Document:

Exhibit 10.1

 

STOCK PURCHASE AGREEMENT

 

By and Among

 

AGILE THERAPEUTICS, INC.

 

and

 

THE PURCHASERS NAMED HEREIN

 

Dated as of March 4, 2019

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
 
    	
Page
    
	
ARTICLE I
    	
 
    	
DEFINITIONS
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
1.1
    	
 
    	
Definitions
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE II
    	
 
    	
PURCHASE AND SALE
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
2.1
    	
 
    	
Closing
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
2.2
    	
 
    	
Payment
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
2.3
    	
 
    	
Closing Date
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
2.4
    	
 
    	
Closing Deliverables
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
2.5
    	
 
    	
Closing Conditions
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE III
    	
 
    	
REPRESENTATIONS AND   WARRANTIES
    	
6
    
	
 
    	
 
    	
 
    	
 
    
	
3.1
    	
 
    	
Representations and   Warranties of the Company
    	
6
    
	
 
    	
 
    	
 
    	
 
    
	
3.2
    	
 
    	
Representations and   Warranties of the Purchasers
    	
19
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE IV
    	
 
    	
OTHER AGREEMENTS OF THE   PARTIES
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
4.1
    	
 
    	
Transfer Restrictions
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
4.2
    	
 
    	
Furnishing of   Information; Public Information
    	
23
    
	
 
    	
 
    	
 
    	
 
    
	
4.3
    	
 
    	
Acknowledgment of   Dilution
    	
24
    
	
 
    	
 
    	
 
    	
 
    
	
4.4
    	
 
    	
Integration
    	
24
    
	
 
    	
 
    	
 
    	
 
    
	
4.5
    	
 
    	
Securities Laws   Disclosure; Publicity
    	
24
    
	
 
    	
 
    	
 
    	
 
    
	
4.6
    	
 
    	
Shareholder Rights Plan
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
4.7
    	
 
    	
Non-Public Information
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
4.8
    	
 
    	
Use of Proceeds
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
4.9
    	
 
    	
Indemnification of   Purchasers
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
4.10
    	
 
    	
Listing of Common Stock
    	
26
    
	
 
    	
 
    	
 
    	
 
    
	
4.11
    	
 
    	
Equal Treatment of   Purchasers
    	
26
    
	
 
    	
 
    	
 
    	
 
    
	
4.12
    	
 
    	
Certain Transactions   and Confidentiality
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
4.13
    	
 
    	
Form D; Blue Sky   Filings
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
4.14
    	
 
    	
Registration Rights
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE V
    	
 
    	
MISCELLANEOUS
    	
30
    
	
 
    	
 
    	
 
    	
 
    
	
5.1
    	
 
    	
Fees and Expenses
    	
30
    
	
 
    	
 
    	
 
    	
 
    
	
5.2
    	
 
    	
Entire Agreement
    	
30
    
	
 
    	
 
    	
 
    	
 
    
	
5.3
    	
 
    	
Notices
    	
30
    
	
 
    	
 
    	
 
    	
 
    
	
5.4
    	
 
    	
Amendments; Waivers
    	
31
    

 

i

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
Page
    
	
5.5
    	
 
    	
Headings
    	
31
    
	
 
    	
 
    	
 
    	
 
    
	
5.6
    	
 
    	
Successors and Assigns
    	
31
    
	
 
    	
 
    	
 
    	
 
    
	
5.7
    	
 
    	
No Third-Party   Beneficiaries
    	
31
    
	
 
    	
 
    	
 
    	
 
    
	
5.8
    	
 
    	
Governing Law;   Jurisdiction
    	
31
    
	
 
    	
 
    	
 
    	
 
    
	
5.9
    	
 
    	
Survival
    	
32
    
	
 
    	
 
    	
 
    	
 
    
	
5.10
    	
 
    	
Execution
    	
32
    
	
 
    	
 
    	
 
    	
 
    
	
5.11
    	
 
    	
Severability
    	
32
    
	
 
    	
 
    	
 
    	
 
    
	
5.12
    	
 
    	
Replacement of Shares
    	
32
    
	
 
    	
 
    	
 
    	
 
    
	
5.13
    	
 
    	
Remedies
    	
32
    
	
 
    	
 
    	
 
    	
 
    
	
5.14
    	
 
    	
Independent Nature of   Purchasers’ Obligations and Rights
    	
32
    
	
 
    	
 
    	
 
    	
 
    
	
5.15
    	
 
    	
Construction
    	
33
    
	
 
    	
 
    	
 
    	
 
    
	
5.16
    	
 
    	
WAIVER OF JURY TRIAL
    	
33
    
	
 
    	
 
    	
 
    	
 
    
	
Exhibit A   — Schedule of Purchasers
    	
 
    

 

ii

 

STOCK PURCHASE AGREEMENT

 

This Stock Purchase Agreement (this “Agreement”) is dated as of March 4, 2019, among Agile Therapeutics, Inc., a Delaware corporation (the “Company”), and each purchaser identified on the signature pages hereto and listed on the Schedule of Purchasers attached hereto as Exhibit A (each, including its successors and assigns, a “Purchaser” and collectively, the “Purchasers”).

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 of Regulation D (“Regulation D”) as promulgated thereunder, the Company desires to issue and sell to the Purchasers, and the Purchasers desire to purchase from the Company, approximately $7,836,877.50 worth of shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), with an aggregate purchase price per Purchaser as set forth opposite such Purchaser’s name on Exhibit A hereto under the heading “Subscription Amount”, as more fully described in this Agreement.

 

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:

 

ARTICLE I
 DEFINITIONS

 

1.1                               Definitions.  In addition to the terms defined elsewhere in this Agreement, the following terms have the meanings set forth in this Section 1.1:

 

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.

 

“Benefit Plan” means all compensation or employee benefit plans, programs, policies, agreements or other arrangements, whether or not “employee benefit plans” (within the meaning of Section 3(3) of ERISA, whether or not subject to ERISA), providing cash- or equity-based incentives, health, medical, dental, disability, accident or life insurance benefits or vacation, severance, retirement, pension or savings benefits, that are sponsored, maintained or contributed to by the Company for the benefit of current or former employees or directors of the Company and all employee agreements providing compensation, vacation, severance or other benefits to any current or former officer or employee of the Company.

 

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

 

“Commission” means the United States Securities and Exchange Commission.

 

“Common Stock Equivalents” means any securities of the Company which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at

 

 

any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

 

“Company Counsel” means Morgan, Lewis & Bockius LLP, with offices located at 502 Carnegie Center, Princeton, NJ 08540.

 

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

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

“FDA” means the U.S. Food and Drug Administration.

 

“FDCA” means the U.S. Federal Food, Drug and Cosmetic Act.

 

“Governmental Authority” means any foreign, domestic, federal, territorial, state or local governmental authority, quasi-governmental authority, instrumentality, court, government or self-regulatory organization, commission, tribunal or organization or any regulatory, administrative or other agency, or any political or other subdivision, department or branch of any of the foregoing.

 

“Insolvent” means the inability to pay the Company’s obligations as they come due.

 

“Liens” means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

 

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

“Price Per Share” means $0.93, which is at least equal to the lower of (i) the closing price per share of Common Stock (as reflected on Nasdaq.com) as of the close of the Trading Day immediately prior to the execution of this Agreement; or (ii) the average closing price per share of the Common Stock (as reflected on Nasdaq.com) for the five Trading Days immediately prior to the execution of this Agreement.

 

“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened.

 

“Registrable Shares” means the Shares issued to the Purchasers at the Closing, including, any shares of Common Stock paid, issued or distributed in respect of any such Shares by way of stock dividend, stock split or distribution, or in connection with a combination of shares, recapitalization, reorganization, merger or consolidation, or issued in exchange for or in replacement of the Shares, or otherwise, but excluding all other shares of Common Stock acquired prior to or after the Closing Date; provided, however, that

 

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Shares will not be “Registrable Shares” (A) after the Shares have been sold pursuant to an effective registration statement or in compliance with Rule 144 or other exemptions from registration or (B) when such Shares, in the opinion of Purchaser’s counsel satisfactory to the Company, are eligible for resale pursuant to Rule 144(b)(1)(i), such that the Shares can be resold by the Purchaser as a non-affiliate that has held such securities for at least one year.

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

 

“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock).

 

“Subscription Amount” means, as to each Purchaser, the aggregate amount to be paid for the Shares purchased hereunder as set forth opposite such Purchaser’s name on Exhibit A attached hereto.

 

“Trading Day” means a day on which the Trading Market is open for trading.

 

“Trading Market” means the Nasdaq Capital Market.

 

“Transfer Agent” means Broadridge Corporate Issuer Solutions.

 

“VWAP” means, for any date, the dollar volume-weighted average price for such security on the Trading Market (or, if the Trading Market is not the principal trading market for such security, then on the principal securities exchange or securities market on which such security is then traded) during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its “Volume at Price” function or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the three highest closing bid prices and the three lowest closing ask prices of all of the market makers for such security as reported in the “pink sheets” by OTC Markets Group, Inc. If the VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually determined by the Company and the Purchasers of a majority in interest of the Shares then outstanding. If the Company and such Purchasers are unable to agree upon the fair market value of such security, the fair market value shall be determined by an independent appraiser selected in good faith by the Purchasers of a majority in interest of the Shares then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

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ARTICLE II
 PURCHASE AND SALE

 

2.1                               Closing.  On the Closing Date, upon the terms and subject to the conditions set forth herein, the Company will issue and sell, and each Purchaser, severally and not jointly, will purchase, the number of shares of Common Stock (the “Shares”) set forth opposite the name of such Purchaser under the heading “Number of Shares to be Purchased” on Exhibit A attached hereto, at the Price Per Share (the “Closing”).  Subject to the conditions set forth in this Article II, the Closing will be held on the Closing Date (as defined below) at the offices of Company Counsel, or at such other time and place (including electronic exchange of signatures) as shall be agreed upon by the Company and the Purchasers hereunder of a majority in interest of the Shares.

 

2.2                               Payment.  At the Closing, each Purchaser shall deliver to the Company via wire transfer of immediately available funds, in accordance with wire instructions provided to the Purchasers by the Company, an amount equal to such Purchaser’s Subscription Amount set forth opposite its name on Exhibit A attached hereto and the Company shall deliver to each Purchaser the number of Shares purchased by such Purchaser, and the Company shall instruct the Transfer Agent to register such issuance at the time of such issuance.

 

2.3                               Closing Date.  The Closing will take place on the Trading Day on which all of the documents to be delivered pursuant to Section 2.4 below have been executed and delivered by the applicable parties thereto, and all conditions precedent to the applicable parties’ obligations hereunder as set forth in Section 2.5 below, have been satisfied or waived, but in no event later than the third Trading Day following the date of this Agreement (the “Closing Date”).

 

2.4                               Closing Deliverables.

 

(a)                                 Company Deliverables.  On or prior to the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:

 

(i)                                     this Agreement duly executed by the Company;

 

(ii)                                  a copy of the irrevocable instructions to the Transfer Agent instructing the Transfer Agent to deliver, on an expedited basis, via book entry to the applicable balance account, a number of Shares equal to such Purchaser’s Subscription Amount divided by the Price Per Share, registered in the name of such Purchaser;

 

(iii)                               a compliance certificate, executed by the Chief Executive Officer and Chief Financial Officer of the Company, dated as of the Closing Date, to the effect that the conditions specified in subsections (i), (ii), and (iv) of Section 2.5(b) have been satisfied;

 

(iv)                              a certificate of the Company’s Secretary certifying as to (A) the Company’s certificate of incorporation and bylaws, (B) the resolutions of the Board approving this Agreement and the transactions contemplated hereby, and (C) good standing certificates with respect to the Company from the applicable

 

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authority(ies) in Delaware and each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except for such jurisdictions where the failure to so qualify or to be in good standing would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, dated a date within five (5) days before the Closing Date; and

 

(v)                                 such other information, certificates and documents as the Purchasers may reasonably request.

 

(b)                                 Purchaser Deliverables.  On or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the following:

 

(i)                                     this Agreement duly executed by such Purchaser; and

 

(ii)                                  such Purchaser’s Subscription Amount by wire transfer to the account specified by the Company.

 

2.5                               Closing Conditions.

 

(a)                                 Conditions Precedent to each Party’s Obligations.  The obligations of the Company and each Purchaser hereunder in connection with the Closing are subject to the following conditions being met:

 

(i)                                     no temporary restraining order, preliminary or permanent injunction or other order or decree, and no other legal restraint or prohibition, shall exist which questions the validity of this Agreement or the right of the Company or any Purchaser, as the case may be, to enter into this Agreement or prevents or could reasonably be expected to prevent the consummation of the transactions contemplated by this Agreement, nor shall any litigation or court or administrative proceeding have been commenced or threatened with respect to the foregoing.

 

(b)                                 Conditions Precedent to each Purchaser’s Obligations.  The obligations of each Purchaser hereunder in connection with the Closing are subject to the following conditions being met:

 

(i)                                     the accuracy in all material respects when made and on the Closing Date of the representations and warranties of the Company contained herein (unless as of a specific date therein);

 

(ii)                                  all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed in all material respects;

 

(iii)                               the delivery by the Company of the items set forth in Section 2.4(a) of this Agreement;

 

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(iv)                              there shall have been no Material Adverse Effect with respect to the Company since the date hereof; and

 

(v)                                 from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Trading Market (except for any suspension of trading of limited duration agreed to by the Company, which suspension shall be terminated prior to the Closing), and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any market or exchange, nor shall a banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of such Purchaser, makes it impracticable or inadvisable to purchase the Shares at the Closing.

 

(c)                                  Conditions Precedent to the Company’s Obligations.  The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:

 

(i)                                     the accuracy in all material respects on the Closing Date of the representations and warranties of each Purchaser contained herein (unless as of a specific date therein in which case they shall be accurate as of such date);

 

(ii)                                  all obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been performed in all material respects; and

 

(iii)                               the delivery by each Purchaser of the items set forth in Section 2.4(b) of this Agreement.

 

ARTICLE III
 REPRESENTATIONS AND WARRANTIES

 

3.1                               Representations and Warranties of the Company.  The Company hereby makes the following representations and warranties to each Purchaser:

 

(a)                                 Organization and Qualification.  The Company is an entity duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted and as described in the SEC Reports (as defined below).  The Company is not in violation nor default of any of the provisions of its certificate of incorporation or bylaws.  The Company is duly qualified to conduct business and is in good standing as a foreign corporation in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as

 

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the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of this Agreement, (ii) a material adverse effect on the results of operations, assets (including intangible assets), business, prospects or condition (financial or otherwise) of the Company, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under this Agreement (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.  The Company has no subsidiaries.

 

(b)                                 Authorization; Enforcement.  The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder.  The execution and delivery of this Agreement by the Company and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s stockholders.  This Agreement has been duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

(c)                                  No Conflicts.  The execution, delivery and performance by the Company of this Agreement, the issuance and sale of the Shares and the consummation by it of the transactions contemplated hereby do not and will not: (i) conflict with or violate any provision of the Company’s certificate of incorporation or bylaws, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company debt or otherwise) or other understanding to which the Company is a party or by which any property or asset of the Company is bound or affected, or (iii) conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.

 

(d)                                 Filings, Consents and Approvals.  The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the

 

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Company of this Agreement, other than: (i) the filings required pursuant to Section 4.4 of this Agreement, (ii) the notice and/or application(s) to the Trading Market for the issuance and sale of the Shares and the listing of the Shares for trading thereon in the time and manner required thereby, (iii) the filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws (collectively, the “Required Approvals”).

 

(e)                                  Issuance of the Shares.  The Shares are duly authorized and, when issued and paid for in accordance with this Agreement, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens other than restrictions on transfer provided for in this Agreement.

 

(f)                                   Capitalization.  The authorized capital of the Company consists of: (i) 150,000,000 shares of Common Stock of which, as of the date of this Agreement, (x) 34,787,633 shares are issued and outstanding and (y) 9,454,803 shares are reserved for issuance pursuant to the Company’s stock incentive plan, of which (1) 7,427,956 shares are issuable upon the exercise of stock options outstanding and (2) 393,750 shares are issuable upon the vesting of performance restricted stock units on the date hereof and (ii) 10,000,000 shares of preferred stock, par value $0.0001 per share, of which no shares are issued and outstanding as of the date of this Agreement.  No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by this Agreement.  Except as a result of the purchase and sale of the Shares or as set forth in SEC Reports, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents.  The issuance and sale of the Shares will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities.  All of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities.  No further approval or authorization of any stockholder, the Board of Directors or others is required for the issuance and sale of the Shares.  Except as set forth in SEC Reports, there are no stockholders agreements, voting agreements or other agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.

 

(g)                                  SEC Filings; Financial Statements.  The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the one (1) year preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing

 

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materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension, and expects to timely file its Annual Report on Form 10-K for the fiscal year ended December 31, 2018.  As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.  Each registration statement and any amendment thereto filed by the Company pursuant to the Securities Act and the rules and regulations thereunder, as of the date such statement or amendment became effective, complied in all material respects with the requirements of the Securities Act and did not, when filed, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading; and each prospectus filed pursuant to Rule 424(b) under the Securities Act, as of its issue date and as of the closing of any sale of securities pursuant thereto, did not, when filed, contain any untrue statement of a material fact or omit to state any material fact required to be stated herein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading (the registration statements, amendments and prospectuses referred to in this section, together with the SEC Reports, the “SEC Filings”).  The Company has never been an issuer subject to Rule 144(i) under the Securities Act.  The financial statements of the Company included in the SEC Filings comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing.  Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments. As of the date hereof, there are no disagreements between the Company and its independent accounting firm on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure relating to the Company’s audit or otherwise that, if not resolved to the satisfaction of the accounting firm, would result in the accounting firm referencing such disagreement in its audit report for such fiscal year.

 

(h)                                 Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included within the SEC Reports, except as specifically set forth in a subsequent SEC Report filed at least two (2) Trading Days prior to the date hereof (and upon written notice to the Purchasers by the Company of such filing): (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has

 

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not incurred any liabilities (contingent or otherwise) other than (a) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (b) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to the holders of its Common Stock or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock incentive plan, (vi) there has not been any material change or amendment to, or any waiver of any material right under, any Material Contract under which the Company or any of its assets is bound or subject, and (vii) there have not been any changes in the authorized capital, assets, liabilities, financial condition, business, prospects or operations of the Company from that reflected in the latest financial statements contained in the SEC Reports except changes in the ordinary course of business which have not had or would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect The Company does not have pending before the Commission any request for confidential treatment of information.  Except for the issuance of the Shares contemplated by this Agreement, no event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect to the Company or its business, properties, operations, assets or financial condition, that would be required to be disclosed by the Company under applicable securities laws if the Company were publicly offering securities pursuant to an effective registration statement under the Securities Act at the time this representation is made or deemed made that has not been publicly disclosed at least two (2) Trading Days prior to the date that this representation is made (and upon written notice to the Purchasers by the Company of such filing). The Company has not taken any steps to seek protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding up, nor does the Company have any knowledge or reason to believe that any of its respective creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so.  The Company is not as of the date hereof, and after giving effect to the transactions contemplated hereby to occur at the Closing, will not be Insolvent. The Company has not engaged in any business or in any transaction, and is not about to engage in any business or in any transaction, for which the Company’s remaining assets constitute unreasonably small capital.

 

(i)                                     Litigation.  There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of this Agreement or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect.  Except as disclosed in SEC Reports, neither the Company, nor any director or officer of the Company, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty.  There has not been, and to the knowledge of the Company, there is not

 

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pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company.  The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company under the Exchange Act or the Securities Act. There are no outstanding orders, judgments, injunctions, awards or decrees of any court, arbitrator or governmental or regulatory body against the Company or, to the Company’s knowledge, any executive officers or directors of the Company in their capacities as such, which individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

 

(j)                                    Labor Relations.  No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company, which could reasonably be expected to result in a Material Adverse Effect.  None of the Company’s employees is a member of a union that relates to such employee’s relationship with the Company, the Company is not a party to any collective bargaining agreement, and the Company believes that its relationships with its employees are good.  No executive officer, to the knowledge of the Company, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company to any liability with respect to any of the foregoing matters.  The Company is in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(k)                                 Compliance.  The Company is not (i) in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company under), nor has the Company received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) in violation of any judgment, decree or order of any court, arbitrator or governmental body or (iii) in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.

 

(l)                                     Regulatory Permits.  The Company possesses all certificates, licenses, approvals, consents, waivers, clearances, exemptions, notices, registrations, and permits or other authorizations of, or similar rights issued by or obtained from or of, the FDA and other appropriate Governmental.  Authorities necessary to conduct its business as described in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and

 

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the Company has not received any notice of proceedings relating to the revocation or modification of any Material Permit.

 

(m)                             Environmental Matters.  The Company is in compliance with all foreign, federal, state and local rules, laws and regulations relating to the use, treatment, storage and disposal of hazardous or toxic substances or waste and protection of health and safety or the environment which are applicable to its business.  To the Company’s knowledge, there has been no storage, generation, transportation, handling, treatment, disposal, discharge, emission, or other release of any kind of toxic or other wastes or other hazardous substances by, due to, or caused by the Company (or, to the Company’s knowledge, any other entity for whose acts or omissions the Company is or may be liable) upon any of the property now or previously owned or leased by the Company, or upon any other property, in violation of any statute or any ordinance, rule, regulation, order, judgment, decree or permit or which would, under any statute or any ordinance, rule (including rule of common law), regulation, order, judgment, decree or permit, give rise to any liability.  There has been no disposal, discharge, emission or other release of any kind onto such property or into the environment surrounding such property of any toxic or other wastes or other hazardous substances with respect to which the Company has knowledge.

 

(n)                                 Title to Assets.  Except as set forth in SEC Reports, the Company has good and marketable title in all personal property owned by the Company that is material to the business of the Company, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties.  The Company does not own any real property. Any real property and facilities held under lease by the Company are held by it under valid, subsisting and enforceable leases with which the Company are in compliance.

 

(o)                                 Patents and Trademarks.  The Company has, or has rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights as necessary or material for use in connection with its business as described in the SEC Reports and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”).  None of, and the Company has not received a notice (written or otherwise) that any of, the Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned, within two (2) years from the date of this Agreement.  The Company has not received, since the date of the latest audited financial statements included within the SEC Reports, a written notice of a claim or otherwise has any knowledge that the Intellectual Property Rights violate or infringe upon the rights of any Person, except as would not have a Material Adverse Effect.  To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights.  The Company has taken reasonable security measures to protect the secrecy, confidentiality and value of

 

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all of its intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(p)                                 FDA and Regulatory Matters.

 

(i)                                     Except as set forth in the SEC Reports, the Company has no knowledge of any actual or threatened material enforcement action or investigation by the FDA or any other Governmental Authority in respect of the Company or any Company product candidates.  The Company has no knowledge or reason to believe that the FDA or any Governmental Authority is considering such action.  The operation of the business of the Company, including the manufacture, import, export, testing, development, processing, packaging, labeling, storage, marketing, sales, and distribution of the Company’s product candidates is, and at all times has been, in material compliance with all applicable laws and permits.

 

(ii)                                  All material reports, documents, claims, permits and notices required to be filed with, maintained for or furnished to the FDA or any Governmental Authority have been so filed, maintained or furnished by the Company.  All such reports, documents, claims, permits and notices filed with, maintained for or furnished to the FDA or any Governmental Authority in respect of the Company and Company product candidates were complete and accurate in all material respects on the date filed or furnished (or were corrected in or supplemented by a subsequent filing), such that no liability exists with respect to such filing, and remain complete and accurate.

 

(iii)                               Except as set forth in the SEC Reports, the Company has not, and to the knowledge of the Company no third party (in so far as it relates to Company product candidates) has, received any FDA Form 483, notice of adverse finding, warning letters, untitled letters or other correspondence or notice from the FDA or any Governmental Authority: (i) alleging or asserting material noncompliance with any applicable laws or permits or (ii) materially contesting the pre-market clearance or approval of, the uses of or the labeling or promotion of any of the Company’s product candidates (each a “Government Notice”). The Company has no knowledge or reason to believe that the FDA or any Governmental Authority is considering providing or otherwise issuing any such Government Notice.  Except as disclosed in the SEC Reports, the Company has not received from the FDA or any Governmental Authority any correspondence concerning the Company product candidates in which the FDA or Governmental Authority alleges or asserts that any Company product candidates may not be safe, effective, or approvable, and to the Company’s knowledge the FDA and Governmental Authorities are not considering any such action.

 

(iv)                              Each of the Company’s product candidates subject to the FDCA that has been developed, manufactured, tested or distributed by or on behalf of the Company is being or has been developed, manufactured, tested or distributed in compliance with all material applicable requirements under the

 

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FDCA and comparable laws in any non-U.S. jurisdiction, including those relating to investigational use, pre-market clearance or approval, licensing of drugs and medical devices and biologics, registration and listing, good manufacturing practices, labeling, advertising, record keeping and filing of required reports.

 

(v)                                 The preclinical tests and clinical trials conducted by the Company, and to the knowledge of the Company the clinical trials conducted by third parties, in each case described in, or the results of which are referred to in, the SEC Reports were and, if still pending, are being conducted in all material respects in accordance with protocols and procedures filed with the appropriate regulatory authorities for each such trial; each description of the results of such preclinical tests and clinical trials contained in the SEC Reports is accurate and complete in all material respects and fairly presents the data derived from such preclinical tests and clinical trials, and the Company has no knowledge of any other studies or tests the results of which are inconsistent with, or otherwise call into question, the results described or referred to in the SEC Reports.

 

(vi)                              None of the Company, the Company’s employees and agents or, to the knowledge of the Company, any third party engaged by the Company for contract research, contract manufacturing, consulting or other collaboration services with respect to Company products candidates, has been debarred, excluded, suspended or otherwise determined to be ineligible to participate in any health care programs of any Governmental Authority, including the FDA, or convicted of any crime related to any such health care programs, or, to the knowledge of the Company, engaged in any conduct, in each case that has resulted, or would reasonably be expected to result, in any such debarment, exclusion, suspension or ineligibility.

 

(q)                                 Insurance.  The Company is insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the business in which the Company is engaged, including, but not limited to, directors and officers insurance coverage at least equal to the aggregate Subscription Amount.  The Company does not have any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost.

 

(r)                                    Transactions With Affiliates and Employees.  Except as set forth in the SEC Reports or as contemplated by this Agreement, none of the officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company, is presently a party to any transaction with the Company (other than for services as employees, consultants, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of

 

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$120,000 other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock incentive plan of the Company.

 

(s)            Sarbanes-Oxley; Internal Accounting Controls.  The Company is in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the Commission thereunder that are effective as of the date hereof.  The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and has taken advantage of relief from certain reporting requirements and other burdens that are otherwise applicable generally to public companies. The Company has taken the exemption from auditor attestation on the effectiveness of its internal controls over financial reporting as permitted under the JOBS Act. The Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.

 

(t)            Private Placement. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, no registration under the Securities Act is required for the offer and sale of the Shares by the Company to the Purchasers as contemplated hereby.  The issuance and sale of the Shares hereunder does not contravene the rules and regulations of the Trading Market.

 

(u)           Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Shares, will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.  The Company shall conduct its business in a manner so that it will not become an “investment company” subject to registration under the Investment Company Act of 1940, as amended.

 

(v)           Registration Rights.  No Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company.

 

(w)          Listing and Maintenance Requirements.  The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating

 

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the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration.  Except as disclosed in SEC Reports, the Company has not received any further notice from the Trading Market to the effect that the Company is not in compliance with the listing or maintenance requirements of the Trading Market.  The issuance of the Shares hereunder does not contravene the rules of the Trading Market.

 

(x)           Application of Takeover Protections.  The Company and the Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s certificate of incorporation or the laws of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and the Company fulfilling their obligations or exercising their rights under this Agreement, including without limitation as a result of the Company’s issuance of the Shares and the Purchasers’ ownership of the Shares. The Company has not adopted a stockholder rights plan or similar arrangement relating to accumulations of beneficial ownership of Common Stock or a change in control of the Company.

 

(y)           No Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, neither the Company, nor any Person acting on its behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Shares to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require the registration of any such securities under the Securities Act, or (ii) any applicable stockholder approval provisions of the Trading Market.

 

(z)           Tax Status.  Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company (i) has made or filed all United States federal and state income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply.  There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim.

 

(aa)         No General Solicitation.  Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Shares by any form of general solicitation or general advertising.  The Company has offered the Shares for sale only to the Purchasers and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.

 

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(bb)         Compliance with Rule 506.  None of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the Company participating in the offering contemplated hereby, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities Act) connected with the Company in any capacity at the time of sale is disqualified from relying on Rule 506 of Regulation D under the Securities Act (“Rule 506”) for any of the reasons stated in Rule 506(d) in connection with the issuance and sale of the Shares to the Purchasers pursuant to this Agreement.  The Company has exercised reasonable care, including without limitation, conducting a factual inquiry that is appropriate in light of the circumstances, into whether any such disqualification under Rule 506(d) exists, but has assumed the accuracy of the Purchaser’s representations and warranties.  The Company has furnished to each Purchaser, a reasonable time prior to the date hereof, a description in writing of any matters that would have triggered disqualification under Rule 506(d) but which occurred before September 23, 2013, in each case, in compliance with the disclosure requirements of Rule 506(e).  The Company has exercised reasonable care, including without limitation, conducting a factual inquiry that is appropriate in light of the circumstances, into whether any such disqualification under Rule 506(d) would have existed and whether any disclosure is required to be made to the Purchasers under Rule 506(e).  Any outstanding securities of the Company (of any kind or nature) that were issued in reliance on Rule 506 at any time on or after September 23, 2013 have been issued in compliance with Rule 506(d) and (e) and no party has any reasonable basis for challenging any such reliance on Rule 506 in connection therewith.

 

(cc)         Foreign Corrupt Practices.  Neither the Company, nor to the knowledge of the Company, any agent or other person acting on behalf of the Company, has: (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is  in violation of law or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.

 

(dd)         Accountants.  The Company’s independent registered public accounting firm is Ernst & Young LLP.  To the knowledge and belief of the Company, such accounting firm: (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect to the financial statements to be included in the Company’s Annual Report for the year ending December 31, 2018.

 

(ee)         Regulation M Compliance.  The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Shares, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Shares, or (iii) paid or

 

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agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company.

 

(ff)          Stock Incentive Plan. Each stock option granted by the Company under the Company’s stock incentive plan was granted (i) in accordance with the terms of the Company’s stock incentive plan and (ii) with an exercise price at least equal to the fair market value of the Common Stock on the date such stock option would be considered granted under GAAP and applicable law.  No stock option granted under the Company’s stock incentive plan has been backdated.  The Company has not knowingly granted, and there is no and has been no Company policy or practice to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the release or other public announcement of material information regarding the Company or its financial results or prospects.

 

(gg)         Office of Foreign Assets Control.  Neither the Company nor, to the Company’s knowledge, any director, officer, agent, employee or affiliate of the Company is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).

 

(hh)         Bank Holding Company Act.  The Company is not subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”) or to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”).  The Company does not own or control, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.  The Company does not exercise a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA or to regulation by the Federal Reserve.

 

(ii)           Money Laundering.  The operations of the Company are and have been conducted at all times in compliance with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.

 

(jj)           ERISA.  Each Benefit Plan has been maintained and administered in compliance with its terms and with applicable law, including ERISA and the Internal Revenue Code of 1986, as amended (the “Code”) to the extent applicable thereto, except for such non-compliance which would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.  The Company does not maintain or contribute to any plan or arrangement which provides retiree medical or retiree welfare benefits, except as required by applicable law.  The Company maintains no Benefit Plan that is subject to Title IV or Section 302 of ERISA or Section 412 or 4971 of the Code.  The consummation of the transactions contemplated by this Agreement will not, either

 

18

 

alone or in combination with another event, (i) entitle any current or former employee, consultant or officer of the Company to severance pay, unemployment compensation or any other payment, except as expressly provided in this Agreement or as required by applicable law or (ii) accelerate the time of payment or vesting, or increase the amount of compensation due any such employee, consultant or officer, except as expressly provided in this Agreement.

 

(kk)         Acknowledgement.  The Company acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an arm’s length purchaser with respect to this Agreement and the transactions contemplated hereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any advice given by any Purchaser or any of their respective representatives or agents in connection with this Agreement and the transactions contemplated hereby is merely incidental to the Purchasers’ purchase of the Shares.  The Company further represents to each Purchaser that the Company’s decision to enter into this Agreement has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.

 

3.2          Representations and Warranties of the Purchasers.  Each Purchaser, for itself and for no other Purchaser, severally and not jointly, hereby represents and warrants as of the Closing Date to the Company as follows (unless as of a specific date therein):

 

(a)           Organization; Authority.  Such Purchaser is either an individual or an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full right, corporate or partnership power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement and performance by such Purchaser of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate, partnership, limited liability company or similar action, as applicable, on the part of such Purchaser.  This Agreement has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.  If the Purchaser(s) is a corporation, trust, partnership or other entity that is not an individual person, it has not been organized for the specific purpose of purchasing the Shares and is not prohibited from doing so.

 

(b)           Own Account.  Such Purchaser understands that the Shares are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Shares as principal for its own account and not with a view to or for distributing or reselling such Shares or any part thereof in violation of the

 

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Securities Act or any applicable state securities law, has no present intention of distributing any of such Shares in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Shares in violation of the Securities Act or any applicable state securities law (this representation and warranty not limiting such Purchaser’s right to sell the Shares in compliance with applicable federal and state securities laws).  Such Purchaser is acquiring the Shares hereunder in the ordinary course of its business.

 

(c)           Purchaser Status.  At the time such Purchaser was offered the Shares, it was, and as of the date hereof it is either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act.  Such Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act.

 

(d)           Experience of Such Purchaser.  Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Shares, and has so evaluated the merits and risks of such investment.  Such Purchaser is able to bear the economic risk of an investment in the Shares and, at the present time, is able to afford a complete loss of such investment.

 

(e)           Reliance on Exemptions.  Such Purchaser understands that the Shares are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and such Purchaser’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of such Purchaser to acquire the Shares.  Such Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Shares, or the fairness or suitability of the investment in the Shares, nor have such authorities passed upon or endorsed the merits of the offering of the Shares.

 

(f)            General Solicitation.  Such Purchaser is not purchasing the Shares as a result of any advertisement, article, notice or other communication regarding the Shares published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar, or any other general solicitation or general advertisement.

 

(g)           Certain Transactions and Confidentiality.  Other than consummating the transactions contemplated hereunder, such Purchaser has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, executed any purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that such Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material terms of the transactions contemplated hereunder and ending

 

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immediately prior to the execution hereof.  Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Shares covered by this Agreement.  Other than to other Persons party to this Agreement, such Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction).  Notwithstanding the foregoing, for avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions, with respect to the identification of the availability of, or securing of, available shares to borrow in order to effect Short Sales or similar transactions in the future.

 

(h)           No Legal Advice From the Company.  Such Purchaser acknowledges, that it had the opportunity to review this Agreement and the transactions contemplated by this Agreement with his or its own legal counsel and investment and tax advisors.  Such Purchaser is relying solely on such counsel and advisors and not on any statements or representations of the Company or any of its representatives or agents for legal, tax or investment advice with respect to this investment, the transactions contemplated by this Agreement or the securities laws of any jurisdiction.

 

(i)            Regulation M.  Such Purchaser is aware that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of Common Stock and other activities with respect to the Common Stock by the Purchasers.

 

(j)            Ownership.  Assuming the accuracy of the Company’s representations and warranties set forth in Section 3.1(f), such Purchaser will not own more than 19.9% of the Common Stock immediately following the Closing.

 

ARTICLE IV
 OTHER AGREEMENTS OF THE PARTIES

 

4.1          Transfer Restrictions.

 

(a)           The Shares may only be disposed of in compliance with state and federal securities laws.  In connection with any transfer of Shares other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Purchaser or in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Shares under the Securities Act.

 

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(b)           The Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any certificate evidencing the Shares in the following form:

 

THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

The Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Shares to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement and, if required under the terms of such arrangement, such Purchaser may transfer pledged or secured Shares to the pledgees or secured parties.  Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith.  Further, no notice shall be required of such pledge.  At the appropriate Purchaser’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Shares may reasonably request in connection with a pledge or transfer of the Shares.

 

(c)           Certificates evidencing the Shares shall not be required to contain any legend (including the legend set forth in Section 4.1(b) hereof): (i) following a sale of the Shares pursuant to a registration statement covering the resale of such Shares, while such registration statement is effective under the Securities Act, (ii) following any sale of such Shares pursuant to Rule 144, (iii) if such Shares are eligible for sale under Rule 144, without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Shares and without volume or manner-of-sale restrictions or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission).

 

(d)           The Company agrees that following such time as the legend is no longer required under Section 4.1(c), it will, no later than three Trading Days following the delivery by a Purchaser to the Transfer Agent of a (i) certificate representing Shares issued with a restrictive legend if such Shares are certificated, or (ii) written notice

 

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requesting the removal of any restrictive legend from the entry in the applicable balance account evidencing such Shares, as the case may be, (such third Trading Day, the “Legend Removal Date”), deliver or cause to be delivered to such Purchaser such Shares, free from all restrictive and other legends, by crediting the account of the Purchaser’s prime broker with the Depository Trust Company System as directed by such Purchaser.  The Company may not make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section 4.  In addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated damages and not as a penalty, for each $1,000 of Shares (based on the VWAP of the Common Stock on the date such Shares are submitted to the Transfer Agent) delivered for removal of the restrictive legend, $5 per Trading Day for each Trading Day after the Legend Removal Date until such Shares are delivered without a legend.  The payments to which a Purchaser shall be entitled pursuant to this Section 4.1(d) are referred to herein as “Legend Removal Failure Payments.”  Nothing herein shall limit such Purchaser’s right to pursue actual damages for the Company’s failure to deliver any Shares as required by this Section 4.1, and such Purchaser shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.

 

(e)           Each Purchaser, severally and not jointly with the other Purchasers, agrees with the Company that such Purchaser will sell any Shares pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if Shares are sold pursuant to a registration statement, they will be sold in compliance with the plan of distribution set forth therein, and acknowledges that the removal of the restrictive legend from certificates representing Shares as set forth in this Section 4.1 is predicated upon the Company’s reliance upon this understanding.

 

4.2          Furnishing of Information; Public Information.

 

(a)           Until the time that no Purchaser owns Shares, the Company covenants to use commercially reasonable efforts to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange Act.

 

(b)           At any time during the period commencing from the six (6) month anniversary of the date hereof and ending at such time that all of the Shares may be sold by a purchaser without the requirement for the Company to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144, if the Company shall fail for any reason to satisfy the current public information requirement under Rule 144(c) (a “Public Information Failure”) then, in addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated damages and not as a penalty, by reason of any such delay in or reduction of its ability to sell the Shares, an amount in cash equal to two percent (2.0%) of the aggregate Subscription Amount of such Purchaser’s Shares on the day of a Public Information Failure and on every thirtieth (30th) day (pro-rated for periods totaling less

 

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than thirty days) thereafter until the earlier of (a) the date such Public Information Failure is cured and (b) such time that such public information is no longer required for such Purchaser to transfer the Shares pursuant to Rule 144.  The payments to which a Purchaser shall be entitled pursuant to this Section 4.2(b) are referred to herein as “Public Information Failure Payments.”  Public Information Failure Payments shall be paid on the earlier of (i) the last day of the calendar month during which such Public Information Failure Payments are incurred and (ii) the third (3rd) Trading Day after the event or failure giving rise to the Public Information Failure Payments is cured.  Nothing herein shall limit such Purchaser’s right to pursue actual damages for the Public Information Failure, and such Purchaser shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.

 

(c)           Notwithstanding anything to the contrary herein, the aggregate amount of Public Information Payments and Legend Removal Failure payments due hereunder to any particular Purchaser shall not exceed six percent (6.0%) of the aggregate Subscription Amount of such Purchaser’s Shares.

 

4.3          Acknowledgment of Dilution.  The Company acknowledges that the issuance of the Shares may result in dilution of the outstanding shares of Common Stock, which dilution may be substantial under certain market conditions.  The Company further acknowledges that its obligations under this Agreement, including, without limitation, its obligation to issue the Shares pursuant to this Agreement, are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless of the effect of any such dilution or any claim the Company may have against any Purchaser and regardless of the dilutive effect that such issuance may have on the ownership of the other stockholders of the Company.

 

4.4          Integration.  Each Purchaser understands that the Company may issue additional securities after the date hereof; provided, however, that the Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Shares in a manner that would require the registration under the Securities Act of the sale of the Shares or that would be integrated with the offer or sale of the Shares for purposes of the rules and regulations of the Trading Market such that it would require stockholder approval prior to the closing of such other transaction unless stockholder approval is obtained before the closing of such subsequent transaction.

 

4.5          Securities Laws Disclosure; Publicity.  The Company shall, by 9:00 a.m. (New York City time) on the Trading Day immediately following the date hereof, issue a press release disclosing the material terms of the transactions contemplated hereby, and shall, within four (4) Trading Days following the date hereof, file a Current Report on Form 8-K disclosing the material terms of the transactions contemplated hereby and including this Agreement as an exhibit thereto.  The Company and each Purchaser shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any Purchaser, or without the prior consent of each Purchaser, with respect to any press release

 

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of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication.  Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure.

 

4.6          Shareholder Rights Plan.  No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that any Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Shares under this Agreement or under any other agreement among the Company and the Purchasers.

 

4.7          Non-Public Information.  Except with respect to the material terms and conditions of the transactions contemplated by this Agreement, the Company covenants and agrees that neither it, nor any other Person acting on its behalf, will provide any Purchaser that is not affiliated with a member of the Board of Directors, or such Purchaser’s agents or counsel, with any information that the Company believes constitutes material non-public information, unless prior thereto such Purchaser shall have entered into a written agreement with the Company regarding the confidentiality and use of such information.  The Company understands and confirms that each Purchaser that is not affiliated with a member of the Board of Directors shall be relying on the foregoing covenant in effecting transactions in securities of the Company.

 

4.8          Use of Proceeds.  The Company shall use the net proceeds from the sale of the Shares hereunder for working capital and general corporate purposes and shall not use such proceeds for: (a) the redemption of any Common Stock or Common Stock Equivalents, (b) the settlement of any outstanding litigation or (c) in violation of the Money Laundering Laws or OFAC regulations.

 

4.9          Indemnification of Purchasers.  The Company will indemnify and hold each Purchaser and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur due to a claim by a third party as a result of or relating to any action instituted against the Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Purchaser Parties, with respect to any of the

 

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transactions contemplated by this Agreement (unless such action is based upon a breach of such Purchaser Party’s representations, warranties or covenants under this Agreement or any agreements or understandings such Purchaser Parties may have with any such stockholder or any violations by such Purchaser Parties of state or federal securities laws or any conduct by such Purchaser Parties which constitutes fraud, gross negligence, willful misconduct or malfeasance).  If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party.  Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel for all Purchaser Parties entitled to indemnification hereunder.  The Company will not be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement.  The indemnity agreements contained herein shall be in addition to any cause of action or similar right of any Purchaser Party against the Company and any liabilities that the Company may be subject to pursuant to law.  The Company will have the exclusive right to settle any claim or proceeding, provided that the Company will not settle any such claim, action or proceeding without the prior written consent of the Purchaser Party, which will not be unreasonably withheld or delayed; provided, however, that such consent shall not be required if the settlement includes a full and unconditional release satisfactory to the Purchaser Party from all liability arising or that may arise out of such claim or proceeding and does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any Purchaser Party.

 

4.10        Listing of Common Stock.  The Company shall have submitted a Listing of Additional Shares Notification Form to the Trading Market and shall have received no objection thereto.  The Company shall use its commercially reasonable efforts to take all steps necessary to maintain, so long as any other shares of Common Stock shall be so listed, such listing.

 

4.11        Equal Treatment of Purchasers.  No consideration (including any modification of this Agreement) shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of this Agreement unless the same consideration is also offered to all of the parties to this Agreement.  For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of Shares or otherwise.

 

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4.12        Certain Transactions and Confidentiality.  Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither it, nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including Short Sales, of any of the Company’s securities during the period commencing with the execution of this Agreement and ending at such time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.5.  Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company pursuant to the initial press release as described in Section 4.5, such Purchaser will maintain the confidentiality of the existence and terms of this transaction and the information included in this Agreement. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the covenant set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Shares covered by this Agreement. Notwithstanding the foregoing, and notwithstanding anything contained in this Agreement to the contrary, the Company expressly acknowledges and agrees that (i) no Purchaser makes any representation, warranty or covenant hereby that it will not engage in effecting transactions in any securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.5, (ii) no Purchaser shall be restricted or prohibited from effecting any transactions in any securities of the Company in accordance with applicable securities laws from and after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.5 and (iii) no Purchaser shall have any duty of confidentiality to the Company after the issuance of the initial press release as described in Section 4.5.  Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the covenant set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Shares covered by this Agreement.

 

4.13        Form D; Blue Sky Filings.  The Company agrees to timely file a Form D with respect to the Shares as required under Regulation D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Shares for, sale to the Purchasers at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such actions promptly upon request of any Purchaser.

 

4.14        Registration Rights.  The Company covenants and agrees as follows:

 

(a)           Within 60 days following a written request to the Company by the Purchasers holding at least fifty percent (50%) of the Registrable Shares then outstanding, or such earlier time as the Company in its sole discretion may agree in

 

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writing, the Company shall file a prospectus supplement or a registration statement to register the resale of the Registrable Shares on a Form S-3 registration statement, or Form S-1 registration statement if the Company is not eligible to use Form S-3, under the Securities Act and shall use commercially reasonable efforts to have such registration statement declared effective.  The Purchasers shall provide any information reasonably requested by the Company to be included in such registration statement.  The Company shall maintain the effectiveness of such registration statement for a period to terminate upon the earliest of (i) two (2) years following the effectiveness of such registration statement, (ii) the date on which all Registrable Shares covered by such registration statement have been sold and (iii) the date on which all such Registrable Shares covered by such registration statement may be sold pursuant to Rule 144(b)(1)(i), such that the Shares can be resold by the Purchaser as a non-affiliate that has held such securities for at least one year.

 

(b)           Notwithstanding the obligations in Section 4.14(a), if the Company furnishes to the Purchasers requesting a registration pursuant to this Section 4.14 a certificate signed by the Company’s chief executive officer stating that in the good faith judgment of the Board of Directors it would be materially detrimental to the Company and its stockholders for such registration statement to either become effective or remain effective for as long as such registration statement otherwise would be required to remain effective, because such action would (i) materially interfere with a significant acquisition, corporate reorganization, or other similar transaction involving the Company; (ii) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with requirements under the Securities Act or Exchange Act, then the Company shall have the right to defer taking action with respect to such filing, and any time periods with respect to filing or effectiveness thereof shall be tolled correspondingly, for a period of not more than sixty (60) days after the request of the Purchasers is given.

 

(c)           All expenses incurred in connection with registrations, filings or qualifications pursuant to this Section 4.14, including all registration, filing and qualification fees; printers’ and accounting fees; and fees and disbursements of counsel for the Company, shall be borne and paid by the Company. All (i) underwriting discounts and selling commission, but only to the extent that the Subscriber intends to distribute the Registrable Shares by means of an underwriting, (ii) fees and disbursements of counsel for the Purchasers and (iii) transfer taxes incurred in connection with the sale of any Shares by any Purchaser (collectively “Selling Expenses”) shall be borne by the Purchasers.  For the avoidance of doubt, the Company shall not bear any Selling Expenses in connection with its obligations pursuant to this Section 4.14.

 

(d)           To the extent permitted by law, the Company will indemnify and hold harmless each Purchaser, and its partners, members, officers and directors (collectively, “Purchaser Indemnified Parties”), against any loss, damage, claim or liability (joint or several) insofar as such loss, damage, claim or liability arises out of and is based upon: (A) any untrue statement or alleged untrue statement of a material fact contained in any registration statement of the Company registering the resale of the Registrable Shares, including any preliminary prospectus or final prospectus contained therein or any

 

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amendments or supplements thereto or (B) an omission or alleged omission to state in such registration statement a material fact required to be stated therein, or necessary to make the statements therein not misleading; provided, however, that the indemnity agreement contained in this Section 4.14(d) shall not apply (i) to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, (ii) any Losses to the extent that they arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of any Purchaser Indemnified Party expressly for use in connection with such registration or (iii) to the extent it is judicially determined that any Purchaser Indemnified Party is not entitled to indemnification hereunder.

 

(e)           To the extent permitted by law, each Purchaser, severally and not jointly, will indemnify and hold harmless the Company and its partners, members, officers and directors (collectively, “Company Indemnified Parties”), against any loss, damage, claim or liability (joint or several) insofar as such loss, damage, claim or liability arises out of and is based upon: (A) any untrue statement or alleged untrue statement of a material fact contained in any registration statement of the Company registering the resale of the Registrable Shares, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto or (B) an omission or alleged omission to state in such registration statement a material fact required to be stated therein, or necessary to make the statements therein not misleading, in each case, only to the extent such untrue statement or omission is contained in any information furnished to the Company by such Purchaser specifically for inclusion in such registration statement; provided, however, that the indemnity agreement contained in this Section 4.14(e) shall not apply (i) to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of such Purchaser, which consent shall not be unreasonably withheld, or (ii) to the extent it is judicially determined that any Company Indemnified Party is not entitled to indemnification hereunder.

 

(f)            Any person entitled to indemnification pursuant to this Section 4.14 shall (i) give prompt notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided that any person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such person unless (a) the indemnifying party has agreed to pay such fees or expenses, or (b) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such person or (c) in the reasonable judgment of any such person, based upon written advice of its counsel, a conflict of interest exists between such person and the indemnifying party with respect to such claims (in which case, if the person notifies the indemnifying party in writing that such person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such person); and provided, further, that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations hereunder, except to the extent that such failure to give notice

 

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shall materially adversely affect the indemnifying party in the defense of any such claim or litigation.  It is understood that the indemnifying party shall not, in connection with any proceeding in the same jurisdiction, be liable for fees or expenses of more than one separate firm of attorneys at any time for all such indemnified parties.  No indemnifying party will, except with the consent of the indemnified party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation.

 

(g)           If for any reason the indemnification provided for in this Section 4.14 is unavailable to an indemnified party or insufficient to hold it harmless, other than as expressly specified therein, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the indemnified party and the indemnifying party, as well as any other relevant equitable considerations.  No person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act shall be entitled to contribution from any person not guilty of such fraudulent misrepresentation.

 

ARTICLE V
 MISCELLANEOUS

 

5.1          Fees and Expenses.  Except as expressly set forth in this Agreement to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement.  The Company shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied in connection with the delivery of any Shares to the Purchasers.

 

5.2          Entire Agreement.  This Agreement, together with the exhibits and schedules hereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

 

5.3          Notices.  Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd)  Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given.  The address for such notices and communications shall be as set forth on the signature pages attached hereto.

 

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5.4          Amendments; Waivers.  No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and the Purchasers holding a majority in interest, or the right to acquire a majority in interest, of the Shares sold pursuant to this Agreement then outstanding or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought.  No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

 

5.5          Headings.  The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

 

5.6          Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns.  The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Purchaser (other than by merger).  Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Shares, provided that such transferee agrees in writing to be bound, with respect to the transferred Shares, by the provisions of this Agreement that apply to the “Purchasers.”

 

5.7          No Third-Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

 

5.8          Governing Law; Jurisdiction.  All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof.  Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an  inconvenient venue for such proceeding.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

 

31

 

5.9          Survival.  Notwithstanding any investigation made by any party to this Agreement, the representations and warranties contained herein shall survive the Closing and the delivery of the Shares.

 

5.10        Execution.  This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

 

5.11        Severability.  If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

 

5.12        Replacement of Shares.  If any certificate or instrument evidencing any Shares is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction.  The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Shares.

 

5.13        Remedies.  In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under this Agreement.  The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in this Agreement and hereby agree to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

 

5.14        Independent Nature of Purchasers’ Obligations and Rights.  The obligations of each Purchaser under this Agreement are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance or non-performance of the obligations of any other Purchaser under this Agreement.  Nothing contained herein, and no action taken by any Purchaser pursuant hereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this Agreement.  Each Purchaser shall be entitled to independently protect and enforce its rights, including, without limitation, the rights

 

32

 

arising out of this Agreement, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose.  Each Purchaser has been represented by its own separate legal counsel in their review and negotiation of this Agreement.  The Company has elected to provide all Purchasers with the same terms for the convenience of the Company and not because it was required or requested to do so by any of the Purchasers.

 

5.15        Construction.  The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise this Agreement and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments hereto.  In addition, each and every reference to share prices and shares of Common Stock in this Agreement shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.

 

5.16        WAIVER OF JURY TRIAL.  IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

 

(Signature Pages Follow)

 

33

 

IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

	
AGILE   THERAPEUTICS, INC.
    	
 
    	
Address   for Notice:
    
	
 
    	
 
    	
101   Poor Farm Road
    
	
 
    	
 
    	
Princeton,   New Jersey 08540
    
	
By:
    	
/s/   Al Altomari
    	
 
    	
Fax: (609) 683-1855
    
	
 
    	
Name:   Al Altomari
    	
 
    	
 
    
	
 
    	
Title:   Chairman and Chief Executive Officer
    	
 
    	
 
    
	
With   a copy to (which shall not constitute notice):
    	
 
    	
 
    
	
Morgan,   Lewis & Bockius LLP
    	
 
    	
 
    
	
502   Carnegie Center
    	
 
    	
 
    
	
Princeton,   New Jersey 08540
    	
 
    	
 
    
	
Attn:   Steven Cohen
    	
 
    	
 
    
	
Fax:   (609) 919-6701
    	
 
    	
 
    

 

 

[PURCHASER SIGNATURE PAGES TO AGRX STOCK PURCHASE AGREEMENT]

 

IN WITNESS WHEREOF, the undersigned have caused this Stock Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

Name of Purchaser: Perceptive Life Sciences Master Fund, Ltd.

 

	
Signature   of Authorized Signatory of Purchaser:
    	
/s/ Joseph Edelman
    	
 
    

 

Name of Authorized Signatory: Joseph Edelman

 

Title of Authorized Signatory: Managing Member of the Investment Manager

 

Email Address of Authorized Signatory: accounting@perceptivelife.com

 

Facsimile Number of Authorized Signatory: 646-205-5301

 

Address for Notice of Purchaser:

Perceptive Advisors, LLC

51 Astor Place — 10th Floor

New York, NY 10003

 

Address for Delivery of Direct Registration System statement for Purchaser (if not same as address for notice):

 

SUBSCRIPTION AMOUNT:  $7,836,877.50

 

NUMBER OF SHARES: 8,426,750

 

EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

 

 

EXHIBIT A

 

SCHEDULE OF PURCHASER

 

	
Name and Address of Purchaser
    	
 
    	
Number of Shares
   Purchased
    	
 
    	
Subscription Amount
    	
 
    
	
Perceptive Life Sciences Master Fund, Ltd.
    	
 
    	
8,426,750
    	
 
    	
$
    	
7,836,877.50
    	
 
    
	
51 Astor Place — 10th Floor
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
New York, NY 10003
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
TOTAL
    	
 
    	
8,426,750
    	
 
    	
$
    	
7,836,877.50Exhibit 10.15

 

SECOND AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

CAPITALA SENIOR LOAN FUND II, LLC 

(A Delaware Limited Liability Company)

 

DATED AS OF December
20, 2018

 

THEse securities ARE
SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOuLd
be aware that they will be required to bear the financial risks of this investment for an indefinite period of time.

 

     

     

    

 

Table
of Contents

 

	 	 	Page
	 	 	 
	ARTICLE 1
	 
	DEFINITIONS
	 
	ARTICLE 2
	 
	GENERAL PROVISIONS
	 	 	 
	Section 2.1	Amendment and Restatement of Existing Agreement	9
	Section 2.2	Formation of Fund	9
	Section 2.3	Fund Name	9
	Section 2.4	Registered Agent and Office	9
	Section 2.5	Purpose and Powers of the Fund	9
	Section 2.6	Fiscal Year	9
	Section 2.7	Liability of Members	10
	Section 2.8	Member List	10
	 	 	 
	ARTICLE 3	 
	 	 	 
	FUND CAPITAL AND INTERESTS	 
	 	 	 
	Section 3.1	Capital Commitments	10
	Section 3.2	Temporary Advances	11
	Section 3.3	Defaulting Members	11
	Section 3.4	Interest or Withdrawals	12
	Section 3.5	Admission of Additional Members	12
	 	 	 
	ARTICLE 4	 
	 	 	 
	ALLOCATIONS	 
	 	 	 
	Section 4.1	Members Receiving Allocations	12
	Section 4.2	Allocation of Net Profits and Net Losses	12
	Section 4.3	Special Allocations	12
	Section 4.4	Loss Limitation	14
	Section 4.5	Curative Allocations	14
	Section 4.6	Tax Allocations:  Code Section 704(c)	15
	Section 4.7	Other Allocation Rules	15

 

    -i- 

     

    

 

TABLE OF CONTENTS

(continued)

 

	 	 	Page
	 
	ARTICLE 5
	 
	DISTRIBUTIONS
	 	 	 
	Section 5.1	General	15
	Section 5.2	Withholding	16
	Section 5.3	Reserves; Certain Limitations; Distributions in Kind	16
	 	 	 
	ARTICLE 6
	 
	MANAGEMENT OF FUND
	 	 	 
	Section 6.1	Board of Managers	16
	Section 6.2	Appointment and Removal of Managers	17
	Section 6.3	Meetings of the Board of Managers	17
	Section 6.4	Delegation of Authority	18
	Section 6.5	Investment Committee	19
	Section 6.6	Administrative Services Agreement	20
	Section 6.7	Leverage Matters	20
	Section 6.8	Specific Consent Regarding Affiliate Transactions	20
	Section 6.9	Reliance by Third Parties	20
	Section 6.10	Partnership Representative	21
	Section 6.11	Fund Expenses	21
	Section 6.12	Action by the Members	21
	 	 	 
	ARTICLE 7
	 
	DUTIES; LIABILITY; INDEMNIFICATION
	 	 	 
	Section 7.1	Duties	21
	Section 7.2	Outside Transactions; Investment Opportunities; Time and Attention	21
	Section 7.3	Limited Liability; Exculpation	22
	Section 7.4	Indemnification	23
	 	 	 
	ARTICLE 8
	 
	TRANSFERS OF FUND INTERESTS; WITHDRAWALS
	 	 	 
	Section 8.1	Transfers by Members	24
	Section 8.2	Withdrawal by Members	26

 

    -ii- 

     

    

 

TABLE OF CONTENTS

(continued)

 

	 	 	Page
	 
	ARTICLE 9
	 
	TERM, DISSOLUTION AND LIQUIDATION OF FUND
	 	 	 
	Section 9.1	Term	27
	Section 9.2	Dissolution	27
	Section 9.3	Wind-down	27
	 	 	 
	ARTICLE 10
	 
	ACCOUNTING, REPORTING AND VALUATION PROVISIONS
	 	 	 
	Section 10.1	Books and Accounts	29
	Section 10.2	Financial Reports; Tax Return	29
	Section 10.3	Tax Elections	30
	Section 10.4	Confidentiality	30
	Section 10.5	Valuation	32
	 	 	 
	ARTICLE 11
	 
	MISCELLANEOUS PROVISIONS
	 	 	 
	Section 11.1	[Reserved]	32
	Section 11.2	Force Majeure	32
	Section 11.3	Applicable Law	33
	Section 11.4	Waivers	33
	Section 11.5	Notices	33
	Section 11.6	Construction	33
	Section 11.7	Amendments	34
	Section 11.8	Legal Counsel	34
	Section 11.9	Execution	34
	Section 11.10	Binding Effect	34
	Section 11.11	Severability	35
	Section 11.12	Entire Agreement	35

 

    -iii- 

     

    

 

SECOND AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF 

CAPITALA SENIOR LOAN FUND II, LLC

(A Delaware Limited Liability Company)

 

This SECOND AMENDED AND RESTATED LIMITED
LIABILITY COMPANY AGREEMENT (this “Agreement”) of Capitala Senior Loan Fund II, LLC, a Delaware limited
liability company (the “Fund”), made and entered into as of December 20, 2018, is by and between Capitala
Finance Corp., a Maryland corporation (the “BDC”) and Trinity Universal Insurance Company, a Texas
corporation (“Trinity” and, together with the BDC, the “Members”). Capitalized terms used
but not defined herein shall have the meanings set forth in ARTICLE 1.

 

RECITALS

 

WHEREAS, the Fund was formed
on January 5, 2015 by the filing of its certificate of formation with the Delaware Secretary of State with the name Capitala Senior
Liquid Loan Fund I, LLC and was initially governed by the Limited Liability Company Agreement of the Fund dated as of January 5,
2015 (the “Original Agreement”);

 

WHEREAS, the Original Agreement
was amended and restated in its entirety by a First Amended and Restated Limited Liability Company Agreement dated as of March
24, 2015 (the “Existing Agreement”);

 

WHEREAS, as of June 29, 2018,
Stephen Riddell was replaced by Peter Sherman as a BDC Manager pursuant to Section 6.2(b) of the Existing Agreement;

 

WHEREAS, as of June 29, 2018,
Stephen Riddell was replaced by Peter Sherman as the BDC’s appointee to the Investment Committee pursuant to Section 6.5(b)
of the Existing Agreement;

 

WHEREAS, as of November 27,
2018 the certificate of formation of the Fund was amended to change the name of the Fund from “Capitala Senior Liquid Loan
Fund I, LLC” to “Capitala Senior Loan Fund II, LLC”; and

 

WHEREAS, the Existing Agreement
is hereby amended and restated in its entirety pursuant to Section 11.7 thereof, to reflect the Fund’s previous name change,
to reflect the previous changes to the composition of the Board of Managers and the Investment Committee, and to make certain significant
modifications, and the terms and conditions contained therein are hereby amended and restated in their entirety as set forth herein.

 

NOW, THEREFORE, in consideration
of the mutual covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby amend and restate the Existing Agreement, which is replaced and superseded in its
entirety by this Agreement, as follows:

 

     

     

    

 

ARTICLE
1

 

DEFINITIONS

 

The following capitalized
terms shall have the meanings specified below:

 

“Acceptance Period”
has the meaning set forth in Section 8.1(g).

 

“Act” has
the meaning set forth in Section 2.2.

 

“Adjusted Capital
Account Deficit” means, with respect to any Member, the deficit balance, if any, in such Member’s Capital Account
as of the end of the relevant year, after giving effect to the following adjustments:

 

(a)          Credit
to such Capital Account of any amounts which such Member is deemed to be obligated to restore pursuant to the penultimate sentences
in Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and

 

(b)          Debit
to such Capital Account the items described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6).

 

The foregoing definition
of Adjusted Capital Account Deficit is intended to comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall
be interpreted consistently therewith.

 

“Administrative Agent”
means Capitala Advisors Corp., a North Carolina corporation.

 

“Administrative Services
Agreement” means the Amended and Restated Administrative Services Agreement between the Fund and the Administrative Agent,
dated as of the date hereof, as further amended from time to time with the approval of the Board of Managers.

 

“Affiliate”
with respect to a Person, means any other Person that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person.

 

“Agreement”
has the meaning set forth in the introductory paragraph.

 

“Allocation Requirements”
has the meaning set forth in Section 7.2(b).

 

“Approved Investment
Agreement” has the meaning set forth in Section 6.8.

 

“BDC” has
the meaning set forth in the introductory paragraph.

 

    	 	2	 

     

    

 

“BDC Managers”
has the meaning set forth in Section 6.2(a).

 

“Board of Managers”
has the meaning set forth in Section 6.1.

 

“Business Day”
means any day other than a Saturday, Sunday or holiday observed by the New York Stock Exchange LLC.

 

“Call Due Date”
has the meaning set forth in Section 3.1(a).

 

“Capital Account”
means, with respect to any Member, the capital account maintained for such Member in accordance with the following provisions:

 

(a)          To
each Member’s Capital Account there shall be credited (i) such Member’s Capital Contribution, (ii) such Member’s
distributive share of Net Profits and any items in the nature of income or gain that are specially allocated to such Member pursuant
to Section 4.3, Section 4.4 or Section 4.5, and (iii) the amount of any Fund liabilities assumed by such
Member or which are secured by any property distributed to such Member. The principal amount of a promissory note that is not readily
traded on an established securities market and is contributed to the Fund by the maker of the note (or a Member related to the
maker of the note within the meaning of Regulations Section 1.704-1(b)(2)(ii)(c)) shall not be included in the Capital Account
of any Member until the Fund makes a taxable disposition of the note or until (and to the extent) principal payments are made on
the note, all in accordance with Regulations Section 1.704-1(b)(2)(iv)(d)(2);

 

(b)          To
each Member’s Capital Account there shall be debited (i) the amount of cash and the Gross Asset Value of any property
distributed to such Member pursuant to any provision of this Agreement, (ii) such Member’s distributive share of Net
Losses and any items in the nature of expenses or losses that are specially allocated to such Member pursuant to Section 4.3,
Section 4.4 or Section 4.5, and (iii) the amount of any liabilities of such Member assumed by the Fund or which
are secured by any property contributed by such Member to the Fund;

 

(c)          In
the event a Membership Interest is assigned in accordance with the terms of this Agreement, the Transferee shall succeed to the
Capital Account of the Transferor to the extent it relates to the assigned Membership Interest; and

 

(d)          In
determining the amount of any liability for purposes of subparagraphs (a) and (b) above, there shall be taken into account
Code Section 752(c) and any other applicable provisions of the Code and Regulations.

 

The foregoing provisions and
the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Regulations
Section 1.704-1(b), and shall be interpreted and applied in a manner consistent with such Regulations. In the event the Administrative
Agent shall determine that it is prudent to modify the manner in which the Capital Accounts, or any debits or credits thereto (including,
without limitation, debits or credits relating to liabilities which are secured by contributed or distributed property or which
are assumed by the Fund or any Members), are computed in order to comply with such Regulations, the Administrative Agent may with
the consent of the Board of Managers make such modification. The Administrative Agent with the consent of the Board of Managers
also shall (i) make any adjustments that are necessary or appropriate to maintain equality between the Capital Accounts of
the Members and the amount of capital reflected on the Fund’s balance sheet, as computed for book purposes, in accordance
with Regulations Section 1.704-1(b)(2)(iv)(q), and (ii) make any appropriate modifications in the event unanticipated events
might otherwise cause this Agreement not to comply with Regulations Section 1.704-1(b).

 

    	 	3	 

     

    

 

“Capital Call Notice”
has the meaning set forth in Section 3.1(a).

 

“Capital Commitment”
means, with respect to any Member, the total amount set forth in such Member’s Subscription Agreement delivered on the date
hereof, which amount is set forth on the Members List and which amount such Member has agreed to contribute to the Fund as such
Member’s Capital Contribution.

 

“Capital Contribution”
means, with respect to any Member, the aggregate amount of cash actually contributed to the equity capital of the Fund by such
Member on or after the date hereof as set forth in Section 3.1. The Capital Contribution of a Member that is a Transferee
of all or a portion of a Membership Interest shall include the Capital Contribution of the Transferor of such Membership Interest
(or a pro rata portion thereof in the case of a Transfer of less than the entire Membership Interest of the Transferor).
For the avoidance of doubt, any capital contributions made by the Members prior to the date hereof pursuant to the Existing Agreement
shall not constitute “Capital Contributions” for purposes of this Agreement.

 

“Code”
means the Internal Revenue Code of 1986, as from time to time amended.

 

“Confidential Information”
has the meaning set forth in Section 10.4(a).

 

“Damages”
has the meaning set forth in Section 7.3(b).

 

“Defaulting Member”
has the meaning set forth in Section 3.3.

 

“Depreciation”
means, for any given fiscal year, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable
with respect to an asset of the Fund for such year, except that if the Gross Asset Value of an asset differs from its adjusted
basis for federal income tax purposes at the beginning of such year, Depreciation shall be an amount which bears the same ratio
to such beginning Gross Asset Value as the federal income tax depreciation, amortization, or other cost recovery deduction for
such year bears to such beginning adjusted tax basis; provided, however, that if the adjusted basis for federal income
tax purposes of an asset at the beginning of such year is zero, Depreciation shall be determined with reference to such beginning
Gross Asset Value using any reasonable method selected by the Administrative Agent.

 

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

 

“ERISA Plan”
means a Person that is an “employee benefit plan” within the meaning of, and subject to the provisions of, ERISA.

 

“Existing Agreement”
has the meaning set forth in the Recitals.

 

    	 	4	 

     

    

 

“Fund”
has the meaning set forth in the introductory paragraph.

 

“Fund Expenses”
has the meaning set forth in Section 6.11.

 

“Fund Minimum
Gain” means “partnership minimum gain” as defined in Regulations Section 1.704-2(b)(2) and determined in
accordance with Regulations Section 1.704-2(d).

 

“Gross Asset Value”
means, with respect to any asset, the asset’s adjusted basis for federal income tax purposes, except as follows (provided
that any determination by the Administrative Agent pursuant to this sentence shall be effective only if approved by the Board of
Managers):

 

(a)          the
initial Gross Asset Value of any asset contributed by a Member to the Fund shall be the gross fair market value of such asset,
as determined by the Administrative Agent;

 

(b)          the
Gross Asset Values of all Fund assets shall be adjusted to equal their respective gross fair market values (taking Code Section
7701(g) into account), as determined by the Administrative Agent as of the following times: (i) the acquisition of additional
Membership Interests in the Fund by any Person in exchange for more than a de minimis capital contribution or upon the exercise
of an option; (ii) the distribution by the Fund to a Member of more than a de minimis amount of Fund property as consideration
for Membership Interests; (iii) the grant of an interest in the Fund (other than a de minimis interest) as consideration for
the provision of services to or for the benefit of the Fund; and (iv) the liquidation of the Fund within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g);

 

(c)          the
Gross Asset Value of any item of Fund assets distributed to any Member shall be adjusted to equal the gross fair market value (taking
Code Section 7701(g) into account) of such asset on the date of distribution as determined by the Administrative Agent; and

 

(d)          the
Gross Asset Values of Fund assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in
determining Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m) and subparagraph (f) of the definition of “Net
Profits” and “Net Losses”; provided, however, that Gross Asset Values shall not be adjusted pursuant
to this subparagraph (d) to the extent that an adjustment pursuant to subparagraph (b) is required in connection with a transaction
that would otherwise result in an adjustment pursuant to this subparagraph (d).

 

If the Gross Asset Value of
an asset has been determined or adjusted pursuant to subparagraph (b) or (d), such Gross Asset Value shall thereafter be adjusted
by the Depreciation taken into account with respect to such asset, for purposes of computing Net Profits and Net Losses.

 

“Indemnified Person”
has the meaning set forth in Section 7.3(b).

 

“Initial Investments”
has the meaning set forth in Section 3.2(b).

 

    	 	5	 

     

    

 

 

“Investment”
means an investment in Underlying Loans held, directly or indirectly, by the Fund from time to time. Investments do not include
interests in any subsidiaries of the Fund and also do not include Leverage.

 

“Investment Committee”
has the meaning set forth in Section 6.5(a).

 

“Investment Company
Act” has the meaning set forth in Section 7.2(b).

 

“Leverage”
means any form of direct or indirect leverage of any kind.

 

“LIBOR Rate”
means the one-month London InterBank Offered Rate, which for purposes hereof shall be deemed to equal for each day of a calendar
quarter such rate as of the first day of such quarter.

 

“Liquidator”
means the Person or Persons conducting the liquidation of the Fund, chosen in accordance with Section 9.3(a).

 

“Manager”
has the meaning set forth in Section 6.1.

 

“Member”
has the meaning set forth in the introductory paragraph hereto, and also includes any other Person that becomes a Member of the
Fund in accordance with the terms hereof.

 

“Member List”
has the meaning set forth in Section 2.8.

 

“Member Nonrecourse
Debt” has the same meaning as the term “partner nonrecourse debt” in Regulations Section 1.704-2(b)(4).

 

“Member Nonrecourse
Debt Minimum Debt Gain” means an amount, with respect to each Member Nonrecourse Debt, equal to the Fund Minimum Gain
that would result if such Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Regulations
Section 1.704-2(i)(3).

 

“Member Nonrecourse
Deductions” has the same meaning as the term “partner nonrecourse deductions” in Regulations Sections 704-2(i)(l)
and 1.704-2(i)(l) and 1.704-2(i)(2).

 

“Membership Interest”
means a Person’s share of the Net Profits and Net Losses of, and right to receive distributions from, the Fund.

 

“Membership Interest
Percentage” in respect of a Member means the percentage of the Capital Commitments of all of the Members represented
by such Member’s Capital Commitment.

 

“Net Profits”
or “Net Losses” means, with respect to any fiscal year, an amount equal to the Fund’s taxable income or
loss for such year, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss, or deduction
required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following
adjustments (without duplication):

 

    	 	6	 

     

    

  

(a)          Any
income of the Fund that is exempt from federal income tax and not otherwise taken into account in computing Net Profits or Net
Losses pursuant to this definition of “Net Profits” and “Net Losses” shall be added to such taxable income
or loss;

 

(b)          Any
expenditures of the Fund described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Net Profits or Net Losses pursuant
to this definition of “Net Profits” and “Net Losses” shall be subtracted from such taxable income or loss;

 

(c)          In
the event the Gross Asset Value of any Fund asset is adjusted pursuant to subparagraphs (b) or (c) of the definition of Gross Asset
Value, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the Gross Asset Value of
the asset) or an item of loss (if the adjustment decreases the Gross Asset Value of the asset) from the disposition of such asset
and shall be taken into account for purposes of computing Net Profits or Net Losses;

 

(d)          Gain
or loss resulting from any disposition of property with respect to which gain or loss is recognized for federal income tax purposes
shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis
of such property differs from its Gross Asset Value;

 

(e)          In
lieu of the depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income
or loss, there shall be taken into account Depreciation for such year, computed in accordance with the definition of Depreciation;

 

(f)          To
the extent an adjustment to the adjusted tax basis of any Fund asset pursuant to Code Section 734(b) is required, pursuant to Regulations
Section 1.704-(b)(2)(iv)(m)(4), to be taken into account in determining Capital Accounts as a result of a distribution other than
in liquidation of a Member’s interest in the Fund, the amount of such adjustment shall be treated as an item of gain (if
the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) from the disposition of such
asset and shall be taken into account for purposes of computing Net Profits or Net Losses; and

 

(g)          Notwithstanding
any other provision of this definition, any items which are specially allocated pursuant to Section 4.3, Section 4.4
or Section 4.5 shall not be taken into account in computing Net Profits or Losses.

 

The amounts of the items of
Fund income, gain, loss or deduction available to be specially allocated pursuant to Section 4.3, Section 4.4 or
Section 4.5 shall be determined by applying rules analogous to those set forth in subparagraphs (a) through (f) above.

 

“Nonrecourse Deductions”
has the meaning set forth in Regulations Section 1.704-2(b)(1) and 1.704-2(i)(2).

 

“Nonrecourse Liability”
has the meaning set forth in Regulations Section 1.704-2(b)(3).

 

“Notice of Intent”
has the meaning set forth in Section 8.1(g).

 

    	 	7	 

     

    

  

“Officer”
has the meaning set forth in Section 6.4(a).

 

“Original Agreement”
has the meaning set forth in the Recitals.

 

“Organization Costs”
means all out-of-pocket costs and expenses reasonably incurred by the Fund, the BDC, the Administrative Agent or their Affiliates
in connection with the recapitalization of the Fund, the change of the name of the Fund, the amendment of the Fund’s certificate
of formation, the amendment of this Agreement, the making of new subscriptions to the Fund by the BDC and Trinity, and the preparation
by the Fund to recommence its business operations, including, without limitation, reasonable and documented (i) fees and disbursements
of legal counsel to the Fund, the Administrative Agent and its Affiliates, (ii) accountant fees and other fees for professional
services, and (iii) travel costs and other out-of-pocket expenses.

 

“Partnership Representative”
has the meaning set forth in Section 6.10.

 

“Permitted Affiliate
Transfer” has the meaning set forth in Section 8.1(a).

 

“Permitted Affiliate
Transferee” means the Affiliate of a Member to whom the Member’s Membership Interest is transferred pursuant to
a Permitted Affiliate Transfer.

 

“Person”
means an individual, corporation, partnership, association, joint venture, company, limited liability company, trust, governmental
authority or other entity.

 

“Proceeding”
has the meaning set forth in Section 7.4(a).

 

“RBH” has
the meaning set forth in Section 11.8.

 

“Regulations”
means the regulations promulgated by the United States Department of the Treasury pursuant to and in respect of provisions of the
Code. All references herein to sections of the Regulations shall include any corresponding provision or provisions of succeeding,
similar, substitute, proposed or final Regulations.

 

“Regulatory Allocations”
has the meaning set forth in Section 4.5.

 

“Reserved Amount”
has the meaning set forth in Section 5.3(a).

 

“Sale Period”
has the meaning set forth in Section 8.1(g).

 

“SEC” has
the meaning set forth in Section 9.2(c).

 

“Temporary Advance”
has the meaning set forth in Section 3.2(a).

 

“Temporary Advance
Rate” with respect to any period means the rate equal to (i) the sum of the average LIBOR Rate during such period (expressed
as an annual rate) plus three percent (3.0%) per annum, multiplied by (ii) a fraction, the numerator of which is the number of
days in such period and the denominator of which is 365; provided that the Temporary Advance Rate for any Temporary Advance
outstanding for less than four days shall equal zero.

 

    	 	8	 

     

    

  

“Transfer”
means the transfer of ownership by sale, exchange, assignment, gift, pledge , donation, grant or other transfer of any kind, whether
voluntary or involuntary, including transfers by operation of law or legal process and whether voluntary or involuntary.

 

“Trinity”
has the meaning set forth in the introductory paragraph.

 

“Trinity Managers”
has the meaning set forth in Section 6.2(a).

 

“Underlying Loans”
has the meaning set forth in Section 2.5.

 

“Value”
as of the date of computation with respect to some or all of the assets or liabilities of the Fund, the value of such assets or
liabilities determined in accordance with Section 10.5.

 

Terms defined in the singular
shall have a comparable meaning when used in the plural, and vice versa. Unless otherwise specified, references herein to applicable
statutes or other laws are references to the federal laws of the United States.

 

ARTICLE
2

 

GENERAL
PROVISIONS

 

Section 2.1           Amendment
and Restatement of Existing Agreement. As stated in the Recitals, this Agreement amends and restates the Existing Agreement,
which is replaced and superseded in its entirety by this Agreement.

 

Section 2.2           Formation
of Fund. The Fund was formed under and shall be operated in accordance with the terms of the Delaware Limited Liability Company
Act, as amended (the “Act”).

 

Section 2.3           Fund
Name. The name of the Fund shall be “Capitala Senior Loan Fund II, LLC,” or such other name as approved by the
Board of Managers.

 

Section 2.4           Registered
Agent and Office. The registered agent and office of the Fund shall be as provided in the Fund’s certificate of formation,
or as otherwise determined by the Board of Managers.

 

Section 2.5           Purpose
and Powers of the Fund. The purpose of the Fund shall be to make loans, and purchase assignments or participations in loans
that have already been made (in either case, “Underlying Loans”), either directly or indirectly through subsidiaries
or other Persons, and to engage in any other lawful business.

 

Section 2.6           Fiscal
Year. The fiscal year of the Fund shall be the period beginning on January 1 and ending on December 31 of each year.

 

    	 	9	 

     

    

 

Section 2.7           Liability
of Members. Except as expressly provided in this Agreement, a Member shall have such liability for the repayment, satisfaction
and discharge of the debts, liabilities and obligations of the Fund only as is provided by the Act. A Member that receives a distribution
made by the Fund in violation of the Act shall be liable to the Fund for the amount of such distribution to the extent, and only
to the extent, required by the Act. The Members shall not otherwise be liable for the repayment, satisfaction or discharge of the
Fund’s debts, liabilities and obligations, except that each Member shall be required to make its Capital Contribution in
accordance with the terms of this Agreement and shall be required to repay any distributions by the Fund to such Member which are
not made in accordance with this Agreement.

 

Section 2.8           Member
List. The Administrative Agent shall cause to be maintained in the principal office of the Fund a list (the “Member
List”) setting forth, with respect to each Member, such Member’s name, address, Capital Commitment, Capital Contributions
and such other information as the Administrative Agent may deem necessary or desirable or as required by the Act. The Administrative
Agent shall from time to time update the Member List as necessary to reflect accurately the information therein. Any reference
in this Agreement to the Member List shall be deemed to be a reference to the Member List as in effect from time to time. No action
of the Members or of the Board of Managers shall be required for the Administrative Agent to supplement or amend the Member List.
Revisions to the Member List made by the Administrative Agent as a result of changes to the information set forth therein made
in accordance with this Agreement shall not constitute an amendment of this Agreement.

 

ARTICLE
3

 

FUND
CAPITAL AND INTERESTS

 

Section 3.1           Capital
Commitments.

 

(a)          Making
of Capital Calls. For the avoidance of doubt, any capital commitment to the Fund any Member may have had under the Existing
Agreement prior to the date hereof is hereby cancelled. Each Member’s Capital Commitment shall be set forth on the Member
List and in such Member’s Subscription Agreement and shall be payable in cash in U.S. dollars. Each such payment shall be
made from time to time after notice from the Administrative Agent specifying the amount then to be paid (such notice, a “Capital
Call Notice”). Such amount shall be payable on the date set forth in such notice provided by the Administrative Agent
(the “Call Due Date”), but such date may not be sooner than three Business Days following the date on which
the Administrative Agent provides the Members with such notice. The Administrative Agent shall be required to obtain the approval
of the Board of Managers for each such capital call made to the Members. Capital Contributions shall be made by all Members pro
rata based on their respective Capital Commitments.

 

(b)          Return
of Unused Contributions. Any Capital Contributions that have been drawn down from the Members but that have not been used
by the Fund either for investment in Underlying Loans or the payment of Fund Expenses within ninety (90) days of the Call Due
Dates with respect to such Capital Contributions will be distributed to such Members in the same proportion in which such Capital
Contributions were made. 

 

    	 	10	 

     

    

 

Section 3.2           Temporary
Advances.

 

(a)          General.
The BDC, in its discretion, may make loans (“Temporary Advances”) to temporarily fund obligations of the Fund
in respect of Underlying Loans (which have been made or acquired with the approval of the Board of Managers) or Fund Expenses until
Capital Contributions are made by the Members as set forth in Section 3.1, and for the purpose identified in Section
3.2(b). Each Temporary Advance plus interest at the Temporary Advance Rate shall constitute an obligation of the Fund to the
BDC and shall be returned by the Fund to the BDC.

 

(b)          Advance
for Existing Investments. On or before the date of this Agreement, the BDC has made one or more Temporary Advances to the Fund
for the purpose of funding two Underlying Loans in aggregate combined amounts of $10,000,000 (such Underlying Loans, the “Initial
Investments”). The Initial Investments were approved by the Investment Committee in accordance with both the Existing
Agreement and this Agreement, as applicable. For the avoidance of doubt, such Temporary Advances shall not constitute Capital Contributions
by the BDC to the Fund, and the BDC shall be entitled to be repaid the amount of such Temporary Advances from Capital Contributions
made by the Members (including the BDC) after the date hereof. The Members also agree that no interest shall be charged in respect
of the Temporary Advances for the Initial Investments. The Members hereby ratify the Initial Investments and all documentation
entered into in connection with any of the foregoing, and hereby approve of the Administrator (x) making a capital call to the
Members (including the BDC) for the purpose of repaying the amount of such Temporary Advances to the BDC (which capital call, to
the extent made to the BDC, may be met by the BDC by the BDC cancelling the obligation of the Fund to repay the BDC the corresponding
portion of the Temporary Advance), and (y) causing the proceeds of such capital call to be paid to the BDC (or at the BDC’s
request, used to fund a Capital Contribution obligation of the BDC to the Fund).

 

Section 3.3           Defaulting
Members. Upon the failure of any Member (a “Defaulting Member”) to pay in full any portion of such Member’s
Capital Commitment on or before the tenth Business Day after the applicable Call Due Date, the Board of Managers, in its sole discretion,
shall have the right to pursue one or more of the following remedies on behalf of the Fund:

 

(a)          elect
to charge the Defaulting Member interest at the Default Rate on the amount due from the Call Due Date until the earlier of (i)
the date on which such payment is received by the Fund from the Defaulting Member, and (ii) the date, if any, on which the Defaulting
Member’s Membership Interest is sold pursuant to Section 3.3(c);

 

(b)          cause
the Fund to cease making distributions to the Defaulting Member, and apply any distributions that would otherwise be made to the
Defaulting Member to the unpaid portion of the Defaulting Member’s Capital Commitment, or distribute such distributions that
would otherwise be made to the Defaulting Member to the other Members;

 

(c)          sell
to any Person (including any other Member or any of its Affiliates) the Defaulting Member’s Membership Interest for consideration
at the valuation most recently approved in accordance with Section 10.5, such consideration to be paid to the Defaulting
Member; or

 

(d)          exercise
and/or pursue any other legal remedy the Fund may have.

 

    	 	11	 

     

    

  

The Board of Managers’
election to pursue any one of such remedies shall not be deemed to preclude the Board of Managers from pursuing any other such
remedy, or any other available remedy, simultaneously or subsequently. Notwithstanding any provision of this Agreement to the contrary,
a Defaulting Member shall remain fully liable to the creditors of the Fund to the extent provided by law as if such default had
not occurred.

 

Section 3.4           Interest
or Withdrawals. No Member shall be entitled to receive any interest on any Capital Contribution to the Fund. Except as otherwise
specifically provided herein, no Member shall be entitled to withdraw any part of its Capital Contributions or Capital Account
balance.

 

Section 3.5           Admission
of Additional Members.

 

(a)          The
Members may, with the approval of the Board of Managers, (i) admit additional Members upon terms approved by the Board of Managers,
or (ii) permit existing Members to subscribe to additional interests in the Fund.

 

(b)          Each
additional Member shall execute and deliver a written instrument satisfactory to the Board of Managers whereby such Member becomes
a party to this Agreement, as well as a subscription agreement and any other documents required by the Board of Managers. Each
such additional Member shall thereafter be entitled to all the rights and subject to all the obligations of Members as set forth
herein. Upon the admission of or the increase in the interest of any Member as herein provided, the Administrative Agent is hereby
authorized to update the Member List, as required, to reflect such admission or increase.

 

ARTICLE
4

 

ALLOCATIONS

 

Section 4.1           Members
Receiving Allocations. All Net Profits and Net Losses shall be allocated to the Persons shown in the records of the Administrative
Agent to have been Members as of the last day of the taxable year for which the allocation is to be made. Notwithstanding the foregoing,
if there is a Transfer of Membership Interests during a taxable year, Net Profits and Net Losses shall be allocated between the
Transferor and the Transferee of such Membership Interests to reflect their varying interests during the year in a manner selected
by the Administrative Agent and permissible under federal tax law, which in all cases shall take into account any extraordinary
non-recurring items of profit or loss of the Fund.

 

Section 4.2           Allocation
of Net Profits and Net Losses. Except as otherwise provided in this Agreement, all Net Profits and Net Losses shall be allocated
among the Members pro rata in accordance with their respective Membership Interest Percentages.

 

Section 4.3           Special
Allocations. The following special allocations shall be made in the following order:

 

    	 	12	 

     

    

 

(a)          Minimum
Gain Chargeback. Except as otherwise provided in Regulations Section 1.704-2(f), notwithstanding any other provision of this
ARTICLE 4, if there is a net decrease in Fund Minimum Gain during any year, each Member shall be specially allocated items
of Fund income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Member’s share of
the net decrease in Fund Minimum Gain, determined in accordance with Regulations Section 1.704-2(g). Allocations pursuant to the
previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto.
The items to be so allocated shall be determined in accordance with Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This
Section 4.3(a) is intended to comply with the minimum gain chargeback requirement in Regulations Section 1.704-2(f) and
shall be interpreted consistently therewith.

 

(b)          Member
Nonrecourse Debt Minimum Gain Chargeback. Except as otherwise provided in Regulations Section 1.704-2(i)(4), notwithstanding
any other provision of this ARTICLE 4, if there is a net decrease in Member Nonrecourse Debt Minimum Gain attributable to
a Member Nonrecourse Debt during any year, each Member that has a share of the Member Nonrecourse Debt Minimum Gain attributable
to such Member Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(5), shall be specially allocated
items of Fund income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Member’s share
of the net decrease in Member Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(4). Allocations pursuant
to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant
thereto. The items to be so allocated shall be determined in accordance with Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2).
This Section 4.3(b) is intended to comply with the minimum gain chargeback requirement in Regulations Section 1.704-2(i)(4)
and shall be interpreted consistently therewith.

 

(c)          Qualified
Income Offset. In the event any Member unexpectedly receives any adjustments, allocations, or distributions described in Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704 1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of Fund income and gain shall be specially
allocated to such Member in an amount and manner sufficient to eliminate, to the extent required by the Regulations, the Adjusted
Capital Account Deficit of the Member as quickly as possible, provided that an allocation pursuant to this Section 4.3(c)
shall be made only if and to the extent that the Member would have an Adjusted Capital Account Deficit after all other allocations
provided for in this ARTICLE 4 have been made as if this Section 4.3(c) were not in the Agreement.

 

(d)          Gross
Income Allocation. In the event any Member has a deficit balance in its Capital Account at the end of any year which is in
excess of the amount such Member is obligated to restore pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(1)
and 1.704-2(i)(5), each such Member shall be specially allocated items of Fund income and gain in the amount of such excess as
quickly as possible, provided that an allocation pursuant to this Section 4.3(d) shall be made only if and to the extent
that such Member would have a deficit balance in its Capital Account in excess of the amount the Member is obligated to restore
after all other allocations provided for in this ARTICLE 4 have been made as if Section 4.3(c) and this Section
4.3(d) were not in the Agreement.

 

(e)          Nonrecourse
Deductions. Nonrecourse Deductions for any year shall be specially allocated to the Members pro rata in accordance with
their respective Membership Interest Percentages.

 

    	 	13	 

     

    

  

(f)          Member
Nonrecourse Deductions. Any Member Nonrecourse Deductions for any year shall be specially allocated to the Member that bears
the economic risk of loss with respect to the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable
in accordance with Regulations Section 1.704-2(i)(1).

 

(g)          Section
754 Adjustments. To the extent that, under Regulations Section 1.704 1(b)(2)(iv)(m)(2) or 1.704 1(b)(2)(iv)(m)(4), an adjustment
to the adjusted tax basis of any Fund asset pursuant to Code Section 734(b) or Code Section 743(b) is required in determining Capital
Accounts as the result of a distribution to a Member in complete liquidation of such Member’s Membership Interest, the amount
of such adjustment to Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset)
or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members in accordance
with their respective Membership Interest Percentages in the event Regulations Section 1.704 1(b)(2)(iv)(m)(2) applies, or to the
Member to whom such distribution was made in the event Regulations Section 1.704 1(b)(2)(iv)(m)(4) applies.

 

Section 4.4           Loss
Limitation. Net Losses allocated pursuant to Section 4.2 and Section 4.3 shall not exceed the maximum amount
of Net Losses that can be allocated without causing any Member to have an Adjusted Capital Account Deficit at the end of any year.
In the event some but not all of the Members would have Adjusted Capital Account Deficits as a consequence of an allocation of
Net Losses pursuant to Section 4.2 and Section 4.3, the limitation set forth in this Section 4.4 shall be
applied on a Member-by-Member basis, and Net Losses not allocable to any Member as a result of such limitation shall be allocated
to the other Members in accordance with the positive balances in such Members’ Capital Accounts so as to allocate the maximum
permissible Net Losses to each Member under Regulations Section 1.704-1(b)(2)(ii)(d).

 

Section 4.5           Curative
Allocations. The allocations set forth in Section 4.3 and Section 4.4 (the “Regulatory Allocations”)
are intended to comply with certain requirements of the Regulations. It is the intent of the Members that, to the extent possible,
all Regulatory Allocations shall be offset either with other Regulatory Allocations or with special allocations of other items
of Fund income, gain, loss or deduction pursuant to this Section 4.5. Therefore, notwithstanding any other provision of
this ARTICLE 4 (other than the Regulatory Allocations), the Administrative Agent shall make such offsetting special allocations
of Fund income, gain, loss or deduction in whatever manner it determines appropriate so that, after such offsetting allocations
are made, each Member’s Capital Account balance is, to the extent possible, equal to the Capital Account balance such Member
would have had if the Regulatory Allocations were not part of the Agreement and all Fund items were allocated pursuant to Section
4.1 and Section 4.2.

 

    	 	14	 

     

    

 

Section 4.6           Tax
Allocations: Code Section 704(c). In accordance with Code Section 704(c) and the Regulations thereunder, income, gain, loss,
and deduction with respect to any property contributed to the capital of the Fund shall, solely for tax purposes, be allocated
among the Members so as to take account of any variation between the adjusted basis of such property to the Fund for federal income
tax purposes and its initial Gross Asset Value (computed in accordance with the definition of Gross Asset Value) using one or more
methods set forth in Regulations Section 1.704-3 as selected by the Administrative Agent with the consent of the Board of Managers.
In the event the Gross Asset Value of any Fund asset is adjusted pursuant to subparagraph (b) of the definition of Gross Asset
Value, subsequent allocations of income, gain, loss, and deduction with respect to such asset shall take account of any variation
between the adjusted basis of such asset for federal income tax purposes and its Gross Asset Value in the same manner as under
Code Section 704(c) and the Regulations thereunder using one or more methods selected by the Administrative Agent with the consent
of the Board of Managers. Any elections or other decisions relating to such allocations shall be made by the Administrative Agent
with the consent of the Board of Managers in any manner that reasonably reflects the purpose and intention of this Agreement. Allocations
pursuant to this Section 4.6 are solely for purposes of federal, state, and local taxes and shall not affect, or in any
way be taken into account in computing, any Member’s Capital Account or share of Net Profits, Net Losses, other items, or
distributions pursuant to any provision of this Agreement.

 

Section 4.7           Other
Allocation Rules. The Members are aware of the income tax consequences of the allocations made by this ARTICLE 4 and
hereby agree to be bound by the provisions of this ARTICLE 4 in reporting their shares of Fund income and loss for income
tax purposes. Solely for purposes of determining a Member’s proportionate share of the “excess nonrecourse liabilities”
of the Fund within the meaning of Regulations Section 1.752 3(a)(3), the Members’ interests in the Fund’s Net Profits
are in proportion to their Membership Interest Percentages. To the extent permitted by Regulations Section 1.704-2(h)(3), the Administrative
Agent shall endeavor to treat distributions as having been made from the proceeds of a Nonrecourse Liability or a Member Nonrecourse
Debt only to the extent that such distributions would cause or increase an Adjusted Capital Account Deficit for any Member.

 

ARTICLE
5

 

DISTRIBUTIONS

 

Section 5.1           General.

 

(a)          Regularly
Quarterly Distributions. To the extent of available cash and cash equivalents, the Administrative Agent shall cause the Fund
to make distributions quarterly in such amounts as determined by the Board of Managers, shared among the Members as set forth below;
provided that the amount of any such distribution may be reduced as provided by Section 5.2 and Section 5.3.

 

(b)          Other
Distributions. As determined by the Board of Managers, the Fund may make one or more distributions, from time to time, in addition
to those pursuant to Section 5.1(a) from available cash and cash equivalents received from one or more Investments, provided
that the amount of any such distribution may be reduced as provided by Section 5.2 and Section 5.3.

 

(c)          Distributions
Priority. Except as otherwise provided in this ARTICLE 5 or Section 9.3, distributions shall be shared among
the Members as follows:

 

(i)          First,
to pay any outstanding Temporary Advances and any interest accrued thereon; and

 

    	 	15	 

     

    

  

(ii)         Second,
to the Members as distributions in respect of their interests in the Fund in proportion to their respective Membership Interest
Percentages.

 

Section 5.2           Withholding.
The Administrative Agent may cause the Fund to withhold from any distribution to any Member any amount which the Fund has paid
or is obligated to pay in respect of any withholding or other tax, including without limitation, any interest, penalties or additions
with respect thereto, imposed on any interest or income of or distributions to such Member, and such withheld amount shall be considered
an interest payment or a distribution, as the case may be, to such Member for purposes hereof. If no payment is then being made
to such Member in an amount sufficient to pay the Fund’s withholding obligation, any amount which the Fund is obligated to
pay shall be deemed an interest-free advance from the Fund to such Member, payable by such Member by withholding from subsequent
distributions or within ten days after receiving written request for payment from the Fund.

 

Section 5.3           Reserves;
Certain Limitations; Distributions in Kind. Notwithstanding the foregoing provisions:

 

(a)          The
Fund shall withhold from any distribution any amount called for purposes of making an Investment (until the Board of Managers shall
have determined not to make such Investment), as well as any reasonable reserve required by the Board of Managers for working capital
of the Fund or for Fund Expenses. Any part or all of such reserved amount (“Reserved Amount”) that is released
from reserve (other than to make payments on account of a purpose for which the reserve was established) shall be distributed to
the Members in accordance with Section 3.1(b), Section 5.1(c) and Section 5.2.

 

(b)          In
no event shall the Fund make a distribution to the extent that it would (i) render the Fund insolvent, or (ii) violate the Act.

 

(c)          The
Fund shall make in-kind distributions only with the approval of the Board of Managers. Unless the Board of Managers agrees otherwise,
distributions of securities and of other non-cash assets of the Fund shall only be made pro rata to all Members (in proportion
to their respective shares of the total distribution) with respect to each security or other such asset distributed.

 

ARTICLE
6

 

MANAGEMENT
OF FUND

 

Section 6.1           Board
of Managers. The management of the Fund and its affairs shall be vested in a “Board of Managers” consisting
of four members (each, a “Manager”) chosen in accordance with Section 6.2. The Managers need not be Members
and need not be residents of the State of Delaware. Except to the extent that the approval of the Members or the Investment Committee
is expressly required by this Agreement, the Board of Managers shall have the full, exclusive and complete authority to manage
the affairs of the Fund. Without limiting the power and authority of the Board of Managers hereunder, Schedule A hereto,
which is incorporated by reference herein, sets forth a non-exclusive list of matters which shall require approval by the Board
of Managers. The Managers shall constitute the managers of the Fund for purposes of the Act. Any action authorized by the Board
of Managers shall constitute the act of and serve to bind the Fund. Persons or entities dealing with the Fund are entitled to rely
conclusively on the power and authority of the Board of Managers as set forth in this Agreement. Each member of the Board of Managers
shall execute this Agreement.

 

    	 	16	 

     

    

  

Section 6.2           Appointment
and Removal of Managers.

 

(a)          Trinity
Managers. Trinity shall have the right to appoint up to two Managers (the “Trinity Managers”). The Trinity
Managers as of the date hereof are John Boschelli and Jonathan Wilson. Trinity shall have the power to remove a Trinity Manager
at any time with or without cause, and in such case may appoint such Person’s replacement. A Trinity Manager shall also cease
to be a Manager upon such Person’s written resignation, death or incapacity, and in any such event Trinity may appoint such
Person’s replacement. Trinity shall notify the other Members and the Board of Managers promptly if any Trinity Manager ceases
to be a Manager and of any replacement of a Trinity Manager. If Trinity ceases to be a Member, or becomes a Defaulting Member,
the Trinity Managers shall at the same time cease to be Managers, and Trinity shall no longer have any right to appoint a replacement
for such Persons.

 

(b)          BDC
Manager. The BDC shall have the right to appoint up to two Managers (the “BDC Managers”). The BDC Managers
as of the date hereof are Joseph B. Alala, III and Peter Sherman. The BDC shall have the power to remove a BDC Manager at any time
with or without cause, and in such case may appoint such Person’s replacement. A BDC Manager shall also cease to be a Manager
upon such Person’s written resignation, death or incapacity, and in any such event the BDC may appoint such Person’s
replacement. The BDC shall notify the other Members and the Board of Managers promptly if any BDC Manager ceases to be a Manager
and of any replacement of a BDC Manager. If the BDC ceases to be a Member, or becomes a Defaulting Member, the BDC Managers shall
at the same time cease to be Managers, and the BDC shall no longer have any right to appoint a replacement for such Persons.

 

(c)          Member-Appointed
Manager. If at any time neither Trinity nor the BDC is a Member, the Fund shall have a single Manager appointed by Members
acting unanimously.

 

Section 6.3           Meetings
of the Board of Managers.

 

(a)          Meetings
Generally. The Board of Managers shall not be required to hold regular meetings. The Board of Managers may provide, by resolution,
the time and place for the holding of regular meetings. Special meetings of the Board of Managers may be called by or at the request
of any Manager. Such a meeting may be held either within or without the State of Delaware, as fixed by the Person or Persons calling
the meeting.

 

(b)          Notice
of Meetings. Regular meetings of the Board of Managers, if established, may be held without notice. For so long as there are
both Trinity Managers and BDC Managers present, a meeting may only be held with the attendance of at least one Trinity Manager
and one BDC Manager. The Person or Persons calling a special meeting of the Board of Managers shall, at least two days before the
meeting, give or cause to be given notice thereof to all Managers. When a meeting is adjourned to a different date, time or place,
notice need not be given of the new date, time or place if the new date, time or place is announced at the meeting before adjournment.
Any Manager may waive notice of any meeting before, during or after the meeting. A Manager’s attendance at or participation
in a meeting waives objection to lack of notice or defective notice of the meeting, unless the Manager at the beginning of the
meeting, or promptly upon arrival, objects to holding the meeting or transacting business at the meeting and does not thereafter
vote for or assent to any action taken at the meeting.

 

    	 	17	 

     

    

  

(c)          Action
by the Board of Managers. The affirmative vote of all Managers in attendance at any meeting of the Board of Managers shall
constitute the act of the Board of Managers hereunder and the act of the Managers for purposes of the Act. As used in this Agreement,
the phrases “the approval of the Board Managers,” “the consent of the Board of Managers,” “as determined
by the Board of Managers” and similar phrases mean the approval as set forth in the preceding sentence, except as expressly
provided otherwise in this Agreement.

 

(d)          Presumption
of Assent. A Manager who is present at a meeting of the Board of Managers when board action is taken is deemed to have assented
to the action taken unless (i) the Manager objects at the beginning of the meeting, or promptly upon the Manager’s arrival,
to holding the meeting or to transacting business at the meeting, (ii) the Manager’s dissent or abstention from the action
taken is entered in the minutes of the meeting, or (iii) the Manager files written notice of the Manager’s dissent or abstention
with the Administrative Agent for filing in the Fund’s records either at or immediately after the adjournment of the meeting.
Such right of dissent or abstention is not available to a Manager who votes in favor of the action taken.

 

(e)          Action
Without Meeting. The Board of Managers may act without a meeting if one or more written consents, describing the action to
be taken, is signed by all of the Managers and delivered to the Administrative Agent for filing in the Fund’s records.

 

(f)          Participation
in Meeting by Telephone. The Managers may participate in a meeting of the Board of Managers or any committee thereof by means
of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear
each other and such participation shall constitute presence in person at such meeting.

 

(g)          Compensation.
The Managers will not receive any compensation. However, the Managers shall be reimbursed by the Fund for their reasonable out-of-pocket
expenses, if any, of attendance at meetings of the Board of Managers.

 

Section 6.4           Delegation
of Authority.

 

(a)          Appointment
of Officers. The Board of Managers may from time to time appoint and delegate to one or more individuals (each an “Officer”)
any portion of authority granted to the Board of Managers hereunder as the Board of Managers deems appropriate, provided that the
appointment of members of the Investment Committee is governed by Section 6.5(b) and not this Section 6.4(a). No
such delegation shall relieve the Managers of their duties and obligations, or limit the authority of the Board of Managers, set
forth herein.

 

(b)          Removal
of Officers. Each Officer shall hold office until such Officer’s death, incapacity, resignation or removal or until the
appointment of a successor. A Person may be removed as an Officer with the consent of the Board of Managers at any time with or
without cause, provided that the removal of members of the Investment Committee is governed by Section 6.5(b) and not this
sentence. A Person may resign as an Officer at any time by delivering written notice to all Managers.

 

    	 	18	 

     

    

  

(c)          Compensation.
An Officer may be paid for his or her services by the Fund as determined by the Board of Managers.

 

(d)          President
and Chief Executive Officer. Acting in his capacity as a Manager of the Fund, Mr. Alala shall be permitted to sign investment
documents in respect of investments that are approved in accordance with this Agreement, including Initial Investments, using the
title “President and Chief Executive Officer”. However, when he signs in such capacity, he shall be deemed to be acting
for purposes of this Agreement as a Manager, and not as an Officer. For the avoidance of doubt, this paragraph does not grant any
independent authority to Mr. Alala to execute any document that he could not otherwise execute as a Manager under this Agreement
in the absence of this paragraph.

 

Section 6.5           Investment
Committee.

 

(a)          Establishment
of Investment Committee. Except as otherwise explicitly provided herein, no Investment shall be made or disposed of by the
Fund, and no consent shall be granted or other action taken by the Fund in its capacity as the owner of an Investment (such as,
for example, in respect of any late payment in respect of an Underlying Loan), unless such action shall first be approved by at
least two members, including at least one member appointed by each of Trinity and the BDC, of an “Investment Committee”
consisting of four members. The members of the Investment Committee shall be considered Officers and not Managers of the Fund for
purposes of the Act.

 

(b)          Membership
of Investment Committee. Trinity shall have the right to appoint two members of the Investment Committee and the BDC shall
have the right to appoint two members of the Investment Committee. Trinity’s appointees to the Investment Committee as of
the date hereof are John Boschelli and Jonathan Wilson, and the BDC’s appointees to the Investment Committee as of the date
hereof are Joseph B. Alala, III and Peter Sherman. The Member appointing a member of the Investment Committee may also remove and
replace that Investment Committee member at any time with or without cause, and may also appoint the replacement for such member
of the Investment Committee in the event that such Person resigns, dies or becomes incapacitated. If either Trinity or the BDC
at any time ceases to be a Member, then such Person’s appointees to the Investment Committee shall also automatically cease
to be members of the Investment Committee and such former Member shall no longer have the right to appoint replacement members
of the Investment Committee.

 

(c)          Delegation
to Investment Committee. The Board of Managers hereby delegates to the Investment Committee the authority to approve those
matters set forth on Schedule B hereto, which is incorporated by reference herein, which shall require approval by the Investment
Committee, but shall not require approval by the Board of Managers.

 

    	 	19	 

     

    

 

Section 6.6           Administrative
Services Agreement. The Fund is entering into the Administrative Services Agreement with the Administrative Agent, pursuant
to which certain administrative functions are delegated to the Administrative Agent. The Administrative Services Agreement is hereby
approved by the Board of Managers, provided that amendments thereto are subject to approval by the Board of Managers. The function
of the Administrative Agent shall be non-discretionary and administrative only.

 

Section 6.7           Leverage
Matters. In the event that the Board of Managers, the Fund or the Administrative Agent makes a good faith determination that,
at any time, the value of the Fund’s Investments as compared to the value of such Investments as of the end of the immediately
preceding fiscal quarter, has declined by an amount exceeding 15% of the total Capital Contributions to the Fund as of the time
of determination, a meeting of the Board of Managers shall be called promptly to discuss the Fund’s Leverage; provided,
however, that in making the determination required by this sentence the Board of Managers and the Fund shall make appropriate
adjustments for the effect of any dispositions of Investments occurring during the applicable time period.

 

Section 6.8           Specific
Consent Regarding Affiliate Transactions. Aside from the Administrative Services Agreement, the Fund shall not enter into any
transaction-related agreement with the BDC, the Administrative Agent or any of their Affiliates without the consent of the Board
of Managers. Notwithstanding the foregoing, if permitted under the terms of an agreement entered into with the consent of the Board
of Managers (an “Approved Investment Agreement”), (a) the BDC and its Affiliates shall be permitted to exercise
any call option or other contract right it may have to purchase all or any portion of an Investment from the Fund, and the Fund
shall comply with any related obligations it may have in respect of such Investment; (b) the Fund shall be permitted to exercise
any put or similar right that it has with respect to any Investment and require the BDC and its Affiliates to purchase all or any
portion of an Investment from the Fund, and the BDC and its Affiliates may comply with any related obligations they may have in
respect of such exercise; and (c) this Section 6.8 shall not be interpreted to in any way diminish the general authority
of the Board of Managers under Section 6.1. The Board of Managers hereby authorizes the BDC to cause either BDC Manager,
acting in his capacity as a Manager, to cause the Fund to enter into any document necessary to effect a transaction contemplated
by Section 6.8(a) or (b), but only if such transaction was contemplated in, and permitted under, the applicable Approved
Investment Agreement.

 

Section 6.9           Reliance
by Third Parties. Notwithstanding any other provision of this Agreement, any contract, instrument or act on behalf of the Fund
by a Manager, or any other Person delegated by the Board of Managers, shall be conclusive evidence in favor of any third party
dealing with the Fund that such Person has the authority, power and right to execute and deliver such contract or instrument and
to take such act on behalf of the Fund. This Section shall not be deemed to limit the liabilities and obligations of such Person
to seek the approval of the Board of Managers or the Investment Committee as set forth in this Agreement.

 

    	 	20	 

     

    

 

Section 6.10         Partnership
Representative. For so long as it is a Member, the BDC shall be the “partnership representative” of the Fund within
the meaning of Section 6223 of the Code (in such capacity, the “Partnership Representative”). If the BDC is
at any time no longer a Member of the Fund, the Board of Managers shall appoint a replacement Partnership Representative. The Partnership
Representative shall have the right and obligation to take all actions authorized and required, respectively, by the Code for the
partnership representative of the Fund. The Partnership Representative shall have the right to retain professional assistance in
respect of any audit of the Fund and all reasonable, documented out-of-pocket expenses and fees incurred by the Partnership Representative
on behalf of the Fund as Partnership Representative shall be Fund Expenses and shall be reimbursed by the Fund. The Partnership
Representative shall give each Member prompt notice of any inquiry or other communication received from the Internal Revenue Service
or other applicable tax authority regarding the tax treatment of the Fund or the Members and shall, to the extent possible, give
the Members prior notice of and a reasonable opportunity to review and comment on any written communication the Partnership Representative
intends to make to any such taxing authority in connection with any examination, audit or other inquiry involving the Fund.

 

Section 6.11         Fund
Expenses. The Fund shall pay or, if paid by the Administrative Agent, the BDC, any of their Affiliates or any of their employees
or representatives, reimburse such Person on demand for, all expenses, fees, charges and liabilities incurred in connection with
the conduct of the affairs and the management of the business of the Fund and its Investments (collectively, “Fund Expenses”),
including without limitation: (a) all interest and expenses payable by the Fund on or in connection with any Leverage or any other
indebtedness incurred by the Fund; (b) any taxes payable by the Fund to Federal, state, local and other governmental agencies;
(c) any amounts payable or reimbursable to the Administrative Agent under the Administrative Services Agreement; (d) Organization
Costs; (e) expenses of any type incurred in connection with or related to the actual or proposed acquisition or disposition of
Underlying Loans, whether or not the contemplated transaction is consummated; (f) any amounts payable by the Fund in respect of
its Investments; and (g) legal, insurance, accounting and auditing expenses. The Administrative Agent is hereby authorized by the
Board of Managers to use any available funds of the Fund to meet Fund Expenses.

 

Section 6.12         Action
by the Members. To the extent that this Agreement or any applicable law requires or permits the Members as a group in their
capacities as members of the Fund to grant any approval or take any action, then such approval or action shall require the unanimous
consent of all of the Members.

 

ARTICLE
7

 

DUTIES;
LIABILITY; INDEMNIFICATION

 

Section 7.1           Duties.
The Managers shall have no fiduciary duties to the Fund, the Members or other Persons other than the contractual duties of good
faith and fair dealing contemplated by Section 18-1101(c) of the Act. The Officers shall have the same fiduciary duties as the
Managers. To the maximum extent permitted by law, the Members, acting in their capacity as such, shall have no duties, fiduciary
or otherwise, to the Fund, the Members or other Persons, except to the extent expressly set forth in this Agreement.

 

Section 7.2           Outside
Transactions; Investment Opportunities; Time and Attention.

 

(a)          No
Time Commitment. No Member, Manager or Officer shall be obligated to devote such Person’s full time or any specific portion
of such Person’s time to the activities and affairs of the Fund.

 

    	 	21	 

     

    

  

(b)          No
Deal Flow Right. The Administrative Agent and its Affiliates may manage or administer other investment funds and other accounts
with similar or dissimilar mandates, and may be subject to the provisions of the Investment Company Act of 1940, as amended (the
“Investment Company Act”), including, without limitation, Section 57 thereof, and the Investment Advisers Act
of 1940, as amended, and the rules, regulations and interpretations thereof, with respect to the allocation of investment opportunities
among such other investment funds and other accounts (the “Allocation Requirements”). Except for any Allocation
Requirement that may be applicable to the Fund, neither the Administrative Agent nor any Member, Manager or Officer shall be obligated
to offer any investment opportunity, or portion thereof, to the Fund.

 

(c)          Other
Activities. Subject to the foregoing provisions of this Section 7.2 and other provisions of this Agreement, each Member,
Manager and Officer, the Administrative Agent and each of their respective Affiliates and owners may engage in, invest in, participate
in or otherwise enter into other business ventures of any kind, nature and description, individually and with others, including,
without limitation, the formation and management of other investment funds with or without the same or similar purposes as the
Fund, and the ownership of and investment in securities, and neither the Fund nor any other Member shall have any right in or to
any such activities or the income or profits derived therefrom.

 

Section 7.3           Limited
Liability; Exculpation.

 

(a)          Limited
Liability. To the maximum extent permitted by law, no Manager, Officer or Member shall be liable for the debts, liabilities
or obligations of the Fund solely by reason of being a Manager, Officer or Member or participating in the management of the Fund’s
affairs.

 

(b)          Exculpation.
To the maximum extent permitted by law, neither any Member (including a Member in its capacity as the Partnership Representative),
Manager, Officer or the Administrative Agent, nor any of their Affiliates, directors, managers, officers, owners, employees, or
representatives (together, the “Indemnified Persons”) shall be liable to the Fund or to the Members for any
cost, expense, damage, liability, or other similar amount (collectively, “Damages”) arising, directly or indirectly,
from or in connection with any act or omission of such Person relating to the business and affairs of the Fund, so long as such
act or omission did not constitute a breach of such Person’s duties (if any) under Section 7.1 (or in the case of
the Administrative Agent, breach the standard of care set forth in the Administrative Services Agreement). In addition, any Member
(including a Member in its capacity as the Partnership Representative), Manager or Officer or any of their Affiliates, directors,
managers, officers, owners, employees, or representatives may consult with legal counsel selected with reasonable care and shall
incur no liability to the Fund or any Member to the extent that such Person acted or refrained from acting in good faith in reliance
upon the opinion or advice of such counsel.

 

    	 	22	 

     

    

 

Section 7.4           Indemnification.

 

(a)          Overview.
Subject to the limitations and conditions as provided in this Section 7.4, each Indemnified Person who was or is made a
party or is threatened to be made a party to or is involved in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative, investigative or arbitrative or in the nature of an alternative dispute resolution in
lieu of any of the foregoing (hereinafter a “Proceeding”), or any appeal in such a Proceeding or any inquiry
or investigation that could lead to such a Proceeding, in respect of or relating to the Fund, shall be indemnified by the Fund
to the fullest extent permitted by applicable law, as the same exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Fund to provide broader indemnification rights than said law permitted
the Fund to provide prior to such amendment) against all Damages actually incurred by such Person in connection with such Proceeding,
appeal, inquiry or investigation, unless a court of competent jurisdiction shall have made a final determination that such Damages
were primarily the result of gross negligence, fraud or intentional misconduct by the Indemnified Person seeking
indemnification hereunder, in which case such indemnification shall not cover such Damages to the extent resulting from such gross
negligence, fraud or intentional misconduct. Indemnification under this Section 7.4 shall continue as to Indemnified
Person who has ceased to serve in the capacity which initially entitled such Person to indemnity hereunder. The rights granted
pursuant to this Section 7.4 shall be deemed contract rights, and no amendment, modification or repeal of this Section
7.4 shall have the effect of limiting or denying any such rights with respect to actions taken or Proceedings, appeals,
inquiries or investigations arising prior to any amendment, modification or repeal.

 

(b)          Reimbursement
of Expenses. The right to indemnification conferred in Section 7.4(a) shall include the right to be paid or reimbursed
by the Fund for the reasonable expenses incurred by an Indemnified Person who was, is or is threatened to be made a named
defendant or respondent in a Proceeding in advance of the final disposition of the Proceeding and without any determination as
to the Indemnified Person’s ultimate entitlement to indemnification; provided, however, that the payment of
such expenses incurred by any such Indemnified Person in advance of the final disposition of a Proceeding shall be made only upon
delivery to the Fund of a written undertaking by such Indemnified Person to repay all amounts so advanced if it shall be finally
adjudicated that such Indemnified Person is not entitled to be indemnified under this Section 7.4 or otherwise.

 

(c)          Determination
of Bad Acts. Unless there is a specific finding of gross negligence, fraud or intentional misconduct (or where such a finding
is an essential element of a judgment or order), the termination of any Proceeding by judgment, order or settlement, or upon a
plea of nolo contendere or its equivalent, shall not, by itself, create a presumption for the purposes of this Section 7.4
that the Indemnified Person in question engaged in gross negligence, fraud or intentional misconduct.

 

(d)          Other
Employees and Agents. The Board of Managers may provide for the Fund to advance expenses to other employees and agents of the
Fund (other than Indemnified Persons) to the same extent and subject to the same conditions under which it may indemnify and advance
expenses to an Indemnified Person under Section 7.4(a) and Section 7.4(b).

 

(e)          Non-Exclusivity.
The right to indemnification and the advancement and payment of expenses conferred in this Section 7.4 shall not be
exclusive of any other right that a Member or other Person indemnified pursuant to this Section 7.4 may have or hereafter
acquire under any law (common or statutory) or provision of this Agreement.

 

    	 	23	 

     

    

  

(f)          Successors
and Assigns. The indemnification rights provided by this Section 7.4 shall inure to the benefit of the heirs,
executors, administrators, successors, and assigns of each Person indemnified pursuant to this Section 7.4.

 

(g)          Fund
Contributions. If for any reason (other than solely by operation of the terms of this Agreement) the indemnification provided
herein is unavailable to an Indemnified Person, or insufficient to hold it harmless, then the Fund shall contribute to the amount
paid or payable by such Indemnified Person as a result of such loss, claim, damage or liability in such proportion as is appropriate
to reflect not only the relative benefits received by the Fund on the one hand and the Indemnified Person on the other, but also
the relative fault of the Fund and the Indemnified Person as well as any other relevant equitable considerations.

 

ARTICLE
8

 

TRANSFERS
OF FUND INTERESTS; WITHDRAWALS

 

Section 8.1           Transfers
by Members.

 

(a)          Approval
for Transfers. The Membership Interest of a Member may not be Transferred without the approval of the Board of Managers. Notwithstanding
the foregoing, without approval of the Board of Managers, any Member may Transfer its entire Membership Interest to an Affiliate
of such Member, if the transferor remains liable for its Capital Commitment (a “Permitted Affiliate Transfer”).
No Transfer by a Member shall be binding upon the Fund until the Fund receives an executed copy of the agreement providing for
such Transfer, which shall be in form and substance satisfactory to the Board of Managers, and any Transfer pursuant to this Section
8.1(a) shall be subject to satisfaction of the conditions set forth in Section 8.1(f).

 

(b)          Admission
of Transferee. Any Person which acquires a Membership Interest by Transfer in accordance with the provisions of this Agreement
shall be admitted as a substitute Member only upon the approval of the Board of Managers. The admission of a Transferee as a substitute
Member shall be conditioned upon the Transferee’s written assumption, in form and substance satisfactory to the Board of
Managers, of all obligations of the Transferor in respect of the Transferred Interest and execution of an instrument satisfactory
to the Board of Managers whereby such Transferee becomes a party to this Agreement.

 

(c)          Transfer
Upon Death. The legal representative of a deceased Person who holds a Membership Interest is hereby authorized to distribute
the deceased individual’s direct or indirect interest in the Membership Interest, without liquidation thereof, to the Person
or Persons entitled thereto under the applicable laws of testate or intestate succession. The legal representative of a deceased
individual holding the direct or indirect interest in the Membership Interest shall promptly notify the Fund of such individual’s
death. Neither the legal representative of the deceased individual nor any distributee of the deceased individual’s direct
or indirect interest in the Membership Interest may require that the Membership Interest be redeemed or liquidated by the Fund.
No Transferee of a deceased individual’s Membership Interest shall be a Member unless admitted in accordance with Section
8.1(b).

 

    	 	24	 

     

    

  

(d)          Rights
of Non-Member Transferees. Any Transfer of a Membership Interest to a Person that has not been admitted as a Member pursuant
to Section 8.1(b) shall be effective to give the Transferee of such Membership Interest only the right to receive, to the
extent Transferred, the allocations of Net Profits and Net Losses and distributions to which the Transferor would have been entitled
if the Transfer had not been made, and shall not be effective to admit the Transferee as a Member. Unless admitted as a Member
pursuant to Section 8.1(b), such Transferee shall have (i) no right to vote or otherwise participate in any decisions of
the Members or matters relating to the Fund, (ii) no right of access to the records of the Fund, and (iii) no other rights of any
kind whatsoever except as described in this Section 8.1(d) or as required by applicable law.

 

(e)          Obligations
of All Transferees. Any Transferee of a Membership Interest, whether or not admitted as a Member, shall be subject to (a) the
terms and conditions of this Agreement, including being subject to all of the obligations of the Members set forth herein as if
such Transferee had been admitted as a Member, and (b) any claims or offsets relating to the Transferred Membership Interest that
the Fund has against the Transferor of the Membership Interest at the time of such Transfer.

 

(f)          Further
Restrictions on Transfer. As additional conditions to the validity of any Transfer of a Membership Interest, such Transfer
shall not:

 

(i)          violate
the registration provisions of the Securities Act of 1933, as amended, or the securities laws of any applicable jurisdiction;

 

(ii)         cause
the Fund to cease to be entitled to the exemption from the definition of an “investment company” pursuant to Section
3(c)(7) of the Investment Company Act, and the rules and regulations of the Securities and Exchange Commission thereunder;

 

(iii)        result
in the termination of the Fund under the Code or in the Fund being classified as a “publicly traded partnership” under
the Code;

 

(iv)        unless
the Board of Managers waives in writing the application of this clause (iv) with respect to such assignment (which the Board of
Managers may refuse to do in its absolute discretion), be to a Person which is an ERISA Plan; or

 

(v)         cause
the Fund or the other Members to be in violation of, or effect a Transfer to a Person that is in violation of, applicable law.

 

As a condition to granting
its consent to a Transfer, the Board of Managers may require reasonable evidence as to the foregoing, including, without limitation,
an opinion of counsel reasonably acceptable to the Board of Managers. Any purported Transfer as to which the conditions set forth
in the foregoing clauses (i) through (v) above are not satisfied shall be void ab initio. A Transferring Member shall be responsible
for all costs and expenses incurred by the Fund, including reasonable legal fees and expenses, in connection with any assignment
or proposed assignment.

 

    	 	25	 

     

    

 

(g)          Right
of First Offer. For so long as the Members are Trinity and the BDC or their respective Permitted Affiliate Transferees, each
Member hereby unconditionally and irrevocably grants to the other Member or its designee a right of first offer to purchase or
designate a third party to purchase all, but not less than all, of any Membership Interest that such other Member may propose to
Transfer to another Person, except for Permitted Affiliate Transfers, at the valuation most recently approved in accordance with
Section 10.5.

 

(i)          The
Member proposing to make a Transfer that would be subject to this Section 8.1(g) must deliver written notice of its intention
to Transfer such interest (the “Notice of Intent”) to the other Member not later than thirty (30) days prior
to the proposed closing date of such Transfer. Such Notice of Intent shall contain the material terms and conditions of the proposed
Transfer and shall identify the proposed transferee of such interest, if known.

 

(ii)         The
Member receiving the Notice of Intent shall have the right, for a period of fifteen (15) business days from the date of receipt
of the Notice of Intent (the “Acceptance Period”), to accept the Membership Interest or to designate a third-party
purchaser to accept such Membership Interest at the valuation most recently approved in accordance with Section 10.5 and
on the terms stated in the Notice of Intent. Such acceptance shall be made by delivering a written notice to the selling Member
and the Fund within the Acceptance Period stating that it elects to exercise its right of first offer and, if applicable, providing
the identity of any Person that the non-transferring Member designates as the purchaser.

 

(iii)        Following
expiration of the Acceptance Period without the Member receiving the Notice of Intent having during the Acceptance Period accepted
the Membership Interest or designated a third-party purchaser to accept such Membership Interest in accordance with the immediately-preceding
subparagraph (ii), the selling Member shall be free to sell its Membership Interest in the Fund to a third party in a Transfer
(which third party shall be the party identified in the Notice of Intent, if known by the selling Member) that otherwise meets
the requirements of this Section 8.1 on terms and conditions it deems acceptable (but at a price not less than the price
and on terms not more favorable to the purchaser thereof than the price and terms stated in the Notice of Intent); provided
that such sale takes place within sixty (60) days after the expiration of the Acceptance Period (the “Sale Period”).
To the extent the selling Member Transfers its interest in the Fund during the Sale Period, the selling Member shall promptly notify
the Fund, and the Fund shall promptly notify the other Member, as to the terms of such Transfer and the name of the owner(s) to
whom the interest was Transferred. If no such sale occurs during the Sale Period, any attempted Transfer of such interest shall
again be subject to the right of first offer set forth in this Section 8.1(g) and the procedures of this Section 8.1(g)
shall be repeated de novo.

 

Section 8.2           Withdrawal
by Members. Members may withdraw from the Fund only as approved by, and on terms agreed to by, the Board of Managers.

 

    	 	26	 

     

    

 

ARTICLE
9

 

TERM,
DISSOLUTION AND LIQUIDATION OF FUND

 

Section 9.1           Term.
Except as provided in Section 9.2, the Fund shall continue without dissolution indefinitely.

 

Section 9.2           Dissolution.
The Fund shall be dissolved and its affairs wound up upon the occurrence of any of the following events:

 

(a)          a
determination by the Board of Managers to dissolve the Fund;

 

(b)          a
written notice by a Member to the other Member to dissolve the Fund, which notice shall become effective as stated therein but
no less than ninety days after delivery (unless the other Member waives such notification requirement);

 

(c)          a
determination by the BDC on its providing written notice to the Board of Managers that the U.S. Securities and Exchange Commission
(the “SEC”) has raised concerns under the Investment Company Act regarding the BDC’s interest in the Fund,
including with respect to consolidation for GAAP or Investment Company Act purposes, or that there has been a determination by
the SEC to subject the BDC’s participation in the Fund to an accounting or reporting treatment or other consequence which
the BDC, in its sole discretion, determines to be materially adverse to it; or

 

(d)          the
entry of a decree of judicial dissolution pursuant to the Act, in which event the provisions of Section 9.3, as modified
by said decree, shall govern the winding up of the Fund’s affairs.

 

Section 9.3           Wind-down.

 

(a)          Liquidation
by the Board of Managers. Upon the dissolution of the Fund, the Fund shall be liquidated in accordance with this Section
9.3 and the Act. The liquidation shall be conducted and supervised by the Board of Managers and the Investment Committee in
the same manner provided by ARTICLE 6 with respect to the operation of the Fund during its term; provided that in
the case of a dissolution and winding up of the Fund pursuant to Section 9.2(c), the BDC may elect, by written notice to
the Board of Managers, to exercise as liquidating agent all of the rights, powers and authority with respect to the assets and
liabilities of the Fund in connection with the liquidation of the Fund, to the same extent as the Board of Managers and the Investment
Committee would have during the term of the Fund.

 

    	 	27	 

     

    

 

(i)          Investments
During Liquidation. From and after the date on which an event set forth in Section 9.2 becomes effective, the Fund shall
cease to make Investments after that date, except for (i) Investments which the Fund was committed to make in whole or in part
(as evidenced by a commitment letter, term sheet or letter of intent, or definitive legal documents under which less than all advances
have been made) on or before such effective date, and (ii) Investments in an issuer in which the Fund then has an Investment in
which the Fund participates made with the approval of the Board of Managers within three (3) Business Days after receipt by the
Board of Managers of written notice from any Member of the availability such an Investment, provided that no such approval
shall be required in connection with an Investment in connection with a refinancing of the Fund’s prior Investment in such
issuer or the sale of such issuer. Capital calls against the Capital Commitment of the Members shall cease from and after the date
on which an event set forth in Section 9.2 becomes effective; provided that capital calls against the Capital Commitment
of the Members may continue to fund the allocable share of Investments in which the Fund continues to participate (as set forth
in the immediately preceding sentence), Fund Expenses and all other obligations of the Fund. Subject to the foregoing, the Members
shall continue to bear an allocable share of Fund Expenses and other obligations of the Fund until all Investments in which the
Fund participates are repaid or otherwise disposed of in the normal course of the Fund’s activities.

 

(ii)         Distributions
During Liquidation. Distributions to the Members during the winding down of the Fund shall be made no less frequently than
quarterly to the extent consisting of a Member’s allocable share of cash and cash equivalents, after taking into account
reasonable reserves deemed appropriate by Board of Managers (or in the event of a dissolution and winding up of the Fund pursuant
to Section 9.2(c), by a Member that has elected to act as liquidating agent pursuant to Section 9.3(a)), to fund
Investments in which the Fund continues to participate (as set forth in the immediately preceding paragraph), Fund Expenses and
all other obligations (including without limitation contingent obligations) of the Fund. Unless waived by the Board of Managers,
the Fund also shall withhold ten percent (10%) of distributions in any calendar year, which withheld amount shall be distributed
within sixty (60) days after the completion of the annual audit covering such year. A Member shall remain a member of the Fund
until all Investments in which the Fund participates are repaid or otherwise disposed of, the Member’s allocable share of
all Fund Expenses and all other obligations (including without limitation contingent obligations) of the Fund are paid, and all
distributions are made hereunder, at which time the Member shall have no further rights under this Agreement.

 

(b)          Final
Allocations and Distributions. Upon dissolution of the Fund, final allocations of all items of Net Profits and Net Losses shall
be made in accordance with ARTICLE 4. Upon dissolution of the Fund, the assets of the Fund shall be applied in the following
order of priority:

 

(i)          to
creditors (other than Members) in satisfaction of liabilities of the Fund (whether by payment or by the making of reasonable provision
for payment thereof), including to establish any reasonable reserves which the Liquidator may, in its reasonable judgment, deem
necessary or advisable for any contingent, conditional or unmatured liability of the Fund;

 

(ii)         to
establish any reserves which the Liquidator may, in its reasonable judgment, deem necessary or advisable for any contingent, conditional
or unmatured liability of the Fund; and

 

(iii)        the
balance, if any, to the Members in accordance with Section 5.1(c).

 

    	 	28	 

     

    

 

(c)          Final
Accounting. Each Member shall be furnished with a statement prepared by the Fund’s accountant, which shall set forth
the assets and liabilities of the Fund as at the date of complete liquidation, and each Member’s share thereof. Upon compliance
with the distribution plan set forth in this Section 9.3, the Members shall cease to be such, and the Liquidator shall execute,
acknowledge and cause to be filed a certificate of cancellation of the Fund.

 

ARTICLE
10

 

ACCOUNTING,
REPORTING AND VALUATION PROVISIONS

 

Section 10.1         Books
and Accounts.

 

(a)          General.
Complete and accurate books and accounts shall be kept and maintained for the Fund at its principal office by the Administrative
Agent. Such books and accounts shall be kept on the accrual basis method of accounting and shall include separate Capital Accounts
for each Member. Each Member or its duly authorized representative, at its own expense, shall at all reasonable times and upon
reasonable prior written notice to the Administrative Agent have access to, and may inspect, such books and accounts and any other
records of the Fund for any purpose reasonably related to its interest in the Fund.

 

(b)          Bank
Accounts. All funds received by the Fund shall be deposited in the name of the Fund in such bank account or accounts or with
such custodian, and securities owned by the Fund may be deposited with such custodian, as may be designated by the Board of Managers
from time to time and withdrawals therefrom shall be made upon such signature or signatures on behalf of the Fund as may be designated
by the Board of Managers from time to time.

 

Section 10.2         Financial
Reports; Tax Return.

 

(a)          Annual
Financial Statements. The Administrative Agent shall engage an independent certified public accountant approved by the Board
of Managers to act as the accountant for the Fund and to audit the Fund’s books and accounts as of the end of each fiscal
year. As soon as practicable, but no later than one hundred and twenty days, after the end of such fiscal year, the Board of Managers
shall cause the Administrative Agent to prepare and deliver, by any of the methods described in Section 11.5, to each Member
and to each former Member who withdrew during such fiscal year:

 

(i)          audited
financial statements of the Fund as at the end of and for such fiscal year, including a balance sheet and statement of income,
together with the report thereon of the Fund’s independent certified public accountant, which annual financial statements
shall be approved by the Board of Managers;

 

(ii)         a
statement of holdings of Investments of the Fund, including both the cost and the Value of such Investments, and a statement of
such Member’s Capital Account; and

 

(iii)        to
the extent that the requisite information is then available, a Schedule K-1 for such Member with respect to such fiscal year, prepared
in accordance with the Code, together with corresponding forms for state income tax purposes, setting forth such Member’s
distributive share of Net Profits and Net Losses for such fiscal year and the amount of such Member’s Capital Account at
the end of such fiscal year.

 

    	 	29	 

     

    

  

The Board of Managers shall
also cause the Administrative Agent to prepare and deliver, by any of the methods described in Section 11.5, to each Member
and each former Member who withdrew during such fiscal year an unaudited draft statement of such Member’s Capital Account
no later than ninety days after the end of each fiscal year of the Fund.

 

(b)          Tax
Returns. The Board of Managers shall cause the Administrative Agent to prepare and timely file after the end of each fiscal
year of the Fund all federal and state income tax returns of the Fund for such fiscal year.

 

(c)          Quarterly
Financials. As soon as practicable, but in no event later than forty-five days, after the end of each of the first three fiscal
quarters of a fiscal year, the Board of Managers shall cause the Administrative Agent to prepare and deliver, by any of the methods
described in Section 11.5, to each Member (i) unaudited financial information with respect to such Member’s allocable
share of Net Profits and Net Losses and changes to its Capital Account as of the end of such fiscal quarter, and (ii) a statement
of holdings of Investments of the Fund, including both the cost and the Value of such Investments.

 

Section 10.3         Tax
Elections. The Partnership Representative with the consent of the Board of Managers may, but shall not be required to, cause
the Fund to make any election pursuant to the provisions of Section 754 or 1045 of the Code, or any other election required or
permitted to be made by the Fund under the Code.

 

Section 10.4         Confidentiality.

 

(a)          General.
Each Member agrees to maintain the confidentiality of the Fund’s records, reports and affairs, and all information and materials
furnished to such Member by the Fund, the BDC, the Administrative Agent or their Affiliates with respect to their respective businesses
and activities. Each Member further agrees not to provide to any other Person copies of any financial statements, tax returns or
other records or reports, or other information or materials, regarding the Fund, the BDC, the Administrative Agent or their Affiliates
provided or made available to such Member hereunder (“Confidential Information”). Each Member agrees not to
disclose to any other Person any Confidential Information without the express prior written consent of the Board of Managers; provided
that any Member may provide Confidential Information (i) to such Member’s employees, accountants, lenders, internal and external
auditors, legal counsel, financial advisors and other fiduciaries and representatives (who may be Affiliates of such Member) as
long as such Member instructs such Persons to maintain the confidentiality thereof and not to disclose to any other Person any
information contained therein; (ii) to potential transferees of such Member’s Membership Interest that agree in writing,
for the benefit of the Fund, to maintain the confidentiality thereof, but only after reasonable advance notice to the Fund; (iii)
if and to the extent required by law (including judicial or administrative order); provided that, to the extent legally
permissible, the Fund is given prior notice to enable it to seek a protective order or similar relief; (iv) to representatives
of any governmental regulatory agency or authority with jurisdiction over such Member, or as otherwise may be necessary to comply
with regulatory requirements applicable to such Member; (v) in the case of the BDC, to the extent required by law in reporting
to its shareholders; and (vi) in order to enforce rights under this Agreement. Notwithstanding the foregoing, the following shall
not be considered Confidential Information for purposes of this Agreement: (A) information generally known to the public; (B) information
obtained by a Member from a third party who is not prohibited from disclosing the information; (C) information in the possession
of a Member prior to its disclosure by the Fund, the BDC, the Administrative Agent or their Affiliates; or (D) information which
a Member can show by written documentation was developed independently of disclosure by the Fund, the BDC, the Administrative Agent
or their Affiliates. Without limitation to the foregoing, Trinity shall not engage in the purchase, sale or other trading of securities
or derivatives thereof based upon what it knows to be material non-public information received from the Fund, the BDC, the Administrative
Agent or their Affiliates.

 

    	 	30	 

     

    

  

(b)          Publicity.
The parties agree that a public announcement and/or similar publicity with respect to the transactions contemplated hereby will
be issued by the BDC following the date hereof. The contents of such announcement and/or publicity by the BDC will be subject to
the approval of Trinity (such approval not to be unreasonably withheld). For the avoidance of doubt, any such announcement and/or
publicity may be transmitted by the BDC by email to its general contacts.

 

(c)          Withholding
Information. To the extent permitted by applicable law, and notwithstanding the provisions of this ARTICLE 10, each
of the Fund and the Administrative Agent may, in its reasonable discretion, keep confidential from any Member information to the
extent such Person reasonably determines that (i) disclosure of such information to such Member likely would have a material adverse
effect upon the Fund or any Investment due to an actual or likely conflict of business interests between such Member and one or
more other parties or an actual or likely imposition of additional statutory or regulatory constraints upon the Fund, the Administrative
Agent or an Investment; or (ii) such Member cannot or will not adequately protect against the improper disclosure of Confidential
Information, the disclosure of which likely would have a material adverse effect upon the Fund, the Administrative Agent or an
Investment. Notwithstanding the foregoing, the Fund and the Administrative Agent shall promptly provide to each Member all relevant
documents and information that would otherwise be required to be provided under this ARTICLE 10 but for the preceding sentence
that is related to any notice or request (whether written or oral) received from any governmental or regulatory agency involving
any pending or threatened Proceeding in connection with the activities or operations of the Fund.

 

(d)          Other
Obligations. The Members (i) acknowledge that the Fund, the BDC, the Administrative Agent, their Affiliates, and their respective
direct or indirect owners, managers, officers, directors and employees may acquire confidential third-party information that, pursuant
to fiduciary, contractual, legal or similar obligations, cannot be disclosed to the Fund or the Members; and (ii) agree that none
of such Persons shall be in breach of any duty under this Agreement or the Act as a result of acquiring, holding or failing to
disclose such information to the Fund or the Members.

 

    	 	31	 

     

    

 

Section 10.5         Valuation.

 

(a)          General.
Valuations shall be made as of the end of each fiscal quarter and upon liquidation of the Fund in accordance with the following
provisions and the Fund’s valuation guidelines then in effect (which shall be consistent with the BDC’s valuation guidelines
then in effect):

 

(i)          Within
forty-five (45) days after the date as of which a valuation is to be made, the Administrative Agent shall deliver to the Board
of Managers a report as to the recommended valuation as of such date, and provide such Persons with a reasonable opportunity to
request information and to provide comments with respect to the report.

 

(ii)         If
the recommended valuation as of such date is approved by the Board of Managers, then the valuation that has been approved shall
be final.

 

(iii)        If
there is an objection to the recommended valuation by a Manager, then the Administrative Agent shall cause a valuation of the asset(s)
subject to unresolved objection to be made as of such date by an approved valuation expert (if not already made), and shall determine
a valuation of such asset(s) consistent with the valuation as of such date by the approved valuation expert, and such valuation
shall be final. For this purpose, a valuation of an asset as of such date shall be considered consistent with a valuation of an
approved valuation expert if it is equal to the recommended value or within the recommended range of values determined by the approved
valuation expert as of such date. An approved valuation expert shall mean an independent valuation consultant that either has been
approved by the Board of Managers or has been referenced in a previous valuation report by the Administrative Agent without objection
by any Manager.

 

(iv)        Liabilities
of the Fund shall be taken into account at the amounts at which they are carried on the books of the Fund, and provision shall
be made in accordance with U.S. generally accepted accounting principles for contingent or other liabilities not reflected on such
books and, in the case of the liquidation of the Fund, for the expenses (to be borne by the Fund) of the liquidation and winding
up of the Fund’s affairs.

 

(v)         No
value shall be assigned to the Fund name and goodwill or to the office records, files, statistical data, or any similar intangible
assets of the Fund not normally reflected in the Fund’s accounting records.

 

(b)          Binding
Valuation. All valuations shall be made in accordance with the foregoing shall be final and binding on all Members, absent
actual and apparent error. Valuations of the Fund’s assets by independent valuation consultants shall constitute a Fund Expense.

 

ARTICLE
11

 

MISCELLANEOUS
PROVISIONS

 

Section 11.1         [Reserved].

 

Section 11.2         Force
Majeure. Whenever any act or thing is required of any Person hereunder to be done within any specified period of time, such
Person shall be entitled to such additional period of time to do such act or thing as shall equal any period of delay resulting
from causes beyond the reasonable control of such Person, including, without limitation, bank holidays, and actions of governmental
agencies, and excluding, without limitation, economic hardship; provided that this provision shall not have the effect of
relieving such Person from the obligation to perform any such act or thing.

 

    	 	32	 

     

    

 

Section 11.3         Applicable
Law. This Agreement shall be governed by, and construed in accordance with, the internal law of the State of Delaware, without
regard to the principles of conflicts of laws thereof.

 

Section 11.4         Waivers.
No waiver of the provisions hereof shall be valid unless in writing and then only to the extent therein set forth. Any right or
remedy of a Person hereunder may be waived only by such Person, and any such waiver shall be binding only on such Person. Except
as specifically herein provided, no failure or delay by any Person in exercising any right or remedy hereunder shall operate as
a waiver thereof, and a waiver of a particular right or remedy on one occasion shall not be deemed a waiver of any other right
or remedy or a waiver on any subsequent occasion.

 

Section 11.5         Notices.
All notices, demands, solicitations of consent or approval, and other communications hereunder shall be in writing or by electronic
mail (with or without attached PDFs), and shall be sufficiently given if personally delivered or sent by postage prepaid, registered
or certified mail, return receipt requested, or sent by electronic mail, overnight courier or facsimile transmission, addressed
as follows: if intended for the Fund, to the Fund’s principal office as set forth in the Fund’s records as kept by
the Administrative Agent; and if intended for any Member, to the address of such Member set forth on the Fund’s records as
maintained by the Administrative Agent, or to such other address as any Member may designate by written notice. Notices shall be
deemed to have been given (i) when personally delivered, (ii) if sent by registered or certified mail, on the earlier of (A) three
days after the date on which deposited in the mails or (B) the date on which received, or (iii) if sent by electronic mail, overnight
courier or facsimile transmission, on the date on which received; provided that notices of a change of address shall not
be deemed given until the actual receipt thereof. The provisions of this paragraph shall not prohibit the giving of written notice
in any other manner; any such written notice shall be deemed given only when actually received.

 

Section 11.6         Construction.

 

(a)          Captions;
Interpretation. The captions used herein are intended for convenience of reference only and shall not modify or affect in any
manner the meaning or interpretation of any of the provisions of this Agreement. This Agreement is not intended to carry over any
economic entitlements or obligations that may have arisen among the parties under the Existing Agreement due to events preceding
this Agreement other than those specifically contemplated herein and should be interpreted accordingly to the extent applicable.

 

(b)          Singular
and Plural. As used herein, the singular shall include the plural, the masculine gender shall include the feminine and neuter,
and the neuter gender shall include the masculine and feminine, unless the context otherwise requires.

 

    	 	33	 

     

    

 

(c)          References
to this Agreement. The words “hereof,” “herein,” and “hereunder,” and words of similar
import, when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.

 

(d)          Articles
and Sections. References in this Agreement to Articles and Sections are intended to refer to Articles and Sections of this
Agreement unless otherwise specifically stated.

 

(e)          Third
Parties. Other than the rights of Indemnified Persons to indemnification and exculpation pursuant to Section 7.3 and
Section 7.4, nothing in this Agreement shall be deemed to create any right in or benefit for any creditor of the Fund or
other Person that is not a party hereto, and this Agreement shall not be construed in any respect to be for the benefit of any
creditor of the Fund or other Person that is not a party hereto.

 

Section 11.7         Amendments.
This Agreement may be amended at any time and from time to time with the approval of the Board of Managers.

 

Section 11.8         Legal
Counsel. The BDC has engaged Robinson, Bradshaw & Hinson, P.A. (“RBH”), as legal counsel to the Fund,
the BDC and the Administrative Agent. Moreover, RBH has previously represented and/or concurrently represents the interests of
the Fund, the BDC, the Administrative Agent and/or parties related thereto in connection with matters other than the preparation
of this Agreement and may represent such Persons in the future. Each Member: (i) approves RBH’s representation of the Fund,
the BDC and the Administrative Agent in the preparation of this Agreement; and (ii) acknowledges that RBH has not been engaged
by any other Member to protect or represent the interests of such Member vis-à-vis the Fund or the preparation of this Agreement,
and that actual or potential conflicts of interest may exist among the Members in connection with the preparation of this Agreement.
In addition, each Member: (iii) acknowledges the possibility of a future conflict or dispute among Members or between any Member
or Members and the Fund or the Administrative Agent; and (iv) acknowledges the possibility that, under the laws and ethical
rules governing the conduct of attorneys, RBH may be precluded from representing the Fund and/or the BDC and/or the Administrative
Agent (or any equity holder thereof) in connection with any such conflict or dispute. Nothing in this Section 11.8 shall
preclude the Fund from selecting different legal counsel to represent it at any time in the future and no Member shall be deemed
by virtue of this Section 11.8 to have waived its right to object to any conflict of interest relating to matters other
than this Agreement or the transactions contemplated herein.

 

Section 11.9         Execution.
This Agreement may be executed in any number of counterparts and all such counterparts together shall constitute one agreement
binding on all Members.

 

Section 11.10         Binding
Effect. This Agreement shall be binding upon and shall inure to the benefit of the respective heirs, executors, administrators,
legal representatives, successors and assigns of the parties hereto; provided that this provision shall not be construed
to permit any assignment or transfer which is otherwise prohibited hereby.

 

    	 	34	 

     

    

 

Section 11.11         Severability.
If any one or more of the provisions contained in this Agreement, or any application thereof, shall be invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the remaining provisions contained herein and all other applications
thereof shall not in any way be affected or impaired thereby.

 

Section 11.12         Entire
Agreement. This Agreement and the Subscription Agreements entered into between the Fund and each Member in connection with
the Members’ subscription of interests in the Fund set forth the entire understanding among the parties relating to the subject
matter hereof, any and all prior correspondence, conversations, memoranda or other writings (including the Existing Agreement)
being merged herein and replaced and being without effect hereon. No promises, covenants or representations of any character or
nature other than those expressly stated herein or in such Subscription Agreements have been made to induce any party to enter
into this Agreement.

 

[Remainder of page left blank]

 

    	 	35	 

     

    

 

IN WITNESS WHEREOF, the
Members have caused this Agreement to be executed and delivered as of December 20, 2018.

 

	 	BDC:
	 	 
	 	Capitala Finance Corp.
	 	 	 	 
	 	By:	/s/ Joseph B. Alala, III
	 	 	Name:	Joseph B. Alala, III
	 	 	Title:	President and Chief Executive Officer
	 	 	 	 
	 	TRINITY:
	 	 
	 	Trinity Universal Insurance Company
	 	 	 	 
	 	By:	/s/ John Boschelli
	 	 	Name:	John Boschelli
	 	 	Title:	Assistant Treasurer
	 	 	 	 
	 	MEMBERS OF THE BOARD OF MANAGERS
	 	 	 	 
	 	By:	/s/ John Boschelli
	 	 	Name:	John Boschelli
	 	 	Title:	Manager
	 	 	 	 
	 	By:	/s/ Jonathan Wilson
	 	 	Name:	Jonathan Wilson
	 	 	Title:	Manager
	 	 	 	 
	 	By:	/s/ Joseph B. Alala, III
	 	 	Name:	Joseph B. Alala, III
	 	 	Title:	Manager
	 	 	 	 
	 	By:	/s/ Peter Sherman
	 	 	Name:	Peter Sherman
	 	 	Title:	Manager

 

     

     

    

 

Schedule A

 

Without limiting the power and authority of
the Board of Managers set forth in the Agreement, approval by the Board of Managers shall be required for the Fund to do any of
the following:

 

		1.	Enter into any transaction-related agreement with a Member
or an Affiliate of a Member (except as expressly permitted by the Agreement, including as contemplated in Section 6.8(a)
and (b));

 

		2.	Make an Investment in a Member or an Affiliate of a Member;

 

		3.	Enter into hedging, swaps, forward contracts or other
commodities transactions, except as permitted by Section 6.7 of the Agreement;

 

		4.	Contract for Leverage on behalf of the Fund;

 

		5.	Replace the Administrative Agent for the Fund, or modify
or waive the terms of any administrative services agreement;

 

		6.	Approve a Transfer of an interest in the Fund where required
by ARTICLE 8 of the Agreement

 

		7.	Take any action or decision which pursuant to any provision
of the Agreement requires approval of the Board of Managers;

 

		8.	Modify or waive any provision of the Agreement, including
this Schedule A or modify the Certificate of Formation of the Fund in a manner adverse to the rights of any Member under
the Agreement;

 

		9.	Guarantee or otherwise become liable for, the obligations
of other Persons;

 

		10.	Materially change the business of the Fund or its subsidiaries
from its current business or enter into any line business other than existing or related lines of business;

 

		11.	Make, change or rescind any tax election;

 

		12.	Settle or compromise with respect to any tax audit, claim,
deficiency notice, suit or other proceeding relating to taxes; make a request for a written ruling to any tax authority; or enter
into a written and legally binding agreement with any tax authority (including any agreement to extend or waive any statute of
limitations with respect to any taxes);

 

		13.	Make short sales of securities;

 

		14.	Change the name or principal office of the Fund or open
additional offices of the Fund;

 

     

     

    

 

		15.	Retain third-party agents on behalf of the Fund, open
accounts with third parties on behalf of the Fund and designate signatures upon which withdrawals from accounts shall be made
on behalf of the Fund;

 

		16.	Adjust Net Profits or Net Losses to amortize Organization
Costs or select a period over which to amortize Organization Costs;

 

		17.	Determine a period to allocate Net Profits or Net Losses
among the Members pursuant to Section 4.1;

 

		18.	Approve an independent certified public accountant to
act as the accountant for the Fund and to audit the Fund’s books and accounts as of the end of each fiscal year; provided
that the retention of Ernst & Young as the Fund’s independent certified accountant for the fiscal year of the date
hereof is hereby approved; and

 

		19.	Organize, acquire an interest in, or transfer or otherwise
dispose of an interest in, any subsidiary of the Fund, any parallel partnerships, corporations or other entities, or modify or
waive the terms thereof.

 

    	 	2	 

     

    

 

Schedule B

 

		1.	Take any action or make any decision that results in
the acquisition or disposition of an Investment;

 

		2.	Grant any consent or take any other action as the owner
of an Investment (such as, for example, in respect of any late payment in respect of an Underlying Loan); and

 

		3.	Materially modify or waive the terms of any Investment.

 

Notwithstanding the foregoing, the approval of the Investment
Committee shall not be required in respect of actions taken by the BDC, its Affiliates and the BDC Managers to the extent permitted
by Section 6.8(a) and (b).

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