Exhibit 10.2

 

EXECUTION VERSION

 

 

 

SALE AND CONTRIBUTION AGREEMENT

 

between

 

PALMER SQUARE CAPITAL BDC INC.,
as the Seller

  

and

 

PALMER SQUARE BDC FUNDING I LLC,
as the Purchaser

 

Dated as of February 18, 2020

 

 

 

 

 

 

Table of Contents

 

    Page       ARTICLE I DEFINITIONS 1       Section 1.1 Definitions 1 Section
1.2 Other Terms 2 Section 1.3 Computation of Time Periods 2 Section 1.4
Interpretation 2 Section 1.5 References 3       ARTICLE II CONVEYANCES OF
TRANSFERRED ASSETS 3       Section 2.1 Conveyances. 3 Section 2.2
Indemnification 7 Section 2.3 Assignments 7       ARTICLE III CONSIDERATION AND
PAYMENT; REPORTING 7       Section 3.1 Purchase Price 7 Section 3.2 Payment of
Purchase Price 7       ARTICLE IV REPRESENTATIONS AND WARRANTIES 8       Section
4.1 Seller’s Representations and Warranties 8 Section 4.2 Reaffirmation of
Representations and Warranties by the Seller; Notice of Breach 11       ARTICLE
V COVENANTS OF THE SELLER 12       Section 5.1 Covenants of the Seller 12
Section 5.2 Covenant of the Purchaser 13       ARTICLE VI Limits on Sales to the
Seller 14       Section 6.1 Limits on Sales and Substitutions 14       ARTICLE
VII CONDITIONS PRECEDENT 14       Section 7.1 Conditions Precedent 14      
ARTICLE VIII MISCELLANEOUS PROVISIONS 15       Section 8.1 Amendments, Etc 15
Section 8.2 Governing Law: Submission to Jurisdiction; Waiver of Jury Trial. 15
Section 8.3 Notices 15 Section 8.4 Severability of Provisions 16 Section 8.5
Further Assurances 16 Section 8.6 No Waiver; Cumulative Remedies 16 Section 8.7
Counterparts 16 Section 8.8 Non-Petition 16 Section 8.9 Transfer of Seller’s
Interest 17 Section 8.10 Binding Effect; Third-Party Beneficiaries 17 Section
8.11 Merger and Integration 17 Section 8.12 Headings 17

 

Schedule A - Schedule of Collateral Assets

 

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This SALE AND CONTRIBUTION AGREEMENT, dated as of February 18, 2020 (as amended,
modified, waived, supplemented or restated from time to time, this “Agreement”),
between PALMER SQUARE CAPITAL BDC INC., a Maryland corporation, as the seller
(together with its successors and assigns in such capacity, the “Seller”) and
PALMER SQUARE BDC FUNDING I LLC, a Delaware limited liability company, as
purchaser (together with its successors and assigns in such capacity, the
“Purchaser”).

 

W I T N E S S E T H:

 

WHEREAS, on and after the Closing Date, the Seller may, from time to time on
each Purchase Date (as defined below), sell or contribute, transfer, and
otherwise convey, to the Purchaser, without recourse except to the extent
specifically provided herein, and the Purchaser may, from time to time on each
Purchase Date, purchase or accept a contribution of all right, title and
interest of the Seller (whether now owned or hereafter acquired or arising, and
wherever located) in and to the Collateral Assets (as defined below) mutually
agreed by the Seller and the Purchaser; and

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, it is hereby agreed by and between the
Purchaser and the Seller as follows:

 

ARTICLE I

DEFINITIONS

 

Section 1.1 Definitions. As used in this Agreement, the following terms shall
have the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined). All capitalized terms used
herein but not defined herein shall have the respective meanings specified in,
or incorporated by reference into, the Credit Agreement, dated as of the date
hereof (as amended, supplemented or otherwise modified and in effect from time
to time, the “Credit Agreement”), by and among the Purchaser, as borrower, the
Lenders from time to time party thereto and Bank of America, N.A., as
administrative agent (in such capacity, the “Administrative Agent”).

 

“Agreement” has the meaning specified in the preamble hereto.

 

“Collateral Assets” means each asset included in the Schedule of Collateral
Assets, as such schedule may be amended, supplemented or updated from time to
time pursuant to the terms hereof.

 

“Convey” means to sell, transfer, assign, contribute or otherwise convey assets
hereunder.

 

“Conveyance” has the meaning specified in Section 2.1(a).

 

“Excluded Amounts” means (i) any amount paid to or for the account of the
Purchaser with respect to any Collateral Asset, which amount is attributable to
the reimbursement of payment by the Seller of any tax, fee or other charge
imposed by any Governmental Authority on such Collateral Asset or on any
underlying asset securing such Collateral Asset, (ii) any interest or fees
(including origination, agency, structuring, management or other upfront fees)
that are for the account of the applicable seller of such Collateral Asset,
(iii) any escrows relating to taxes in connection with Collateral Assets which
are held in an escrow account for the benefit of the obligor and the secured
party pursuant to escrow arrangements under Collateral Asset Documents and (iv)
any amount paid to or for the account of the Purchaser in error.

 

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“Net Purchased Loan Balance” means, as of any date of determination, an amount
equal to the sum of (i) the aggregate Principal Balance of all Collateral Assets
sold and/or contributed to the Purchaser by the Seller hereunder prior to such
date plus (ii) the aggregate Principal Balance of all Collateral Assets acquired
by the Purchaser other than from the Seller prior to such date, in each case
calculated as of the date of the Purchaser’s acquisition thereof.

 

“Participation Interest” has the meaning specified in Section 2.1(h).

 

“Purchase Date” has the meaning specified in Section 2.1(a).

 

“Purchase Price” has the meaning specified in Section 3.1.

 

“Purchaser” has the meaning specified in the preamble hereto.

 

“Schedule of Collateral Assets” means the schedule identifying the Collateral
Assets that are sold from time to time by the Seller to the Purchaser in
accordance with this Agreement, which schedule is attached hereto as Schedule A.

 

“Seller” has the meaning specified in the preamble hereto.

 

“Transferred Asset” has the meaning specified in Section 2.1(a).

 

Section 1.2 Other Terms. All accounting terms not specifically defined herein
shall be construed in accordance with generally accepted accounting principles.
All terms used in Article 9 of the UCC, and not specifically defined herein, are
used herein as defined in such Article 9. The term “including” when used in this
Agreement means “including without limitation.”

 

Section 1.3 Computation of Time Periods. Unless otherwise stated in this
Agreement, in the computation of a period of time from a specified date to a
later specified date, the word “from” means “from and including” and the words
“to” and “until” each means “to but excluding.”

 

Section 1.4 Interpretation. In this Agreement, unless a contrary intention
appears:

 

(a) reference to any Person includes such Person’s successors and assigns but,
if applicable, only if such successors and assigns are permitted by the Loan
Documents;

 

(b) reference to any gender includes each other gender;

 

(c) reference to day or days without further qualification means calendar days;

 

(d) unless otherwise stated, reference to any time means New York time;

 

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(e) references to “writing” include printing, typing, lithography, electronic or
other means of reproducing words in a visible form;

 

(f) reference to any agreement (including any Loan Document or underlying
instrument), document or instrument means such agreement, document or instrument
as amended, modified, supplemented, replaced, restated, waived or extended and
in effect from time to time in accordance with the terms thereof and, if
applicable, the terms of the other Loan Documents, and reference to any
promissory note includes any promissory note that is an extension or renewal
thereof or a substitute or replacement therefor;

 

(g) reference to any requirement of law means such requirement of law as
amended, modified, codified, replaced or reenacted, in whole or in part, and in
effect from time to time, including rules and regulations promulgated thereunder
and reference to any Section or other provision of any requirement of law means
that provision of such requirement of law from time to time in effect and
constituting the substantive amendment, modification, codification, replacement
or reenactment of such Section or other provision; and

 

(h) references to “including” means “including, without limitation.”

 

Section 1.5 References. All Section references (including references to the
Preamble), unless otherwise indicated, shall be to Sections (and the Preamble)
in this Agreement.

 

ARTICLE II

CONVEYANCES OF TRANSFERRED ASSETS

 

Section 2.1 Conveyances.

 

(a) On the terms and subject to the conditions set forth in this Agreement
(including the conditions to purchase set forth in Article VII), on each date
with respect to which the Purchaser and Seller agree that the Purchaser will
purchase a Collateral Asset from the Seller (each such date a “Purchase Date”),
the Seller hereby Conveys to the Purchaser, and the Purchaser hereby purchases
and takes from the Seller (the “Conveyance”) all right, title and interest
(whether now owned or hereafter acquired or arising and wherever located) of the
Seller (including all obligations of the Seller as lender to fund any Revolving
Loan or any Delayed Drawdown Loan conveyed by the Seller to Purchaser hereunder
which obligations Purchaser hereby assumes) in the property identified in
clauses (i)-(iv) below and all accounts, cash and currency, chattel paper,
tangible chattel paper, electronic chattel paper, copyrights, copyright
licenses, equipment, fixtures, general intangibles, instruments, commercial tort
claims, deposit accounts, inventory, investment property, letter-of-credit
rights, accessions, proceeds and other property consisting of, arising out of,
or related to any of the following (in each case above and below excluding the
Excluded Amounts) (collectively, the “Transferred Assets”):

 

(i) the Collateral Assets listed on each Schedule of Collateral Assets delivered
electronically by the Seller to the Purchaser with respect to such Purchase Date
pursuant to this Section 2.1(a) and all monies due, to become due or paid in
respect of such Collateral Assets on and after the related Purchase Date,
including but not limited to all collections and other recoveries thereon, in
each case as they arise after the related Purchase Date;

 

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(ii) all guaranties, indemnities and warranties, insurance policies, financing
statements and other agreements or arrangements of whatever character from time
to time supporting or securing payment of the Collateral Assets referred to in
clause (i) above (except to the extent such Liens are held in a capacity as an
administrative agent or collateral agent);

 

(iii) all Collateral Asset Documents with respect to the Collateral Assets
referred to in clause (i) above; and

 

(iv) all income and proceeds of the foregoing.

 

Notwithstanding the foregoing or anything to the contrary contained herein, the
parties acknowledge and agree that the Purchaser has no interest in the Excluded
Amounts. Promptly upon the receipt by or release to the Purchaser of any
Excluded Amounts, the Purchaser hereby irrevocably agrees to deliver and release
to the Seller such Excluded Amounts, which release shall be automatic and shall
require no further act by the Purchaser; provided that the Purchaser shall
execute and deliver such instruments of release and assignment or other
documents, or otherwise confirm the foregoing release of such Excluded Amounts,
as may be reasonably requested by the Seller in writing.

 

(b) From and after each Purchase Date, the Transferred Assets listed on the
relevant Schedule of Collateral Assets (as updated from time to time pursuant to
the terms hereof) shall be deemed to be Transferred Assets hereunder.

 

(c) Except as specifically provided in this Agreement, the Conveyance of
Transferred Assets under this Agreement shall be without recourse to the Seller;
it being understood that the Seller shall be liable to the Purchaser for all
representations, warranties, covenants and indemnities made by the Seller
pursuant to the terms of this Agreement, all of which obligations are limited so
as not to constitute recourse to the Seller for the credit risk of the obligors.
The representations and warranties of Seller with respect to the Transferred
Assets do not address the creditworthiness of the obligor on such Transferred
Assets or the risk of default or declines in credit quality with respect to such
Transferred Assets after the related Purchase Date.

 

(d) In connection with each Conveyance of Transferred Assets as contemplated by
this Agreement, the Purchaser hereby directs the Seller to, and the Seller
agrees that it will deliver, or cause to be delivered each Collateral Asset
being Conveyed to the Purchaser on such Purchase Date in accordance with the
applicable provisions of the Credit Agreement. The Seller shall take such action
reasonably requested by the Purchaser or the Administrative Agent, from time to
time hereafter, that may be necessary or appropriate to ensure that the
Purchaser has an enforceable ownership interest and its assigns under the Credit
Agreement have an enforceable and perfected security interest in the Transferred
Assets purchased by the Purchaser as contemplated by this Agreement.

 

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(e) In connection with each Conveyance by the Purchaser of Transferred Assets as
contemplated by this Agreement, the Seller further agrees that it will, at its
own expense, indicate clearly and unambiguously in its computer files and its
financial statements, on or prior to the related Purchase Date, that such
Transferred Assets have been purchased by the Purchaser in accordance with this
Agreement.

 

(f) The Seller further agrees to deliver to the Purchaser on or before each
Purchase Date a computer file containing a true, complete and correct Schedule
of Collateral Assets (which shall contain the related outstanding Principal
Balance, loan number and obligor name for each Collateral Asset) as of the
related Purchase Date. Such file or list shall be marked as Schedule A to this
Agreement, shall be delivered to the Purchaser as confidential and proprietary,
and is hereby incorporated into and made a part of this Agreement as such
Schedule A may be supplemented and amended from time to time.

 

(g) It is the intention of the parties hereto that the conveyance of all right,
title and interest in and to the Transferred Assets to the Purchaser as provided
in Section 2.1 shall constitute an absolute sale, conveyance and transfer
conveying good title, free and clear of any Lien (other than Permitted Liens)
and that the Transferred Assets shall not be part of the Seller’s bankruptcy
estate in the event of a bankruptcy, insolvency, reorganization, liquidation or
similar proceeding of the Seller (or in the event that a receiver, trustee,
conservator, intervenor or sequestrator or the like has been appointed with
respect to the Seller). Furthermore, it is not intended that such conveyance be
deemed a pledge of the Collateral Assets and the other Transferred Assets to the
Purchaser to secure a debt or other obligation of the Seller. If, however,
notwithstanding the intention of the parties, the conveyance provided for in
this Section 2.1 is determined to be a transfer for security, then this
Agreement shall also be deemed to be, and hereby is, a “security agreement”
within the meaning of Article 9 of the UCC and the Seller hereby grants to the
Purchaser a duly perfected, first priority “security interest” within the
meaning of Article 9 of the UCC in all right, title and interest in and to the
Transferred Assets, now existing and hereafter created, to secure the prompt and
complete payment of a loan deemed to have been made in an amount equal to the
aggregate Purchase Price of the Transferred Assets together with all of the
other obligations of the Seller hereunder, and the Purchaser hereby assigns all
of its right, title and interest in such security interest to the Administrative
Agent, for the benefit of the Secured Parties. The Purchaser shall have, in
addition to the rights and remedies which it may have under this Agreement, all
other rights and remedies provided to a secured creditor under the UCC and other
Applicable Law, which rights and remedies shall be cumulative. In connection
with this Agreement, the Seller agrees to file (or cause to be filed) on or
prior to the Closing Date, at its own expense, a financing statement or
statements with respect to the Transferred Assets Conveyed by the Seller to the
Purchaser hereunder from time to time meeting the requirements of applicable
state law in the jurisdiction of the Seller’s organization to perfect and
protect the interests of the Purchaser created hereby under the UCC against all
creditors of, and purchasers from, the Seller along with any financing
statements necessary to assign such interests to the Purchaser, and to deliver a
file-stamped copy of such financing statements or other evidence of such filings
to the Purchaser and the Administrative Agent as soon as reasonably practicable
after its receipt thereof. Without limiting the foregoing, the Seller shall, in
order to accurately reflect the Conveyances contemplated by this Agreement,
execute and file such financing or continuation statements or amendments thereto
or assignments thereof (as permitted pursuant hereto) or other documents or
instruments as may be requested by the Purchaser or the Administrative Agent and
mark its records noting the Conveyance to the Purchaser of the Transferred
Assets. The Seller hereby authorizes the Purchaser and the Administrative Agent
to file and, to the fullest extent permitted by Applicable Law the Purchaser and
the Administrative Agent shall be permitted to sign (if necessary) and file,
initial financing statements, continuation statements and amendments thereto and
assignments thereof without further acts of the Seller; provided that the
description of collateral contained in such financing statements shall be
limited to only Transferred Assets. Carbon, photographic or other reproduction
of this Agreement or any financing statement shall be sufficient as a financing
statement.

 

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(h) Participation Interests. Notwithstanding anything to the contrary contained
herein, any sale of a Collateral Asset contemplated hereunder may take the form
of a grant of a 100% undivided participation interest in a Collateral Asset that
is an Eligible Collateral Asset (a “Participation Interest”), the legal title to
which is held by the Seller, and for which the Purchaser shall acquire the
Participation Interest and assume and agree to perform and comply with all
assumed obligations of the Seller with respect to the related Collateral Asset.
The parties hereby agree to treat the transfer of any Participation Interests by
Seller to Purchaser as a sale and purchase on all of their respective relevant
books and records as otherwise provided in this Section 2.1. The Seller and the
Purchaser shall use commercially reasonable efforts to, as soon as practicable,
cause the Purchaser to become a lender under the underlying instrument with
respect to Seller’s interest in the applicable Collateral Asset and take such
action as shall be mutually agreeable in connection therewith and in accordance
with the terms and conditions of the underlying instrument and consistent with
the terms of this Agreement. Seller shall direct the underlying administrative
agent for each Collateral Asset to send all proceeds of each Collateral Asset to
the Collateral Account. Pending settlement of the assignment of a Collateral
Asset in accordance with the applicable underlying instruments, Seller shall
comply with any written instructions provided to Seller by or on behalf of
Purchaser with respect to voting rights to be exercised by holders of the
applicable Collateral Asset, other than with respect to any voting rights that
are not permitted to be participated pursuant to the terms of the applicable
underlying instrument.

 

(i) Except as otherwise permitted under this Agreement or the Loan Documents,
the Seller shall have no right hereunder to reacquire any of the Transferred
Assets, and the Purchaser shall be entitled to dispose of any Transferred Assets
in its discretion (subject to the Credit Agreement) and shall have no duty or
obligation to account to the Seller in respect thereof nor any recourse to the
Seller in connection with any such disposition; provided that nothing in this
Section 2.1(i) shall prohibit the Purchaser from transferring assets to the
Seller in accordance with the limits set forth in Section 6.1.

 

(j) Each of the Seller and the Purchaser acknowledges, agrees, represents and
warrants that (1) there are no other agreements related to the sale and purchase
of the Transferred Assets other than this Agreement and any related assignment
agreements and (2) this Agreement (along with any related assignment agreements)
represents the entire agreement between the parties with respect to the
transactions subject of and contemplated by this Agreement, (3) this Agreement
is not an attempt to hide the true agreement between the parties, and (4) the
parties to this Agreement do not and will not depart from its terms with respect
to the matters subject hereof.

 

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Section 2.2 Indemnification. The Seller shall indemnify the Purchaser and its
successors, transferees, and assigns (including each Secured Party) and all
Related Parties of any of the foregoing (each of the foregoing Persons being
individually called an “Indemnified Party”) against, and hold each Indemnified
Party harmless from, any and all costs, losses, claims, damages, liabilities and
related expenses (including the reasonable and documented out-of-pocket fees,
charges and disbursements of any outside counsel for any Indemnitee) (all of the
foregoing being collectively called “Indemnified Amounts”) incurred by any
Indemnified Party or awarded against any Indemnified Party by any Person
(including the Seller) other than such Indemnified Party and its Related Parties
arising out of any material breach by the Seller of any of its obligations
hereunder or arising as a result of the failure of any representation or
warranty of the Seller herein to be true and correct in all material respects on
the date such representation or warranty was made; provided that such indemnity
shall not, as to any Indemnitee, be available to the extent that such
Indemnified Amounts (w) are determined by a court of competent jurisdiction by
final and nonappealable judgment to have resulted from the gross negligence,
fraud, bad faith or willful misconduct of such Indemnified Party or its reckless
disregard of its duties hereunder or any Loan Document, result from (x) a claim
brought by the Seller against an Indemnified Party for breach in bad faith of
such Indemnified Party’s obligations hereunder or under any other Loan Document,
if the Seller has obtained a final and nonappealable judgment in its favor on
such claim as determined by a court of competent jurisdiction, (y) any punitive,
indirect, special or consequential damages, lost profits or other similar
damages or (z) Collateral Assets which are uncollectible due to the obligor’s
financial inability to pay. If the Seller has made any payment pursuant to this
Section 2.2 and the recipient thereof later collects any payments from others
(including insurance companies) in respect of such amounts or is found in a
final and nonappealable judgment by a court of competent jurisdiction not to be
entitled to such indemnification, then the recipient agrees that it shall
promptly repay to the Seller such amounts collected.

 

Section 2.3 Assignments. The Seller and the Purchaser acknowledge and agree
that, solely for administrative convenience, any transfer document or assignment
agreement required to be executed and delivered in connection with the transfer
of a Transferred Asset in accordance with the terms of the related Collateral
Asset Documents may reflect that (i) the Seller (or any Affiliate or third party
from whom the Seller or the applicable Affiliate may purchase Transferred Asset)
is assigning such Transferred Asset directly to the Purchaser or (ii) the
Purchaser is acquiring such Transferred Asset at the closing of such Transferred
Asset.

 

ARTICLE III

CONSIDERATION AND PAYMENT; REPORTING

 

Section 3.1 Purchase Price. The purchase price for each Transferred Asset
purchased by the Purchaser in accordance with this Agreement shall be a dollar
amount equal to the fair market value or reasonable equivalent thereof as
determined by the Seller (the “Purchase Price”).

 

Section 3.2 Payment of Purchase Price. The Purchase Price for any Transferred
Asset acquired by the Purchaser on any Purchase Date pursuant to this Agreement
shall be paid in a combination of (i) immediately available funds and (ii) if
the Purchaser does not have sufficient funds to pay the full amount of the
Purchase Price (after taking into account any Loan the Purchaser expects to
receive pursuant to the Credit Agreement), or as otherwise provided in Section
3.2(b), by means of a capital contribution by the Seller to the Purchaser.

 

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(a) Notwithstanding anything to the contrary contained herein, the Seller may on
any Purchase Date elect to designate all or a portion of the Transferred Assets
proposed to be transferred to the Purchaser on such date as a capital
contribution to the Purchaser. In such event, the cash portion of the Purchase
Price payable with respect to such Conveyance shall be reduced by that portion
of the Purchase Price of the Transferred Assets that was so contributed;
provided that Transferred Assets contributed to the Purchaser as capital shall
constitute Transferred Assets for all purposes of this Agreement. To the extent
the fair market value or reasonable equivalent thereof of any Transferred Asset
purchased or acquired by replacement and substitution by Purchaser pursuant to
this Agreement exceeds the amount of cash paid or other consideration exchanged
therefor, such excess shall be deemed to be a capital contribution from the
Seller to the Purchaser.

 

(b) Upon the payment of the Purchase Price for any Transferred Asset, title to
such Transferred Assets (or, in the case of a Participation Interest, the rights
granted hereunder in respect thereof) shall vest in Purchaser, whether or not
the conditions precedent to such Conveyance and the other covenants and
agreements contained herein were in fact satisfied.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

 

Section 4.1 Seller’s Representations and Warranties. The Seller represents and
warrants to the Purchaser as of the Closing Date and as of each Purchase Date:

 

(a) Existence, Qualification and Power. The Seller (i) is duly organized,
validly existing and, as applicable, in good standing under the Laws of the
jurisdiction of its incorporation or organization, (ii) has all requisite power
and authority and has acquired all requisite governmental licenses,
authorizations, consents and approvals to (A) own or lease its assets and carry
on its business in which it is currently engaged and (B) execute, deliver and
perform its obligations under the Loan Documents to which it is a party, and
(iii) is duly qualified and is licensed and, as applicable, in good standing
under the Laws of each jurisdiction where its ownership, lease or operation of
properties or the conduct of its business requires such qualification or
license; except in each case referred to in clause (ii)(A) or (iii), to the
extent that failure to do so would not reasonably be expected to have a Material
Adverse Effect.

 

(b) Authorization; No Contravention. The execution, delivery and performance by
the Seller of each Loan Document to which the Seller is party, have been duly
authorized by all necessary corporate or other organizational action, and do not
and will not (i) violate the terms of any of the Seller’s Organization
Documents; (ii) result in any breach or contravention of, or creation of any
Lien (other than a Permitted Lien) under, or require any payment to be made
under (A) any Contractual Obligation to which the Seller is a party or affecting
the Seller or the properties of the Seller or (B) any order, injunction, writ or
decree of any Governmental Authority or any arbitral award to which the Seller
or its property is subject; or (iii) violate any Law, (except in the case of
clauses (ii) and (iii), other than any violation, breach or conflict which would
not reasonably be expected to have a Material Adverse Effect).

 

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(c) Governmental Authorization; Other Consents. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required in
connection with the execution, delivery or performance by, or enforcement
against, the Seller of this Agreement or any other Loan Document except where
the failure to do so would not reasonably be expected to have a Material Adverse
Effect.

 

(d) Binding Effect. This Agreement has been, and each other Loan Document to
which the Seller is a party, when delivered hereunder, will have been, duly
executed and delivered by the Seller. This Agreement constitutes, and each other
Loan Document to which the Seller is a party when so delivered, and when
executed and delivered by the other parties thereto, will constitute, a legal,
valid and binding obligation of the Seller, enforceable against the Seller in
accordance with its terms, except as such enforceability may be limited by
Debtor Relief Laws or other Laws affecting creditors’ rights generally and by
general principles of equity, regardless of whether considered in a proceeding
in equity or at Law.

 

(e) No Adverse Proceeding; Title. There are no material actions, suits,
proceedings, claims or disputes pending or, to the knowledge of the Seller,
threatened, at law, in equity, in arbitration or before any Governmental
Authority, by or against the Seller or against any of its properties or
revenues.

 

(f) Good and Marketable Title. The Seller owns and has good and marketable title
to the Transferred Assets Conveyed to the Purchaser on the applicable Purchase
Date, free and clear of any Lien (other than the Liens in favor of the Purchaser
and the Secured Parties pursuant to the Loan Documents and inchoate Liens
arising by operation of law, Permitted Liens or any Lien that will be released
prior to or contemporaneously with the applicable Conveyance);

 

(g) Backup Security Interest. In the event that, notwithstanding the intent of
the parties, the Conveyances hereunder shall be characterized as loans and not
as sales and/or contributions, then:

 

(i) this Agreement creates a valid and continuing Lien on the Seller’s right,
title and interest in and to the Transferred Assets in favor of the Purchaser
and the Administrative Agent, as assignee, for the benefit of the Secured
Parties, which security interest is validly perfected under Article 9 of the UCC
(to the extent such security interest may be perfected by filing a UCC financing
statement under such article), and is enforceable as such against creditors of
and purchasers from the Seller;

 

(ii) the Transferred Assets constitute “general intangibles,” “instruments,”
“accounts,” “investment property,” or “chattel paper,” within the meaning of the
applicable UCC;

 

(iii) the Seller has received all consents and approvals required by the terms
of the Collateral Assets to any Conveyance of the Collateral Assets hereunder to
the Purchaser (except (A) to the extent that the requirement for such consent is
rendered ineffective under Section 9-406 of the UCC and (B) for any customary
procedural requirements and agents’ and/or obligors’ consents expected to be
obtained in due course in connection with the transfer of the Collateral Assets
to the Purchaser (except, in the case of clause (B), for any such agents’
consents where the Seller or any of its Affiliates is the agent which the Seller
has or will obtain), and (C) any such consent which the failure to obtain would
not reasonably be expected to have a Material Adverse Effect);

 

9

 

 

(iv) none of the underlying promissory notes that constitute or evidence the
Collateral Assets has any marks or notations indicating that they have been
pledged, assigned or otherwise conveyed to any Person other than the Purchaser
and the Administrative Agent, as assignee on behalf of the Secured Parties;

 

(v) except with respect to any Collateral Asset for which there is no promissory
note, all original executed copies of each promissory note that constitutes or
evidences the Collateral Assets have been delivered by the Seller at the
direction of the Purchaser as required under the Credit Agreement.

 

(h) Fair Consideration; No Avoidance for Collateral Asset Payments. With respect
to each Transferred Asset sold or contributed hereunder, the Seller sold or
contributed such Transferred Asset to the Purchaser in exchange for payment,
made in accordance with the provisions of this Agreement, in an amount which
constitutes fair consideration and reasonably equivalent value. Each such
Conveyance referred to in the preceding sentence shall not have been made for or
on account of an antecedent debt owed by the Seller to the Purchaser and,
accordingly, no such sale is or may be voidable or subject to avoidance under
title 11 of the United States Code and the rules and regulations thereunder.

 

(i) Adequate Capitalization; No Insolvency. As of such date it is, and after
giving effect to any Conveyance it will be, solvent and it is not entering into
this Agreement or any other Loan Document or consummating any transaction
contemplated hereby or thereby with any intent to hinder, delay or defraud any
of its creditors.

 

(j) True Sale or True Contribution. Each Transferred Asset sold or contributed
hereunder shall have been sold or contributed by the Seller to the Purchaser in
a “true sale” or a “true contribution.”

 

(k) True and Complete Information. All information heretofore or hereafter
furnished by or on behalf of the Seller in writing to the Purchaser in
connection with this Agreement or any transaction contemplated hereby or thereby
is and will be (when taken as a whole and in each case, as modified or
supplemented by other information so furnished) true, complete and correct in
all material respects as of the date such information is stated or certified and
does not and will not omit to state a material fact necessary to make the
statements contained therein not misleading; provided that solely with respect
to information furnished by the Seller which was provided to the Seller from an
obligor with respect to a Collateral Asset, such information shall only need to
be true, complete and correct to the actual knowledge of the Seller; provided
further that, with respect to projected financial information, the Seller
represents only that such information was prepared in good faith based upon
assumptions believed to be reasonable at the time of preparation.

 

10

 

 

(l) Eligibility of Transferred Collateral Assets. Each Transferred Collateral
Asset Conveyed hereunder is, at the time of such Conveyance, an Eligible
Collateral Asset. At the time of such Conveyance, no event has occurred and is
continuing which could reasonably be expected to affect the collectibility of
such Transferred Collateral Asset or cause it not to be paid in full. The
information contained in Schedule A is true, correct and complete in all
material respects as of each such Purchase Date.

 

(m) Price of Collateral Assets. The Purchase Price for each Collateral Asset
Conveyed by the Seller to the Purchaser hereunder represents the fair market
value or reasonable equivalent thereof of such Collateral Asset as of the time
of Conveyance hereunder, as may have changed from the time the applicable
Collateral Asset was originally acquired by the Seller.

 

(n) Notice to Agents and obligors. The Seller will direct any agent,
administrative agent or obligor for any Collateral Asset included in the
Transferred Assets to remit all payments and collections with respect to such
Collateral Asset directly to the Collateral Account.

 

(o) Collections. The Seller acknowledges that all Interest Proceeds and
Principal Proceeds received by it or its Affiliates with respect to the
Transferred Assets (other than Excluded Amounts) Conveyed to the Purchaser are
held and shall be held in trust for the benefit of the Purchaser and its
assignees until deposited into the Collateral Account. The Seller promptly shall
remit to the Purchaser or the Purchaser’s designee any payment or any other sums
relating to, or otherwise payable on account of, the Transferred Assets (other
than Excluded Amounts) that the Seller receives after the applicable Purchase
Date.

 

(p) Selection Procedures. In selecting the Transferred Assets hereunder, no
selection procedures were employed which are intended to be adverse to the
interests of the Administrative Agent or any Lender.

 

(q) Special Purpose Entity. The Purchaser is an entity with assets and
liabilities separate and distinct from those of the Seller and any Affiliates
thereof, and the Seller hereby acknowledges that the Administrative Agent, the
Lenders and the other Secured Parties are entering into the transactions
contemplated by the Credit Agreement in reliance upon the Purchaser’s identity
as a legal entity that is separate from the Seller and from each other Affiliate
of the Seller. Therefore, prior to and as of the date of execution and delivery
of this Agreement, except as required for tax and consolidated accounting
purposes, the Seller has taken all reasonable steps, including all steps that
the Purchaser or the Administrative Agent may from time to time reasonably
request, to create the Purchaser’s identity as a legal entity that is separate
from the Seller and from each other Affiliate of the Seller, and to make it
manifest to third parties that the Purchaser is an entity with assets and
liabilities distinct from those of the Seller and each other Affiliate thereof
and not just a division of the Seller or any such other Affiliate.

 

Section 4.2 Reaffirmation of Representations and Warranties by the Seller;
Notice of Breach. On the Closing Date and on each Purchase Date, the Seller, by
accepting the proceeds of such Conveyance, shall be deemed to have certified
that all representations and warranties described in Section 4.1 are true and
correct in all material respects on and as of such day as though made on and as
of such day (or if specifically referring to an earlier date, as of such earlier
date). The representations and warranties set forth in Section 4.1 shall survive
(a) the Conveyance of the Transferred Assets to the Purchaser, (b) the
termination of the rights and obligations of the Purchaser and the Seller under
this Agreement and (c) the termination of the rights and obligations of the
Purchaser under the Credit Agreement. Upon discovery by a Responsible Officer of
the Purchaser or the Seller of a breach of any of the foregoing representations
and warranties in any material respect, the party discovering such breach shall
give prompt written notice to the other and to the Administrative Agent.

 

11

 

 

ARTICLE V

COVENANTS OF THE SELLER

 

Section 5.1 Covenants of the Seller. The Seller hereby covenants and agrees with
the Purchaser that, from the date hereof until the termination of this
Agreement, unless the Purchaser otherwise consents in writing:

 

(a) Compliance with Agreements and Applicable Laws. The Seller shall perform
each of its obligations under this Agreement and the other Loan Documents and
comply in all material respects with the requirements of all Applicable Laws and
all orders, writs, injunctions and decrees applicable to it or to its business
or property, except in such instances in which such requirement of Law or order,
writ, injunction or decree is being contested in good faith by appropriate
proceedings diligently conducted.

 

(b) Cash Management Systems: Deposit of Collections. The Seller shall transfer,
or cause to be transferred, all Interest Proceeds and Principal Proceeds (if
any) it receives in respect of the Collateral Assets (other than Excluded
Amounts) to the Collateral Account by the close of business on the second
Business Day following the date such Interest Proceeds and Principal Proceeds
are received by the Seller.

 

(c) Books and Records. The Seller shall maintain proper books of record and
account of the transactions contemplated hereby, in which full, true and correct
entries in conformity with GAAP consistently applied shall be made of all
financial transactions contemplated hereunder.

 

(d) Accounting of Purchases. Other than for consolidated accounting purposes,
the Seller will not account for or treat the transactions contemplated hereby in
any manner other than as a sale or contribution of the Transferred Assets by the
Seller to the Purchaser; provided that solely for federal income tax reporting
purposes, the Purchaser is treated as a “disregarded entity” and, therefore, the
Conveyance of Transferred Assets by the Seller to the Purchaser hereunder will
not be recognized.

 

(e) Liens. The Seller shall not create, incur, assume or permit to exist any
Lien on or with respect to any of its rights under any of the Loan Documents or
on or with respect to any of its rights in the Transferred Assets (other than
the Liens in favor of the Purchaser and the Secured Parties pursuant to the Loan
Documents, Permitted Liens and any Lien that will be released prior to or
contemporaneously with the applicable Conveyance). For the avoidance of doubt,
this Section 5.1(e) shall not apply to any property retained by the Seller and
not Conveyed or purported to be Conveyed hereunder.

 

(f) Change of Name, Etc. The Seller shall not change its name, or name under
which it does business, in any manner that would make any financing statement or
continuation statement filed by the Seller or Purchaser pursuant hereto (or by
the Administrative Agent on behalf of the Seller or Purchaser) or change its
jurisdiction of organization, unless the Seller shall have given the Purchaser
and the Administrative Agent at least 30 days prior written notice thereof, and
shall promptly file appropriate amendments to all previously filed financing
statements and continuation statements.

 

12

 

 

(g) Sale Characterization. The Seller shall not make statements or disclosures,
or treat the transactions contemplated by this Agreement (other than for
consolidated accounting purposes) in any manner other than as a true sale,
contribution or absolute assignment of the title to and sole record and
beneficial ownership interest of the Transferred Assets Conveyed or purported to
be Conveyed hereunder; provided that the Seller may consolidate the Purchaser
and/or its properties and other assets for accounting purposes in accordance
with GAAP if any consolidated financial statements of the Seller and the
Purchaser contain footnotes that the Transferred Assets have been sold or
contributed to the Purchaser and do not suggest in any way (other than by the
mere fact of consolidation) that the Purchaser’s assets are directly available
to satisfy the claims of the Seller’s creditors or vice versa.

 

(h) Commingling. The Seller shall not, and shall not permit any of its
Affiliates to, deposit or permit the deposit of any funds that do not constitute
Interest Proceeds and Principal Proceeds of any Collateral Assets into the
Collateral Account.

 

(i) Expenses. The Seller shall pay its operating expenses and liabilities from
its own assets.

 

(j) SPE Covenant. The Seller shall comply with the covenants listed on Annex D
of the Credit Agreement.

 

(k) Opinion Assumptions. The Seller shall not take any actions contrary to the
“Facts and Assumptions” and “Further Assumptions” sections in the opinions of
Dechert LLP, dated the date hereof, relating to certain true sale and
non-consolidation matters.

 

(l) Separate Identity. The Seller acknowledges that the Administrative Agent,
the Lenders and the other Secured Parties are entering into the transactions
contemplated by this Agreement and the Credit Agreement in reliance upon the
Purchaser’s identity as a legal entity that is separate from the Seller and each
other Affiliate of the Seller. Accordingly, from and after the date of execution
and delivery of this Agreement, the Seller will take all reasonable steps to
maintain the Purchaser’s identity as a legal entity that is separate from the
Seller and each other Affiliate of the Seller and to make it manifest to third
parties that the Purchaser is an entity with assets and liabilities distinct
from those of the Seller and each other Affiliate thereof and not just a
division of the Seller or any such other Affiliate. Without limiting the
generality of the foregoing and in addition to the other covenants set forth
herein, the Seller will take all other actions necessary on its part to ensure
that the Purchaser is at all times in compliance with Section 7.11 of the Credit
Agreement.

 

Section 5.2 Covenant of the Purchaser. The Purchaser hereby covenants and agrees
with the Seller that, from the date hereof until the termination of this
Agreement, unless the Seller otherwise consents in writing, the Purchaser shall
comply with the covenants listed on Annex D of the Credit Agreement.

 

13

 

 

ARTICLE VI

Limits on Sales to the Seller

 

Section 6.1 Limits on Sales and Substitutions. Sales and transfers of
Transferred Assets from the Seller to the Purchaser shall be subject to the
following limitations: (a) in no event shall the aggregate outstanding balance
of Transferred Assets sold to the Seller by the Purchaser exceed 20% of the Net
Purchased Loan Balance and (b) in no event shall the outstanding balance of
Transferred Assets which are Defaulted Assets sold to the Seller by the
Purchaser exceed 10% of the Net Purchased Loan Balance, it being understood that
the limit set forth in this clause (b) shall be a sub-limit of the limitation
set forth in clause (a).

 

ARTICLE VII

CONDITIONS PRECEDENT

 

Section 7.1 Conditions Precedent. The obligations of the Purchaser to pay the
Purchase Price for the Transferred Assets sold on the Closing Date and any other
Purchase Date shall be subject to the satisfaction of the following conditions:

 

(a) All representations and warranties of the Seller contained in this Agreement
shall be (i) to the extent already qualified with respect to “material” matters
or “Material Adverse Effect”, shall be true and correct on and as of such date
and (ii) to the extent not already qualified with respect to “material” matters
or “Material Adverse Effect”, shall be true and correct in all material respects
on and as of such date, except to the extent that such representations and
warranties specifically refer to an earlier date, in which case they shall be
true and correct (in all material respects or as so qualified, as applicable) as
of such earlier date;

 

(b) The Seller shall have performed in all material respects all other
obligations required to be performed by it pursuant to the provisions of this
Agreement, the Collateral Asset Documents and the other Loan Documents to which
it is a party as of such date; and

 

(c) All organizational and legal proceedings, and all instruments in connection
with the transactions contemplated by this Agreement and the other Loan
Documents shall be reasonably satisfactory in form and substance to the
Purchaser, and the Purchaser shall have received from the Seller copies of all
documents (including records of corporate proceedings) relevant to the
transactions herein contemplated as the Purchaser may reasonably have requested;
and

 

(d) The Seller shall have either filed, caused to be filed or provided in form
suitable for filing the financing statement(s) required to be filed pursuant to
Section 2.1(g).

 

14

 

 

ARTICLE VIII

MISCELLANEOUS PROVISIONS

 

Section 8.1 Amendments, Etc. This Agreement and the rights and obligations of
the parties hereunder may not be amended, supplemented, waived or otherwise
modified except in an instrument in writing signed by the Purchaser and the
Seller and consented to in writing by the Administrative Agent. Any reconveyance
executed in accordance with the provisions hereof shall not be considered an
amendment or modification to this Agreement.

 

Section 8.2 Governing Law: Submission to Jurisdiction; Waiver of Jury Trial.

 

(a) This Agreement will be governed by and construed in accordance with the law
of the State of New York.

 

(b) With respect to any suit, action or proceedings relating to this Agreement
(collectively, “Proceedings”), to the fullest extent permitted by applicable
law, each party hereto irrevocably (i) submits to the non-exclusive jurisdiction
of the courts of the State of New York and the United States District Court
located in the Borough of Manhattan in New York City and (ii) waives any
objection which it may have at any time to the laying of venue of any
Proceedings brought in any such court, waives any claim that such Proceedings
have been brought in an inconvenient forum and further waives the right to
object, with respect to such Proceedings, that such court does not have any
jurisdiction over such party. Nothing in this Agreement precludes any party
hereto from bringing Proceedings in any other jurisdiction, nor will the
bringing of Proceedings in any one or more jurisdictions preclude the bringing
of Proceedings in any other jurisdiction.

 

(c) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.

 

Section 8.3 Notices. All notices and other communications provided for hereunder
shall, unless otherwise stated herein, be in writing (including facsimile or
other electronic communication) and shall be personally delivered or sent by
certified mail, postage prepaid, by electronic mail or by facsimile, to the
intended party at the address or facsimile number of such party set forth below:

 

(a) in the case of the Purchaser, as provided in the Credit Agreement.

 

(b) in the case of the Seller:

 

Palmer Square Capital BDC Inc.
c/o HSB Agent Services Inc.
245 W. Chase Street
Baltimore, MD 21201
Attention: Investor Relations
Email: investorrelations@palmersquarecap.com

 

(in each case, with a copy to the Administrative Agent at the address for notice
provided under the Credit Agreement)

 

15

 

 

All such notices and communications shall be effective, (a) if personally
delivered, when received, (b) if sent by certified mail, three Business Days
after having been deposited in the mail, postage prepaid, (c) if sent by two-day
mail, two Business Days after having been deposited in the mail, postage
prepaid, (d) if sent by overnight courier, one Business Day after having been
given to such courier, and (e) if transmitted by facsimile or email, when sent,
receipt confirmed by telephone or electronic means.

 

Section 8.4 Severability of Provisions. If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall for any reason
whatsoever be held invalid, then such covenants, agreements, provisions, or
terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement.

 

Section 8.5 Further Assurances. The Purchaser and the Seller each agree that at
any time and from time to time, at its expense and upon reasonable request of
the Administrative Agent, it shall promptly execute and deliver all further
instruments and documents, and take all reasonable further action, that is
necessary or desirable to perfect and protect the Conveyances and security
interests granted or purported to be granted by this Agreement or to enable the
Administrative Agent or any of the Secured Parties to exercise and enforce its
rights and remedies under this Agreement with respect to any Transferred Assets.

 

Section 8.6 No Waiver; Cumulative Remedies. No failure to exercise and no delay
in exercising, on the part of the Purchaser, the Seller or the Administrative
Agent, any right, remedy, power or privilege hereunder, shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not
exhaustive of any rights, remedies, powers and privilege provided by law.

 

Section 8.7 Counterparts. This Agreement may be executed in two or more
counterparts including telecopy transmission thereof (and by different parties
on separate counterparts), each of which shall be an original, but all of which
together shall constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Agreement by facsimile or e-mail in
portable document format (.pdf) shall be effective as delivery of a manually
executed counterpart of this Agreement.

 

Section 8.8 Non-Petition. The Seller covenants and agrees that, prior to the
date that is one year and one day (or, if longer, any applicable preference
period and one day) after the payment in full of all Obligations (other than
contingent reimbursement and indemnification obligations), no party hereto shall
institute against, or join any other Person in instituting against, the
Purchaser any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other similar proceedings under any federal, state or foreign
bankruptcy or similar law. This Section 8.8 shall survive termination of the
Agreement.

 

16

 

 

Section 8.9 Transfer of Seller’s Interest. With respect to each transfer of a
Transferred Asset on any Purchase Date, (a) the Purchaser shall, as to each
Transferred Asset, be a party to the relevant Collateral Asset Documents and
have the rights and obligations of a lender thereunder, and (b) the Seller
shall, to the extent provided in this Agreement, and the applicable Collateral
Asset Documents, relinquish its rights and be released from its obligations, as
to each Transferred Asset. The obligors or agents on the Transferred Asset were
or will be notified of the transfer of the Transferred Asset to the Purchaser to
the extent required under the applicable Collateral Asset Documents. The
Collateral Administrator will have possession of the related underlying
instrument (including the underlying promissory notes, if any).

 

Section 8.10 Binding Effect; Third-Party Beneficiaries. This Agreement will
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. The Administrative Agent, for the
benefit of the Secured Parties, is intended by the parties hereto to be an
express third-party beneficiary of this Agreement.

 

Section 8.11 Merger and Integration. Except as specifically stated otherwise
herein, this Agreement and the other Loan Documents set forth the entire
understanding of the parties relating to the subject matter hereof, and all
prior understandings, written or oral, are superseded by this Agreement and the
other Loan Documents.

 

Section 8.12 Headings. The headings herein are for purposes of reference only
and shall not otherwise affect the meaning or interpretation of any provision
hereof.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

17

 

 

IN WITNESS WHEREOF, the Purchaser and the Seller each have caused this Sale
Agreement to be duly executed by their respective officers as of the day and
year first above written.

 

  PALMER SQUARE CAPITAL BDC INC.,   as Seller       By: /s/ Scott A. Betz  
Name: Scott A. Betz   Title: Chief Compliance Officer         PALMER SQUARE BDC
FUNDING I LLC,
as Purchaser         By: /s/ Scott A. Betz   Name: Scott A. Betz   Title: Chief
Compliance Officer

 

[Signature Page to Sale Agreement]

 

 

 

 

Schedule A

 

SCHEDULE OF COLLATERAL ASSETS

 

[see attached]