Document:

Exhibit 10.2

 

KCAP FINANCIAL,
INC.

NON-EMPLOYEE DIRECTOR PLAN

As Amended and Restated June 20, 2014

 

		1.	Purpose and Certain Defined Terms

 

The purpose of this
Non-Employee Director Plan, As Amended and Restated June 20, 2014 (the “Plan”) is to advance the interests of
the Company (as defined below) by providing for the grant to Non-Employee Directors (as defined below) of Restricted Shares (as
defined below) (the “Awards”) to the extent permitted by exemptive or other relief that may be granted by the
Securities and Exchange Commission (the “Commission”). The Plan is an amendment and restatement of the 2008
Non-Employee Director Plan as adopted on February 5, 2008 (the “Prior Plan”), and amended and restated effective
June 10, 2011. At all times during such periods as the Company qualifies or intends to qualify as a “business development
company” under the Investment Company Act of 1940, as amended (the “1940 Act”), the terms of the Plan
shall be construed so as to conform to the share-based compensation requirements applicable to “business development companies”
under the 1940 Act. Any Non-Employee Director selected to receive an Award under the Plan is referred to as a “participant.”

 

The following terms,
when used in the Plan, will have the meanings and be subject to the provisions set forth below:

 

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

 

“Company”
means KCAP Financial, Inc., a Delaware corporation. The Company was formerly known as Kohlberg Capital Corporation.

 

“Continuous
Service” means a participant’s uninterrupted service with the Company as a Non-Employee Director.

 

“Effective
Date” means June 10, 2011, the date on which the Prior Plan was amended and restated in accordance with a resolution
of the Board and approved by a vote of the Company’s shareholders.

 

“Employee
Plan” means the Company’s 2006 Equity Incentive Plan, as amended from time to time.

 

“Executive
Compensation Plans” means the Plan, together with any Company executive compensation plan that did, does, or may in the
future, exist.

 

“Non-Employee
Director” means any director of the Company who is not an employee or officer of the Company.

 

“Restricted
Shares” means an award of Shares for so long as the Shares remain subject to restrictions requiring that they be forfeited
to the Company if specified conditions are not satisfied.

 

“Shares”
means the common stock, $.01 par value per share, of the Company.

 

“Shareholders”
means the shareholders of the Company.

 

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		2.	Administration

 

The Plan shall be administered
by the Board unless and until it delegates administration to a committee as provided herein. The Board shall have discretionary
authority, subject to the express provisions of the Plan, (a) subject to Section 9(b), to grant Awards to such Eligible Persons
(defined below in Section 5 hereof) as the Board may select; (b) to prescribe the form or forms of any instruments evidencing Awards
and any other instruments required under the Plan and to change such forms from time to time; (c) to adopt, amend, and rescind
rules and regulations for the administration of the Plan; and (d) to interpret the Plan and to decide any questions and settle
all controversies and disputes that may arise in connection with the Plan. Such determinations of the Board shall be conclusive
and shall bind all parties. Subject to Section 9(a) hereof, the Board shall also have the authority, both generally and in particular
instances, to waive compliance by a participant with any obligation to be performed by him or her under an Award, to waive any
condition or provision of an Award, and to amend or cancel any Award (and if an Award is canceled, to grant a new Award on such
terms as the Board shall specify), provided that the Board may not take any action with respect to an outstanding Award that would
adversely affect the rights of the participant under such Award without such participant’s consent. Nothing in the preceding
sentence shall be construed as limiting the power of the Board to make adjustments required by Sections 4(d) and 6(e) hereof or
by applicable law.

 

The Board may, in its
discretion, delegate some or all of its powers with respect to the Plan to a committee (the “Committee”), in
which event all references (as appropriate) to the Board hereunder shall be deemed to refer to the Committee.

 

Determinations, interpretations
and constructions made by the Board in good faith shall not be subject to review by any person and shall be final, binding and
conclusive on all persons.

 

		3.	Effective Date and Term of Plan

 

The Plan is effective
as of the Effective Date. For the avoidance of doubt, all option Awards made under the Prior Plan as in force prior to the Effective
Date are governed in all respects by the terms of the Prior Plan and shall be construed accordingly.

 

No Awards shall be
granted under the Plan after the fifth anniversary of the Effective Date, but Awards granted prior to the fifth anniversary of
the Effective Date may extend beyond that date.

 

		4.	Shares Subject to the Plan

 

(a)         Number of
Shares. Subject to adjustment as provided in Section 4(d), the aggregate number of Shares that may be the subject of Awards
granted under the Plan shall be 100,000. If any Restricted Share Award granted under the Plan is forfeited, the number of Shares
as to which such Restricted Share Award was granted shall be available for future grants.

 

(b)         Shares to
be Delivered. Shares delivered under the Plan shall be authorized but unissued Shares, or if the Board so decides in its sole
discretion, previously issued Shares acquired by the Company and held in its treasury. Any Shares acquired by the Company will
be acquired in accordance with the 1940 Act, including Section 23 of the 1940 Act. No fractional Shares shall be delivered under
the Plan.

 

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(c)           Limits on
Number of Awards. The maximum amount of Restricted Shares that may be issued under the Executive Compensation Plans will be
10% of the outstanding Shares on the Effective Date, plus 10% of the number of Shares issued or delivered by the Company (other
than pursuant to the Executive Compensation Plans) during the term of the Plan. No one person shall be granted more than 25% of
the Restricted Shares reserved for issuance under this Plan. The amount of voting securities that would result from the exercise
of all of the Company’s outstanding warrants, options and rights, together with any Restricted Shares issued pursuant to
the Executive Compensation Plans, at the time of issuance shall not exceed 25% of the outstanding voting securities of the Company
(excluding the Restricted Shares), except that if the amount of voting securities that would result from the exercise of all the
Company’s outstanding warrants, options and rights issued to the Company’s directors, officers and employees (not including
any warrants, options or rights issued to Shareholders of the Company generally), together with any Restricted Shares issued pursuant
to the Executive Compensation Plans, would exceed 15% of the outstanding voting securities of the Company (excluding the Restricted
Shares), then the total amount of voting securities that would result from the exercise of all outstanding warrants, options and
rights, together with any Restricted Shares issued pursuant to the Executive Compensation Plans, at the time of issuance shall
not exceed 20% of the outstanding voting securities of the Company (excluding the Restricted Shares).

 

(d)           Changes in
Shares. In the event of a Share dividend, Share split or combination of Shares, recapitalization, or other change in the Shares,
the number and kind of Shares or securities of the Company subject to Awards then outstanding or subsequently granted under the
Plan, the maximum number of Shares that may be delivered under the Plan, and other relevant provisions shall be appropriately adjusted
by the Board, whose determination shall be binding on all persons.

 

The Board may also
adjust the number of Shares subject to outstanding Awards and the terms of outstanding Awards, to take into consideration material
changes in accounting practices or principles, extraordinary dividends, consolidations or mergers (except those described in Section
6(e)), acquisitions or dispositions of securities or property, or any other event if it is determined by the Board that such adjustment
is appropriate to avoid distortion in the operation of the Plan. References in the Plan to Shares will be construed to include
any units, any stock or any other securities resulting from an adjustment pursuant to this Section 4(d).

 

		5.	Eligibility for Awards

 

Persons eligible to
receive Awards under the Plan (“Eligible Persons”) shall be Non-Employee Directors.

 

		6.	Terms and Conditions of Awards

 

(a)          Awards.
Each Award shall contain such terms and conditions as the Board shall deem appropriate. No Awards of Restricted Shares shall be
granted prior to the Effective Date.

 

(b)         Amounts;
Vesting of Awards.

 

(1)         Subject
to Section 9(b), on and after the Effective Date, each Non-Employee Director who is a director of the Company on the date of each
annual meeting of Shareholders or meeting in lieu of the annual meeting of Shareholders, shall automatically be granted 1,000 Restricted
Shares on the date of each such annual meeting of Shareholders during the term of the Plan, or if no such meeting be held in a
year, then on the anniversary of the prior annual meeting or meeting in lieu of the annual meeting. Such Awards shall immediately
vest as to one-half of the Restricted Share grant and as to the remaining one-half of the Restricted Share grant on the earlier
of (i) the first anniversary of such grant, or (ii) the date immediately preceding the next annual meeting of Shareholders (or
meeting in lieu of the annual meeting of Shareholders), provided that the participant is then and since the date of grant has continuously
been a Non-Employee Director (subject to Section 7 hereof).

 

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(2)         Subject
to Section 9(b), on and after the Effective Date, a Non-Employee Director who is appointed to serve on the Board outside of the
annual election cycle shall automatically be granted a pro rata portion of the Restricted Share Award on the date of such appointment
to the Board (i.e., such Non-Employee Director will receive a grant of Restricted Shares equal to the product of (x) the number
of full months, if any, remaining until the next annual meeting of Shareholders (or the next annual meeting in lieu of the annual
meeting of Shareholders) divided by twelve and (y) 1,000). One-half of such pro rata grant will vest immediately and the remaining
one-half of such pro rata grant will vest on the earlier of (i) the first anniversary of the preceding annual meeting of Shareholders
(or the preceding meeting in lieu of the annual meeting of Shareholders), or (ii) the date immediately preceding the next annual
meeting of Shareholders (or meeting in lieu of the annual meeting of Shareholders), provided that the participant is then and since
the date of such pro-rata grant has continuously been a Non-Employee Director (subject to Section 7 hereof).

 

(c)          Rights as
Shareholder. A participant shall not have the rights of a Shareholder with regard to an Award under the Plan except as to Shares
actually received by him or her under the Plan. For this purpose, Shares are received by a participant on the date of record issuance
of such Shares in the books of the Company or the issuance to participant of a stock certificate with respect to such Shares.

 

(d)         Nontransferability
of Awards. No unvested Restricted Shares may be transferred. Vested Restricted Shares may be sold, assigned, pledged, hypothecated,
encumbered, or transferred or disposed of in any other manner, in whole or in part, only in compliance with the terms, conditions
and restrictions as set forth in the governing instruments of the Company, applicable federal and state securities laws or any
other applicable laws or regulations and the terms and conditions hereof.

 

(e)         Mergers,
Etc. To the extent permitted under the 1940 Act, the following provisions shall apply in the event of a Covered Transaction
(as defined below).

 

(1)         Subject
to subparagraph (2) below, all outstanding Awards to the extent not fully vested (including Awards subject to conditions not yet
satisfied or determined) will be forfeited, as of the effective time of the Covered Transaction (as defined in subparagraph (3)
herein), provided that the Board may in its sole discretion on or prior to the effective date of the Covered Transaction remove
any conditions or restrictions on any Award; or

 

(2)         With respect
to an outstanding Award held by a participant who, following the Covered Transaction, will be employed by or otherwise providing
services to an entity which is a surviving or acquiring entity in the covered transaction or any affiliate of such an entity, the
Board may at or prior to the effective time of the Covered Transaction, in its sole discretion and in lieu of the action described
in subparagraph (1) above, arrange to have such surviving or acquiring entity or affiliate assume any Award held by such participant
outstanding hereunder or grant a replacement Award which, in the judgment of the Board is substantially equivalent to any Award
being replaced.

 

(3)         For purposes
of this Section 6(e), a “Covered Transaction” is a (i) Share sale, consolidation, merger, or similar transaction
or series of related transactions in which the Company is not the surviving corporation or which results in the acquisition of
all or substantially all of the Company’s then outstanding Shares by a single person or entity or by a group of persons and/or
entities acting in concert; (ii) a sale or transfer of all or substantially all the Company’s assets, or (iii) a dissolution
or liquidation of the Company. Where a Covered Transaction involves a tender offer that is reasonably expected to be followed by
a merger described in clause (i) (as determined by the Board), the Covered Transaction shall be deemed to have occurred upon consummation
of the tender offer.

 

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(f)         Compliance
with Law; Commission Approval. At all times during such periods as the Company qualifies or intends to qualify as a “business
development company,” no Award may be granted under the Plan if the grant or terms of such Award would cause the Company
to violate any provision of the 1940 Act applicable to “business development companies,” and, if approved for grant,
such an Award will be void and of no effect. Subject to Section 9(b), the grants of Awards under the Plan will be automatic and
will not be changed without shareholder approval.

 

		7.	Termination of Continuous Service

 

Unless the Board expressly
provides otherwise, immediately upon the cessation of the participant’s service as a Non-Employee Director (unless upon such
termination or within 90 days thereafter the participant becomes an officer or employee of the Company or rejoins the Board as
a Non-Employee Director) all Awards, to the extent not already vested, will be forfeited. If a participant ceases providing services
as a Non-Employee Director but within 90 days of such cessation becomes an officer or employee of the Company or rejoins the Board
as a Non-Employee Director, such participant shall vest in any unvested Restricted Shares on the later of (i) the next annual shareholders
meeting (in accordance with Section 6(b) hereof) or (ii) the date on which such participant becomes an officer or employee of the
Company or rejoins the Board as a Non-Employee Director.

 

		8.	Rights

 

Neither the adoption
of the Plan nor the grant of Awards shall confer upon any participant any right to continue as a Non-Employee Director (or in any
other capacity) of the Company, its parent, or any subsidiary or affect in any way the right of the Company, its parent, or a subsidiary
to terminate the participant’s relationship at any time. Except as specifically provided by the Board in any particular case,
the loss of existing or potential profit in Awards granted under this Plan shall not constitute an element of damages in the event
of termination of the relationship of a participant even if the termination is in violation of an obligation of the Company to
the participant by contract or otherwise.

 

		9.	Discontinuance, Cancellation, Amendment, and Termination;
Board Review

 

(a)          The Board may
at any time or times amend the Plan or any outstanding Award for any purpose which may at the time be permitted by law, and may
at any time terminate the Plan as to any future grants of Awards; provided that, except as otherwise expressly provided in the
Plan the Board may not, without the participant’s consent, alter the terms of an Award so as to affect adversely the participant’s
rights under the Award, unless the Board expressly reserved the right to do so at the time of the Award. Any amendments to the
Plan shall be conditioned upon approval of Shareholders and the Commission only to the extent, if any, such approval is required
by law (including the Code), as determined by the Board.

 

(b)         The Board shall
review the Plan from time to time and at least annually, its reviews to include an assessment of the potential impact that Awards
made or scheduled to be made under the Plan may have on the Company’s earnings and net-asset value per Share. The Board is
authorized to take appropriate steps to ensure that the granting of Awards would not have an effect contrary to the interests of
Shareholders, including the authority to limit or eliminate the automatic granting of additional Awards pursuant to Section 6(b).
The Board shall maintain adequate records of any reviews conducted pursuant to this Section 9(b). For the avoidance of doubt, any
action by the Board pursuant to this Section 9(b) that would affect an already outstanding Award shall, to that extent, be subject
to the limitations of Section 9(a).

 

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		10.	Waiver of Jury Trial

 

By accepting an Award
under the Plan, each participant waives any right to a trial by jury in any action, proceeding or counterclaim concerning any rights
under the Plan and any Award, or under any amendment, waiver, consent, instrument, document or other agreement delivered or which
in the future may be delivered in connection therewith, and agrees that any such action, proceedings or counterclaim shall be tried
before a court and not before a jury. By accepting an Award under the Plan, each participant certifies that no officer, representative,
or attorney of the Company has represented, expressly or otherwise, that the Company would not, in the event of any action, proceeding
or counterclaim, seek to enforce the foregoing waivers.

 

		11.	Legal Conditions on Delivery of Shares

 

The Company will not
be obligated to deliver any Shares pursuant to the Plan or to remove any restriction from Shares previously delivered under the
Plan until: (i) the Company is satisfied that all legal matters in connection with the issuance and delivery of such Shares have
been addressed and resolved; (ii) if the outstanding Shares are at the time of delivery listed on any stock exchange or national
market system, the Shares to be delivered have been listed or authorized to be listed on such exchange or system upon official
notice of issuance; and (iii) all conditions of the Award have been satisfied or waived. If the sale of Shares has not been registered
under the Securities Act of 1933, as amended (the “Securities Act”), the Company may require, as a condition
to exercise of the Award, such representations or agreements as counsel for the Company may consider appropriate to avoid violation
of the Securities Act. The Company may require that certificates evidencing Shares issued under the Plan bear an appropriate legend
reflecting any restriction on transfer applicable to such Shares, and the Company may hold the certificates pending lapse of the
applicable restrictions.

 

    	6Exhibit 10.3

 

KCAP Financial, Inc.

Employee Restricted Stock Award Agreement

 

KCAP FINANCIAL, INC. STRONGLY ENCOURAGES YOU TO SEEK THE
ADVICE OF YOUR OWN LEGAL AND FINANCIAL ADVISORS WITH RESPECT TO YOUR AWARD AND ITS TAX CONSEQUENCES.

 

The undersigned Grantee (the “Grantee”) (i)
acknowledges receipt of an award (the “Award”) of restricted stock from KCAP Financial, Inc., a Delaware corporation
(the “Company”), under the Company’s 2006 Equity Incentive Plan as Amended and Restated Effective June
20, 2014 (the “Plan”), subject to the terms set forth below and in the Plan; and (ii) agrees with the Company
as follows:

 

		1.	Effective Date. This Restricted Stock Award Agreement (the “Award Agreement”)
shall take effect as of June 20, 2014, which is the grant date of the Award (the “Grant Date”). The Grantee
shall be the record owner of the Shares on the Grant Date.

 

		2.	Shares Subject to Award. The Award consists of a total of _________________________ shares
of Common Stock of the Company, par value $0.01 per share (the “Shares”). 

 

The Grantee’s rights to the Shares are subject
to the restrictions described in this Award Agreement and the Plan (which is incorporated herein by reference with the same effect
as if set forth herein in full) in addition to such other restrictions, if any, as may be imposed by law.

 

		3.	Nontransferability of Shares. Except as provided in this Award Agreement or the Plan,
the Shares acquired by the Grantee pursuant to this Award Agreement shall not be sold, transferred, pledged, assigned or otherwise
encumbered or disposed and are subject to a substantial risk of forfeiture.

 

		4.	Forfeiture Risk. If the Grantee's employment with the Company and its subsidiaries ceases
for any reason, then, except as provided in Section 7, any and all outstanding and unvested Shares acquired by the Grantee hereunder
shall be automatically and immediately forfeited. 

 

The Grantee hereby (i) appoints the Company as the
attorney-in-fact of the Grantee to take such actions as may be necessary or appropriate to effectuate a transfer of the record
ownership of any Shares that are unvested and forfeited hereunder, (ii) agrees to deliver to the Company, as a precondition to
the issuance of any certificate or certificates with respect to unvested Shares hereunder, one or more stock powers, endorsed in
blank, with respect to such Shares, and (iii) agrees to sign such other powers and take such other actions as the Company may reasonably
request to accomplish the transfer or forfeiture of any unvested Shares that are forfeited hereunder.

 

		5.	Book Entry Form. Unvested Shares are to be held in book entry form and the Grantee agrees
that the Company may give stop transfer instructions to the depositary, stock transfer agent or other keeper of the Company’s
stock records to ensure compliance with the provisions hereof.

 

		6.	Certificates for Unvested Shares. The Company may, upon request, issue the Grantee a certificate
representing unvested Shares. The administrative costs and risk of loss of such certificated shares are the sole responsibility
of the Grantee. In addition to any legend required by applicable law, any certificates issued representing Shares shall contain
a legend substantially in the following form:

 

THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES
OF STOCK REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS (INCLUDING FORFEITURE) OF THE KCAP FINANCIAL, INC. 2006 EQUITY
INCENTIVE PLAN AS AMENDED AND RESTATED EFFECTIVE JUNE 20, 2014, AND THE RESTRICTED STOCK AWARD AGREEMENT RELATING TO THE SHARES
ENTERED INTO BETWEEN THE REGISTERED OWNER AND KCAP FINANCIAL, INC. COPIES OF SUCH PLAN AND AWARD AGREEMENT ARE ON FILE IN THE OFFICES
OF KCAP FINANCIAL, INC.

 

    	 

    	 

    

  

		7.	Vesting of Shares. Unless earlier vested pursuant to the Plan, the restrictions on the
Shares granted hereunder shall lapse, i.e., the Shares shall vest, during the Grantee’s employment by the Company or a subsidiary
thereof in accordance with the provisions of this Section 7 and applicable provisions of the Plan, as follows: 

 

		i.	The Shares shall vest in four (4) equal annual installments beginning on the first anniversary of the Grant Date, provided
that the Grantee remains in the continuous employment of the Company or a subsidiary through each vesting date.

		ii.	Notwithstanding the foregoing, if the Grantee’s employment terminates for any reason, then all unvested Shares will be
automatically and immediately forfeited back to the Company. (However, if Grantee has a written employment agreement with the Company
with terms contrary to this provision 7(ii), the terms of the written employment agreement shall govern.)

 

		8.	Settlement of Vested Shares. Each Share that is vested in accordance with this Award Agreement
shall be settled by the issuance of a whole share of Common Stock. 

 

Unless a Section 83(b) election is made within 30 days
of the Grant Date, vested Shares shall be treated as compensation and shall be taxed at normal federal, state and local income
tax rates at the fair value of the Shares on the vesting date.

 

The Company's obligation to deliver a certificate upon
vesting representing such vested Shares shall be subject to the Grantee’s satisfaction of all applicable federal, state and
local income and employment tax withholding obligations. The Grantee may satisfy such obligation(s), in whole or in part, by (i)
delivering to the Company a check for the amount required to be withheld or (ii) if permitted under the 1940 Act and as the Board
in its sole discretion approves in any specific or general case, having the Company withhold Shares or delivering to the Company
already-owned shares of Common Stock, in either case having a fair market value equal to the amount required to be withheld, as
determined by the Company. In addition, to the extent that the Company so chooses, the Company can hold back 100% of the Grantee's
compensation earned after such obligations arose and such held back amount shall be applied by the Company to satisfy such obligations.

 

		9.	Delivery of Vested Shares. Delivery of vested Shares is conditioned on: (i) the Grantee’s
satisfaction of applicable tax withholding requirements as set forth in Section 8 of this Award Agreement; (ii) the completion
of any administrative steps (for example, but without limitation, the transfer of certificates) that the Company may reasonably
impose; and (iii) applicable requirements of federal and state securities laws.

 

For any vested Shares that have been requested to be
settled by the Grantee, the Company will take such steps as it deems necessary or appropriate to record and manifest such Shares
for delivery to the Grantee without restriction on transferability. At the direction of the Grantee, delivery may be either in
book-entry form through the Depository Trust Company (or a nominee thereof) to an account at the Grantee’s direction or certificated,
without the aforesaid legend, and issued and delivered to the Grantee. The Grantee agrees to complete and execute any documents
and to take any additional action that the Company may request to enable it to deliver the vested Shares to the Grantee.

 

		10.	Fractional Shares.
Fractional shares shall not vest hereunder, and when any provision hereof may cause a fractional share to vest, any vesting in
such fractional share shall be postponed until such fractional share and other fractional shares equal a vested whole share.

 

    	 

    	 

    

  

		11.	Dividends, etc. The Grantee shall be entitled to (i) receive any and all dividends or
other distributions paid with respect to those vested and unvested Shares of which the Grantee is the record owner on the record
date for such dividend or other distribution, whether or not vested at such time, in the same form and amount as any holder of
Stock receives, and (ii) vote any Shares of which the Grantee is the record owner on the record date for such vote; provided,
however, that any property (other than cash) distributed with respect to a share of Stock (the “Associated Share”)
acquired hereunder, by reason of a stock dividend, stock split or other similar adjustment to the Stock pursuant to Section 4(d)
of the Plan, shall be subject to the restrictions of this Award Agreement in the same manner and for so long as the Associated
Share remains subject to such restrictions, and shall be promptly forfeited if and when the Associated Share is so forfeited. Notwithstanding
the foregoing, the Grantee shall elect, and hereby irrevocably appoints the Company’s Chairman of the Board and the Company’s
Secretary as the Grantee’s attorneys-in-fact to elect on Grantee’s behalf in the absence of an election from Grantee,
to receive cash distributions under the Company’s dividend reinvestment plan in respect of all unvested Shares under this
Award Agreement.

 

		12.	Sale of Vested Shares. The Grantee acknowledges and agrees that any Common Stock issued
in respect of vested Shares hereunder may be traded only as permitted by the Company’s Codes of Ethics, policies and procedures.

 

		13.	Provisions of the Plan. This Grant is subject in its entirety to the provisions of the
Plan, which are incorporated herein by reference. A copy of the Plan as in effect on the date of the grant of this Award is available
to the Grantee and the Grantee agrees to be bound by the terms of the Plan and this Award. In the event of any conflict between
the terms of this Award and the Plan, the terms of this Award shall control.

 

		14.	Definitions. Capitalized terms defined in this Award Agreement are used herein as so defined.
Capitalized terms used in this Award Agreement and not otherwise defined herein shall have the meaning provided in the Plan.

 

		15.	Change in Capital Structure. In accordance with Section 4(d) of the Plan, the terms of
this Award Agreement shall be adjusted as the Board determines is equitably required in the event the Company effects one or more
stock dividends, stock split-ups, subdivisions or consolidations of shares or other similar changes in capitalization. 

 

		16.	No Employment Commitment; Tax Treatment. Nothing herein contained shall be deemed to be
or constitute an agreement or commitment by the Company or any of its subsidiaries to continue the Grantee in its employ. The Company
makes no representation about the tax treatment to the Grantee with respect to receipt or settlement of the restricted Shares or
acquiring, holding or disposing of the Shares.

 

		17.	Grantee Bound by Plan. The Grantee hereby acknowledges that a copy of the Plan as in effect
on the date hereof has been made available to the Grantee and agrees to be bound by all the terms and provisions thereof (as such
Plan may be amended from time to time in accordance with the terms thereof).

 

		18.	General. For purposes of this Award Agreement and any determinations to be made by the
Board or the Committee, as the case may be, hereunder, the determinations by the Board or the Committee, as the case may be, shall
be binding upon the Grantee and any transferee. 

 

	Agreed as of the Grant Date Shown Above:	 	 
	 	 	 
	KCAP FINANCIAL, INC.	 	GRANTEE
	 	 	 	 
	 	 	 	 
	Name:	Edward U. Gilpin	 	Print Name
	Title:	Chief Financial Officer	 	 
	 	 	 	 
	 	 	 	Signature

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