctions to prevent or
restrain breaches or threatened breaches of this Agreement and to specifically
enforce the terms and provisions of this Agreement to prevent breaches or
threatened breaches of, or to enforce compliance with, the covenants and
obligations of the other under this Agreement. Each Party hereby agrees not to
raise any objections to the availability of the equitable remedy of specific
performance to prevent or restrain breaches or threatened breaches of this
Agreement, and to specifically enforce the terms and provisions of this
Agreement to prevent breaches or threatened breaches of, or to enforce
compliance with, the covenants and obligations under this Agreement. The Parties
further agree that (i) by seeking the remedies provided for in this
Section 10.9(b), neither Party shall in any respect waive its right to seek any
other form of relief that may be available to a Party under this Agreement
(including monetary damages) in the event that this Agreement has been
terminated or in the event that the remedies provided for in this
Section 10.9(b) are not available or otherwise are not granted, and (ii) nothing
set forth in this Section 10.9(b) shall require either Party to institute any
proceeding for (or limit such Party’s right to institute any proceeding for)
specific performance under this Section 10.9(b) prior or as a condition to
exercising any termination right under Section 9.1 (and pursuing damages after
such termination), nor shall the commencement of any legal proceeding pursuant
to this Section 10.9(b) or anything set forth in this Section 10.9(b) restrict
or limit either Party’s right to terminate this Agreement in accordance with
Section 9.1 or pursue any other remedies under this Agreement that may be
available then or thereafter.

(c) Notwithstanding anything to the contrary set in this Section 10.9, the
Parties expressly acknowledge and agree that the remedies set forth in
Section 9.4 shall be the sole and exclusive remedies available to Buyer in the
event this Agreement is terminated under Section 9.1(c), (d), (e), (f) or (g).
To the extent Buyer is entitled to receive the Termination Fee or reimbursement
of Buyer Expenses, except as otherwise provided in Section 9.4, the receipt of
such amounts shall be deemed to be full and final payment for any and all losses
or damages suffered

 

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or incurred by Buyer or any of its Affiliates or any other Person in connection
with this Agreement (and the termination hereof), the Contemplated Transactions
(and the abandonment thereof) or any matter forming the basis for such
termination, and none of Buyer or any of its Affiliates or any other Person
shall be entitled to bring or maintain any other claim, action or proceeding
against the Company or any of its Affiliates arising out of this Agreement, any
of the Contemplated Transactions or any matters forming the basis for such
termination.

10.10 Waiver of Jury Trial. Each Party acknowledges and agrees that any
controversy which may arise under this Agreement is likely to involve
complicated and difficult issues, and therefore each such Party hereby
irrevocably and unconditionally waives any right such Party may have to a trial
by jury in respect of any litigation directly or indirectly arising out of or
relating to this Agreement or the Contemplated Transactions. Each Party
certifies and acknowledges that (i) no representative, agent or attorney of any
other Party has represented, expressly or otherwise, that such other Parties
would not, in the event of litigation, seek to enforce the foregoing waiver,
(ii) each Party understands and has considered the implications of this waiver,
(iii) each Party makes this waiver voluntarily and (iv) each Party has been
induced to enter into this Agreement by, among other things, the mutual waivers
and certifications in this Section 10.10.

 

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IN WITNESS WHEREOF, the undersigned Parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.

 

TRIANGLE CAPITAL CORPORATION By:  

/s/ E. Ashton Poole

  Name:  E. Ashton Poole   Title:    Chairman & CEO BARINGS LLC By:  

/s/ Thomas Finke

  Name:  Thomas Finke   Title:    Chairman & CEO

Signature Page