Document:

ffwm-ex102_7.htm

Exhibit 10.2

 

CHANGE OF CONTROL SEVERANCE COMPENSATION AGREEMENT

This CHANGE OF CONTROL SEVERANCE COMPENSATION AGREEMENT, dated as of June 1, 2020, (the “Agreement”), is made by and between First Foundation Inc., a California corporation (the “Company”) and Kevin L. Thompson (the “Executive”), with reference to the following facts and circumstances:

R E C I T A L S:

A.The Company’s Board of Directors has determined that it is appropriate and in the Company’s best interests to reinforce and encourage the continued attention and dedication of key members of the management of the Company and its material subsidiaries, who include the Executive, to their assigned duties without distraction in potentially disturbing circumstances that would arise in the event of a threatened or actual Change in Control (as hereinafter defined) of the Company or such subsidiaries and thereby also provide the Company with greater assurance that it will be able to retain the key members of management, including Executive, in the employ of the Company or a material subsidiary (as the case may be) in the event of any threatened or actual Change in Control; and

B.This Agreement sets forth the severance compensation which the Company agrees it will pay, or cause the Subsidiary to pay, to Executive if his/her employment with the Company or First Foundation Bank (the “Subsidiary”), as the case may be, terminates under one of the circumstances described herein following a Change in Control of the Company or the Subsidiary.

C.Executive is employed as Executive Vice President, Chief Financial Officer under an Executive Employment Agreement dated April 22, 2020 and effective as of June 1, 2020 (the “Employment Agreement”).  This Change of Control Severance Compensation Agreement sets forth the rights and obligations of the Company and Executive in the event of a termination of Executive’s employment, for Good Reason (as defined below), that is attributable to, or that occurs concurrently with or within 24 months following, a Change in Control.  On the other hand, the Employment Agreement, rather than this Agreement, governs and determines the severance compensation to which Executive would be entitled upon any other termination of Executive’s employment. 

NOW, THEREFORE, it is agreed as follows:

1.Definitions.   The following terms shall have the respective meanings ascribed to them below in this Section 1:

1.1The terms “affiliate” and “associate” shall have the respective meanings given to such terms in Rule 12b-2 under the Exchange Act (even if the Company has no securities registered under that Act).

1.2The terms “beneficial ownership,” “beneficially owned” and “beneficial owner” shall have the meanings given to such terms in Rule 13d-3 under the Exchange Act (even if the Company has no securities registered under that Act).

1.3The term “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

1.4The term “Parent” of a corporation or other entity means any person that is the beneficial owner, directly or indirectly, of a majority of the Voting Securities of that corporation or other entity. 

 

 

 

1.5The term “Voting Securities” of any person that is a corporation means the combined voting power of that person’s then outstanding securities having the right to vote in an election of that person’s directors.  The term “Voting Securities” of any person, other than a corporation, such as a partnership or limited liability company, shall mean the combined voting power of that person’s outstanding ownership interests that are entitled to vote or select the individuals (such as the managers of a limited liability company) that have substantially the same authority or decision-making powers with respect to such person that are generally exercisable by directors of a corporation.

1.6The term “Common Stock” of the Company shall mean the shares of the Company’s common stock, par value $0.001 per share, and any voting securities into which such shares may be converted or exchanged in any merger, consolidation, reorganization or recapitalization of the Company.

1.7The term “person” shall have the meaning given to such term in Section 13(d) and Section 14(d) of the Exchange Act (even if the Company has no securities registered under that Act) and, therefore, the term “person” shall include any two or more persons acting together, whether as a partnership, limited partnership, joint venture, syndicate or other group, at least one of the purposes of which is to acquire, hold or dispose of beneficial ownership of securities of the Company or the Subsidiary.  The term “person also shall include any natural person, any corporation, limited liability company, general or limited partnership, joint venture, trust, estate, or unincorporated association.  

1.8The term “Change in Control” of the Company shall mean the occurrence of any of the following:

(a)Any person who (together with all of such person’s affiliates and associates) shall, at any time become the beneficial owner, directly or indirectly, of more than twenty-five percent (25%) of the Company’s Voting Securities Company, except (i) the Company or any of its subsidiaries, (ii) any trustee, fiduciary or other person or entity holding securities under any employee benefit plan or trust of the Company or any of its subsidiaries or (iii) Ulrich E. Keller, Jr. (collectively, the Exempt Owners”); or

(b)There shall be consummated any consolidation, merger, or reorganization (as such term is defined in the California Corporations Code), of the Company with or into another person, or of another person with or into the Company, in which the holders of the Company’s outstanding Voting Securities immediately prior to the consummation of such consolidation, merger or reorganization would not, immediately after such consummation, own beneficially, directly or indirectly, (in the aggregate) at least sixty percent (60%) of the Voting Securities of (i) the continuing or surviving person in such merger, consolidation or reorganization (whether or not that is the Company) or (ii) the ultimate Parent, if any, of that continuing or surviving person; or

(c)There shall be consummated any consolidation, merger or reorganization of the Subsidiary with or into another person, or of another person with or into the Subsidiary, unless the persons that were the holders of the Company’s Voting Securities immediately prior to such consummation would have, immediately after such consolidation, merger or reorganization, substantially the same proportionate direct or indirect beneficial ownership of at least sixty (60%) of the Voting Securities of (i) the continuing or surviving person in such consolidation, merger or reorganization (whether or not that is the Subsidiary) or, (ii) the ultimate Parent, if any, of that continuing or surviving person; or

(d)There shall be consummated any sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of the Company or of the Subsidiary; or 

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(e)The holders of the Voting Securities of the Company approve any plan or proposal for the liquidation or dissolution of the Company, unless the plan of liquidation provides for all or substantially all of the assets of the Company to be transferred to a person in which the holders of the Company’s Voting Securities immediately prior to such liquidation have or will have, immediately after such liquidation, substantially the same proportionate direct or indirect beneficial ownership of at least sixty percent (60%) of the Voting Securities of such person; or 

(f)During any period of two (2) consecutive years during the term of this Agreement, individuals who at the beginning of that two year period constituted the entire Board of Directors do not, for any reason, constitute a majority thereof, unless the election (or the nomination for election) by the holders of the Company’s Voting Securities, of each director who was not a member of the Board of Directors at the beginning of that two year period was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the two year period.

Notwithstanding the foregoing, a "Change in Control" shall not be deemed to have occurred within the meaning of Paragraph 1.8(a) above solely as the result of any acquisition of Voting Securities by the Company or any subsidiary thereof that has the effect of (i) reducing the number of the Company’s outstanding Voting Securities, or (ii) increasing the beneficial ownership of the Company’s Voting Securities by any person to more than twenty-five percent (25%) of the Company’s outstanding Voting Securities or by any Pre-September 1, 2007 Shareholder; provided, however, that, if any such person (other than any of the Exempt Owners, as defined above) shall thereafter become the direct or indirect beneficial owner of any additional Voting Securities of the Company (other than pursuant to a stock split, stock dividend, or similar transaction or as a result of an acquisition of securities directly from the Company) and immediately thereafter beneficially owns more than twenty-five percent (25%) of the then outstanding Voting Securities of the Company, then, a "Change of Control" shall be deemed to have occurred for purposes of this Agreement.

1.9The term “Employer” means whichever of the Company or Subsidiary is the principal employer of Executive. 

1.10The term “Code” means the Internal Revenue Code of 1986, as amended, and any successor statute thereto.

2.Term.  The term of this Agreement shall commence on the date hereof and, subject to earlier termination pursuant to Section 6 hereof, shall end three (3) years following the date on which notice of non‐renewal or termination of this Agreement is given by either the Company or Executive to the other.  Thus, this Agreement shall renew automatically on a daily basis so that the outstanding term is always three (3) years following any effective notice of non‐renewal or of termination given by the Company or Executive, other than in the event of a termination pursuant to Section 6 hereof.

3.Change in Control.  No compensation shall be payable under this Agreement unless and until (i) there has been a Change in Control of the Company (as hereinafter defined) while the Executive is still an officer of the Company or the Subsidiary, and (ii) the Executive’s employment by the Company or the Subsidiary terminates under any of the circumstances or for any of the reasons set forth in Section 4 below.  

4.Termination by Executive for Good Reason.  If (i) a Change in Control of the Company occurs while the Executive is still employed as an officer of the Company or the Subsidiary or the surviving or continuing person in any such Change in Control, and (ii) any of the following events (each a “Good Reason Event”) shall occur (that is not consented to by Executive) as a result or at the time or within 12 months of the consummation of such Change in Control, then, Executive shall be entitled to the 

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compensation provided in Section 5 of this Agreement, provided that he gives the Company written notice of the termination of his/her employment and of all positions he/she may have with the Company and the Subsidiary for “Good Reason” within forty-five (45) days following the occurrence of any such Good Reason Event.  

4.1Reduction or Adverse Change of Responsibilities, Authority, Etc.  The scope of Executive’s authority or responsibilities is significantly reduced or diminished or there is an change in Executive’s position or title as an officer of the Company or the Subsidiary, or both, that constitutes or would generally be considered to constitute a demotion of Executive, unless such reduction, diminution or change is made as a consequence of (i) Executive’ disability (determined as provided in Section 6(e) of the Employment Agreement), or (ii)  any acts or omissions of Executive which would entitle the Company or Subsidiary to terminate Executive’s employment for Cause (as defined in Section 6(a) of the Employment Agreement); or

4.2Reduction in Base Salary.  Executive's Base Annual Salary (as defined in his Employment Agreement and as in effect immediately prior to the consummation of the Change in Control) is reduced, unless such reduction is made (i) as part of an across-the-board cost cutting measure that is applied equally or proportionately to all senior executives of the Employer, or (ii) as a result of Executive’s Disability (determined as provided in Section 6(e) of the Employment Agreement), or any acts or omissions of Executive which would entitle Employer to terminate Executive’s employment for Cause (as defined in Section 6(a) of the Employment Agreement);

4.3Discontinuance or Reduction of Bonus Opportunity Under Bonus Compensation Plan.  Executive's bonus and/or incentive compensation award opportunity under any incentive or bonus compensation plan or program in which he is participating immediately prior to the consummation of the Change of Control is discontinued or significantly reduced, unless such discontinuance or reduction (i) is expressly permitted under the terms of such plan or program, or (ii) is a result of a policy of Employer applied equally or proportionately to all senior executives of Employer participating in such plan or program, or (iii) is the result of the replacement of such plan or program with another bonus or incentive compensation plan in which Executive is afforded substantially comparable bonus or incentive compensation opportunities; 

4.4Discontinuance of Participation in Employee Benefit Plans.  Executive's participation in any other benefit plan maintained by the Company or Employer in which Executive was participating immediately prior to the consummation of the Change of Control (including any vacation program) is terminated or the benefits that had been afforded under any such benefit plan are significantly reduced, unless such discontinuance or reduction (as the case may be) is (i) expressly permitted by the terms of that plan or program, or (ii) due to a change in applicable law or the loss or reduction in the tax deductibility to Employer of the contributions to or payments made under such plan, or (iii) the result of a policy of Employer or the Company that is applied equally or proportionately to all senior executives participating in such benefit plan, or (iv) the result of the adoption of one or more other benefit plans providing reasonably comparable benefits (in terms of value) to Executive; or

4.5Relocation. The relocation of Executive to an office that located more than thirty (30) miles from Executive’s principal office location prior to the consummation of the Change of Control or to an office that is not the headquarters office of Executive’s employer (other than for temporary assignments or required travel in connection with the performance by Executive of his/her duties for Employer or the Company); or

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4.6Breach of Agreements.  A breach by the Company or Employer of any of its material obligations to Executive under the Employment Agreement or this Agreement which continues uncured for a period of thirty (30) days following written notice thereof from Executive.

5.Severance Compensation upon Termination of Employment for Good Reason.  Subject to Section 5.4 and Section 7 below, upon a termination of Executive’s employment by Executive pursuant to Section 4 hereof (a “Good Reason Termination”), then:

5.1Change of Control Severance Compensation.  Subject to Section 5.4 below, in lieu of any further salary and bonus payments or other payments that would otherwise be due to Executive under the Employment Agreement, or otherwise, for periods subsequent to the date of such Good Reason Termination, Executive shall become entitled to receive the following severance compensation and benefits: 

(a)Employer shall pay the Executive all amounts owed through the date of Executive’s Good Reason Termination; and

(b)Employer also shall pay to Executive, at the applicable time set forth in Section 5.3, an amount equal to the product of two (2) times the sum of (i) Executive’s Base Annual Salary in effect as of the date of termination and (ii) an amount equal to the Maximum Bonus Award (as hereinafter defined) payable to Executive under any incentive or bonus compensation plan in which he/she was participating at the time of such termination of employment, which amount shall be paid as provided in Section 5.3 hereof.  For purposes hereof, the term “Maximum Bonus Award” shall mean the amount of the bonus compensation that would be paid to Executive under such incentive or bonus compensation plan assuming that all performance goals or targets required to have been achieved as a condition of the payment of the maximum bonus under such plan were achieved and all other conditions precedent to the payment of such bonus compensation were satisfied.  

(c)All options to purchase stock of the Company granted to the Executive that had not vested as of the date of such Good Reason Termination shall vest effective immediately prior to such termination.

(d)All restricted stock awards, restricted stock unit awards, and other forms of equity-based compensation awards granted to the Executive, which had not vested as of the date of such Good Reason Termination, shall vest effective immediately prior to such termination.

(e)The Company or the Subsidiary shall maintain in full force and effect, during the period commencing on the date of such Good Reason Termination and ending on the December 31 of the second calendar year following the calendar year in which such termination occurred (the “Benefit Continuation Period”), all employee medical, dental and vision plans and programs, disability plans and programs and all life insurance programs in which the Executive and/or his/her family members were entitled to participate or under which they were entitled to receive benefits immediately prior to the date of the occurrence of the Good Reason Event, provided, however, that if such continued participation is prohibited under the general terms and provisions of such plans and programs, then, the Company or the Subsidiary shall, at its expense, arrange for substantially equivalent benefits to be provided to Executive and/or his/her family members during the Benefit Continuation Period.  Notwithstanding the foregoing, however, there shall only be included as benefits to which Executive and/or his/her family members shall be entitled under this Paragraph 5.1(e), and Executive and/or such family members shall only be entitled to, those benefits if the plans or programs in which Executive or his/her family members were participating immediately prior to the occurrence of the Good Reason Event were exempt from the term “nonqualified deferred compensation plan” under Section 409A of the Code.

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Notwithstanding any other provision in this Agreement to the contrary, under no circumstances, shall the Executive be permitted to exercise any discretion to modify the vesting of an award or the amount, timing or form of payment or benefit described in this Section 5.1.

5.2Timing and Manner of Payment.  The amount that becomes payable to Executive pursuant to Section 5.1(b) above shall be paid as follows: 

(a)If, on the date that the Executive terminates his/her employment for Good Reason pursuant to Section 4 above, the Company is a reporting company under the Exchange Act, then Executive will be entitled to receive such payment in a single lump sum on the first business day that occurs at the end of the period commencing on the date of that termination and ending six months after the last day of the calendar month in which the date of termination occurred (e.g., if Executive were to terminate his/her employment for Good Reason on March 15, 2015, for example, then Employer would be required to pay the amount specified in Section 5.1(b) on the first business day immediately following September 30, 2015); or

(b)If, however, the Company is not a reporting company under the Exchange Act at the time the Executive terminates his/her employment for Good Reason pursuant to Section 4 above, then Executive shall be entitled to receive such payment in a single lump sum on the fifth (5th) business day following such termination of employment.

5.3No Requirement of Mitigation.  The Executive shall not be required to mitigate the amount of any payment or benefit provided for in this Section 5 by seeking other employment or otherwise, nor shall any compensation or other payments received by the Executive from other persons after the date of termination reduce any payments due under this Section 5.

5.4Limitation. 

(a)Anything in this Agreement to the contrary notwithstanding, if any compensation, payment, benefit or distribution by the Company or Employer Subsidiary to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (collectively, the "Severance Payments"), would be subject to the excise tax imposed by Section 4999 of the Code, then, the following provisions shall apply: 

(i)If the Threshold Amount (as hereinafter defined) is less than (x) the Severance Payments, but greater than (y) the Severance Payments reduced by the-sum of (A) the Excise Tax (as defined below) and (B) the total of the Federal, state, and local income and employment taxes on the amount of the Severance Payments which are in excess of the Threshold Amount, then the Severance Payments that would otherwise be payable under this Agreement shall be reduced (but not below zero) to the extent necessary so that the maximum Severance Payments shall not exceed the Threshold Amount.  To the extent that there is more than one method of reducing the Severance Payments to bring them within the Threshold Amount, Executive shall determine which method shall be followed; provided that if Executive fails to make such determination within 45 days after the Company has sent Executive written notice of the need for such reduction, the Company may determine the amount of such reduction in its sole discretion. 

(ii)If, however, the Severance Payments, reduced by the sum of (A) the Excise Tax and (B) the total of the Federal, state and local income and employment taxes payable by Executive on the amount of the Severance Payments which are in excess of the Threshold Amount, are greater than or equal to the Threshold Amount, there shall be no reduction in the Severance Payments to Executive pursuant to Paragraph 5.4(a)(i) above. 

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(b)For the purposes of this Section 5.4, the term "Threshold Amount" shall mean three (3) times Executive's "base amount" (within the meaning of Section 280G(b)(3) of the Code and the regulations promulgated thereunder) less one dollar ($1.00); and the term "Excise Tax" shall mean the excise tax imposed by Section 4999 of the Code, and any interest or penalties incurred by Executive with respect to such excise tax.

(c)The determination as to which of Paragraph 5.4(a)(i) or 5.4(a)(ii) shall apply to Executive shall be made by Eide Bailly LLP, independent registered public accountants, or any other independent accounting firm selected by mutual agreement of the Company and Executive (the "Accounting Firm"), which agreement shall not be unreasonably withheld or delayed by either party.  Such Accounting Firm shall provide detailed supporting calculations both to the Company and Executive within 15 business days of the date of Executive’s Good Reason Termination, if applicable, or at such earlier time as is reasonably requested by the Company or Executive.  For purposes of determining which of the alternative provisions of 5.4(a)(i) or 5.4(a)(ii) shall apply, Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation applicable to individuals for the calendar year in which the determination is to be made, and state and local income taxes at the highest marginal rates of individual taxation in the state and locality of Executive's residence on the Termination Date, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.  Any determination by the Accounting Firm shall be binding on the Company and Executive. 

5.5Withholding.  Notwithstanding anything to the contrary that may be contained elsewhere in this Agreement, all payments made to Executive under this Agreement shall be made net of all taxes and other amounts required to be withheld from the wages or salary of employees under applicable federal, state or local laws or regulations. 

6.Termination of Agreement.  Notwithstanding Section 2 hereof, this Agreement shall terminate sooner as provided in this Section 6. 

6.1Termination of Employment Other Than for Good Reason.  This Agreement shall terminate upon the happening, at any time prior to the termination of Executive’s employment for Good Reason pursuant to Section 4 hereof, of any of the following events:  

(a)Executive’s Disability or Death.  This Agreement shall terminate upon the termination of Executive’s employment as a result of Executive’s disability pursuant to and in accordance with Section 6(e) of the Employment Agreement.  This Agreement also shall terminate immediately in the event of the death of the Executive.  

(b)Retirement.  This Agreement shall terminate automatically on Retirement (as hereinafter defined) of Executive.  The term “Retirement” as used in this Agreement shall mean termination by the Company or the Executive of Executive’s employment based on the Executive’s having reached age 75 or such other age as shall have been fixed in any arrangement established with the Executive’s consent with respect to Executive retirement.

(c)Cause.  This Agreement shall terminate, if Executive’s employment with the Company or an Employer Subsidiary is terminated for Cause, as such term is defined in Section 6(a) of the Employment Agreement.  

(d)Termination by Executive without Cause.  This Agreement shall terminate upon any voluntary termination by Executive of his/her employment with the Company or the Subsidiary, as the case may be, other than pursuant to Section 4 of this Agreement. 

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In the event of a termination of this Agreement pursuant to this Section 6.1, then, notwithstanding anything to the contrary that may be contained elsewhere herein, except for any severance or other compensation to which Executive may be entitled, by reason of such termination, under the Employment Agreement, neither the Company nor the Subsidiary shall have any liability to Executive, or Executive’s estate, heirs, successors, representatives or assigns, due to such termination of this Agreement or by reason of any prior or subsequent Change in Control of the Company.

6.2Effect of Good Reason Termination on Term of this Agreement.  In the event of a Good Reason Termination pursuant to Section 4 hereof, Executive shall have no further rights or remedies under this Agreement, except his/her right to receive the severance compensation set forth in Section 5 hereof attributable to the occurrence of the Good Reason Event that entitled Executive to terminate his/her employment pursuant to Section 4 hereof.  Accordingly, but without limiting the generality of the foregoing, Executive shall be entitled to receive any compensation under this Agreement in the event of the occurrence of a second Change in Control of the Company after the date of the Executive’s Good Reason Termination. 

7.Release of Claims.  The obligations of the Company under this Agreement shall constitute the only obligations of the Company arising from a Good Reason Termination by Executive pursuant to Section 4 hereof.  Additionally, upon any such termination, except for Executive’s rights and the obligations of the Company or the Subsidiary (as the case may be) under Section 5 hereof, none of the Company, the Subsidiary or any of their affiliates shall have any obligation or liability of any kind or nature whatsoever to Executive by reason of or arising out of his/her employment with the Company or the Subsidiary or the termination thereof.  Executive further agrees that, except for his/her rights and the obligations of the Company or the Subsidiary (as the case may be) under Section 5 hereof, all demands, claims and causes of action that Executive may have against, and any and all rights that Executive may have to recover any payments, damages, liabilities or other amounts of any kind or nature whatsoever from, the Company, the Subsidiary or any of their affiliates , or any of their respective, officers, directors, shareholders, employees, agents or independent contractors (the “Company Related Parties”), shall be forever released by Executive as a condition precedent to Executive’s rights to receive and the obligations of the Company or Subsidiary (as the case may be) to pay or provide to Executive the severance compensation and benefits provided for in Section 5 hereof, irrespective of whether or not such demands, claims, causes of action or rights arise or have arisen under (i) this Agreement, the Employment Agreement, or any other contract, agreement or understanding, written or oral, between Executive and the Company or any of the Company Related Parties, or (ii) any employee or executive benefit plans or programs, including any stock incentive or stock based compensation plans, or (iii) any federal, state or local statutes or government regulations, or otherwise, and whether or not such demands, claims, causes of action or rights are known or unknown, certain or uncertain, or suspected or unsuspected by Executive.  Executive further covenants and agrees that such condition precedent shall not be satisfied unless and until he/she executes and delivers to the Company all appropriate written agreements reflecting such settlement and complete release in a form reasonably acceptable to the Company.

8.Arbitration of Disputes.  Except as otherwise provided in the last sentence of this Section 9 with respect to equitable proceedings and remedies, any controversy or claim arising out of or relating to this Agreement, the performance or non-performance (actual or alleged) by either party of any of such party's respective obligations hereunder or any actual or alleged breach thereof, shall, to the fullest extent permitted by law, be resolved exclusively by binding arbitration in any forum and form agreed upon by the parties or, in the absence of such an agreement, under the auspices of the American Arbitration Association (“AAA”) in Orange County, California in accordance with the Employment Dispute Resolution Rules of the AAA, including, but not limited to, the rules and procedures applicable to the selection of arbitrators.  In the event that any person, other than Executive or the Company, may be a party with regard to any such controversy or claim, such controversy or claim shall be submitted to arbitration subject to such other person’s agreement thereto.  Judgment upon the award rendered by the arbitrator in any such arbitration 

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proceeding may be entered in any court having jurisdiction thereof.  This Section 8 shall be specifically enforceable.  The reasonable fees and disbursements of the prevailing party's legal counsel, accountants and experts incurred in connection with any such arbitration proceeding shall be paid by the non-prevailing party in such arbitration proceeding.  Notwithstanding anything to the contrary that may be contained in this Section 9, however, each party shall be entitled to bring an action in any court of competent jurisdiction for the purpose of obtaining a temporary restraining order or a preliminary or permanent injunction or other equitable remedies in circumstances in which such relief is appropriate.

9.Miscellaneous.  

9.1Entire Agreement.  This Agreement constitutes the entire agreement between the parties relating to the subject matter hereof and supersedes all prior agreements and understandings, whether written or oral, between the parties with respect to that subject matter.

9.2Assignment; Successors and Assigns, etc.  Neither party may make any assignment, in whole or in part, of this Agreement or any interest herein, by operation of law or otherwise, or delegate any of their respective duties hereunder, without the prior written consent of the other party; except that in the event of a Change in Control of the Company, the rights and obligations of the Company under this Agreement may be assigned to the successor-in-interest of the Company in such Change in Control without the consent of Executive, provided that (i) such successor-in-interest enters into a written agreement, in a form reasonably acceptable to Executive, by which such successor-in-interest shall expressly agree to be bound by this Agreement and (ii) no such assignment shall relieve the Company of its obligations under this Agreement.  Subject to the foregoing restrictions on assignment, this Agreement shall inure to the benefit of and be enforceable by and shall be binding on the parties and their respective successors, legal representatives, executors, administrators, heirs, devisees and legatees, and permitted assigns.  If Executive should die while any amounts are still payable to him/her pursuant to Section 5 hereof, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive’s devisee, legatee, or other designee or, if there be no such designee, to the Executive’s estate.

9.3Severability.  If any portion or provision of this Agreement (including, without limitation, any portion or provision of any section of this Agreement) shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.  

9.4Waiver.  No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party.  The failure of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any right or obligation under or breach of this Agreement, shall not prevent any subsequent enforcement of such term, right or obligation or be deemed a waiver of any prior or subsequent breach of the same obligation.

9.5Notices.  Any notices, requests, demands and other communications provided for by this Agreement ("Notices") shall be sufficient if in writing and delivered in person or sent by a nationally recognized overnight courier service or by registered or certified mail, postage prepaid, return receipt requested, to Executive at the last address Executive has filed in writing with Employer or, in the case of any Notice to be given to the Company or the Employer (if other than the Company), at its headquarters offices, attention of the Chief Executive Officer, and shall be effective on the date of delivery in person or by courier or two (2) business days after the date such Notice is mailed by registered or certified mail, postage prepaid and return receipt requested (whether or not the requested receipt is returned).

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9.6Amendment.  This Agreement may be amended or modified only by a written instrument signed by the Executive and by a duly authorized officer or other representative of the Company.

9.7Interpretation and Construction of this Agreement.  This Agreement is the result of arms-length bargaining by the parties, each party was represented by legal counsel of such party's choosing in connection with the negotiation and drafting of this Agreement and no provision of this Agreement shall be construed against a party, due to an ambiguity therein or otherwise, by reason of the fact that such provision may have been drafted by counsel for such party.  For purposes of this Agreement: (i) the term "including" shall mean "including without limitation" or "including but not limited to"; (iv) the term "or" shall not be deemed to be exclusive; and (v) the terms "hereof," "herein," "hereinafter," "hereunder," and "hereto," and any similar terms shall refer to this Agreement as a whole and not to the particular Section, paragraph or clause in which any such term is used, unless the context in which any such term is used clearly indicates otherwise.  

9.8Governing Law.  This Agreement is being entered into and will be performed in the State of California and shall be construed under and be governed in all respects by and enforced under the laws of the State of California, without giving effect to its conflict of laws rules or principles.

9.9Headings.  The Section and paragraph headings in this Agreement are inserted for convenience of reference only and shall not affect, nor shall be considered in connection with, the construction or application of any of the provisions of this Agreement.

9.10Counterparts.  This Agreement may be executed in any number of counterparts, and each such executed counterpart, and any photocopy or facsimile copy thereof, shall constitute an original of this Agreement; but all such executed counterparts and photocopies and facsimile copies thereof shall, together, constitute one and the same instrument.

 

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Signatures of parties follow on next page.]

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first above written.

“Company”“Executive”

First Foundation Inc.

By:     /s/ Scott F. Kavanaugh            /s/ Kevin L. Thompson

Name:Scott F. KavanaughName:  Kevin L. Thompson

Title:Chief Executive Officer

 

 

 

“Subsidiary”

First Foundation Bank

By:     /s/ Scott F. Kavanaugh

Name:Scott F. Kavanaugh

Title:Chief Executive Officer

 

 

 

11Exhibit 10.1

      

      
        Execution Version

      

       

      

      SETTLEMENT AGREEMENT

       

      This Settlement Agreement (this “Agreement”), effective as of May 27, 2020 (the “Effective Date”), is entered into by
        and among MVC Capital, Inc., a Delaware corporation (the “Company”) and Wynnefield Partners Small Cap Value, L.P. I and the other persons and entities identified under that certain Wynnefield Schedule 13D (as
        defined below) as Reporting Persons (as defined therein) (each, a “Wynnefield Party” and collectively, the “Wynnefield Parties”). The Company and the Wynnefield Parties
        are collectively referred to herein as the “Parties,” and each of the Company and the collective Wynnefield Parties, a “Party.” Unless otherwise defined herein,
        capitalized terms shall have the meanings given to them in Section 15 herein.

       

      WHEREAS, the Wynnefield Parties beneficially own, or exercise control or direction over, an aggregate of 1,514,379 shares of Common Stock, representing
        approximately 8.5% of the shares of Common Stock issued and outstanding as of the Effective Date;

       

      WHEREAS, on January 17, 2020, the Wynnefield Parties delivered a letter to the Company with respect to the submission of a stockholder proposal (the “Proposal”) and, on April 21, 2020, April 24, 2020 and May 25, 2020, the Wynnefield Parties submitted to the Company notices of intent to present the Proposal at the 2020 annual meeting of stockholders of the
        Company, including, without limitation, any adjournment or postponement (the “2020 Annual Meeting”);

       

      WHEREAS, on April 21, 2020, April 24, 2020 and May 25, 2020, the Wynnefield Parties submitted to the Company notices of intent to nominate (together, the “Stockholder Nomination”) Ron Avni, John D. Chapman and Arthur D. Lipson (Avni, Chapman and Lipson, each, a “Wynnefield Designee” and together, the “Wynnefield Designees”) as director candidates for election to the Board at the 2020 Annual Meeting; and

       

      WHEREAS, the Company and the Wynnefield Parties wish to enter into this Agreement in order to reflect their mutual agreement with respect to the election of
        directors to the Board at the 2020 Annual Meeting, the Proposal and certain related matters.

       

      NOW, THEREFORE, in consideration of the promises, representations and mutual covenants and agreements set forth herein, and for other good and valuable
        consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

       

      
        1.           2020 Annual Meeting and Board Matters.

      

       

      (a)          At the 2020 Annual Meeting:

       

      (i)          nine directors will be elected to the Board;

       

      (ii)       the Company will nominate the following slate of individuals for election as directors: Ron Avni, John D. Chapman, Phillip
        Goldstein, Gerald Hellerman, Douglas A. Kass, Robert Knapp, Scott D. Krase, Arthur D. Lipson and Michael Tokarz (the “2020 Nominees”); and

       

      
        
          

      

      
      (iii)     no individual other than the 2020 Nominees shall be nominated for election by the Company or the Wynnefield Parties; provided,
        however, that the foregoing shall only restrict nominations to the Board made at the 2020 Annual Meeting.

       

      (b)         Until the Termination Date, the Company agrees that, for so long as the Wynnefield Designees serve on the Board, the Company will
        cause a Wynnefield Designee to serve on each of the following standing committees of the Board: (1) the Valuation Committee, (2) the Nominating/Corporate Governance/Strategy Committee and (3) the Compensation Committee (collectively, the “Committees”); provided, however, that such Wynnefield Designee shall only be entitled to sit on an applicable committee to the extent permitted by federal securities laws or other applicable laws
        and stock exchange regulations and only if he meets any and all independence or other requirements under federal securities laws or other applicable laws and applicable stock exchange regulations for service on such Committees. Notwithstanding any
        provision herein to the contrary, prior to the Effective Date, the Board has in good faith reviewed and approved the credentials of each of the Wynnefield Designees and in the exercise of its fiduciary duties concluded that each of the Wynnefield
        Designees, as of the date hereof, are qualified to serve on each of the Committees in accordance with all independence or other requirements under federal securities laws or other applicable laws and applicable stock exchange regulations.

       

      (c)         Concurrently with the execution of this Agreement, the Wynnefield Parties hereby irrevocably withdraw the Stockholder Nomination
        and the Proposal for presentation and consideration at the 2020 Annual Meeting or at any other meeting of stockholders of the Company prior to the Termination Date.

       

      (d)        The Wynnefield Parties agree that each Wynnefield Party shall immediately cease all efforts, direct or indirect, in furtherance of
        the Stockholder Nomination and the Proposal and any related solicitation in connection with Stockholder Nomination and the Proposal, including any negative solicitation efforts relating to the 2020 Annual Meeting concerning the Company and members
        of the slate of nominees proposed by the Company.

       

      (e)          The Company shall solicit, recommend, obtain proxies in favor of and otherwise support the election at the 2020 Annual Meeting
        of the 2020 Nominees and cause all proxies received by them to be voted in the manner specified by such proxies and, to the extent permitted under applicable law and stock exchange rules, cause all proxies for which a vote is not specified in
        respect of the election of directors to be voted for the 2020 Nominees. The Company and the Wynnefield Parties agree that if any proxy submitted by the Wynnefield Parties specifies a vote in favor of the election of any individual other than one of
        the 2020 Nominees for election as a director such vote shall be disregarded at the 2020 Annual Meeting.

       

      (f)          The Company agrees that it shall hold the 2020 Annual Meeting no later than July 15, 2020.

       

      
        2

        
          

      

      (g)        If the 2020 Annual Meeting is not held by July 15, 2020 for any reason (including, without limitation, by reason of cancellation,
        adjournment or postponement), the Company agrees that the Board shall take all actions necessary to (i) immediately accept the resignations of Emilio Dominianni, Warren Holtsberg and William Taylor as directors on the Board pursuant to each of the
        irrevocable resignation letters attached hereto as Exhibit A; (ii) immediately appoint each of the Wynnefield Designees to fill the resulting vacancies on the Board and to serve as directors on the Board as well as until the 2020 Annual
        Meeting and their successors are duly elected and qualified subject to the terms of this Agreement; and (iii) immediately appoint a Wynnefield Designee to each of the Committees, provided that the proviso in the first sentence of Section
          1(b) shall apply to this clause (iii) mutatis mutandis.

       

      (h)        Until the 2020 Annual Meeting, the Company agrees that it shall not amend, extend, replace or otherwise modify that certain
        Investment Advisory and Management Agreement between the Company and The Tokarz Group Advisers LLC.

       

      (i)           The Board has formed a special committee of directors (the “Special Committee”),
        comprised of Messrs. Knapp, Krase and Tokarz, to review Extraordinary Transactions presented to the Company.  The Company agrees that it will pursue and/or explore any Extraordinary Transaction (which shall include but not be limited to, executing
        a non-disclosure agreement, providing access to confidential information concerning the Company or any relevant subsidiary as well as making recommendations to the Board whether to proceed with and/or approve any Extraordinary Transaction) if a
        majority of the Special Committee approve doing so (the “Protocol”).  The Protocol shall continue and remain in effect through July 15, 2020.  The Company represents that neither the Board nor any of the
        members of the Special Committee have any special voting or veto rights with respect to the decision to pursue and/or explore any Extraordinary Transaction.

       

      (j)           Until the 2020 Annual Meeting, the Company shall not enter into any definitive agreement providing for an Extraordinary
        Transaction, unless approved by both (i) a majority of the Board and (ii) a majority of the non-management directors.

       

      (k)          The Company agrees that it shall hold the 2021 Annual Meeting no later than the last day of the 2021 fiscal year of the Company.

       

      (l)          The Company shall not, and shall cause its directors, officers and other Representatives not to, prior to or at the 2020 Annual
        Meeting, (i) expand the size of the Board to greater than nine members, (ii) create any new class of directors of the Board, or (iii) otherwise amend the Company’s Bylaws or Certificate of Incorporation for the purpose of accomplishing any of the
        foregoing.

       

      (m)         The Company agrees that, without the prior approval of a majority of the Wynnefield Designees, the Company will not take any
        action prior to the Termination Date to: (i) expand the size of the Board to greater than nine members, (ii) create any new class of directors of the Board, (iii) adopt an “advance notice” provision with respect to stockholder proposals or director
        elections, or (iv) otherwise amend the Company’s Bylaws or Certificate of Incorporation for the purpose of accomplishing any of the foregoing.

       

      
        3

        
          

      

      (n)         The Wynnefield Parties represent that each of the Wynnefield Designees has agreed to serve his full term as a director of the
        Board; provided, however,  that in the event any Wynnefield Designee is unable to serve due to death or disability, the Wynnefield Parties shall have the right to propose a replacement nominee provided that such replacement nominee
        is reasonably acceptable to the Company and any such replacement nominee shall be deemed to be a Wynnefield Designee for all purposes of this Agreement.

       

      (o)          With respect to any matter and/or transaction set forth in this Agreement that is dependent on either the approval or
        recommendation of a majority of the Wynnefield Designees, the Company agrees that unless the Company otherwise publicly discloses that such matter and/or transaction was unanimously determined by the Board, the Company will promptly publicly
        disclose the determination of each of the Wynnefield Designees with regard to such matter and/or transaction.

       

      
        2.           Mutual Non-Disparagement.

      

       

      (a)          Subject to Section 5, each Wynnefield Party agrees that, during the Standstill Period, neither it nor any of its
        Representatives shall, and it shall cause each of its Representatives not to, directly or indirectly, in any way publicly criticize, disparage, call into disrepute or otherwise defame or slander, the Company or any of its former or present
        Representatives, or any of their respective businesses, products or services.

       

      (b)         The Company hereby agrees that, during the Standstill Period, neither it nor any of its Representatives shall, and it shall cause
        each of its Representatives not to, directly or indirectly, in any way publicly criticize, disparage, call into disrepute or otherwise defame or slander, any Wynnefield Party or any of their respective Representatives, or any of their respective
        businesses, products or services.

       

      (c)        Notwithstanding the foregoing, nothing in this Section 2 or elsewhere in this Agreement shall prohibit any Party from
        making any statement or disclosure required under the federal securities laws or other applicable laws (including to comply with any subpoena or other legal process from any governmental or regulatory authority with competent jurisdiction over the
        relevant Party, including without limitation official request for information, formal inquiry, or examination) or stock exchange regulations; provided, however, that, unless prohibited under applicable law and to the extent
        reasonably practicable, such Party shall provide written notice to the other Parties prior to making any such statement or disclosure required under the federal securities laws or other applicable laws or stock
          exchange regulations that would otherwise be prohibited by the provisions of this Section 2, and reasonably consider any comments of such other Party.

       

      (d)         The limitations set forth in Sections 2(a) and 2(b) shall not prevent any Party from responding to any public
        statement made by the other Party of the nature described in Sections 2(a) and 2(b), if such statement by the other Party was made in breach of this Agreement. This Section 2 will not apply to any truthful statement made in
        connection with any action to enforce this Agreement

       

      
        4

        
          

      

      
        3.           Releases.

      

       

      (a)          As of the Effective Date, the Company, on behalf of itself and each of the Company’s Affiliates (as defined below), permanently,
        fully and completely releases, acquits and discharges each Wynnefield Party and each of the Wynnefield Parties’ subsidiaries, joint ventures and partnerships, successors, assigns, officers, directors, partners, members, managers, principals,
        predecessor entities, agents, employees, stockholders, advisors, consultants, attorneys, insurers, heirs, executors, administrators, successors and assigns of any such person or entity (in each case, and in their capacities as such) (collectively,
        the “Wynnefield Affiliates”), collectively, separately and severally, of and from any and all claims (including derivative claims), demands, damages, causes of action, debts, liabilities, controversies,
        judgments and suits of every kind and nature whatsoever, foreseen, unforeseen, known or unknown, that the Company has had, now has, or may have against the Wynnefield Parties and/or the Wynnefield Affiliates, collectively, separately and severally,
        at any time prior to and including the Effective Date, including (but not limited to) any and all claims arising in respect of or in connection with the nomination and election of directors to the Board, the Proposal or other actions to be taken at
        the 2020 Annual Meeting; provided, however, that nothing contained herein shall operate to release any obligations arising hereunder.

       

      (b)       As of the Effective Date, each of the Wynnefield Parties, on behalf of himself or itself and each of the Wynnefield Affiliates,
        permanently, fully and completely releases, acquits and discharges the Company, and the Company’s subsidiaries, joint ventures and partnerships, successors, assigns, officers, directors, partners, members, managers, principals, predecessor
        entities, agents, employees, stockholders, advisors, consultants, attorneys, insurers, heirs, executors, administrators, successors and assigns of any such person or entity (in each case, and in their capacities as such) (collectively, the “Company’s Affiliates”), collectively, separately and severally, of and from any and all claims, demands, damages, causes of action, debts, liabilities, controversies, judgments and suits of every kind and nature
        whatsoever, foreseen, unforeseen, known or unknown, that the Wynnefield Parties have had, now have, or may have against the Company and/or the Company’s Affiliates, collectively, separately and severally, at any time prior to and including the
        Effective Date, including (but not limited to) any and all claims arising in respect of or in connection with the nomination and election of directors to the Board, the Proposal or other actions to be taken at the 2020 Annual Meeting; provided,
        however, that nothing contained herein shall operate to release any obligations arising hereunder.

       

      4.          Voting. Until the Termination Date, the Wynnefield Parties shall, and shall cause each of their respective Affiliates to (i) be represented
        in person or by proxy at the 2020 Annual Meeting cause all shares of Common Stock that the Wynnefield Parties and their respective Affiliates beneficially own or exercise control or direction over to be counted as present for purposes of
        establishing a quorum, (ii) vote, or cause to be voted at the 2020 Annual Meeting, all shares of Common Stock that the Wynnefield Parties and their respective Affiliates beneficially own or exercise control or direction over on the Company’s proxy
        or voting instruction form in favor of (A) each of the directors nominated by the Board and recommended by the Board for election to the Board  at the 2020 Annual Meeting (and not in favor of (x) any other nominees for election to the Board or (y)
        the removal of any such nominees), including, for greater certainty, in favor of the 2020 Nominees at the 2020 Annual Meeting and (B) each routine matter or proposal recommended for stockholder approval by the Board at the 2020 Annual Meeting and
        (iii) not execute any proxy or voting instruction form in respect of  the 2020 Annual Meeting other than the proxy or voting instruction form being solicited by or on behalf of management of the Company; provided, however, that the Wynnefield
        Parties and their respective Affiliates shall have the right to vote or act by written consent in their sole discretion with respect to any (1) Extraordinary Transaction involving the Company and requiring a vote of the Company’s stockholders, (2)
        any other non-routine matters or proposals presented for stockholder consideration at such meeting (excluding, for the avoidance of doubt, any matter referred to in clause (A) above), and/or (3) any matters or proposals requiring a vote of the
        Company’s stockholders at any meeting subsequent to the 2020 Annual Meeting, in each case, for the avoidance of doubt, subject to Section 5.

       

      
        5

        
          

      

      5.            Standstill.

       

      (a)          During the Standstill Period, each Wynnefield Party shall not, and shall cause his or its Representatives not to, directly or
        indirectly:

       

      (i)       seek, alone or in concert with others, (A) to call a meeting of stockholders, (B) representation on the Board, except as
        specifically contemplated in Section 1 of this Agreement or (C) the removal of any member of the Board;

       

      (ii)       solicit proxies or written consents of stockholders or conduct any other type of referendum (binding or non-binding) with respect
        to the shares of the Common Stock, or from the holders of the shares of Common Stock, or become a “participant” (as such term is defined in Instruction 3 to Item 4 of the Schedule 14A promulgated under the Exchange Act) in or assist, encourage,
        advise or influence any Third Party (as defined below) in any “solicitation” of any proxy, consent or other authority (as such terms are defined under the Exchange Act) to vote any shares of Common Stock (other than any encouragement, advice or
        influence that is consistent with the Board’s recommendation in connection with such matter);

       

      (iii)      (A) form or join in a “group” (within the meaning of Section 13(d)(3) of the Exchange Act) with respect to any shares of Common
        Stock (for the avoidance of doubt, excluding any group composed solely of the Wynnefield Parties and their Affiliates), (B) grant any proxy, consent or other authority to vote with respect to any matters to be voted on by the Company’s stockholders
        (other than to the Wynnefield Parties and their Affiliates and the named proxies included in the Company’s proxy card for any annual meeting or special meeting of stockholders) or (C) agree to deposit or deposit any shares of Common Stock or any
        securities convertible or exchangeable into or exercisable for any such shares of Common Stock in any voting trust or similar arrangement (other than (x) to the Wynnefield Parties and their Affiliates or the named proxies included in the Company’s
        proxy card for any stockholder meeting and (y) customary brokerage accounts, margin accounts, prime brokerage accounts and the like, in each case, of the Wynnefield Parties and their Affiliates);

       

      
        6

        
          

      

      (iv)       execute any written consent as a stockholder with respect to the Company or its Common Stock, except as contemplated by this
        Agreement;

       

      (v)        without the approval of the Board, separately or in conjunction with any Third Party in which it is or proposes to be either a
        principal, partner or financing source or is acting or proposes to act as broker or agent for compensation, publicly (including in communications to the media) propose or support or effect any tender offer or exchange offer, merger, acquisition,
        reorganization, restructuring, recapitalization or other similar business transaction involving the Company or a material amount of the assets or businesses of the Company or actively encourage, initiate or support any other Third Party in any such
        activity; provided that the Wynnefield Parties shall be permitted to sell or tender their shares of Common Stock or other Voting Securities, and otherwise receive consideration, pursuant to any such transaction; and provided further
        that if a Third Party (not a Party or an Affiliate of a Party) commences an unsolicited tender offer or exchange offer for all of the outstanding shares of Common Stock or other Voting Securities that is recommended by the Board, then the
        Wynnefield Parties shall similarly be permitted to commence a tender offer or exchange offer for all of the outstanding shares of Common Stock or other Voting Securities at the same or higher consideration per share, unless the decision of the
        Board to recommend such Third Party unsolicited tender offer or exchange offer is supported by a majority of Wynnefield Designees serving on the Board;

       

      (vi)       present at any annual meeting or any special meeting of the Company’s stockholders any proposal for consideration for action by
        the stockholders;

       

      (vii)       seek to have the Company waive, amend or modify any provisions of the Company’s Certificate of Incorporation or Bylaws;

       

      (viii)     make any request for stockholder list materials or other books and records of the Company under Section 220 of the Delaware
        General Corporation Law or make any request pursuant to Rule 14a-7 under the Exchange Act or otherwise, except as is reasonably necessary to enable the Wynnefield Parties to effect a tender offer or exchange offer permitted under Section
          5(a)(v);

       

      (ix)          institute, solicit or join, as a party, or remain as a class member in any litigation, arbitration or other proceeding against
        the Company or any of its current or former directors or officers (including derivative actions), other than (A) litigation by the Wynnefield Parties to enforce the provisions of this Agreement, (B) counterclaims with respect to any proceeding
        initiated by, or on behalf of, the Company or its Affiliates against the Wynnefield Parties or Nelson Obus and (C) the exercise of statutory appraisal rights; provided that the foregoing shall not prevent any member of the Wynnefield
        Parties from responding to or complying with a validly issued legal process (and the Company agrees that this Section 5(a)(ix) shall apply mutatis mutandis to the Company and its directors, officers, partners, members, employees, agents (in each
        case, acting in such capacity) and Affiliates with respect to the Wynnefield Parties);

       

      
        7

        
          

      

      (x)      comment publicly (including in communications to the media) concerning the Company’s management,
          policies, strategy, operations, financial results or affairs or any transactions involving the Company or any of its subsidiaries, except (i) with respect to any Extraordinary Transaction that has not been approved by a majority of the Wynnefield
          Designees on the Board, (ii) with respect to the Wynnefield Parties’ commencing of a tender offer or exchange offer in accordance with Section 5(v), and (iii) as otherwise expressly permitted by this
          Agreement;

       

      (xi)      sell, offer or agree to sell directly or indirectly, through swap or hedging transactions or
          otherwise, the securities of the Company or any rights decoupled from the underlying securities held by any of the Wynnefield Parties to any person in a private transaction (or a series of related private transactions) that is not (A) a party to
          this Agreement, (B) a member of the Board, (C) an officer of the Company, or (D) an Affiliate of any Party (any person not set forth in clauses (A) through (D) shall be referred to as a “Third
          Party”) that would result in the Wynnefield Parties selling in excess of 4.9% of the shares of Voting Securities beneficially owned by the Wynnefield Parties at such time, other than to a Third Party that
          agrees to be bound by the provisions of Section 5 of this Agreement during the term of this Agreement; or

       

      (xii)     publicly disclose, except as may be required by applicable law, any request that the Company or any directors, officers, partners,
        members, employees, agents or Affiliates of the Company, directly or indirectly, amend or waive any provision of this Agreement (including this Section 5 (a)(xii)).

       

      Notwithstanding anything to the contrary contained in this Section 5, none of the Wynnefield Parties nor their respective Affiliates shall be prohibited or restricted from: (A)
        communicating privately with the Board or any officer or director of the Company, in the manner set forth for communicating with the Company in the Company Policies, regarding any matter, so long as such communications are not intended to, and
        would not reasonably be expected to, require any public disclosure of such communications by any of the Wynnefield Parties or their respective Affiliates, the Company or its Affiliates or any Third Party, subject in any case to any confidentiality
        obligations to the Company of any such director or officer and applicable law, rules or regulations; (B) taking any action necessary to comply with any law, rule or regulation or any action required by any governmental or regulatory authority or
        stock exchange that has, or may have, jurisdiction over any Wynnefield Party, provided that a breach by such Parties of this Agreement is not the cause of the applicable requirement; (C) privately communicating to any of their potential
        investors or investors factual information regarding the Company, provided that such communications are subject to reasonable confidentiality obligations and are not otherwise reasonably expected to be publicly disclosed; or (D) responding
        to or complying with a validly issued legal process.

       

      
        8

        
          

      

      (b)          The provisions of this Section 5 shall not limit in any respect the actions of any director of the Company in his or her
        capacity as such, recognizing that such actions are subject to such director’s fiduciary duties to the Company and its stockholders and the Company Policies. Except as otherwise provided in this Agreement, the provisions of this Section 5
        shall also not prevent the Wynnefield Parties from freely voting their respective shares of Common Stock.

       

      (c)         During the Standstill Period, each Wynnefield Party shall refrain from taking any actions which could have the effect of
        encouraging, assisting or influencing other stockholders of the Company or any other persons to engage in actions which, if taken by such Party, would violate this Agreement.

       

      (d)         Anything to the contrary in this Section 5 or elsewhere in this Agreement (including Section 2) notwithstanding,
        the Wynnefield Parties shall not be prohibited from (i) nominating directors for election at the 2021 Annual Meeting, (ii) submitting proposals for consideration by stockholders at the 2021 Annual Meeting; (iii) soliciting proxies for the election
        of its director nominees or approval of its stockholder proposals at the 2021 Annual Meeting, in compliance with Regulation 14A under the Exchange Act; (iv) requesting that a proposal for consideration by stockholders at the 2021 Annual Meeting be
        included in the Company’s proxy materials for the 2021 Annual Meeting, in compliance with Rule 14a-8 under the Exchange Act; or (v) making any public or private communication in connection with any of the foregoing, in compliance with Rule 14a-9
        and any other applicable provision of Regulation 14A under the Exchange Act.  Anything to the contrary in Section 2 or elsewhere in this Agreement notwithstanding, the Company shall not be prohibited from (i) soliciting proxies in
        opposition to any nomination, solicitation or proposal permitted to be made by the Wynnefield Parties pursuant to this Section 5(d), in compliance with Regulation 14A under the Exchange Act or (ii) making any public or private communication
        in connection with the foregoing, in compliance with Rule 14a-9 and any other applicable provision of Regulation 14A under the Exchange Act.

       

      (e)          The provisions of clauses (i) through (xii) of Section 5(a) shall cease to apply following the public announcement of an
        Extraordinary Transaction that has been approved by the Board and which is opposed by a majority of the Wynnefield Designees serving on the Board.

       

      6.          Representations and Warranties of the Company. The Company represents and warrants to the Wynnefield Parties that (a) the Company has the
        corporate power and authority to execute this Agreement and to bind it thereto, (b) this Agreement has been duly and validly authorized, executed and delivered by the Company, constitutes a valid and binding obligation and agreement of the Company,
        and is enforceable against the Company in accordance with its terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws generally affecting the rights
        and remedies of creditors and subject to general equity principles, and (c) the execution, delivery and performance of this Agreement by the Company does not and will not violate or conflict with (i) any law, rule, regulation, order, judgment or
        decree applicable to it, or (ii) result in any breach or violation of or constitute a default (or an event which with notice or lapse of time or both could become a default) under or pursuant to, or result in the loss of a material benefit under,
        or give any right of termination, amendment, acceleration or cancellation of, any organizational document, or any material agreement, contract, commitment, understanding or arrangement to which the Company is a party or by which it is bound.

       

      
        9

        
          

      

      7.          Representations and Warranties of the Wynnefield Parties. Each Wynnefield Party jointly and severally represents and warrants to the Company
        that (a) this Agreement has been duly and validly authorized, executed and delivered by such Wynnefield Party, and constitutes a valid and binding obligation and agreement of such Wynnefield Party, enforceable against
          such Wynnefield Party in accordance with its terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws generally affecting the rights and remedies
          of creditors and subject to general equity principles, (b) such Wynnefield Party has the appropriate entity power and authority to execute this Agreement and the signatory for such Wynnefield Party has the
          power and authority to execute this Agreement and any other documents or agreements entered into in connection with this Agreement on behalf of itself and the applicable Wynnefield Party associated with that signatory’s name, and to bind such
          Wynnefield Party to the terms hereof and thereof, and (c) the execution, delivery and performance of this Agreement by such Wynnefield Party does not and will not violate or conflict with (i) any law, rule, regulation, order, judgment or decree
          applicable to it, or (ii) result in any breach or violation of or constitute a default (or an event which with notice or lapse of time or both could become a default) under or pursuant to, or result in the loss of a material benefit under, or
          give any right of termination, amendment, acceleration or cancellation of, any organizational document, agreement, contract, commitment, understanding or arrangement to which such member is a party or by which it is bound.

       

      8.           SEC Filings; Public Statements.

       

      (a)          No later than three (3) business days following the Effective Date, the Company shall file with the SEC a Current Report on Form
        8-K reporting its entry into this Agreement and appending this Agreement as an exhibit thereto (the “Form 8-K”). The Company shall provide the Wynnefield Parties with a reasonable opportunity to review and
        comment on the Form 8-K prior to the filing with the SEC and consider in good faith any comments of the Wynnefield Parties.

       

      (b)          No later than three (3) business days following the Effective Date, the Wynnefield Parties shall file with the SEC an amendment
        to that certain Statement of Beneficial Ownership on Schedule 13D, filed with the SEC on June 1, 2016 and amended on April 27, 2019, January 22, 2020, April 21, 2020 and April 24, 2020 (collectively, the “Wynnefield
          Schedule 13D”), in compliance with Section 13 of the Exchange Act reporting their entry into this Agreement and appending this Agreement as an exhibit thereto or incorporating this Agreement by reference to the Company’s Current Report on
        Form 8-K referred to in Section 8(a) hereof (the “Wynnefield Schedule 13D Amendment”). The Wynnefield Parties shall provide the Company with a reasonable opportunity to review and comment on the
        Wynnefield Schedule 13D Amendment prior to it being filed with the SEC and consider in good faith any comments of the Company.

       

      
        10

        
          

      

      (c)        Promptly following the execution of this Agreement, the Company and the Wynnefield Parties shall execute a joint press release
        announcing the execution of this Agreement substantially in the form attached hereto as Exhibit B.

       

      (d)        Except as otherwise provided in this Section 8, Section 2(c) and/or Section 2(d), the Company and the
        Wynnefield Parties shall not make any public statements related to this Agreement.

       

      9.           Term; Termination. The term of this Agreement shall commence on the Effective Date and the obligations of the Parties shall cease:

       

      (a)          at the option of the Company, upon a material breach by any of the Wynnefield Parties of any obligation hereunder, which has not
        been cured within fourteen (14) calendar days after receiving notice of such breach from the Company;

       

      (b)          at the option of the Wynnefield Parties, upon a material breach by the Company of any obligation hereunder which has not been
        cured within fourteen (14) calendar days after receiving notice of such breach from the Wynnefield Parties;

       

      (c)          at any time, upon the written consent of all Parties;

       

      (d)          automatically at the conclusion of the 2021 Annual Meeting; or

       

      (e)          automatically on October 31, 2021.

       

      Termination of this Agreement shall not relieve any Party from its responsibilities in respect of any breach of this Agreement prior to such termination. Section 3 hereof shall survive
        termination of this Agreement indefinitely.

       

      10.         Expenses. Not later than five (5) business days after the Effective Date, the Company shall pay to the Wynnefield Parties an aggregate amount equal to $290,000 as reimbursement for the Wynnefield Parties’ actual , documented out-of-pocket expenses incurred
        in connection with the Proposal and the Stockholder Nomination and the negotiation and execution of this Agreement and the transactions contemplated hereby, including, but not limited to, the preparation of related filings
        with the SEC and the fees and disbursements of counsel, any proxy solicitors and other advisors, and each Wynnefield Party hereby agrees that such payment shall be in full
        satisfaction of any claims or rights it may have as of the date hereof for reimbursement of fees, expenses or costs incurred in connection with the Proposal and the Stockholder Nomination and the negotiation and execution of this Agreement and the
        transactions contemplated hereby, including, but not limited to, the preparation of related filings with the SEC and the fees and disbursements of counsel, any proxy solicitors and other advisors.

       

      11.       No Other Discussions or Arrangements. The Wynnefield Parties represent and warrant that, as of the date of this Agreement, except as
        specifically disclosed on the Wynnefield Schedule 13D, or as disclosed to the Company in writing prior to the Effective Date, (a) none of the Wynnefield Parties owns, of record or beneficially, any Voting Securities or any securities convertible
        into, or exchangeable or exercisable for, any Voting Securities and (b) none of the Wynnefield Parties have entered into, directly or indirectly, any agreements or understandings with any person (other than their own respective Representatives)
        with respect to any potential transaction involving the Company or the voting or disposition of any securities of the Company.

       

      
        11

        
          

      

      12.         Governing Law; Jurisdiction. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware
        without giving effect to any choice or conflict of law provision or rule that would cause the application of laws of any jurisdiction other than those of the State of Delaware. Each Party irrevocably submits to the exclusive jurisdiction of the
        Delaware Court of Chancery (or, only if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, any U.S. federal or state court sitting in the State of Delaware), and any appellate court thereof, for the purpose of
        any suit, action or other proceeding relating to or arising out of this Agreement and the transactions contemplated hereby.  Each of the Parties waives any defense of inconvenient forum to the maintenance of any suit, action or proceeding so
        brought and waives any bond, surety or other security that might be required of any other Party with respect thereto.  Each Party agrees that a final judgment in any such suit, action or proceeding brought in such court shall be conclusive and
        binding on it and may be enforced in any court to the jurisdiction of which it is subject by a suit upon such judgment.

       

      13.        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 IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR
        RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
        WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS
        AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 13.

       

      14.         Specific Performance. Each of the Parties acknowledges and agrees that irreparable injury to the other Parties would occur in the event any
        of the provisions of this Agreement are not performed in accordance with their specific terms or are otherwise breached and that such injury would not be adequately compensable by the remedies available at law (including the payment of money
        damages). It is accordingly agreed that each of the Parties shall be entitled to specific enforcement of, and injunctive or other equitable relief as a remedy for any such breach or to prevent any violation or threatened violation of, the terms
        hereof, and the other Parties will not take action, directly or indirectly, in opposition thereto on the grounds that any other remedy or relief is available at law or in equity. The Parties further agree to waive any requirement for the security
        or posting of any bond in connection with any such relief. The remedies available pursuant to this Section 14 shall not be deemed to be the exclusive remedies for a breach of this Agreement but shall be in addition to all other
        remedies available at law or equity.

       

      
        12

        
          

      

      15.          Certain Definitions. As used in this Agreement:

       

      (a)        “2021 Annual Meeting” shall mean the 2021 annual meeting of stockholders of the Company,
        including, without limitation, any adjournment or postponement;

       

      (b)         “Affiliate” shall mean any “Affiliate” as defined
        in Rule 12b-2 promulgated by the SEC under the Exchange Act, including, for the avoidance of doubt, persons who become Affiliates subsequent to the Effective Date;

       

      (c)          “Associate” shall mean any “Associate” as
        defined in Rule 12b-2 promulgated by the SEC under the Exchange Act, including, for the avoidance of doubt, persons who become Associates subsequent to the Effective Date;

       

      (d)       “beneficial owner”, “beneficial ownership” and “beneficially own” shall have the same meanings as set forth in Rule 13d-3 promulgated by the SEC under the Exchange Act;

       

      (e)          “Board” shall mean the Company’s Board of Directors;

       

      (f)           “business day” shall mean any day other than a Saturday, Sunday or day on which the
        commercial banks in the State of New York are authorized or obligated to be closed by applicable law;

       

      (g)         “Bylaws” shall mean the Eighth Amended and Restated Bylaws of the Company, as amended by
        Amendment No. 1 and Amendment No. 2 thereto and as may be further amended from time to time;

       

      (h)       “Certificate of Incorporation” shall mean the Certificate of Incorporation of the Company,
        as amended by the Certificate of Amendment dated July 7, 2004, and as may be further amended from time to time;

       

      (i)          a “Change of Control” transaction shall be deemed to have taken place if (i) any person
        is or becomes a beneficial owner, directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the equity interests and voting power of the Company’s then-outstanding equity securities or (ii) the Company
        enters into a stock-for-stock transaction whereby immediately after the consummation of the transaction the Company’s stockholders retain less than fifty percent (50%) of the equity interests and voting power of the surviving entity’s
        then-outstanding equity securities;

       

      (j)           “Common Stock” shall mean the common stock of the Company;

       

      (k)         “Company Policies” shall mean the policies, processes, procedures, codes, rules,
        standards and guidelines applicable to members of the Board, including, but not limited to, the Company’s Corporate Governance Policy, Privacy Policy, Joint Code of Ethics, and any other policies on stock ownership, public disclosures and
        confidentiality;

       

      
        13

        
          

      

      (l)           “Exchange Act” shall mean the Securities and Exchange Act of 1934, as amended;

       

      (m)         “Extraordinary Transaction” shall mean any equity tender offer, equity exchange offer,
        merger, acquisition, business combination, or other transaction with a Third Party that, in each case, would result in a Change of Control of the Company, liquidation, dissolution or other extraordinary transaction involving a majority of its
        equity securities or a majority of its assets, and, for the avoidance of doubt, including any such transaction with a Third Party that is submitted for a vote of the Company’s stockholders;

       

      (n)       “other Parties” shall mean, (i) with respect to the Company, any of the Wynnefield Parties
        and (ii) with respect to any of the Wynnefield Parties, the Company;

       

      (o)         “person” or “persons” shall mean any individual,
        corporation (including not-for-profit), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization or other entity of any kind, structure or nature;

       

      (p)         “Representative” shall mean a person’s Affiliates and Associates and its and their
        respective directors, officers, employees, partners, members, managers, consultants, legal or other advisors, agents and other representatives; provided, that when used with respect to the Company, “Representatives” shall not include any non-executive employees;

       

      (q)          “SEC” shall mean the Securities and Exchange Commission;

       

      (r)           “Standstill Period” shall mean the period starting on the Effective Date and ending on
        the Termination Date;

       

      (s)         “Termination Date” shall mean the earlier of (i) the day this Agreement is terminated in
        accordance with Section 9 hereof; (ii) the conclusion of the 2021 Annual Meeting; and (iii) October 31, 2021; and

       

      (t)          “Voting Securities” shall mean the Common Stock and any other securities of the Company
        entitled to vote in the election of directors.

       

      16.          Notices. All notices, requests, consents, claims, demands, waivers, and other communications hereunder shall be in writing and shall be
        deemed to have been given: (a) when delivered by hand (with written confirmation of receipt), (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested), (c) on the date sent by email if sent during
        normal business hours, and on the next business day if sent after normal business hours, unless the sender receives a bounce back or failure to deliver message notification; or (d) on the third day after the date mailed, by certified or registered
        mail, return receipt requested, postage prepaid. Such communications must be sent to the respective Parties at the addresses set forth in this Section 16 (or to such other address that may be designated by a Party from time to time in
        accordance with this Section 16).

       

      
        14

        
          

      

      If to the Company, to its address at:

       

      MVC Capital, Inc.

      287 Bowman Avenue, 2nd Floor

      Purchase, New York 10577

      
        	
                

                

              	
                Attention:

              	
                Secretary

              

      

      
        	 	
                Email:

              	
                jackie@ttga.com

              

      

       

      With a copy (which shall not constitute notice) to:

       

      Kramer Levin Naftalis & Frankel LLP

      1177 Avenue of the Americas

      New York, New York 10036

      
        	 	
                Attention:

              	
                George M. Silfen, Esq.

              

      

      
        	 	
                Email:

              	
                GSilfen@KRAMERLEVIN.com

              

      

      

      

      If to a Wynnefield Party, to the address at:

       

      Wynnefield Partners Small Cap Value, L.P.

      450 Seventh Avenue, Suite 509

      New York, New York  10123

      
        	 	
                Attention:

              	
                Mr. Nelson Obus

              

      

      
        	 	
                Email:

              	
                nobus@wynnecap.com

              

      

       

      With a copy (which shall not constitute notice) to:

       

      Kane Kessler, P.C.

      666 Third Avenue, 23rd Floor

      New York, New York 10017

      
        	 	
                Attention:

              	
                Jeffrey S. Tullman, Esq.

              

      

      
        	 	
                Email:

              	
                jtullman@kanekessler.com

              

      

      

      

      17.        Entire Agreement. This Agreement constitutes the sole and entire agreement of the Parties with respect to the subject matter contained
        herein, and supersedes all prior and contemporaneous understandings, agreements, representations, and warranties, both written and oral, with respect to such subject matter. This Agreement may only be amended, modified, or supplemented by an
        agreement in writing signed by each Party.

       

      18.        Severability. If any term or provision of this Agreement is invalid, illegal, or unenforceable in any jurisdiction, such invalidity,
        illegality, or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction.

       

      19.        Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be
        deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, email, or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this
        Agreement.

       

      
        15

        
          

      

      20.        Assignment. No Party may assign any of its rights or delegate any of its obligations hereunder without the prior written consent of the other
        Parties. No assignment or delegation shall relieve the assigning or delegating Party of any of its obligations hereunder. This Agreement is for the sole benefit of the Parties and their respective successors and permitted assigns and nothing
        herein, express or implied, is intended to or shall confer upon any other person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

       

      21.         Waivers. No waiver by any Party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the
        Party so waiving. No waiver by any Party shall operate or be construed as a waiver in respect of any failure, breach, or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring
        before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power, or privilege arising from this Agreement shall operate or be construed 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.

       

      22.         Further Assurances. Each Party agrees to take or cause to be taken such further actions, and to execute, deliver and file or cause to be
        executed, delivered and filed such further documents and instruments, and to obtain such consents, as may be reasonably required or requested by the other party in order to effectuate fully the purposes, terms and conditions of this Agreement.

       

      23.       Survival. The representations and warranties, covenants and agreements contained in this Agreement shall survive the execution of this
        Agreement and any investigation at any time by or on behalf of the Wynnefield Parties or the Company.

       

      24.          No
          Strict Construction. The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by
        the Parties, and no presumption or burden of proof will arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.

      

      

      [Remainder of Page Intentionally Left Blank]

       

      
        16

        
          

      

      IN WITNESS WHEREOF, the Parties have executed this Agreement to be effective as of the Effective Date.

       

      	 	
              COMPANY:

            
	 	
              MVC CAPITAL, INC.

            
	 	 
	 	
              By:

            	
              /s/ Michael Tokarz

            
	 	
              Name:

            	
              Michael Tokarz

            
	 	
              Title:

            	
              Chairman and Portfolio Manager

            

      

      

      Signature Page to Settlement Agreement

      

      

      
        
          

      

      	 	
              WYNNEFIELD PARTIES:

            
	 	
              WYNNEFIELD PARTNERS SMALL CAP

              VALUE, L.P. I

            
	 	 
	 	
              By:

            	
              Wynnefield Capital Management, LLC,

            
	 	 	
              its general partner

            
	 	 	 
	 	 	
              By:

            	
              /s/ Nelson Obus

            
	 	 	 	
              Name: Nelson Obus

            
	 	 	 	
              Title: Co-Managing Member

            
	 	 
	 	
              WYNNEFIELD PARTNERS SMALL CAP

              VALUE, L.P.

            
	 	 
	 	
              By:

            	
              Wynnefield Capital Management, LLC,

            
	 	 	
              its general partner

            
	 	 	 
	 	 	
              By:

            	
              /s/ Nelson Obus

            
	 	 	 	
              Name: Nelson Obus

            
	 	 	 	
              Title: Co-Managing Member

            
	 	 
	 	
              WYNNEFIELD SMALL CAP VALUE

              OFFSHORE FUND, LTD.

            
	 	 
	 	
              By:

            	
              Wynnefield Capital, Inc.

            
	 	 	 
	 	 	
              By:

            	
              /s/ Nelson Obus

            
	 	 	 	
              Name: Nelson Obus

            
	 	 	 	
              Title: President

            

       

      Signature Page to Settlement Agreement

      

      

      
        
          

      

      	 	
              WYNNEFIELD CAPITAL MANAGEMENT, LLC

            
	 	 
	 	
              By:

            	
              /s/ Nelson Obus

            
	 	 	
              Name: Nelson Obus

            
	 	 	
              Title: Co-Managing Member

            
	 	 	 
	 	
              WYNNEFIELD CAPITAL, INC.

            
	 	 	 
	 	
              By:

            	
              /s/ Nelson Obus

            
	 	 	
              Name: Nelson Obus

            
	 	 	
              Title: President

            
	 	 	 
	 	
              WYNNEFIELD CAPITAL, INC. PROFIT

              SHARING & MONEY PURCHASE PLAN

            
	 	 
	 	
              By:

            	
              /s/ Nelson Obus

            
	 	 	
              Name: Nelson Obus

            
	 	 	
              Title: Co-Trustee

            
	 	 
	 	
              /s/ Nelson Obus

            
	 	
              NELSON OBUS

            
	 	 
	 	
              /s/ Joshua H. Landes

            
	 	
              JOSHUA H. LANDES

            

      

      

      Signature Page to Settlement Agreement

      

      

      
        
          

      

      EXHIBIT A

      DIRECTOR RESIGNATION LETTER

      

      

      May 27, 2020

       

      MVC CAPITAL, INC.

      287 Bowman Avenue

      2nd Floor

      Purchase, New York 10577

       

      Ladies and Gentlemen:

       

      Reference is made to that certain Settlement Agreement dated as of May 27, 2020 (the “Settlement Agreement”) by and among MVC Capital, Inc., a Delaware corporation (the “Company”),
        and the Wynnefield Parties (as defined therein).

       

      In accordance with the terms of the Settlement Agreement, I hereby resign from my office as a director of the Company, which resignation shall be effective as of the close of business on July 15,
        2020 if the Annual Meeting of Stockholders of the Company, at which the directors of the Company are actually elected, is not held on that date.  This letter may be executed and delivered by electronic transmission.

       

      	 	
              Sincerely,

            
	 	 	 
	 	
              Name:

            	 

      

      

      
        
          

      

      EXHIBIT B

       

      MVC CAPITAL AND WYNNEFIELD CAPITAL REACH AGREEMENT

      ON BOARD NOMINATIONS FOR JULY 15TH ANNUAL MEETING

      

      

      Purchase, N.Y., May 27, 2020 – MVC Capital, Inc. (NYSE: MVC) (the “Company” or “MVC”) and Wynnefield Capital (“Wynnefield”) today announced an agreement (the “Agreement”) under which six of MVC’s current directors and three independent director
        candidates proposed by Wynnefield will be nominated by MVC’s Board for election at the Company’s 2020 Annual Meeting of Stockholders, currently scheduled for July 15, 2020 (“the “Annual Meeting”).

      

      

      The Board will remain at its current size of nine directors. The six current directors to be nominated for reelection include Philip Goldstein, Gerald Hellerman, Douglas Kass, Robert Knapp, Scott Krase and Chairman Michael Tokarz. Current
        directors Emilio Dominianni, Warren Holtsberg and William Taylor will not stand for reelection. The three new nominees standing for election are Ron Avni, John Chapman and Arthur Lipson, who were previously nominated by Wynnefield.

      

      

      A committee comprised of Chairman Tokarz and two independent Board members, Robert Knapp and Scott Krase, will continue to explore strategic alternatives and other value enhancing opportunities. There will be no changes to the Company’s current
        management agreement with The Tokarz Group Advisers LLC prior to the Annual Meeting.

      

      

      Michael Tokarz, Chairman and Portfolio Manager of MVC Capital, said, “We believe the three new director nominees will make valuable contributions to the Board and thank Wynnefield for introducing us to them. MVC has recently taken actions to
        successfully transition to primarily yielding investments and I look forward to continuing to work with the Board to ensure MVC is on the right path for long term stockholder value creation.”

      

      

      Mr. Tokarz continued, “On behalf of the Board, I thank Emilio Dominianni, Warren Holtsberg and William Taylor for their service and dedication to the Board and MVC. They have made numerous contributions to MVC during their tenures for which we
        are grateful.”

      

      

      Nelson Obus, President of Wynnefield Capital, said, “We are pleased that MVC will support the nominations of Ron Avni, John Chapman and Arthur Lipson, for election to the Company’s Board at the upcoming Annual Meeting. Each of these individuals
        is highly experienced and qualified to serve the best interests of MVC’s stockholders. I am confident that they will work diligently and collaboratively with their Board colleagues to position MVC for success.”

      

      

      Mr. Obus continued, “We thank Chairman Michael Tokarz, and MVC’s independent directors, for facilitating today’s settlement.  While I may have had differences of opinion in regard to MVC’s business decisions,
          personal accusations were not intended. I have always felt Michael to be a man of integrity and appreciate his commitment to acting in the best interest of MVC and all its stockholders.  I look forward to maintaining constructive dialogue
        with Michael, along with the Board and the management team to achieve our collective goal of value creation for stockholders.”

       

      Wynnefield Capital is a long term stockholder of MVC, with beneficial ownership of approximately 8.5% of MVC’s outstanding common stock.

       

      
        
          

      

      The agreement between MVC and Wynnefield, which contains certain customary standstill, voting, and other provisions, will be filed with the Securities and Exchange Commission (SEC).

       

      Kramer Levin Naftalis & Frankel LLP provided legal counsel to MVC Capital. Kane Kessler, P.C. provided legal counsel to Wynnefield Capital.

       

      About Ron Avni

       

      	-	
              20 years of extensive financial, operational and investment management experience.

            

       

      	-	
              Track record of successfully creating shareholder value within distressed companies and transforming these companies in collaboration with key stakeholders.

            

       

      	-	
              Adviser to companies on investment and business strategies.

            

       

      	-	
              Served as a portfolio manager at QVT Financial LP, a multi-billion-dollar investment firm where, among other things, he led investment activities in closed-end fund arbitrage and related special situations globally.

            

       

      	-	
              Served as senior quantitative analyst and trader at Weiss Asset Management, where he developed quantitative trading methodologies and software as well as managed a broad array of the firm’s business operations.

            

       

      	-	
              CFA® Charterholder.  Received an AB in Physics, magna cum laude, from Harvard University and is enrolled in a PhD program at the University of Texas at Austin.

            

       

      About John Chapman

       

      	-	
              Specializes in representing shareholder interests in connection with the operation and management of investment funds and ancillary assets.

            

       

      	-	
              Unique skillset, insights and qualifications to serve as a member of MVC’s Board and any of its committees.

            

       

      	-	
              Extensive legal, financial analysis and corporate governance expertise.

            

       

      	-	
              Served as the chairman, executive director, or non-executive director of a number of public companies, both domestically and globally.

            

       

      	-	
              CFA® Charterholder and member of the New York State Bar Association. Received a B.A. from Bates College and a Juris Doctorate from The University of Texas.

            

       

      About Arthur Lipson

       

      	-	
              Served as the managing member of Western Investment LLC, specializing in investing undervalued companies, particularly closed-end funds.

            

       

      	-	
              Served as a director of Pioneer Municipal and Equity Income Trust, during which time he oversaw the elimination of a steep discount to PBF’s net asset value and the merger of PBF into Pioneer Tax Free Income Fund, an open end fund.

            

       

      
        
          

      

      	-	
              Previously headed all fixed income research for Lehman Brothers and Paine Weber, and is credited as the creator of the Kuhn Loeb Bond Indices, now known as the Bloomberg Barclay Indices.

            

       

      	-	
              Long-term shareholder of MVC.

            

       

      About MVC Capital, Inc.

       

      MVC Capital (MVC) is a business development company traded on the New York Stock Exchange that provides long-term debt and equity investment capital to fund growth, acquisitions and
          recapitalizations of companies in a variety of industries. For additional information about MVC, please visit MVC's website at www.mvccapital.com.

       

      About Wynnefield Capital, Inc.

      

      

      Established in 1992, Wynnefield Capital, Inc. is a value investor specializing in U.S. small cap situations that have company or industry specific catalysts.

      

      

      Safe Harbor Statement and Other Disclosures

       

      Statements included herein may constitute "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Statements other than statements of historical facts, regarding management’s beliefs, plans
        and objectives about the future, as well as its assumptions and judgments concerning such beliefs included in this press release may constitute forward-looking statements and are not guarantees of future performance, condition or results and
        involve a number of risks and uncertainties. These statements are evidenced by terms such as “may,” “will,” “believe,” “intend,” “expect,” “estimate” and similar expressions. Examples of forward-looking statements include, among others, statements
        made herein regarding the strategic direction of the Company. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in our filings with the
        Securities and Exchange Commission (the “SEC”). For a discussion of the risks and uncertainties involved, see the section of the periodic reports that the Company files with the SEC entitled “Risk Factors.” The Company undertakes no duty to update
        any forward-looking statement made herein to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. All forward-looking statements speak only as of the date of this press release.

      
         

        MVC Contacts:

      

      
         

        Investors:

        Jackie Rothchild

        MVC Capital

        914.510.9400

        

        

      

      Media:

      Jeffrey Goldberger / Allison Soss

      KCSA Strategic Communications

      212.896.1249 / 212.896.1267

      

      

      or

       

      

      
        
          

      

      Matt Sherman / Andy Brimmer / Joseph Sala

      Joele Frank, Wilkinson Brimmer Katcher

      212.355.4449

      

      

      Wynnefield Media Contact:

      

      

      Daniel Yunger / Mark Semer

      Kekst CNC

      212.521.4800

      daniel.yunger@kekstcnc.com / mark.semer@kekstcnc.com

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