Document:

COLLATERAL ADMINISTRATION
AGREEMENT

 

This COLLATERAL ADMINISTRATION
AGREEMENT (this “Agreement”) dated as of February 24, 2012 is made by and among KCAP Funding (the “Issuer”),
Kohlberg Capital Corporation (“Kohlberg”), in its capacity as portfolio manager (the “Portfolio Manager”),
Credit Suisse AG, Cayman Islands (“CS”), in its capacity as Senior Commitment Party (as defined in the Note
Purchase Agreement (as defined below)) and The Bank of New York Mellon Trust Company, National Association (the “Bank”),
in its capacities as Collateral Administrator (the “Collateral Administrator”) and Collateral Agent (the “Collateral
Agent”). Capitalized terms not otherwise defined in this Agreement shall have the meanings set forth in the Note Purchase
Agreement.

 

WITNESSETH:

 

WHEREAS, the Issuer intends
to acquire, from time to time, Collateral Debt Obligations selected by the Portfolio Manager and approved by the Senior Commitment
Party with financing provided by the Senior Commitment Party and Junior Noteholder pursuant to the Note Purchase Agreement, dated
as of February 24, 2012, between the Issuer, CS, in its capacities as Senior Commitment Party and Senior Noteholder, Kohlberg,
in its capacities as Junior Noteholder and Portfolio Manager, Credit Suisse Securities (USA) LLC, in its capacity as Arranger,
and the Bank, in its capacities as Collateral Agent and Collateral Administrator (such agreement, the “Note Purchase Agreement”);

 

WHEREAS, the Collateral
Administrator shall receive, hold in safekeeping and release Collateral Debt Obligations purchased by the Issuer and all interest
(including paid and unpaid accrued interest, premiums and fees, without duplication) amounts, principal amounts and other amounts
received on account of the Collateral Debt Obligations, and CLO Asset Management Fees and any interest thereon (collectively, the
“Assets”) in accordance with the terms of this Agreement and the Note Purchase Agreement, and perform certain
administrative functions relating to the Collateral Debt Obligations.

 

NOW, THEREFORE, in consideration
of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows.

 

1.          The
Collateral Administrator hereby agrees to accept (a) the Collateral Debt Obligations from time to time presented to the Collateral
Administrator by the Issuer (or the Portfolio Manager on its behalf), (b) the CLO Asset Management Fees, (c) any proceeds of the
foregoing and (d) any financing amounts from time to time presented to the Collateral Administrator by the Senior Commitment Party
or the Junior Noteholder, and agrees to hold, release and transfer the same in accordance with the provisions of this Agreement
and the Note Purchase Agreement.

 

2.          The
Collateral Administrator shall, on or prior to the date of this Agreement, establish four segregated, non-interest bearing
trust accounts in the name of the Collateral Agent for the benefit of the Secured Parties, which shall be designated as (a)
an interest account with the account number [  ] (the “Interest Account”), (b) a principal account with the
account number [  ] ( the “Principal
Account”), (c) a collateralized loan obligation asset management fees account with account number [  ] (the
“CLO Asset Management Fees Account”) and (d) a custodial account with the account number [  ] (the
“Custody Account,” and together with the Interest Account, Principal Account and the CLO Asset
Management Fees Account, the “Accounts”). Any interest, premiums and fees accrued on and other income on
the Collateral Debt Obligations shall be held in the Interest Account. Any principal payments or redemption amounts with
respect to the Collateral Debt Obligations shall be held in the Principal Account. Any CLO Asset Management Fees and any
interest thereon shall be held in the CLO Asset Management Fees Account. Unless a Termination Event has occurred, the
Collateral Administrator will release funds on deposit in the CLO Asset Management Fees Account at the direction of the
Portfolio Manager. Any financing amounts received from the Senior Commitment Party or the Junior Noteholder shall be credited
to the Principal Account prior to the application of such amount to the purchase of Collateral Debt Obligations in accordance
with the Note Purchase Agreement. Any Collateral Debt Obligations purchased by the Issuer shall be held in the Custodial
Account. Any amounts received with respect to the Collateral Debt Obligations and any CLO Asset Management Fees shall be
invested by the Collateral Administrator in the JPMorgan US Dollar Treasury Liquidity Fund, unless otherwise specified in
writing jointly by the Portfolio Manager and the Senior Commitment Party. The Collateral Administrator shall not be liable
for losses on any investments made by it pursuant to and in compliance with such instructions. Wire instructions with respect
to the Collateral Administrator are listed in Section II of Exhibit A to the Note Purchase Agreement.

 

    	 

    	 

    

 

3.           (a)          The
Collateral Administrator represents and warrants that it is a bank or trust company that in the ordinary course of business maintains
securities accounts for others and in that capacity has established the Accounts and qualifies as a “securities intermediary”
as defined in Article 8 of the Uniform Commercial Code, as in effect from time to time in the State of New York (the “UCC”)
and will maintain the Accounts as “securities accounts” as defined in Article 8 of the UCC.

 

(b)          The
Collateral Administrator agrees that:

 

(i)          the
Collateral Administrator will treat the Collateral Agent as the “entitlement holder” within the meaning of the UCC,
entitled to exercise the rights that comprise the financial assets credited to the Accounts;

 

(ii)         following
a Termination Event, the Collateral Administrator will act only on entitlement orders or other instructions with respect to the
Accounts originated by the Collateral Agent and no other person;

 

(iii)        the
Collateral Administrator will treat all property credited to any Account as a “financial asset” for purposes of Article
8 of the UCC;

 

(iv)         the
Collateral Administrator has no notice of any adverse claim with respect to any “financial asset” credited to any Account;
and

 

(v)          any
security interest or right of set-off in favor of the Collateral Administrator with respect to any Account will be subordinate
to the Priority of Payments.

 

(c)          Following
a Termination Event, the Collateral Agent will act solely upon the direction of the Controlling Party with respect to amounts on
deposit in or credited to each Account and in accordance with the Note Purchase Agreement.

 

(d)          The
Collateral Administrator and the Collateral Agent will be deemed to have knowledge of a Termination Event only if they receive
actual notice or have actual knowledge of such Termination Event.

 

(e)          The
parties hereto agree that “securities intermediary’s jurisdiction” for the purposes of Section 8-110 of
the UCC shall be the State of New York. The parties hereto further agree that with respect to any Account the law applicable to
all the issues in Article 2(1) of The Hague Convention on the Law Applicable to Certain Rights in Respect of Securities Held with
an Intermediary shall be the law of the State of New York.

 

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4.          The
Collateral Administrator shall hold the Assets in safekeeping as custodian and shall release and transfer the Assets only in accordance
with the provisions of the Note Purchase Agreement and this Agreement. If the Refinancing Date occurs, on the Refinancing Date,
Collateral Debt Obligations held in the Custodial Account, CLO Asset Management Fees held in the CLO Asset Management Fees Account
and any remaining proceeds to be retained by the Issuer after application of the Priority of Payments shall be released and transferred
in accordance with written instructions from the Portfolio Manager and the Senior Commitment Party.

 

5.          The
Collateral Administrator shall be obligated only for the performance of such duties as are specifically set forth in this Agreement
and the Note Purchase Agreement and may rely and shall be protected in acting or refraining from acting on any written notice,
request, waiver, consent or instrument reasonably believed by it to be genuine and to have been signed or presented by the proper
party or parties. The Collateral Administrator shall not be required to risk or expend its own funds in performing its obligations
hereunder. The Collateral Administrator shall have no duty to determine or inquire into the happening or occurrence of any event
or contingency, and it is agreed that its duties are purely ministerial in nature. The Collateral Administrator may consult with
and obtain advice from legal counsel as to any provision hereof or its duties hereunder. The Collateral Administrator shall not
be liable for any action taken or omitted by it, except for gross negligence or willful misconduct, in good faith and reasonably
believed by it to be authorized hereby, nor for action taken or omitted by it in accordance with the advice of its counsel. Anything
in this Agreement notwithstanding, in no event shall the Collateral Administrator be liable for special, indirect, punitive or
consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Collateral Administrator
has been advised of such loss or damage and regardless of the form of action.

 

6.          If
the Collateral Administrator receives funds from the Senior Commitment Party or Junior Noteholder to purchase Collateral Debt Obligations
on behalf of the Issuer, the Collateral Administrator shall remit those funds to the sellers of such Collateral Debt Obligations
upon the written direction of the Portfolio Manager.

 

7.          The
Collateral Administrator shall perform the following functions with respect to the Assets:

 

(a)          Enter
information (as mutually agreed by the Collateral Administrator, the Portfolio Manager and the Senior Commitment Party) regarding
each acquired Collateral Debt Obligation into the Collateral Administrator’s loan tracking system;

 

(b)          Make
adjustments on a daily basis to the loan tracking system to account for principal and interest payments received on the Collateral
Debt Obligations;

 

(c)          Provide
the Senior Commitment Party and the Portfolio Manager electronic access to all documents, information, notices, requests and any
other correspondence received from the agent banks with respect to the Collateral Debt Obligations;

 

(d)          Prepare
and deliver the Collateral Reports and any other information relating to the Assets as required by the Note Purchase Agreement;

 

(e)          Keep
full and accurate books and records relating to the Assets and stamp or otherwise mark such books and records in such manner as
the Senior Commitment Party may reasonably require; and

 

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(f)          Take
such other actions with respect to the Assets as may be reasonably required by the Note Purchase Agreement or may be reasonably
requested by the Senior Commitment Party and agreed to by the Collateral Administrator, which agreement shall not be unreasonably
withheld.

 

8.          The
Collateral Administrator may at any time resign hereunder by giving written notice of its resignation to the Issuer, the Senior
Commitment Party and the Portfolio Manager at least thirty (30) days prior to the date specified for such resignation to take effect,
and upon the effective date of such resignation, the Assets hereunder shall be delivered by it to such person as may be designated
in writing by the Senior Commitment Party, whereupon all the Collateral Administrator’s obligations hereunder shall cease
and terminate. If no such person shall have been designated by such date and an instrument of acceptance by a successor Collateral
Administrator shall not have been delivered to the Collateral Administrator, the Issuer, the Senior Commitment Party and the Portfolio
Manager within thirty (30) days after giving such notice of resignation, the Collateral Administrator may petition any court of
competent jurisdiction for the appointment of a successor Collateral Administrator. The Collateral Administrator’s sole responsibility
thereafter shall be to keep safely all Assets then held by it and to deliver the same to a person designated in writing by the
Senior Commitment Party or in accordance with the direction of a final order or judgment of a court of competent jurisdiction.

 

9.          The
Issuer (the “indemnifying party”) agrees to indemnify, defend and hold the Bank, its officers, directors, employees
and agents (each, an “indemnified party”) harmless from and against any and all losses, claims, damages, demands,
expenses and costs, causes of action, judgments or liabilities that may be incurred by the Bank, its officers, directors, employees
and agents arising directly or indirectly out of or in connection with the Bank’s acceptance or appointment as Collateral
Administrator hereunder and its other capacities under the Note Purchase Agreement, including the reasonable out-of-pocket legal
costs and expenses as such expenses are incurred (including, without limitation, the expenses of any experts, counsel or agents)
of investigating, preparing for or defending itself against any action, claim or liability in connection with its performance hereunder.
 In no event, however, shall the Issuer be obligated to indemnify the Bank and save the Bank harmless from any fees, expenses,
charges and/or liabilities incurred by the Bank as a result of its own willful misconduct or gross negligence.

 

Promptly after receipt by an indemnified party
under this paragraph 9 of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof
is to be made against the indemnifying party hereunder, notify the indemnifying party in writing of the commencement thereof. In
case any such action shall be brought against an indemnified party and it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate therein and to assume the defense thereof, with counsel reasonably
satisfactory to the indemnified party who may, subject to the following sentence, be counsel to the indemnifying party. After notice
from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnified party shall
have the right to participate in such action and to retain its own counsel, but the indemnifying party shall not be liable to such
indemnified party hereunder for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by
such indemnified party, in connection with the defense thereof, unless (i) the Issuer has agreed in writing to pay such fees and
expenses or (ii) the Issuer shall have failed to employ counsel reasonably satisfactory to the indemnified party in a timely manner
or (iii) the indemnified party shall have been advised by counsel that representation of the indemnified party by counsel provided
by the Issuer pursuant to the foregoing would be inappropriate due to an actual or potential conflicting interest between the Issuer
and the indemnified party, including situations in which there are one or more legal defenses available to the indemnified party
that are different from or additional to those available to the Issuer; provided, however, that the Issuer shall
not, in connection with any one such action or proceeding or separate but substantially similar actions or proceedings arising
out of the same general allegations, be liable for the fees and expenses of more than one separate firm of attorneys at any time
for all indemnified parties, except to the extent that local counsel, in addition to its regular counsel, is required in order
to effectively defend against such action or proceeding. No indemnified party may consent to the terms of any compromise or settlement
of any action without the prior consent of the Issuer. If the indemnifying party does not notify the indemnified party in writing,
within 45 days (or such shorter period within which a timely answer or response must be filed) after the receipt of notice of the
commencement of any action, that the indemnifying party elects to undertake the defense thereof, then such indemnified party shall
have the right to contest the claim or (with the prior written consent of the indemnifying party, which consent shall not be withheld
unreasonably) settle or compromise the claim and the indemnifying party will pay the indemnified party in immediately available
funds for all out-of-pocket expenses (including the reasonable fees and expenses of counsel and other experts and agents) and all
other losses, claims, damages, demands, costs, judgments or liabilities actually paid by such indemnified party, all as aforesaid.

 

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10.         The
Issuer warrants and represents to the Collateral Administrator that the Collateral Administrator has no duty to withhold any federal
or state income tax, local or state property tax, local or state sales or use taxes, or any other tax by any taxing authority arising
from its custody of the Assets. The Issuer agrees to indemnify the Collateral Administrator fully for any tax liability, penalties
or interest incurred by the Collateral Administrator arising hereunder and agrees to pay in full any such tax liability together
with penalty and interest if any tax liability is ultimately assessed against the Collateral Administrator for any reason as a
result of its actions hereunder (except for the Collateral Administrator’s individual income tax liability arising from the
income from its fees).

 

11.         The
Issuer agrees to pay the Bank for the services rendered by it pursuant to the provisions of this Agreement and the Note Purchase
Agreement as set forth in a separate fee letter between the Bank and the Issuer. Except as otherwise noted, this fee covers account
acceptance, set up and termination expenses, plus usual and customary related administrative services such as safekeeping, investment,
collection and distribution of assets, including normal record-keeping/reporting requirements and any legal expenses related to
the arrangement in addition to other activities and duties expressly agreed to herein or in the Note Purchase Agreement. Any additional
services beyond the receipt, investment and payment of funds specified in this Agreement or the services specified in the Note
Purchase Agreement, or activities requiring excessive administrator time or out-of-pocket expenses, shall be deemed extraordinary
expenses for which related costs, transaction charges and additional fees will be billed at the Bank’s standard charges for
such items.

 

The Issuer’s obligation to pay the Bank’s
indemnities, fees and expenses shall survive the termination of this Agreement and the resignation of the Collateral Administrator.

 

12.         The
Collateral Administrator shall have no liability for losses arising from any cause beyond its control, including but not limited
to, the act, failure or neglect of any agent, attorney or correspondent selected with due care by the Collateral Administrator;
any delay, error, omission or default of any mail, email, telegraph, cable or wireless agency or operator; or the acts or edicts
of any government or governmental agency or other group or entity exercising governmental powers. In no event shall the Collateral
Administrator be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of
or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents,
acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss
or malfunctions of utilities, communications or computer (software and hardware) services, it being understood that the Collateral
Administrator shall use reasonable best efforts which are consistent with accepted practices in the industry to maintain performance.

 

13.         THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

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14.         This
Agreement shall remain in full force and effect until the earlier to occur of (a) the transfer of all of the Assets in accordance
with Paragraph 4 above, and (b) a court of competent jurisdiction finally disposing of the rights and obligations of the parties
pursuant to the provisions hereof. The parties hereto shall not be bound by any modification, amendment, termination, cancellation,
rescission or supersession of this Agreement unless the same shall be in writing and signed by each of the parties hereto.

 

15.         This
Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall together
constitute one and the same instrument. This Agreement shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns.

 

16.         Any
corporation or association into which the Collateral Administrator may be merged or converted or with which it may be consolidated,
or any corporation or association resulting from any merger, conversion or consolidation to which the Collateral Administrator
shall be a party, or any corporation or association to which all or substantially all of the corporate trust business of the Collateral
Administrator may be sold or otherwise transferred, shall be the successor Collateral Administrator hereunder without any further
act.

 

17.         Notwithstanding
any other provision of this Agreement, the parties hereto may not, prior to the date that is one year (or, if longer, the then
applicable preference period) plus one day after termination of this Agreement or, in the event securities of the Issuer are issued
pursuant to or in respect of the Refinancing Transaction, the payment in full of all such notes institute against, or join any
other individual or entity in instituting against the Issuer, any bankruptcy, reorganization, arrangement, insolvency, moratorium
or liquidation proceedings, or other proceedings under Cayman Islands bankruptcy laws, United States federal or state bankruptcy
laws, or any similar laws.

 

None of the directors, officers,
incorporators, shareholders, partners, agents or employees of the Issuer shall be personally liable for any of the obligations
of the Issuer under this Agreement. Notwithstanding anything to the contrary contained herein, the Issuer’s sole source of
funds for payment of all amounts due hereunder shall be the Collateral, and, upon application of the proceeds of the Collateral
in accordance with the terms and under the circumstances described herein, no recourse shall be had against the Issuer for any
amounts still outstanding by the Issuer and all obligations of, and any claims against, the Issuer arising from this Agreement
or any transactions contemplated hereby shall be extinguished and shall not thereafter revive.

 

The provisions of this Paragraph 17 shall survive
the termination of this Agreement and resignation of the Collateral Administrator.

 

18.         THE
PARTIES HERETO VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR THE NOTE PURCHASE AGREEMENT, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY OF THE PARTIES HERETO AND THERETO. THE PARTIES HERETO
HEREBY AGREE THAT THEY WILL NOT SEEK TO CONSOLIDATE ANY SUCH LITIGATION WITH ANY OTHER LITIGATION IN WHICH A JURY TRIAL HAS NOT
OR CANNOT BE WAIVED. THE PROVISIONS OF THIS SECTION 18 HAVE BEEN FULLY NEGOTIATED BY THE PARTIES HERETO AND SHALL BE SUBJECT TO
NO EXCEPTIONS. EACH PARTY ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND
THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR EACH PARTY ENTERING INTO THIS AGREEMENT AND THE NOTE PURCHASE AGREEMENT.

 

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19.         The
Bank, in its capacity as Collateral Administrator, agrees to accept and act upon instructions or directions pursuant to this Agreement
sent by unsecured email, facsimile transmission or other similar unsecured electronic methods, provided, however, that each
party providing such instructions or directions shall provide to the Bank an incumbency certificate listing persons designated
to provide such instructions or directions, which incumbency certificate shall be amended whenever a person is added or deleted
from the listing. If such party elects to give the Bank email or facsimile instructions (or instructions by a similar electronic
method) and the Bank in its discretion elects to act upon such instructions, the Bank’s reasonable understanding of such
instructions shall be deemed controlling. The Bank shall not be liable for any losses, costs or expenses arising directly or indirectly
from the Bank’s reliance upon and compliance with such instructions notwithstanding such instructions conflicting with or
being inconsistent with a subsequent written instruction. Each party hereto agrees to assume all risks arising out of the use of
such electronic methods to submit instructions and directions to the Bank, including without limitation the risk of the Bank acting
on unauthorized instructions, and the risk of interception and misuse by third parties. Any party providing such instructions acknowledges
and agrees that there may be more secure methods of transmitting such instructions than the method(s) selected by it and agrees
that the security procedures (if any) to be followed in connection with its transmission of such instructions provide to it a commercially
reasonable degree of protection in light of its particular needs and circumstances.

 

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IN WITNESS WHEREOF, the
parties hereto have hereunto caused this Collateral Administration Agreement to be executed as of the day and year first hereinabove
written.

 

	 	KCAP FUNDING
	 	 
	 	By:	/s/ Cleveland Stewart	 
	 	Name:   Cleveland Stewart
	 	Title:     Director
	 	 
	 	CREDIT SUISSE AG, CAYMAN ISLANDS,
	 	as Senior Commitment Party
	 	 
	 	By:	/s/ Bik Kwan Chung 	 
	 	Name:   Bik Kwan Chung
	 	Title:     Authorized Signatory
	 	 
	 	By:	/s/ Louis J. Impellizeri	 
	 	Name:   Louis J. Impellizeri
	 	Title:     Authorized Signatory
	 	 
	 	KOHLBERG CAPITAL CORPORATION,
	 	as Portfolio Manager
	 	 
	 	By:	/s/ Dayl W. Pearson	 
	 	Name:   Dayl W. Pearson
	 	Title:     Chief Executive Officer
	 	              Kohlberg Capital Corporation 
	 	 
	 	The Bank of New York Mellon Trust
	 	Company, National Association,
	 	as Collateral Administrator
	 	 
	 	By:	/s/ MARIA D. CALZADO	 
	 	Name:   MARIA D. CALZADO
	 	Title:     Vice PresidentExecution Version

 

[Trimaran Advisors, L.L.C. letterhead]

 

February 29, 2012

 

Jay R. Bloom

c/o Trimaran Fund Management, LLC

1325 Avenue of the Americas, 34th Floor

New York, NY 10019

 

Dear Mr. Bloom:

 

This letter (the “Agreement”)
will confirm our offer to you of employment with Trimaran Advisors, L.L.C. (the “Company”), under the terms
and conditions that follow.

 

1.            Position,
Duties and Term.

 

(a)          You
will be employed by the Company as a Portfolio Manager of the collateral of Trimaran CLO IV Ltd. (“CLO IV”),
Trimaran CLO V Ltd., Trimaran CLO VI Ltd. and Trimaran CLO VII Ltd. (collectively, along with CLO IV, the “CLOs”)
reporting to the Chief Executive Officer (the “CEO”) of Kohlberg Capital Corporation (“KCAP”).
Promptly following the date hereof, KCAP will (unless you by notice to KCAP elect otherwise) propose to its Nominating and Corporate
Governance Committee (the “Nominating Committee”) your nomination to its Board of Directors of (the “KCAP
Board”). Subject to the approval of such nomination by the Nominating Committee, you shall be appointed to the KCAP Board.
At the first stockholder meeting after the date hereof at which you shall stand for reelection to the KCAP Board, KCAP will (unless
you by notice to KCAP on or prior to the date that is 30 days prior to the date that the KCAP proxy statement for such stockholder
meeting is mailed to stockholders elect otherwise) propose to its Nominating Committee your renomination to the KCAP Board, and
subject to the approval of such nomination by the Nominating Committee, you shall be nominated for election by the KCAP stockholders
at such stockholder meeting.

 

(b)          As
a Portfolio Manager, you shall be responsible for the management of the collateral of the CLOs. You agree to perform the duties
of your position, including, without limitation, performing such duties as are required to satisfy your obligations as a “Key
Manager” as such term is defined in the Collateral Management Agreement, dated as of September 29, 2005, between CLO IV and
the Company (the “CLO IV CMA”), in the form the same exists on the date hereof . Anything in this Agreement
to the contrary notwithstanding, the Company and KCAP agree that you shall have no responsibilities or duties (including fiduciary
duties) as an employee of the Company (or agent of KCAP) other than those responsibilities and duties expressly set forth in this
Section 1(b) or in Sections 1(d) and 3 and that your obligations in this Agreement (other than in Section 3) are conditioned on
the Company’s providing or causing to be provided such resources as you may reasonably request and such personnel as are
reasonably necessary in connection with the management of the CLOs’ assets and those other assets managed by KCAP and its
subsidiaries and such personnel’s reasonable performance of their duties and otherwise complying with your (or your delegate’s)
reasonable instructions.

 

    	 

    	 

    

 

(c)          The
term of this Agreement (the “Term”) shall be for one year following the date hereof and shall automatically renew on
each anniversary of such date unless either party delivers a written notice of nonrenewal to the other party not later than ninety
(90) days prior to any such anniversary; provided that the Company may not deliver such notice prior to the CLO IV Termination
Date.

 

(d)          Notwithstanding
anything to the contrary in this Section 1 or elsewhere in this Agreement but subject to the immediately following sentence, you
agree not to take any action (including, without limitation, exercising any non-renewal pursuant to Section 1(c)) that would be
reasonably expected to result in a “Key Manager Event” as such term is defined in the CLO IV CMA. For the avoidance
of doubt, the occurrence of a Key Manager Event primarily caused by any of the following shall not result in a violation of this
Section 1(d): (i) termination (or non-renewal) of this Agreement (x) by you (A) for Good Reason or (B) after the earlier of (I)
December 1, 2017 or (II) the date on which CLO IV is dissolved (the earlier of such dates (I) and (II), the “CLO IV Termination
Date”), or (y) by the Company for any reason, (ii) your death or Serious Illness or (iii) any action taken by you at
the direct instruction or with the express consent of the KCAP Board. “Serious Illness” means an illness materially
adversely affecting your ability to perform your duties hereunder with respect to CLO IV for at least 45 days, based on the written
opinion of a physician selected by you (and reasonably acceptable to the Company) delivered to the Company.

 

(e)          The
parties agree that you may perform your duties hereunder at such location as you shall determine.

 

2.           Compensation
and Benefits. During the Term, as compensation for all services performed by you for the Company and its Affiliates and subject
to your full performance hereunder, the Company will provide you the following pay and benefits:

 

(a)          Base
Salary. The Company will pay you a base salary at the rate shown on Schedule 2(a) per year plus, if applicable, the Kehler
Base Salary Amount, payable in accordance with the regular payroll practices of the Company and its Affiliates and subject to increase,
but not decrease, from time to time by the KCAP Board in its discretion.

 

(b)          No
Participation in Employee Benefit Plans or Paid Time Off. You acknowledge and agree that you shall not be entitled to participate
in any employee benefit plans from time to time in effect for employees of the Company or its Affiliates. You further acknowledge
that you shall not earn any paid time off during your employment by the Company.

 

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(c)          Business
Expenses. The Company will pay or reimburse you for all reasonable business expenses incurred or paid by you in the performance
of your duties and responsibilities for the Company hereunder, subject to any maximum annual limit and other restrictions on such
expenses set by the Company and to such reasonable substantiation and documentation as may be specified from time to time. Your
right to reimbursement for business expenses hereunder shall be subject to the following additional rules: (i) the amount of expenses
eligible for reimbursement during any calendar year shall not affect the expenses eligible for reimbursement in any other taxable
year, (ii) reimbursement shall be made as soon as practicable following your submission for reimbursement, but in all events not
later than March 31 of the calendar year following the calendar year in which the expense was incurred, and (iii) the right to
reimbursement is not subject to liquidation or exchange for any other benefit.

 

(d)          Indemnification.
KCAP represents and warrants to you that the KCAP Board has designated you, by virtue of your employment hereunder, as an agent
of KCAP and, as such, you are entitled to the indemnification rights set forth in its Certificate of Incorporation. To the extent
that any amendment to KCAP’s Certificate of Incorporation or By-laws after the date hereof adversely affects such rights
as in effect as of the date hereof, such amendment shall not, subject to the requirements of applicable law, reduce your rights
to indemnification thereunder. The provision of this Section 2(d) shall survive any termination or non-renewal of this Agreement,
regardless of the reason therefor.

 

3.            Confidential
Information.

 

(a)          Confidential
Information. During the course of your employment with the Company, you will learn of Confidential Information, as defined
below, and you may develop Confidential Information on behalf of the Company and its Affiliates. You agree that you will not use
or disclose to any Person (except as required by applicable law or for the proper performance of your regular duties and responsibilities
for the Company) any Confidential Information obtained by you incident to your employment or any other association with the Company
or any of its Affiliates. You agree that this restriction shall continue to apply after your employment terminates, regardless
of the reason for such termination.

 

(b)          Protection
of Documents. All documents, records and files, in any media of whatever kind and description, relating to the business, present
or otherwise, of the Company or any of its Affiliates, and any copies, in whole or in part, thereof (the “Documents”),
whether or not prepared by you, shall be the sole and exclusive property of the Company. You agree to safeguard all Documents and
to surrender to the Company, at the time your employment terminates, all Documents then in your possession or control.

 

    	3

    	 

    

 

(c)          The
provisions in this Section 3 will not prohibit any (i) retention of copies of records or disclosure (1) required by any applicable
Legal Requirement (as defined in the Purchase and Sale Agreement dated as of the date hereof between KCAP, Commodore Holdings,
L.L.C, you, Dean C. Kehler, HBK Caravelle, L.L.C. and Trimaran Fund Management, L.L.C. (the “Purchase Agreement”))
or Governmental Authority (as defined in the Purchase Agreement) so long as reasonable prior notice is given to the Company of
such disclosure and a reasonable opportunity is afforded to the Company to contest the same or (2) made or used in connection with
the enforcement of any right or remedy relating to this Agreement or the Purchase Agreement or (ii) use of (1) information delivered
pursuant to Section 8.05 of the Purchase Agreement or (2) “track record” information for periods ending prior to January
1, 2011.

 

(d)          In
signing this Agreement, you give the Company assurance that you have carefully read and considered all the terms and conditions
of this Agreement, including the restraints imposed on you under this Section 3. You further agree that, were you to breach any
of the covenants contained in this Section 3, the damage to the Company and its Affiliates would be irreparable. You therefore
agree that the Company, in addition to any other remedies available to it, shall be entitled to seek preliminary and permanent
injunctive relief against any breach or threatened breach by you of any of those covenants, without having to post bond, together
with an award of its reasonable attorney’s fees incurred in enforcing its rights hereunder. It is also agreed that each of
the Company’s Affiliates shall have the right to enforce all of your obligations to that Affiliate under this Agreement,
including without limitation pursuant to this Section 3. Finally, no claimed breach of this Agreement or other violation of law
attributed to the Company shall operate to excuse you from the performance of your obligations under this Section 3.

 

4.            Termination
of Employment. Your employment under this Agreement may be terminated prior to the expiration of the Term pursuant to this
Section 4.

 

(a)          The
Company may terminate your employment for Cause by providing written notice to you specifying in reasonable detail the condition
giving rise to Cause no later than the 30th day following the occurrence of that condition, providing you 30 days to
remedy the condition and so specifying in the notice and by terminating your employment within 30 days following the expiration
of the remedy period if you fail to remedy the condition. The following, as determined by the Company in its reasonable judgment,
shall constitute Cause: (i) your material negligence in the performance of your material duties and responsibilities hereunder
to the Company, which could reasonably result in material injury to the Company or any of its Affiliates, taken as a whole or (ii)
your material breach of any material provision of this Agreement or of Section 6.02 or 6.04 of the Purchase Agreement, including,
without limitation, a breach of your obligations under Section 3 of this Agreement.

 

(b)          The
Company may terminate your employment at any time other than for Cause upon 90 days’ notice to you. The Company may elect
to waive such notice period or any portion thereof; but in that event, the Company shall pay you your base salary for that portion
of the notice period so waived.

 

    	4

    	 

    

 

(c)          You
may terminate this Agreement for Good Reason by providing written notice to the Company specifying in reasonable detail the condition
giving rise to Good Reason no later than the 30th day following the occurrence of that condition, providing the Company 30 days
to remedy the condition and so specifying in the notice and by terminating your employment within 30 days following the expiration
of the remedy period if the Company fails to remedy the condition. The following, as determined by you, in your reasonable judgment,
shall constitute Good Reason: a material breach by the Company or KCAP of any material provision of this Agreement.

 

(d)          This
Agreement shall automatically terminate in the event of your death during employment. In the event you become disabled during employment
and, as a result, are unable to continue to perform substantially all of your duties and responsibilities under this Agreement,
either with or without reasonable accommodation, the Company will continue to pay you your base salary and to provide you benefits
in accordance with Section 2(c) above for up to twelve (12) weeks of disability during any period of three hundred and sixty-five
(365) consecutive calendar days. If you are unable to return to work after twelve (12) weeks of disability, the Company may terminate
your employment, upon notice to you. If any question shall arise as to whether you are disabled to the extent that you are unable
to perform substantially all of your duties and responsibilities for the Company and its Affiliates, you shall, at the Company’s
request, submit to a medical examination by a physician selected by the Company to whom you or your guardian, if any, has no reasonable
objection to determine whether you are so disabled, and such determination shall for purposes of this Agreement be conclusive of
the issue. If such a question arises and you fail to submit to the requested medical examination, the Company’s determination
of the issue shall be binding on you.

 

5.            Other
Matters Related to Termination.

 

(a)          In
the event of termination of your employment with the Company, howsoever occurring, the Company shall pay you as soon as practicable
following the effective date of such termination (the “Separation Date”) (i) your final base salary through
the Separation Date or through the end of any period of notice waived; and (ii) reimbursement for business expenses incurred by
you but not yet paid to you as of the Separation Date; provided you submit all expenses and supporting documentation required within
60 days of the Separation Date, and provided further that such expenses are reimbursable under Company policies as then in effect.

 

(b)          Following
the termination of your employment by the Company without Cause or by you for Good Reason, the Company shall pay you the base salary
that you would have received hereunder, but for such termination, from the Separation Date through the end of the then-current
Term (including any extension thereof, if you or the Company delivers notice of such termination within ninety (90) days prior
to the expiration of the Term) (such payment, the “Severance Payment”). Your right to receive and retain the
Severance Payment is conditioned, however, on your continued compliance with your surviving obligations under this Agreement. Any
Separation Payment to which you become entitled shall be paid in a lump sum on the sixtieth (60th) day following the Separation
Date.

 

    	5

    	 

    

 

(c)          The
provisions of this Agreement shall survive any termination of employment if so provided in this Agreement or if necessary or desirable
to accomplish the purposes of other surviving provisions, including without limitation your obligations under Section 3(a) and
(b) of this Agreement and the KCAP’s and the Company’s obligations in Section 2(d).

 

6.            Definitions.
For purposes of this Agreement, the following definitions apply:

 

(a)          “Affiliates”
means all persons and entities directly or indirectly controlling, controlled by or under common control with the Company, where
control may be by management authority, equity interest or otherwise.

 

(b)          “Confidential
Information” means any and all information of the Company and its Affiliates that is not generally available to the public.
Confidential Information also includes any information received by the Company or any of its Affiliates from any Person with any
understanding, express or implied, that it will not be disclosed. Confidential Information does not include information that enters
the public domain, other than through your breach of your obligations under this Agreement.

 

(c)          “Kehler
Base Salary Amount” means, in respect of any period during which you may not terminate (or during which you may not elect
not to renew) this Agreement pursuant to Section 1(c) without violating Section 1(d) and during which Dean Kehler is no longer
employed by the Company pursuant to his employment agreement with the Company (other than as a result of a termination for Cause
thereunder or a termination due to his death or permanent disability), the base salary that would have been payable to Dean Kehler
had his Employment Agreement not been terminated (or not renewed) by the Company (other than for Cause or due to his death or disability).
For the avoidance of doubt, for purposes of this definition, it will be assumed that a notice of non-renewal could be given by
you pursuant to Section 1(c) at any time and would be effective on the date given.

 

(d)          “Person”
means an individual, a corporation, a limited liability company, an association, a partnership, an estate, a trust or any other
entity or organization, other than the Company or any of its Affiliates.

 

7.           Conflicting
Agreements. You hereby represent and warrant that your signing of this Agreement and the performance of your obligations under
it will not breach or be in conflict with any other agreement to which you are a party or are bound, and that you are not now subject
to any covenants against competition or similar covenants or any court order that could affect the performance of your obligations
under this Agreement. You agree that you will not disclose to or use on behalf of the Company any confidential or proprietary information
of a third party without that party’s consent.

 

8.           Limitation
of Remedies. Neither the Company nor KCAP shall have any right to monetary damages in respect of any breach of your obligations
hereunder other than for (a) an intentional or willful breach of any such obligation (i.e., a breach of this Agreement resulting
from action or inaction by you which action or inaction was known by you to be a breach hereof), or (b) any breach of Section 1(d),
3 or 7.

 

    	6

    	 

    

 

9.           Withholding.
All payments made by the Company under this Agreement shall be reduced by any tax or other amounts required to be withheld by the
Company under applicable law.

 

10.         Assignment.
Neither you nor the Company may make any assignment of this Agreement or any interest in it, by operation of law or otherwise,
without the prior written consent of the other; provided, however, the Company may assign its rights and obligations under this
Agreement without your consent to one of its Affiliates (provided that the Company shall remain secondarily liable for all obligations
of such Affiliate following any such assignment) or to any Person with or into whom the Company shall hereafter effect a reorganization,
consolidate, or merge, or to whom it shall transfer all or substantially all of its properties or assets. This Agreement shall
inure to the benefit of and be binding upon you and the Company, and each of our respective successors, executors, administrators,
heirs and permitted assigns.

 

11.         Severability.
If any portion or provision of this Agreement shall to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than
those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of
this Agreement shall be valid and enforceable to the fullest extent permitted by law.

 

12.         Miscellaneous.
This Agreement sets forth the entire agreement between you and the Company, and replaces all prior and contemporaneous communications,
agreements and understandings, written or oral, with respect to the terms and conditions of your employment. This Agreement may
not be modified or amended, and no breach shall be deemed to be waived, unless agreed to in writing by you and an expressly authorized
representative of the KCAP Board. The headings and captions in this Agreement are for convenience only and in no way define or
describe the scope or content of any provision of this Agreement. This Agreement may be executed in two or more counterparts, each
of which shall be an original and all of which together shall constitute one and the same instrument. This is a New York contract
and shall be governed and construed in accordance with the laws of the State of New York, without regard to the conflict of laws
principles thereof.

 

13.         Notices.
Any notice, request, demand, claim or other communication required or permitted to be delivered, given or otherwise provided under
this Agreement must be in writing and must be delivered personally, delivered by nationally recognized overnight courier service,
sent by certified or registered mail, postage prepaid, or (if a facsimile number is provided below) sent by facsimile (subject
to electronic confirmation of good facsimile transmission). Any such notice, request, demand, claim or other communication shall
be deemed to have been delivered and given (a) when delivered, if delivered personally, (b) the Business Day (as defined in the
Purchase Agreement) after it is deposited with such nationally recognized overnight courier service, if sent for overnight delivery
by a nationally recognized overnight courier service, (c) the day of sending, if sent by facsimile prior to 5:00 p.m. (Eastern
time) on any Business Day or the next succeeding Business Day if sent by facsimile after 5:00 p.m. (Eastern time) on any Business
Day or on any day other than a Business Day or (d) five Business Days after the date of mailing, if mailed by certified or registered
mail, postage prepaid, in each case, to the following address or, if applicable, facsimile number, or to such other address or
addresses or facsimile number or numbers as such party may subsequently designate to the other parties by notice given hereunder:

 

    	7

    	 

    

 

If to KCAP or the Company, to:

 

Kohlberg Capital Corporation

or

Trimaran Advisors LLC

c/o Kohlberg Capital Corporation

295 Madison Avenue - 6th Floor

New York, NY 10017

Telephone number: (212) 455-8300

Facsimile number: (212) 983-7654

Attention: Dayl Pearson, Chief Executive Officer

 

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

 

Ropes & Gray LLP

Prudential Tower

800 Boylston Street

Boston, MA 02199

Telephone number: (617) 951-7802

Facsimile number: (617) 235-0514

Attention: Craig Marcus

 

If to you, to:

 

Jay R. Bloom

c/o Trimaran Fund Management, LLC

1325 Avenue of the Americas, 34th
Floor

New York, NY 10019

Telephone number: 212-616-3710

Facsimile number: 212-616-3794

 

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

 

Willkie Farr & Gallagher LLP

787 Seventh Avenue

New York, NY 10019

Telephone number: (212) 728-8278

Facsimile number: (212) 728-9278

Attention: Laurence Weltman

 

    	8

    	 

    

 

 

Each of the parties to this Agreement may specify
a different address or addresses or facsimile number or facsimile numbers by giving notice in accordance with this Section 13 to
each of the other parties hereto.

 

If the foregoing is acceptable to you, please
sign this letter in the space provided below. At the time you sign and return it, this letter will take effect as a binding agreement
between you and the Company on the basis set forth above. The enclosed copy is for your records.

 

[Signature Page Follows]

    	9

    	 

    

 

	Sincerely yours,	 
	 	 
	/s/ Dayl Pearson	 
	 	 
	Dayl Pearson, President	 
	 	 
	Accepted and Agreed:	 
	 	 
	/s/ Jay R. Bloom	 
	Jay R. Bloom	 
	 	 
	Date:  February 29, 2012	 
	 	 
	Accepted and Agreed (as to the last three	 
	sentences of Section 1(a) and Section 2(d))	 
	 	 
	KOHLBERG CAPITAL CORPORATION	 
	 	 
	By:	/s/ Dayl Pearson	 
	 	Name:  Dayl Pearson	 
	 	Title:  President	 

 

    	10

    	 

    
 

Schedule 2(a)

 

	Year Commencing:	 	Annual Salary	 
	 	 	 	 
	February 29, 2012	 	$	50,000	 
	 	 	 	 	 
	March 1, 2013	 	$	75,000	 
	 	 	 	 	 
	March 1, 2014	 	$	125,000	 
	 	 	 	 	 
	March 1, 2015 and thereafter	 	$	200,000	 

 

    	11

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