Document:

EX-10.1

 Exhibit 10.1 

Execution Version 

February 18, 2020             

Ronald J. Bernstein 
 [REDACTED]

  

	 	Re:	 Non-Executive Chairman and Senior Advisor Agreement

 Dear Ron: 
 On behalf of
the Board of Managers (the “Board”), I want to thank you for your over 28 years of service to Liggett Vector Brands LLC (“LVB”) and its affiliates, including Liggett Group LLC (“Liggett Group”) and
Vector Tobacco Inc. (“VT”). I know I speak for the rest of the Board when I say that you have demonstrated remarkable leadership and immeasurable commitment to LVB, VT and Liggett Group (together, “Liggett”). 

Although the Board accepts your decision to retire from active employment as the President and Chief Executive Officer of Liggett Group and
LVB, effective as of March 31, 2020 (your “Retirement Date”), we have asked you to continue to provide services to Liggett following your retirement as the Non-Executive Chairman of the
Board of Managers of LVB (the “Non-Executive Chairman”) and a Senior Advisor to Liggett. In addition, your retirement will not affect your status as a member of the Board of Directors of
Vector Group Ltd. (the “Vector Board”) and you will continue to serve on the Vector Board following the Retirement Date. The purpose of this Letter Agreement (the “Letter Agreement”) is to confirm the agreements
that we have reached. We appreciate your willingness to provide continued support and expertise to Liggett and the Vector Board. 
  

	1.	 Employment Through Retirement Date 

During your employment in the period from the date hereof through your Retirement Date, you will continue in your current role as President and
Chief Executive Officer of Liggett and will continue to receive compensation and employee benefits as in effect as of the date hereof and subject to the terms and conditions of the applicable compensation and benefits plans of Liggett and its
affiliates. 
 Upon your retirement, any accrued benefits (including, but not limited to, bonus,
tax-qualified and non-qualified pension and retirement benefits, deferred compensation and accrued but unpaid vacation) will be paid to you, in each case, in accordance
with the terms and conditions of the applicable plan document and any applicable prior payment election made by you.    In addition, upon your retirement, you will be treated as a
non-employee director with respect to your ongoing Vector Board service and will receive compensation and benefits for your Vector Board service following the Retirement Date in accordance with the non-employee director compensation plans and policies of Vector Group Ltd. (“Vector”).         

	2.	 Services; Term; Renewal 

Following your Retirement Date, you agree to serve as the Non-Executive Chairman and Senior Advisor on
the terms and conditions of this Letter Agreement. In such roles, you agree to perform the following services (the “Services”), reporting to the senior management of Vector: (i) provide advice and counsel regarding all aspects
of the Liggett business to the senior management of Liggett, (ii) assist with special projects as requested by the senior management of Vector, (iii) continue to assist Vector with investor and shareholder engagement as well as
community, customer and business relations as requested by the senior management of Vector, (iv) perform such additional duties as are customarily performed by a non-executive chairman and member of a
board of managers and (v) perform such other services as the parties may mutually agree upon from time to time during the Term. 
 The
term of your arrangement will be from April 1, 2020 until March 31, 2021, unless earlier terminated as provided in paragraph 4 of this Letter Agreement or extended pursuant to the next sentence of this paragraph (the
“Term”). Commencing on April 1, 2021 and on each anniversary thereafter, the Term will be automatically extended for twelve (12) months, unless either you give LVB not less than four (4) months’ prior written
notice of your intention not to extend the Term or LVB gives you not less than 30 days’ prior written notice of its intention to not extend the Term. Notwithstanding anything to the contrary contained herein, this Letter Agreement cannot be
terminated by LVB prior to March 31, 2021 without Cause (as defined below). 
 Your duties as the
Non-Executive Chairman and Senior Advisor will not require you to perform more than 30 hours per month of services for each month of the Term. LVB and you confirm that it is currently expected that your duties
as the Non-Executive Chairman and Senior Advisor will not exceed twenty percent (20%) of the average level of services performed by you during your last three years of employment with LVB, consistent with the
parties’ intent that your Retirement Date constitute a “separation from service” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). 

 

	3.	 Fees; Other Benefits and Expenses 

As compensation for your performance of the Services and the other terms and conditions of this Letter Agreement, during the Term, you will
receive a monthly fee (the “Monthly Fee”) in the amount of $60,000 per month. The Monthly Fee will be payable monthly in arrears. Subject to paragraph 4 below, the portion of the Monthly Fee paid for each month in which this Letter
Agreement commences or terminates shall be prorated based on the number of days during such month that the Letter Agreement was in effect. 

During the Term, LVB will also provide you with (A) access to an office with furnishings comparable to those in effect prior to your
Retirement Date located in Morrisville, North Carolina, (B) administrative support provided by your current assistant (or such replacement as you may select upon your current assistant’s retirement or separation from LVB) on the same basis
as provided to you prior to your Retirement Date, which assistant will remain an employee of LVB and receive compensation and benefits consistent with past practice, and (C) payment or reimbursement of actual out-of-pocket expenses reasonably incurred by you in connection with the Services, subject to LVB’s reimbursement policy as in effect from time to time. 

  
 -2- 

	4.	 Termination 

You may terminate the Term for any reason before its scheduled expiration by providing four (4) months’ prior written notice to LVB.
LVB may terminate the Term for any reason before its scheduled expiration by providing thirty (30) days’ written notice to you, or immediately in the case of a termination by Vector for Cause pursuant to clause (ii) of the Cause
definition. In the event the Term is terminated due to your death, Disability, by you for any reason other than due to material breach by LVB of the terms of this Letter Agreement or LVB terminates the Term for Cause, no Monthly Fee or other
benefits described in paragraph 3 above will be paid or provided for any period following the date of termination. In the event you terminate the Term due to material breach by LVB of the terms of this Letter Agreement or LVB terminates the Term
other than for Cause, LVB will pay the Monthly Fees and provide the other benefits described in paragraph 3 through the end of the then current Term. In the event of any early termination of the Term pursuant to this paragraph 4, your obligations
under paragraph 5 below will continue. 
 For purposes of this paragraph 4, “Cause” means: (i) a material breach by you of
your duties and obligations under this Letter Agreement that is not remedied to the satisfaction of the Board within thirty (30) days after your receipt of written notice of such breach from the Board; (ii) your conviction or indictment,
or plea of guilty or nolo contendere, for a felony; (iii) an act or acts of personal dishonesty by you intended to result in your personal enrichment at the expense of LVB or any of its affiliates; (iv) your material violation of
any written policy of LVB or its affiliates, including the Code of Business Conduct and Ethics of Vector; or (v) any grossly negligent act of omission or any willful and deliberate misconduct by you that results, or is likely to result, in
material economic or other harm to LVB or any of its affiliates, provided however, that any act or omission by you will not fall within the scope of this clause (v) if it was done or omitted to be done by you in good faith and with a reasonable
belief that such action or omission was in LVB’s best interests. “Disability” means: as a result of your incapacity due to physical or mental illness, you have been substantially unable to perform the Services hereunder for a
continued period of 180 days. 
  

	5.	 Restrictive Covenants 

You agree to be bound by the restrictive covenants set forth in Annex 1. 

 

	6.	 Indemnification 

Following your Retirement Date, LVB and its affiliates will continue to indemnify you against any actual or threatened action, suit or
proceeding and to provide you with D&O insurance coverage, in each case, with respect to your services as an executive officer and director of Vector and its subsidiaries prior to your Retirement Date and thereafter the Services as the Non-Executive Chairman and Senior Advisor to Liggett and services as a director of Vector and, in each case, to the same extent that such indemnification and D&O insurance coverage is provided to executive
officers and directors of Vector and its subsidiaries. 
  

	7.	 Independent Contractor; Taxes 

You agree that you are performing the Services as an independent contractor and not as an employee of LVB and that, following your Retirement
Date, you will not be eligible to continue to participate as an employee in any employee benefit programs of LVB 

  
 -3- 

 
or its affiliates. Nothing in this Letter Agreement will be deemed to constitute a partnership or joint venture between LVB and you nor will anything in this Letter Agreement be deemed to
constitute LVB or you as the agent of the other. During the Term, neither you nor LVB will be or become liable to or bound by any representation, act or omission whatsoever of the other. 

You acknowledge that, as an independent contractor, you will be responsible for the payment of all applicable taxes levied or based upon the
Monthly Fee and for all non-reimbursable expenses attributable to the rendering of Services, including without limitation, the payment of all federal, state and local income taxes, self-employment FICA (social
security) taxes, and unemployment and workers compensation payments.                 
  

	8.	 Miscellaneous 

You agree that any and all contracts, correspondence, books, accounts and other sources of information relating to LVB’s and its
affiliates’ businesses will be available for inspection at your office by LVB’s authorized representative during ordinary business hours upon reasonable notice to you. Neither party will assign, transfer or subcontract this Letter
Agreement or any of its obligations hereunder without the other party’s express, prior written consent. Notwithstanding the foregoing, LVB may assign this Letter Agreement to a purchaser of all, or substantially all, of LVB’s assets. 

This Letter Agreement will be governed by and construed and interpreted in accordance with the laws of the State of New York without reference
to principles of conflict of laws. Any dispute regarding this Letter Agreement will be resolved by a court of competent jurisdiction in the State of New York. 

If any provision of this Letter Agreement, including Annex 1, is found by any court of competent jurisdiction (or legally empowered agency) to
be illegal, invalid or unenforceable for any reason, then (i) the provision will be amended automatically to the minimum extent necessary to cure the illegality or invalidity and permit enforcement and (ii) the remainder of this Letter
Agreement will not be affected. 
 It is the intent of the parties that any amounts payable under this Letter Agreement be exempt from or
otherwise comply with the provisions of Section 409A of the Code (“Section 409A”), and each payment under this Letter Agreement will be treated as a separate payment for purposes of Section 409A. The
parties intend that the terms and provisions of this Letter Agreement will be interpreted and applied in a manner that satisfies the requirements and exemptions of Section 409A and, to the maximum extent permitted, this Letter Agreement will be
interpreted so as to comply with Section 409A. With respect to any provision of this Letter Agreement that provides for reimbursement of costs and expenses or in-kind benefits, the right to reimbursement
or benefits may not be exchanged for any other benefit, and the amount of expenses eligible for reimbursement (or in-kind benefits paid) in one year will not affect amounts reimbursable or provided as in-kind benefits in any subsequent year. All expense reimbursements paid pursuant to this Letter Agreement that are taxable income to you will in no event be paid later than the end of the calendar year next
following the year in which you incur the expense. 
 This Letter Agreement constitutes the entire agreement of the parties with respect to
the subject matter hereof and supersedes all prior and contemporaneous representations, proposals, discussions, and communications, whether oral or in writing with respect to the subject matter hereof. This Letter Agreement will be binding upon you
and your heirs, administrators, representatives and executors and LVB and its successors and assigns and may be modified only in a writing signed by you and LVB. 

  
 -4- 

 Any notices given under this Letter Agreement (1) by LVB to you will be in writing and
will be given by hand delivery or by email with a copy by FedEx, addressed to you at your address listed above or (2) by you to LVB will be in writing and will be given by email with a copy by FedEx, addressed to the General Counsel of Vector
at Vector’s corporate headquarters. 

*                *       
         * 

  
 -5- 

 To confirm the foregoing terms are acceptable to you, please execute and return the copy of this Letter
Agreement, which is enclosed for your convenience. 
  

			
	Very truly yours,
	
	VECTOR GROUP LTD.
		
	By:	 	 /s/ Marc N. Bell

		 	Marc N. Bell
		 	Senior Vice President and General Counsel

  

			
	AGREED AND ACKNOWLEDGED:
	
	 /s/ Ronald J. Bernstein

	Ronald J. Bernstein
	
	AGREED AND ACKNOWLEDGED:
	   LIGGETT VECTOR BRANDS LLC
		
	By:	 	 /s/ Nicholas P. Anson

		 	Nicholas P. Anson
		 	Executive Vice President, Finance & Administration, CFO and Treasurer

  
 -6- 

 Annex 1 

to 
 Non-Executive Chairman and Senior Advisor Agreement 
 RESTRICTIVE COVENANTS 

You agree to comply with the following covenants. 
  

	1.	 CONFIDENTIALITY. 

You covenant and agree with LVB that you will not, directly or indirectly, at any time, except in the good faith performance of your obligations to LVB
hereunder or with the prior express written consent of the Board, disclose any Confidential Information that you have learned or may learn by reason of your service to, or association with, LVB, or use any such information for your own personal
benefit or gain. The term “Confidential Information” includes, without limitation, information with respect to the operations, facilities and methods, trade secrets and other intellectual property, systems, procedures, manuals,
confidential reports, pricing information, financial information (including, without limitation, the revenues, costs or profits) associated with any activities or products of LVB and/or its affiliates, business plans, prospects, opportunities or
other information of or relating to LVB and/or its affiliates. Confidential Information will not include information which (i) is or becomes generally available to the public other than as a result of disclosure by you in violation of this
section or (ii) you are required to disclose under any applicable laws, regulations or directives of any government agency, tribunal or authority having jurisdiction in the matter or under subpoena or other process of law. 

Notwithstanding anything to the contrary in this Letter Agreement or otherwise, nothing will limit your rights under applicable law to provide truthful
information to any governmental entity or to file a charge with or participate in an investigation conducted by any governmental entity. 
 You are hereby
notified that the immunity provisions in Section 1833 of title 18 of the United States Code provide that an individual cannot be held criminally or civilly liable under any federal or state trade secret law for any disclosure of a trade secret
that is made (1) in confidence to federal, state or local government officials, either directly or indirectly, or to an attorney, and is solely for the purpose of reporting or investigating a suspected violation of the law, (2) under seal
in a complaint or other document filed in a lawsuit or other proceeding, or (3) to your attorney in connection with a lawsuit for retaliation for reporting a suspected violation of law (and the trade secret may be used in the court proceedings
for such lawsuit) as long as any document containing the trade secret is filed under seal and the trade secret is not disclosed except pursuant to court order. 
  

	2.	 NON-SOLICITATION. 

You covenant and agree with LVB that you will not, directly or indirectly, for the period commencing on the Retirement Date and ending twenty-four
(24) months following the last payment received under this Letter Agreement (a) take any action to solicit or divert any business (or potential business) or clients or customers (or potential clients or potential customers) away from LVB
or any affiliate and/or (b) induce any person in the employment of LVB or any affiliate or any consultant to LVB or any affiliate to (i) terminate such employment or consulting arrangement, (ii) accept employment, or enter into any

 
consulting arrangement, with anyone other than LVB or any affiliate, and/or (iii) interfere with (x) the business relations between LVB or any affiliate and each of their respective
customers or suppliers in any manner or (y) the business of LVB or any affiliate in any manner. 
  

	3.	 NON-DISPARAGEMENT. 

Subject to the requirements of any applicable securities or other laws, you covenant and agree with LVB that, during and after the Term, you will not at any
time make any statement or representation, written or oral, which you know or should know will, or which you know or should know is reasonably likely to, impair, bring into disrepute, or adversely affect in any way the reputation, good will,
business, or public relations of LVB, or any affiliate, and/or any person or entity which you know or should know is one of the following: (i) an employee or a member of the boards of managers or directors, as applicable, of LVB, or any
affiliate, (ii) a person or entity who has or has had a legal or beneficial ownership interest in LVB, or any affiliate (an “Owner”), and/or (iii) an owner, employee, director, partner, representative of, and/or adviser to, any
such Owner. 
  

	4.	 NON-COMPETITION. 

You covenant and agree with LVB that for the period commencing on the Retirement Date and ending twenty-four (24) months following the last payment
received under this Agreement, you will not as an employee, consultant or in any other capacity, provide services, in the geographic areas in which LVB or any of its affiliates does business, that are the same as or similar to the services you
provided to LVB or its affiliates, to any business that then engages in the development or manufacture of tobacco products, including but not limited to, cigarettes, roll-your-own tobacco, cigars, smokeless
tobacco, hookah tobacco, pipe tobacco, vaporizers and other electronic nicotine delivery products, dissolvable nicotine products, as well as reduced risk or cessation products or is in the same, similar or otherwise competitive business as LVB or
any affiliate. You acknowledge and agree that LVB’s market for research, development and sale of cigarette products is located throughout the United States and that the foregoing restrictions are reasonable and necessary to protect LVB’s
legitimate business interests. The foregoing covenant will not prohibit you from owning securities traded on any national or international exchange provided that you own such securities for investment purposes only and that such securities represent
less than one percent (1%) of the total outstanding shares of such securities. 
  

	5.	 EQUITABLE RELIEF. 

You understand and agree that the rights and obligations set forth in this Annex 1 will extend beyond the Term and the termination of the Services. Without
intending to limit the remedies available to LVB, you acknowledge that a breach of the covenants contained in this Annex 1 may result in material irreparable injury to LVB and its affiliates or subsidiaries for which there is no adequate remedy
at law, that it may not be possible to measure damages for such injuries precisely and that, in the event of such a breach or threat thereof, LVB will be entitled to obtain a temporary restraining order and/or a preliminary or permanent injunction
restraining you from engaging in activities prohibited by this Annex 1 or such other relief as may be required to specifically enforce any of the covenants in this Annex 1. You will also be required to pay all legal fees and costs incurred by LVB in
connection with enforcing its rights under this Annex 1.owl-ex46_15.htm

 

Exhibit 4.6

DESCRIPTION OF OUR SECURITIES

	
 
	
A.
	
Common Stock, par value $0.01 per share.

As of December 31, 2019, the authorized stock of Owl Rock Capital Corporation (“ORCC,” the “Company,” “we,” “our,” or “us”) consisted solely of 500 million shares of common stock, par value $0.01 per share, and no shares of preferred stock, par value $0.01 per share. Our common stock is listed on the New York Stock Exchange (“NYSE”) under the ticker symbol “ORCC.” There are no outstanding options or warrants to purchase our stock. No stock has been authorized for issuance under any equity compensation plans. Under Maryland law, our stockholders generally are not personally liable for our debts or obligations.

As permitted by the Maryland General Corporation Law (“MGCL”), our charter provides that a majority of the entire board of directors (the “Board”), without any action by our shareholders, may amend the charter from time to time to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that we have authority to issue. Our charter also provides that the Board may classify or reclassify any unissued shares of our common stock into one or more classes or series of common stock or preferred stock by setting or changing the preferences, conversion or other rights, voting powers, restrictions, or limitations as to dividends, qualifications, or terms or conditions of redemption of the shares. Unless the Board determines otherwise, we will issue all shares of our stock in uncertificated form.

        None of our shares of common stock are subject to further calls or to assessments, sinking fund provisions, obligations or potential liabilities associated with ownership of the security (not including investment risks).

        Under the terms of the charter, all shares of our common stock have equal rights as to dividends, distributions and voting and, when they are issued, will be duly authorized, validly issued, fully paid and nonassessable. Dividends and distributions may be paid to our shareholders if, as and when authorized by the Board and declared out of funds legally available therefor. Shares of our common stock have no preemptive, exchange, conversion or redemption rights and shareholders generally have no appraisal rights. Other than as described below, shares of our common stock are freely transferable, except where their transfer is restricted by federal and state securities laws or by contract. Following July 18, 2019, the date of our listing on the New York Stock Exchange (the "Listing Date"), without the prior written consent of the Board:

• for 180 days following the Listing Date, a shareholder is not permitted to transfer (whether by sale, gift, merger, by operation of law or otherwise), exchange, assign, pledge, hypothecate or otherwise dispose of or encumber any shares of common stock held by such shareholder prior to the Listing Date;

• for 270 days following the Listing Date, a shareholder is not permitted to transfer (whether by sale, gift, merger, by operation of law or otherwise), exchange, assign, pledge, hypothecate or otherwise dispose of or encumber two-thirds of the shares of common stock held by such shareholder prior to the Listing Date; and

• for 365 days following the Listing Date, a shareholder is not permitted to transfer (whether by sale, gift, merger, by operation of law or otherwise), exchange, assign, pledge, hypothecate or otherwise dispose of or encumber one-third of the shares of common stock held by such shareholder prior to the Listing Date.

        This means that, as a result of these transfer restrictions, without the consent of the Board, a shareholder who owned 99 shares of common stock on the Listing Date could not sell any of such shares for 180 days following the Listing Date; 181 days following the Listing Date, such shareholder could only sell up to 33 of such shares; 271 days following the Listing Date, such shareholder could only sell up to 66 of such shares and 366 days following the Listing Date, such shareholder could sell all of such shares.

        In the event of a liquidation, dissolution or winding up, each share of our common stock would be entitled to share ratably in all of our assets that are legally available for distribution after we pay or otherwise provide for all debts and other liabilities and subject to any preferential rights of holders of our preferred stock, if any preferred stock is outstanding at such time. Subject to the rights of holders of any other class or series of stock, each share of 

 

 

our common stock is entitled to one vote on all matters submitted to a vote of our shareholders, including the election of directors, and the shareholders will possess the exclusive voting power. There will be no cumulative voting in the election of directors. Cumulative voting entitles a shareholder to as many votes as equals the number of votes which such holder would be entitled to cast for the election of directors multiplied by the number of directors to be elected and allows a shareholder to cast a portion or all of the shareholder's votes for one or more candidates for seats on the Board. Without cumulative voting, a minority shareholder may not be able to elect as many directors as the shareholder would be able to elect if cumulative voting were permitted. Subject to the special rights of the holders of any class or series of preferred stock to elect directors, each director will be elected by a majority of the votes cast with respect to such director's election, except in the case of a "contested election" (as defined in our bylaws), in which directors will be elected by a plurality of the votes cast in the contested election of directors.

Limitation on Liability of Directors and Officers; Indemnification and Advance of Expenses

        Maryland law permits a Maryland corporation to include in its charter a provision eliminating the liability of its directors and officers to the corporation and its shareholders for money damages except for liability resulting from (a) actual receipt of an improper benefit or profit in money, property or services or (b) active and deliberate dishonesty that is established by a final judgment and is material to the cause of action. Our charter contains a provision that eliminates directors' and officers' liability, subject to the limitations of Maryland law and the requirements of the Investment Company Act of 1940, as amended (the “1940 Act”).

        Maryland law requires a corporation (unless its charter provides otherwise, which our charter does not) to indemnify a director or officer who has been successful in the defense of any proceeding to which he or she is made or threatened to be made a party by reason of his or her service in that capacity against reasonable expenses actually incurred in the proceeding in which the director or officer was successful. Maryland law permits a corporation to indemnify its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made or threatened to be made a party by reason of their service in those or other capacities unless it is established that (1) the act or omission of the director or officer was material to the matter giving rise to the proceeding and (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty; (2) the director or officer actually received an improper personal benefit in money, property or services; or (3) in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful. Under Maryland law, a Maryland corporation also may not indemnify for an adverse judgment in a suit by or on behalf of the corporation or for a judgment of liability on the basis that a personal benefit was improperly received, unless in either case a court orders indemnification, and then only for expenses. In addition, Maryland law permits a corporation to advance reasonable expenses to a director or officer upon the corporation's receipt of (a) a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification by the corporation and (b) a written undertaking by him or her or on his or her behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined that the standard of conduct was not met.

        Our charter obligates us, subject to the limitations of Maryland law and the requirements of the 1940 Act, to indemnify (1) any present or former director or officer; (2) any individual who, while a director or officer and at the Company's request, serves or has served another corporation, real estate investment trust, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise as a director, officer, partner, member, manager or trustee; or (3) the Adviser or any of its affiliates acting as an agent for the Company, from and against any claim or liability to which the person or entity may become subject or may incur by reason of such person's service in that capacity, and to pay or reimburse such person's reasonable expenses as incurred in advance of final disposition of a proceeding. These indemnification rights vest immediately upon an individual's election as a director or officer. In accordance with the 1940 Act, the Company will not indemnify any person for any liability to the extent that such person would be subject by reason of such person's willful misconduct, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his, her or its office.

        Notwithstanding the foregoing, and in accordance with the North American Securities Administrations Association (“NASAA”) Omnibus Guidelines, at anytime following a continuous public offering through the independent broker-dealer network (a "Non-Listed Offering"), our charter prohibits us from holding harmless a 

 

 

director, the Adviser or any affiliate of the Adviser for any loss or liability suffered by the Company, or indemnifying such persons for any loss or liability by him, her or it, unless each of the following conditions are met: (1) the party seeking indemnification has determined, in good faith, that the course of conduct that caused the loss or liability was in the Company's best interest; (2) the party seeking indemnification was acting or performing services on the Company's behalf; (3) such liability or loss was not the result of (a) negligence or misconduct, in the case that the party seeking indemnification is the Adviser or any of its affiliates or an officer of the Company, or (b) gross negligence or willful misconduct, in the case that the party seeking indemnification is an independent director (and not also an officer of us, the Adviser or any of its affiliates); and (4) such indemnification or agreement to hold harmless is recoverable only out of our net assets and not from shareholders. Our charter provides that this provision does not apply to any dealer manager.

        Our charter further provides that, following a Non-Listed Offering, we may not provide indemnification to a director, the Adviser or any affiliate of the Adviser for any loss, liability or expense arising from or out of an alleged violation of federal or state securities laws by such party unless one or more of the following conditions are met: (1) there has been a successful adjudication on the merits of each count involving alleged material securities law violations as to the party seeking indemnification; (2) such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction as to such party; or (3) a court of competent jurisdiction approves a settlement of the claims against such party and finds that indemnification of the settlement and the related costs should be made, and the court considering the request for indemnification has been advised of the position of the Securities and Exchange Commission (the “SEC”) and of the published position of any state securities regulatory authority in which our securities were offered or sold as to indemnification for violations of securities laws.

        Our charter provides that, following a Non-Listed Offering, we may pay or reimburse reasonable legal expenses and other costs incurred by a director, the Adviser or any affiliate of the Adviser in advance of final disposition of a proceeding only if all of the following are satisfied: (1) the proceeding relates to acts or omissions with respect to the performance of duties or services on our behalf; (2) such party provides us with written affirmation of his, her or its good faith belief that he, she or it has met the standard of conduct necessary for indemnification by us; (3) the legal proceeding was initiated by a third party who is not a shareholder or, if by a shareholder acting in his or her capacity as such, a court of competent jurisdiction approves such advancement; and (4) such party provides us with a written agreement to repay the amount paid or reimbursed by us, together with the applicable legal rate of interest thereon, if it is ultimately determined that such party did not comply with the requisite standard of conduct and is not entitled to indemnification. Our charter provides that this provision does not apply to any dealer manager.

Maryland Law and Certain Charter and Bylaws Provisions; Anti-Takeover Measures

        Maryland law contains, and our charter and bylaws also contain, provisions that could make it more difficult for a potential acquirer to acquire us by means of a tender offer, proxy contest or otherwise. These provisions are expected to discourage certain coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of us to negotiate first with our Board. These measures may delay, defer or prevent a transaction or a change in control that might otherwise be in the best interests of shareholders. We believe, however, that the benefits of these provisions outweigh the potential disadvantages of discouraging any such acquisition proposals because, among other things, the Board's ability to negotiate such proposals may improve their terms.

        Under the MGCL, a Maryland corporation generally cannot dissolve, amend its charter, merge, consolidate, convert into another form of business entity, sell all or substantially all of its assets or engage in a statutory share exchange unless declared advisable by the corporation's board of directors and approved by the affirmative vote of shareholders entitled to cast at least two-thirds of the votes entitled to be cast on the matter. A Maryland corporation may provide in its charter for approval of these matters by a lesser or greater percentage, but not less than a majority of all of the votes entitled to be cast on the matter. Subject to certain exceptions discussed below, our charter provides for approval of these actions by the affirmative vote of shareholders entitled to cast a majority of the votes entitled to be cast on the matter.

        Subject to certain exceptions provided in our charter, the affirmative vote of at least 75% of the votes entitled to be cast thereon, with the holders of each class or series of our stock voting as a separate class, in addition to the 

 

 

affirmative vote of at least 75% of the members of the Board, will be necessary to effect any of the following actions:

• any amendment to the charter to make our common stock a "redeemable security" or to convert us from a "closed-end company" to an "open-end company" (as such terms are defined in the 1940 Act);

• any shareholder proposal as to specific investment decisions made or to be made with respect to our assets;

• following a Non-Listed Offering, any proposal as to the voluntary liquidation or dissolution of the Company or any amendment to the charter to terminate our existence;

• following a Non-Listed Offering, any merger, consolidation or statutory share exchange of us with or into any other person; or

• following a Non-Listed Offering, the sale of all or substantially all of the assets of us, as further described in the charter, when such sale is to be made other than in the ordinary course of our business.

        However, if the proposal, transaction or business combination is approved by at least 75% of our continuing directors, the proposal, transaction or business combination may be approved only by the Board and, if necessary, the shareholders as otherwise would be required by applicable law, the charter and bylaws and, following a Non-Listed Offering, the NASAA Omnibus Guidelines, without regard to the supermajority approval requirements discussed above. A "continuing director" is defined in the charter as a director who (i) is not an interested party (meaning a person who has or proposes to enter into a business combination with us or owns more than 5% of any class of our stock) or an affiliate or an associate of an interested party and who has been a member of the Board for a period of at least 24 months (or since we commenced operations, if that period is less than 24 months); or (ii) is a successor of a continuing director who is not an interested party or an affiliate or an associate of an interested party and is recommended to succeed a continuing director by a majority of the continuing directors then in office or is nominated for election by the shareholders by a majority of the continuing directors then in office; or (iii) is elected to the Board to be a continuing director by a majority of the continuing directors then in office and who is not an interested party or an affiliate or associate of an interested party.

        Our charter also provides that the Board is divided into three classes, as nearly equal in size as practicable, with each class of directors serving for a staggered three-year term. Additionally, subject to the rights of holders of one or more classes or series of preferred stock to elect or remove one or more directors, directors may be removed at any time, but only for cause (as such term is defined in the charter) and only by the affirmative vote of shareholders entitled to cast at least 75% of the votes entitled to be cast generally in the election of directors, voting as a single class. The charter and bylaws also provide that, except as provided otherwise by applicable law, including the 1940 Act and subject to any rights of holders of one or more classes or series of preferred stock to elect or remove one or more directors, any vacancy on the Board, except, until such time as we have three independent directors, for vacancies resulting from the removal of a director by the shareholders, and any newly created directorship resulting from an increase in the size of the Board, may only be filled by vote of the directors then in office, even if less than a quorum, or by a sole remaining director; provided that, under Maryland law, when the holders of any class, classes or series of stock have the exclusive power under the charter to elect certain directors, vacancies in directorships elected by such class, classes or series may be filled by a majority of the remaining directors so elected by such class, classes or series of our stock. In addition, the charter provides that, subject to any rights of holders of one or more classes or series of stock to elect or remove one or more directors, the total number of directors will be fixed from time to time exclusively pursuant to resolutions adopted by the Board.

        The classification of the Board and the limitations on removal of directors described above as well as the limitations on shareholders' right to fill vacancies and newly created directorships and to fix the size of the Board could have the effect of making it more difficult for a third party to acquire us, or of discouraging a third party from acquiring or attempting to acquire us.

        Maryland law and our charter and bylaws also provide that:

• any action required or permitted to be taken by the shareholders at an annual meeting or special meeting of shareholders may only be taken if it is properly brought before such meeting or by unanimous consent in lieu of a meeting;

 

 

• special meetings of the shareholders may only be called by the Board, the chairman of the Board or the chief executive officer, and must be called by the secretary upon the written request of shareholders who are entitled to cast at least a majority of all the votes entitled to be cast on such matter at such meeting; and

• from and after the Initial Closing, any shareholder nomination or business proposal to be properly brought before a meeting of shareholders must have been made in compliance with certain advance notice and informational requirements.

        Our charter also provides that any tender offer made by any person, including any "mini-tender" offer, must comply with the provisions of Regulation 14D of the Securities and Exchange Act of 1934, as amended (the "1934 Act"), including the notice and disclosure requirements. Among other things, the offeror must provide us notice of such tender offer at least ten business days before initiating the tender offer. Our charter prohibits any shareholder from transferring shares of stock to a person who makes a tender offer which does not comply with such provisions unless such shareholder has first offered such shares of stock to us at the tender offer price in the non-compliant tender offer. In addition, the non-complying offeror will be responsible for all of our expenses in connection with that offeror’s noncompliance.

        These provisions could delay or hinder shareholder actions which are favored by the holders of a majority of our outstanding voting securities. These provisions may also discourage another person or entity from making a tender offer for the our common stock, because such person or entity, even if it acquired a majority of our outstanding voting securities, would be able to take action as a shareholder (such as electing new directors or approving a merger) only at a duly called shareholders meeting, and not by written consent. The provisions of our charter requiring that the directors may be removed only for cause and only by the affirmative vote of at least three-quarters of the votes entitled to be cast generally in the election of directors will also prevent shareholders from removing incumbent directors except for cause and upon a substantial affirmative vote. In addition, although the advance notice and information requirements in our bylaws do not give the Board any power to disapprove shareholder nominations for the election of directors or business proposals that are made in compliance with applicable advance notice procedures, they may have the effect of precluding a contest for the election of directors or the consideration of shareholder proposals if proper procedures are not followed and of discouraging or deterring a third party from conducting a solicitation of proxies to elect its own slate of directors or to approve its own proposal without regard to whether consideration of such nominees or proposals might be harmful or beneficial to us and our shareholders.

        Under the MGCL, a Maryland corporation generally cannot amend its charter unless the amendment is declared advisable by the corporation's board of directors and approved by the affirmative vote of shareholders entitled to cast at least two-thirds of the votes entitled to be cast on the matter. A Maryland corporation may provide in its charter for approval of these matters by a lesser or greater percentage, but not less than a majority of all of the votes entitled to be cast on the matter. Subject to certain exceptions discussed below, our charter provides for approval of charter amendments by the affirmative vote of shareholders entitled to cast a majority of the votes entitled to be cast on the matter. The Board, by vote of a majority of the members of the Board, has the exclusive power to adopt, alter, amend or repeal our bylaws. Our charter provides that any amendment to the following provisions of our charter, among others, will require, in addition to any other vote required by applicable law or our charter, the affirmative vote of shareholders entitled to cast at least three-quarters of the votes entitled to be cast thereon, with the holders of each class or series of our stock voting as a separate class, in addition to the affirmative vote of at least 75% of the members of the Board, unless three-quarters of the continuing directors approve the amendment, in which case such amendment must be approved as would otherwise be required by applicable law, our charter and bylaws, and, following a Non-Listed Offering, the NASAA Omnibus Guidelines:

• the provisions regarding the classification of the Board;

• the provisions governing the removal of directors;

• the provisions limiting shareholder action by written consent;

• the provisions regarding the number of directors on the Board;

• the provisions specifying the vote required to approve extraordinary actions and amend the charter and the Board's exclusive power to amend our bylaws;

• the limitations of directors' and officers' liability for money damages and the requirement that we indemnify its directors and officers as described above; and

 

 

• the provisions imposing additional voting requirements on certain business combinations and other actions.

        Following a Non-Listed Offering, without the approval of shareholders entitled to cast a majority of the votes entitled to be cast on the matter, we may not permit the Adviser to:

• amend the charter, except for amendments that would not adversely affect the interests of shareholders;

• except as permitted in the Investment Advisory Agreement, voluntarily withdraw as investment adviser, unless such withdrawal would not affect our tax status and would not materially adversely affect the shareholders;

• appoint a new investment adviser other than a sub-adviser pursuant to the terms of the Investment Advisory Agreement and applicable law;

• sell all or substantially all of our assets other than in the ordinary course of our business or as otherwise permitted by law; and

• cause a merger or any other reorganization of us except as permitted by law.

        Our charter prohibits the Adviser from, following a Non-Listed Offering: (i) receiving or accepting any rebate, give-ups or similar arrangement that is prohibited under applicable federal or state securities laws, (ii) participating in any reciprocal business arrangement that would circumvent provisions of applicable federal or state securities laws governing conflicts of interest or investment restrictions, or (iii) entering into any agreement, arrangement or understanding that would circumvent the restrictions against dealing with affiliates or promoters under applicable federal or state securities laws. In addition, the Adviser may not directly or indirectly pay or award any fees or commissions or other compensation to any person or entity engaged to sell our stock or give investment advice to a potential shareholder; provided, however, that the Adviser may pay a registered broker-dealer or other properly licensed agent from sales commissions for selling or distributing our common stock.

Advance Notice Provisions for Shareholder Nominations and Shareholder Proposals

        Our bylaws provide that, with respect to an annual meeting of shareholders, nominations of individuals for election as directors and the proposal of business to be considered by shareholders may be made only (a) pursuant to the notice of the meeting, (b) by or at the direction of the Board or (c) by a shareholder who is a shareholder of record both at the time of giving the advance notice required by our bylaws and at the time of the meeting, who is entitled to vote at the meeting in the election of each individual so nominated or on any such other business and who has complied with the advance notice procedures of our bylaws. With respect to special meetings of shareholders, only the business specified in the notice of the meeting may be brought before the meeting. Nominations of individuals for election as directors at a special meeting at which directors are to be elected may be made only (a) by or at the direction of the Board or (b) provided that the special meeting has been called in accordance with our bylaws for the purpose of electing directors, by a shareholder who is a shareholder of record both at the time of giving the advance notice required by our bylaws and at the time of the meeting, who is entitled to vote at the meeting in the election of each individual so nominated and who has complied with the advance notice provisions of our bylaws.

        The purpose of requiring shareholders to give us advance notice of nominations and other business is to afford the Board a meaningful opportunity to consider the qualifications of the proposed nominees and the advisability of any other proposed business and, to the extent deemed necessary or desirable by the Board, to inform shareholders and make recommendations about such qualifications or business, as well as to provide a more orderly procedure for conducting meetings of shareholders. Although our bylaws do not give the Board any power to disapprove shareholder nominations for the election of directors or proposals recommending certain action, the advance notice and information requirements may have the effect of precluding election contests or the consideration of shareholder proposals if proper procedures are not followed and of discouraging or deterring a third party from conducting a solicitation of proxies to elect its own slate of directors or to approve its own proposal without regard to whether consideration of such nominees or proposals might be harmful or beneficial to us and our shareholders.

No Appraisal Rights

 

 

        For certain extraordinary transactions and charter amendments, the MGCL provides the right to dissenting shareholders to demand and receive the fair value of their shares, subject to certain procedures and requirements set forth in the statute. Those rights are commonly referred to as appraisal rights. As permitted by the MGCL, our charter provides that shareholders will not be entitled to exercise appraisal rights unless the Board determines that appraisal rights apply, with respect to all or any classes or series of stock, to one or more transactions occurring after the date of such determination in connection with which shareholders would otherwise be entitled to exercise appraisal rights.

Control Share Acquisitions

        Certain provisions of the MGCL provide that a holder of control shares of a Maryland corporation acquired in a control share acquisition has no voting rights with respect to the control shares except to the extent approved by the affirmative vote of two-thirds of the votes entitled to be cast on the matter, which is referred to as the Control Share Acquisition Act. Shares owned by the acquiror, by officers or by employees who are directors of the corporation are excluded from shares entitled to vote on the matter. Control shares are voting shares of stock which, if aggregated with all other shares of stock owned by the acquirer or in respect of which the acquirer is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquirer to exercise voting power in electing directors within one of the following ranges of voting power:

• one-tenth or more but less than one-third;

• one-third or more but less than a majority; or

• a majority or more of all voting power.

        The requisite shareholder approval must be obtained each time an acquirer crosses one of the thresholds of voting power set forth above. Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained shareholder approval or shares acquired directly from the corporation. A control share acquisition means the acquisition of issued and outstanding control shares, subject to certain exceptions.

        A person who has made or proposes to make a control share acquisition may compel the board of directors of the corporation to call a special meeting of shareholders to be held within 50 days of demand to consider the voting rights of the shares. The right to compel the calling of a special meeting is subject to the satisfaction of certain conditions, including an undertaking to pay the expenses of the meeting. If no request for a meeting is made, the corporation may itself present the question at any shareholders meeting.

        If voting rights are not approved at the meeting or if the acquiring person does not deliver an acquiring person statement as required by the statute, then the corporation may redeem for fair value any or all of the control shares, except those for which voting rights have previously been approved. The right of the corporation to redeem control shares is subject to certain conditions and limitations. Fair value is determined, without regard to the absence of voting rights for the control shares, as of the date of the last control share acquisition by the acquirer or if a meeting of shareholders is held at which the voting rights of the shares are considered and not approved, as of the date of such meeting. If voting rights for control shares are approved at a shareholder meeting and the acquirer becomes entitled to vote a majority of the shares entitled to vote, all other shareholders may exercise appraisal rights. The fair value of the shares as determined for purposes of appraisal rights may not be less than the highest price per share paid by the acquirer in the control share acquisition.

        The Control Share Acquisition Act does not apply (a) to shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction or (b) to acquisitions approved or exempted by the charter or bylaws of the corporation. Our bylaws contain a provision exempting from the Control Share Acquisition Act any and all acquisitions by any person of shares of stock. There can be no assurance that such provision will not be amended or eliminated at time in the future. However, the Securities and Exchange Commission (the “SEC”) staff has taken the position that, if a business development company ("BDC") fails to opt-out of the Control Share Acquisition act, its actions are inconsistent with Section 18(i) of the 1940 Act and we will amend our bylaws to be subject to the Control Share Acquisition Act only if the Board determines that it would be in our best interests and if 

 

 

the SEC staff does not object to our determination that being subject to the Control Share Acquisition Act does not conflict with the 1940 Act.

Business Combinations

        Under Maryland law, "business combinations" between a Maryland corporation and an interested shareholder or an affiliate of an interested shareholder are prohibited for five years after the most recent date on which the interested shareholder becomes an interested shareholder. These business combinations include a merger, consolidation, statutory share exchange or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities. An interested shareholder is defined as:

• any person who beneficially owns 10% or more of the voting power of the corporation's stock; or

• an affiliate or associate of the corporation who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then outstanding voting stock of the corporation.

A person is not an interested shareholder under this statute if the corporation's board of directors approves in advance the transaction by which he or she otherwise would have become an interested shareholder. However, in approving a transaction, the board may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the board.

        After the five-year prohibition, any such business combination generally must be recommended by the corporation's board of directors and approved by the affirmative vote of at least:

• 80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation; and

• two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested shareholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested shareholder.

        These super-majority vote requirements do not apply if holders of the corporation's common stock receive a minimum price, as defined under Maryland law, for their shares in the form of cash or other consideration in the same form as previously paid by the interested shareholder for its shares. The statute provides various exemptions from its provisions, including for business combinations that are exempted by the corporation's board of directors before the time that the interested shareholder becomes an interested shareholder. The Board has adopted a resolution exempting from the requirements of the statute any business combination between us and any other person, provided that such business combination is first approved by the Board (including a majority of the directors who are not "interested persons" within the meaning of the 1940 Act). This resolution, however, may be altered or repealed in whole or in part at any time. If this resolution is repealed, or the Board does not otherwise approve a business combination, the statute may discourage others from trying to acquire control of us and increase the difficulty of consummating any offer.

Restrictions on Roll-Up Transactions

        Following a Non-Listed Offering, in connection with a proposed "roll-up transaction," which, in general terms, is any transaction involving the acquisition, merger, conversion or consolidation, directly or indirectly, of us and the issuance of securities of an entity that would be created or would survive after the successful completion of the roll-up transaction, we will obtain an appraisal of all of its properties from an independent expert. In order to qualify as an independent expert for this purpose, the person or entity must have no material current or prior business or personal relationship with us and must be engaged to a substantial extent in the business of rendering opinions regarding the value of assets of the type held by us. Following a Non-Listed Offering, our assets will be appraised on a consistent basis, and the appraisal will be based on the evaluation of all relevant information and will indicate the value of our assets as of a date immediately prior to the announcement of the proposed roll-up transaction. The appraisal will assume an orderly liquidation of our assets over a 12-month period. The terms of the engagement of 

 

 

such independent expert will clearly state that the engagement is for our benefit and the benefit of our shareholders. We will include a summary of the appraisal, indicating all material assumptions underlying the appraisal, in a report to the shareholders in connection with the proposed roll-up transaction. If the appraisal will be included in a prospectus used to offer the securities of the roll-up entity, the appraisal will be filed with the SEC and the states as an exhibit to the registration statement for the offering.

        Following a Non-Listed Offering, in connection with a proposed roll-up transaction, the person sponsoring the roll-up transaction must offer to the shareholders who vote against the proposal a choice of:

• accepting the securities of the entity that would be created or would survive after the successful completion of the roll-up transaction offered in the proposed roll-up transaction; or

• one of the following:

• remaining as shareholders and preserving their interests in us on the same terms and conditions as existed previously; or

• receiving cash in an amount equal to their pro rata share of the appraised value of our net assets.

        Following a Non-Listed Offering, we are prohibited from participating in any proposed roll-up transaction:

• which would result in shareholders having voting rights in the entity that would be created or would survive after the successful completion of the roll-up transaction that are less than those provided in our charter including rights with respect to the election and removal of directors, annual and special meetings, amendments to our charter and our dissolution;

• which includes provisions that would operate as a material impediment to, or frustration of, the accumulation of shares of our common stock by any purchaser of the securities of the entity that would be created or would survive after the successful completion of the roll-up transaction, except to the minimum extent necessary to preserve the tax status of such entity, or which would limit the ability of an investor to exercise the voting rights of its securities of the entity that would be created or would survive after the successful completion of the roll-up transaction on the basis of the number of shares held by that investor;

• in which shareholders' rights to access to records of the entity that would be created or would survive after the successful completion of the roll-up transaction will be less than those provided in our charter; or

• in which we would bear any of the costs of the roll-up transaction if the shareholders reject the roll-up transaction.

Conflict with the 1940 Act

        Our bylaws provide that, if and to the extent that any provision of the MGCL, including the Control Share Acquisition Act (if we amend our bylaws to be subject to such Act) and the Business Combination Act or any provision of our charter or bylaws conflicts with any provision of the 1940 Act, the applicable provision of the 1940 Act will control.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00304-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00304-of-00352.parquet"}]]