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TABLE OF CONTENTS
INDEX TO FINANCIAL STATEMENTS

Table of Contents

As filed with the Securities and Exchange Commission on August 1, 2016

Registration No. 333-          

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-14

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. o
Post-Effective Amendment No. o
(Check appropriate box or boxes)

Great Elm Capital Corp.
(Exact Name of Registrant as Specified in Charter)

200 Clarendon Street, 51 st  Floor, Boston, MA 02116
(Address of Principal Executive Offices)

(617) 375-3000
(Area Code and Telephone Number)

Peter A. Reed
Chief Executive Officer
Great Elm Capital Corp.
200 Clarendon Street, 51 st  Floor
Boston, MA 02116
(Name and Address of Agent for Service)

Copies to:

John J. Mahon
Schulte Roth & Zabel LLP
1152 15th Street, NW, Suite 850
Washington, DC 20005
(202) 729-7477
  Michael K. Hoffman
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, NY 10036
(212) 735-3406
  Harry S. Pangas
Sutherland Asbill &
Brennan LLP
700 6th St NW #700,
Washington, DC 20001
(202) 383-0805
  John A. Healy
Clifford Chance US LLP
31 West 52nd Street
New York, NY 10019
(212) 878-8781

Approximate Date of Proposed Public Offering: As soon as practicable after this registration statement becomes effective and upon completion of the merger described in the enclosed document.

Calculation of Registration Fee under the Securities Act of 1933

 
   
   
   
   
   
   
   
   
   
   
 
  Title of Securities Being Registered
   
  Amount
Being
Registered (1)

   
  Proposed
Maximum
Offering Price Per
Unit

   
  Proposed
Maximum
Proposed Offering
Price (2)

   
  Amount of
Registration Fee

   
     Common stock, par value $0.01 per share       5,000,000       N/A       $60,000,889       $6,043    
(1)
The number of shares to be registered represents the maximum number of shares of the registrant's common stock estimated to be issuable in connection with the merger agreement described in this Registration Statement. Pursuant to Rule 416, this registration statement also covers additional securities that may be issued as a result of stock splits, stock dividends or similar transactions.
(2)
Represents (x) $2.67, the closing price on July 27, 2016 of common stock of Full Circle Capital Corporation multiplied by (y) 22,472,243, the number of then outstanding shares of Full Circle Capital Corporation common stock.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

   


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Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This document shall not constitute an offer to sell or the solicitation of any offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

PRELIMINARY—SUBJECT TO COMPLETION—DATED AUGUST 1, 2016



GRAPHIC

 


GRAPHIC

On June 23, 2016, Full Circle Capital Corporation ( Full Circle ) and Great Elm Capital Corp. ( GECC ) entered into an Agreement and Plan of Merger (the Merger Agreement ) providing for the merger of Full Circle with and into GECC (the Merger ).

If the Merger is completed, you will have a right to receive [     ·     ] shares of common stock, par value $0.01 per share, of GECC, for each share of Full Circle common stock you hold immediately prior to the Merger. In connection with the Merger, GECC expects to issue a maximum of 5,000,000 shares of its common stock. Also, the Merger Agreement provides that the board of directors of Full Circle (the Full Circle Board ) will declare a special cash distribution to record holders of Full Circle common stock immediately before the effective time of the Merger that is expected to equal approximately $0.22 per share of Full Circle common stock (the Special Distribution ).

Full Circle and GECC are closed-end, non-diversified management investment companies incorporated in Maryland. Full Circle has elected, and GECC will elect before the Merger, to be regulated as a business development company ( BDC ) under the Investment Company Act of 1940, as amended. Full Circle's investment objective is to generate both current income and capital appreciation through debt and equity investments. GECC's investment objective is to seek to generate both current income and capital appreciation by investing in debt acquired primarily in the secondary market, often at a discount to par value. Immediately before the Merger, GECC will have been capitalized with $30 million in cash and a portfolio of debt investments with a fair value of approximately $90 million as of June 30, 2016 in exchange for shares of GECC common stock, which is referred to as Formation Transactions .

The following table shows the closing sale price of Full Circle common stock as reported on the NASDAQ Global Market ( NASDAQ ) on June 23, 2016, the last full trading day before the public announcement of the Merger, and on August [     ·     ], 2016, the last full trading day before printing this document. The implied value of the merger consideration in the below table was calculated by multiplying the pro forma as adjusted net asset value per share of GECC as of 5:00 p.m. Eastern time on                         , 2016 the ( Measurement Date ), by the exchange ratio, after giving effect to the Formation Transactions. The trading price of GECC may be lower than the implied value in this table.

  Full Circle
Common Stock
  Implied Value of One
Share of Full Circle
Common Stock*
 

Closing Price at June 23, 2016

  $ 2.71   $ [ · ]  

Closing Price at September [ · ], 2016

  $ [ · ]   $ [ · ]  
*
Not including the Special Distribution

The market price of Full Circle common stock will fluctuate before the Merger. You should obtain current stock price quotations for Full Circle common stock. Full Circle common stock trades on the NASDAQ Global Market under the symbol "FULL." This is the initial public offering of GECC, and GECC intends to apply to list its common stock on the NASDAQ Global Select Market under the symbol "GECC" upon completion of the Merger. Reports, proxy statements and other information concerning us may also be inspected at the NASDAQ offices at 1735 K Street, N.W., Washington, D.C. 20006.

The Merger is intended to qualify as a "reorganization" within the meaning of Section 368(a) of the Internal Revenue Code of 1986 with respect to Full Circle and you are not expected to recognize any gain or loss for U.S. federal income tax purposes upon the exchange of shares of Full Circle common stock for shares of GECC common stock, except with respect to any cash received in lieu of fractional shares of GECC common stock.


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At a special meeting of Full Circle stockholders, Full Circle stockholders will be asked to vote to approve the Merger. The affirmative vote of the holders of a majority of the shares of Full Circle common stock outstanding and entitled to vote is required to approve the Merger.

On the recommendation of a special committee of the Full Circle Board, the Full Circle Board has unanimously approved the Merger and the Merger Agreement and unanimously recommends that you vote "FOR" approval of the Merger and "FOR" approval of the proposal to adjourn the Full Circle special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the Full Circle special meeting to approve the Merger.

This document concisely describes the special meeting, the Merger, the documents related to the Merger, including the Merger Agreement, and other related matters that you ought to know before voting on the proposals described in this document and should be retained for future reference. Please carefully read this entire document, including "Risk Factors" beginning on page 9. You also can obtain information about Full Circle and GECC from documents that each has filed with the Securities and Exchange Commission and are available upon oral or written request and without charge. See "Where You Can Find More Information" for instructions on how to obtain such information.

Ownership of GECC common stock is subject to risks including the risk of total loss of investment. The types of securities in which GECC will invest are subject to special risks. For example, GECC will invest in securities that are rated below investment grade by rating agencies or that would be rated below investment grade if they were rated. Below investment grade securities, which are often referred to as "high yield" and "junk," are subject to significant risks with respect to their respective issuers' ability to pay interest and repay principal.

The Securities and Exchange Commission has not approved or disapproved the GECC common stock offered and sold under this document or determined if this document is accurate or adequate. Any representation to the contrary is a criminal offense.


Full Circle Capital Corporation
102 Greenwich Avenue, 2nd Floor
Greenwich, CT 06830
(203) 900-2100
  Great Elm Capital Corp.
200 Clarendon Street, 51 st  Floor
Boston, MA 02116
(617) 375-3000

In addition, if you have questions about the Merger or this document, would like additional copies of this document or need to obtain proxy cards or other information related to the proxy solicitation, you may contact [     ·     ], Full Circle's proxy solicitor, at the address and telephone number listed below. You will not be charged for any of these documents that you request.

Broadridge Proxy Service Center
1155 Long Island Ave, Edgewood, NY 11717
Banks and Brokers Call [Phone]
All Others Call Toll-Free [Phone]

The date of this document is September [     ·     ], 2016. It is first being mailed or otherwise delivered to Full Circle stockholders on or about September [     ·     ], 2016.


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GRAPHIC


NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

OF FULL CIRCLE CAPITAL CORPORATION

To the Stockholders of Full Circle Capital Corporation:

        You are cordially invited to a special meeting of stockholders of Full Circle Capital Corporation, a Maryland corporation, or Full Circle, to be held at the offices of Clifford Chance US LLP, 31 West 52nd Street, New York, New York 10019, on October [     ·     ], 2016, beginning at 9:00 a.m. Eastern Time to consider and vote on the following matters:

        You have the right to receive notice of and to vote at the Full Circle special meeting if you were a stockholder of record at the close of business on August [     ·     ], 2016. Whether or not you expect to be present in person at the Full Circle special meeting, please sign the enclosed proxy card and return it promptly in the postage-paid envelope provided or authorize your proxy by telephone or through the Internet. Instructions are shown on the proxy card.

        You have the option to revoke your proxy at any time prior to the vote at the meeting or to vote your shares personally on request if you attend the meeting.

         On the recommendation of a special committee of the board of directors of Full Circle, the board of directors of Full Circle has unanimously approved the merger and the merger agreement and unanimously recommends that you vote "FOR" approval of the merger and "FOR" approval of the proposal to adjourn the Full Circle special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the Full Circle special meeting to approve the foregoing proposal.

By Order of the Board of Directors,

Michael J. Sell
Secretary

Greenwich, Connecticut
September [    
·     ], 2016


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TABLE OF CONTENTS

 
  Page
ABOUT THIS DOCUMENT   ii
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER   iii
SUMMARY   1
RISK FACTORS   9
COMPARATIVE FEES AND EXPENSES   32
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS   35
THE FULL CIRCLE SPECIAL MEETING   36
THE MERGER   39
CERTAIN MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS   56
DESCRIPTION OF THE MERGER AGREEMENT   66
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET   78
CAPITALIZATION   83
MARKET PRICE, DIVIDEND AND DISTRIBUTION INFORMATION   84
GECC   86
FULL CIRCLE   113
SELECTED FINANCIAL DATA   126
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF FULL CIRCLE   127
DESCRIPTION OF GECC's CAPITAL STOCK   205
COMPARISON OF STOCKHOLDER RIGHTS   212
GECC DIVIDEND REINVESTMENT PLAN   213
SHARES ELIGIBLE FOR FUTURE SALE   215
REGULATION AS A BUSINESS DEVELOPMENT COMPANY   217
LEGAL MATTERS   221
EXPERTS   221
STOCKHOLDER NOMINATIONS AND PROPOSALS FOR THE NEXT ANNUAL MEETING   222
STOCKHOLDERS SHARING AN ADDRESS   222
WHERE YOU CAN FIND MORE INFORMATION   222
INDEX TO FINANCIAL STATEMENTS   F-1
ANNEX A—Agreement and Plan of Merger   A-1
ANNEX B—Opinion of Houlihan Lokey Capital, Inc., Financial Advisor to the Special Committee   B-1

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ABOUT THIS DOCUMENT

        This document, which forms part of a registration statement on Form N-14 (File No. 333-              ) filed with the Securities and Exchange Commission (the SEC ), by GECC, constitutes a prospectus of GECC under Section 5 of the Securities Act of 1933, as amended (the Securities Act ), with respect to the offer and sale of shares of GECC common stock to be issued to the stockholders of Full Circle, in the transactions contemplated by the Merger Agreement.

        This document also constitutes a proxy statement of Full Circle under Section 14(a) of the Securities Exchange Act of 1934, as amended (the Exchange Act ). It also constitutes a notice of meeting with respect to the special meeting of Full Circle common stockholders, at which Full Circle common stockholders will be asked to vote on a proposal to approve the Merger.

        You should rely only on the information contained in this document. No one has been authorized to provide you with information that is different from that contained in this document. This document is dated September [     ·     ], 2016. You should not assume that the information contained in this document is accurate as of any date other than that date. Neither the mailing of this document to Full Circle common stockholders nor the issuance by GECC of common stock in connection with the Merger will create any implication to the contrary.

        This document does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.

        Except where the context otherwise indicates, information contained in this document regarding GECC has been provided by GECC and information contained in this document regarding Full Circle has been provided by Full Circle.

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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

         The questions and answers below highlight only selected information from this document. They do not contain all of the information that may be important to you. You should carefully read through this entire document to fully understand the Merger Agreement and the transactions contemplated thereby, including the Merger, and the voting procedures for the special meeting.

         Unless otherwise indicated in this document or the context otherwise requires, throughout this document the following terms are generally referred to:

Q:    Why am I receiving these materials?

A:
Full Circle is sending these materials to you and its other stockholders to help you decide how to vote your shares of Full Circle common stock at the special meeting. You have the right to receive notice of and to vote at the Full Circle special meeting if you were a stockholder of record at the close of business on August [     ·     ], 2016 (the Record Date ). At the special meeting, you will be asked to vote on a proposal to approve the Merger (the Merger Proposal ). You also may be asked to vote on a proposal to approve the adjournment of the special meeting, to allow time to solicit additional proxies if there are not sufficient votes at the time of the special meeting to approve the Merger Proposal (the Adjournment Proposal ).

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Q:    When and where is the special meeting?

A:
The special meeting will take place on October [     ·     ], 2016 beginning at 9:00 a.m., Eastern Time, at the offices of Clifford Chance US LLP, 31 West 52nd Street, New York, New York.

Q:    What is happening at the special meeting?

A:
Full Circle stockholders are being asked to consider and vote on the following matters at the special meeting:

the Merger Proposal; and

the Adjournment Proposal.

Q:    What will happen in the Merger?

A:
Subject to the terms and conditions of the Merger Agreement, Full Circle will merge with and into GECC and the separate corporate existence of Full Circle will cease. GECC will be the surviving entity of the Merger and will succeed to and assume all the rights and obligations of Full Circle and will continue its existence as a corporation under Maryland law. Full Circle's existing investment advisory agreement with Full Circle Advisors will terminate and GECM will be the investment manager of GECC.

Q:    What will I receive in the Merger?

A:
Each Full Circle stockholder as of the Effective Time will be entitled to receive [     ·     ] shares of GECC common stock for each share of Full Circle common stock owned by such Full Circle stockholder immediately prior to the Merger (the Exchange Ratio ), subject to the payment of cash instead of fractional shares. For example, if you own 100 shares of Full Circle common stock at the Effective Time, then, as a result of the Merger, you will receive [     ·     ] shares of GECC common stock, plus cash instead of the fractional [     ·     ] share of GECC common stock, in exchange for your 100 shares of Full Circle common stock. Each Full Circle stockholder as of the Effective Time also will be entitled to receive a special cash distribution, payable after the Merger, as described below.

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Q:    Is the Exchange Ratio subject to any adjustment?

A:
Generally, no. The Exchange Ratio will only be adjusted if the outstanding shares of GECC common stock or Full Circle common stock have themselves been increased, decreased, changed into or exchanged for a different number or type of security as a result of any reclassification, recapitalization, stock split, reverse stock split, split-up, combination or exchange of shares, or if a stock dividend or dividend payable in any other securities is declared with a record date prior to closing of the Merger or if any other similar event has occurred, exclusive of the Formation Transactions.

Q:    Will I receive dividends or distributions on the GECC common stock I receive in the Merger?

A:
GECC currently intends to distribute monthly dividends or distributions to its stockholders, the payment, timing and amount of which will be determined by GECC's board of directors depending on, among other things, GECC's cash requirements, its financial condition and earnings, as well as contractual restrictions, legal and regulatory considerations and other factors. See "GECC Dividend Reinvestment Plan" for additional information regarding GECC's dividend reinvestment plan.

Q:    Is the Merger subject to any regulatory approvals or third party consents?

A:
Under the Merger Agreement, the parties' obligations to complete the Merger are subject to GECM having become registered as an investment adviser under the Advisers Act and GECC having elected to be regulated as a BDC, under the 1940 Act, and to the shares of the surviving corporation's common stock having been authorized for listing on the NASDAQ Global Select Market. These are the only regulatory approvals or third party consents required for completion of the Merger other than approval of the Merger Proposal. For more information, see "Description of the Merger Agreement—Conditions to the Merger."

Q:    How do GECC's investment objectives and strategy differ from Full Circle's?

A:
Full Circle and GECC have similar objectives in that they each seek to generate both current income and capital appreciation primarily through investments in the debt and equity of private companies and public companies with small equity capitalizations.

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Q:    How will the combined company be managed following the Merger?

A:
Upon completion of the Merger, Peter A. Reed will be GECC's chief executive officer and chairman of its board of directors. GECC's board of directors will be comprised of five directors. Two independent directors will be appointed as members of GECC's board of directors and, at the Effective Time, Mark Biderman and John Stuart, both of whom are members of the Full Circle Board, will also be appointed to the board of directors of GECC. GECC expects that Michael J. Sell, who at present is Full Circle's chief financial officer, will become GECC's chief financial officer, treasurer and secretary at the Effective Time.

Q:    Am I able to exercise dissenters' (or appraisal) rights in connection with the Merger?

A:
Under Maryland law, you will not be entitled to exercise dissenters' (or appraisal) rights with respect to any matter to be voted upon at the special meeting.

Q:    When do you expect to complete the Merger?

A:
While there can be no assurance as to the exact timing, or that the Merger will be completed at all, Full Circle and GECC are working to complete the Merger in the fourth quarter of 2016. Full Circle and GECC currently expect to complete the Merger promptly after obtaining stockholder approval of the Merger, subject to the satisfaction of the other closing conditions in the Merger Agreement.

Q:    Is the Merger or the Special Distribution expected to be taxable to Full Circle stockholders?

A:
The Merger is intended to qualify as a "reorganization" within the meaning of Section 368(a) of the Code as to Full Circle. Accordingly, you should not recognize any gain or loss for U.S. federal income tax purposes on the exchange of your shares of Full Circle common stock for shares of GECC common stock in the Merger, except with respect to cash received in lieu of fractional shares of GECC common stock. The Special Distribution should not be treated for U.S. federal income tax purposes as part of the consideration paid for your shares in the Merger but instead should be treated for U.S. federal income tax purposes as a distribution with respect to your Full Circle common stock. If you are a U.S. stockholder, you will generally be required to take the Special Distribution into account as ordinary income or capital gains. If you are a non-U.S. stockholder, the Special Distribution may be subject to U.S. federal withholding tax. Any amounts so withheld will be treated for all purposes as having been paid to you. You should read "Certain Material U.S. Federal Income Tax Considerations—Tax Consequences of the Merger" carefully in its entirety. Tax matters can be complicated and the tax consequences of the Merger to you will depend on your particular tax situation . You should consult with your tax advisor to confirm the tax consequences to you of the Merger and the Special Distribution.

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Q:    What happens if the Merger is not consummated?

A:
If the Merger is not approved by the requisite vote of Full Circle's stockholders or if the Merger is not completed for any other reason, you will not receive any payment for your shares in connection with the Merger and the Special Distribution will not be declared or paid. Instead, Full Circle will remain an independent public company and its common stock will continue to be listed and traded on NASDAQ. Under circumstances specified in the Merger Agreement, Full Circle may be required to pay GECC a termination fee of $3 million or reimburse up to $1 million of GECC's out of pocket expenses.

Q:    What Full Circle stockholder vote is required to approve the Merger Proposal?

A:
The affirmative vote of the holders of a majority of the shares of Full Circle common stock outstanding and entitled to vote as of the Record Date is required to approve the Merger Proposal. If you abstain from voting, or if you do not (1) deliver a properly-executed proxy card, (2) instruct the proxy solicitor on how to cast your vote by telephone or via the Internet pursuant to the instructions shown on the proxy card or (3) vote at the special meeting, that will have the same effect as if you voted "against" the Merger Proposal.

Q:    Does the Full Circle Board recommend approval of the Merger Proposal and the Adjournment Proposal?

A:
Yes. The Full Circle Board, acting on the recommendation of the Special Committee, unanimously approved the Merger and the Merger Agreement and recommends that you vote "FOR" the Merger Proposal and "FOR" the Adjournment Proposal.

Q:    What do I need to do now?

A:
Full Circle and GECC each urge you to carefully read this entire document, including the Merger Agreement, which is attached as Annex A to this document. You should also review the documents referenced under "Where You Can Find More Information" and consult with your financial, accounting, legal and tax advisors.

Q:    How do I vote my shares?

A:
You may indicate how you want to vote on your proxy card and then sign and mail your proxy card in the enclosed postage-paid return envelope as soon as possible so that your shares may be represented at the special meeting. You may instruct the proxy solicitor on how to cast your vote by calling the proxy solicitor or via the Internet pursuant to the instructions shown on the proxy card. If you are a record stockholder, you may also attend the special meeting in person instead of submitting a proxy. If you hold some or all of your shares in a brokerage account, and you attend the special meeting in person, you will need to bring a letter from your broker identifying you as the beneficial owner of the shares as of the Record Date and authorizing you to vote your shares at the special meeting.

Q:    If some or all of my Full Circle shares are held in a brokerage account, or in "street name," will my broker vote my shares for me?

A:
Not unless you instruct your broker how to vote your shares. If you do not provide your broker with instructions on how to vote your street name shares, your broker will not be permitted to vote them on the Merger Proposal or the Adjournment Proposal.

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Q:    If I am a Full Circle stockholder on the Record Date, what happens if I sell my shares before the special meeting?

A:
If you transfer a share of Full Circle common stock after the Record Date but before the special meeting, you will retain your right to vote that share at the special meeting, but will have transferred the right to receive shares of GECC common stock in the Merger and the right to receive the Special Distribution. In order to receive shares of GECC common stock in the Merger and the Special Distribution, you must hold your Full Circle shares through completion of the Merger.

Q:    If I want to change my vote, what can I do?

A:
You may change your vote at any time before the special meeting takes place. To do so, you may either complete and submit a new proxy card or send a written notice stating that you would like to revoke your proxy. You may also change your vote by calling the applicable proxy solicitor or via the Internet pursuant to the instructions shown on the proxy card and simply authorizing a new proxy to vote your shares. The last recorded vote will be the vote that is counted. In addition, you may elect to attend the special meeting and vote in person, as described above.

Q:    If my shares are represented by stock certificates, should I send them in now?

A:
No. You should not send in your stock certificates at this time. If the Merger is consummated, GECC's exchange agent will send you a letter of transmittal explaining what you must do to exchange your Full Circle stock certificates for the merger consideration payable to you. If you hold your shares in uncertificated form, you will receive a confirmation as to the GECC common stock issued in exchange for such Full Circle common stock and cash in lieu of fractional shares without any action on your part.

Q:    Whom can I contact with any additional questions?

A:
If you have questions, please contact:

Q:    Where can I find more information about GECC and Full Circle?

A:
You can find more information about GECC and Full Circle in the documents described under "Where You Can Find More Information."

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SUMMARY

         This summary highlights some of the information contained elsewhere in this document. It is not complete and may not contain all of the information that you may want to consider. You are urged to carefully read this entire document, including "Risk Factors" beginning on page 10, and the other documents you are referred to for a more complete understanding of the Merger. See "Where You Can Find More Information."

Full Circle and GECC Propose a Merger of Full Circle into GECC (page 39)

        Pursuant to the Merger Agreement, Full Circle will be merged with and into GECC. GECC will be the surviving entity in the Merger, and, following the Merger, Full Circle will no longer exist as a separate entity. As a result, all of Full Circle's assets, liabilities and subsidiaries immediately before the Merger will become assets, liabilities and subsidiaries of GECC.

        GECC stockholders are expected to own approximately 62% of the combined company's outstanding common stock and Full Circle stockholders are expected to own approximately 38% of the combined company's outstanding common stock.

        The Merger Agreement is attached as Annex A to this document and is incorporated by reference herein in its entirety. You are encouraged to read the Merger Agreement carefully and in its entirety, as it is the principal legal document governing the Merger.

The Parties to the Merger

Full Circle Capital Corporation
102 Greenwich Avenue, 2 nd  Floor
Greenwich, CT 06830
(203) 900-2100

        Full Circle is a Maryland corporation formed in April 2010 that operates as an externally managed non-diversified closed-end management investment company that has elected to be regulated as a BDC under the 1940 Act. Full Circle's investment objective is to generate both current income and capital appreciation through debt and equity investments. Full Circle is managed by Full Circle Advisors and Full Circle Service Company provides the administrative services necessary for it to operate.

        Full Circle invests primarily in senior secured loans and, to a lesser extent, second lien loans, mezzanine loans and equity securities issued by lower middle-market companies and middle-market companies that operate in a diverse range of industries. In Full Circle's lending activities, it focuses primarily on portfolio companies with both (1) tangible and intangible assets available as collateral and security against Full Circle's loan to help mitigate Full Circle's risk of loss, and (2) cash flow to cover debt service.

        Full Circle's investments generally range in size from $3 million to $10 million; however, it may make larger or smaller investments from time to time on an opportunistic basis. Full Circle focuses primarily on senior secured loans and "stretch" senior secured loans, also referred to as "unitranche" loans, which combine characteristics of traditional first-lien senior secured loans and second-lien or subordinated loans. Full Circle's stretch senior secured loans typically possess a greater advance rate against the borrower's assets and cash flow, and accordingly carry a higher interest rate and/or greater equity participation, than traditional senior secured loans. Full Circle also may invest in mezzanine, subordinated or unsecured loans. In addition, Full Circle may acquire equity or equity related interests from a borrower along with Full Circle's debt investment. Full Circle attempts to protect against risk of loss on Full Circle's debt investments by investing in borrowers with cash flows to cover debt services, while frequently securing its loans against tangible or intangible assets of its borrowers, which may include accounts receivable and contracts for services, and obtaining a favorable loan-to-value ratio, and in many cases, securing other financial protections or credit enhancements, such as personal guarantees from the principals of its borrowers, make well agreements and other forms of collateral, rather than lending predominantly against anticipated cash flows of Full Circle's borrowers.

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Great Elm Capital Corp.
200 Clarendon Street, 51 st  Floor
Boston, MA 02116
(617) 375-3000

        GECC was formed on April 22, 2016 and has not yet commenced operations. GECC is incorporated in Maryland, and will operate as a closed-end, non-diversified management investment company. Before the Merger is effective, GECC will elect to be regulated as a BDC under the 1940 Act. GECC will be managed by GECM, which will also provide the administrative services necessary for GECC to operate. GECC is an "emerging growth company" within the meaning of the Jumpstart Our Business Startups Act of 2012 (the JOBS Act) and, as such, is subject to reduced public company reporting requirements.

        Before the Effective Time, GECC will acquire a portfolio of fixed income securities (the Initial GECC Portfolio ) from private investment funds (the MAST Funds ), that are managed by MAST Capital Management, LLC ( MAST ), a 14 year-old Boston-based middle-market credit-focused investment manager. The investments included in the Initial GECC Portfolio had a collective fair value of approximately $90 million as of May 31, 2016. As consideration for the Initial GECC Portfolio, GECC expects to issue an aggregate of approximately 5,920,000 shares of its common stock to the MAST Funds, representing approximately 75% of the outstanding shares of common stock of GECC immediately prior to completion of the Merger. In addition, Great Elm Capital Group, Inc., the parent of GECM, which was formerly known as Unwired Planet, Inc. ( Great Elm Capital Group ), contributed $30 million in cash to GECC in exchange for the issuance of approximately 1,973,333 shares of GECC common stock, representing approximately 25% of GECC's outstanding shares of common stock immediately prior to completion of the Merger. See "GECC—Formation Transactions."

        GECC will seek to generate current interest and capital appreciation by investing in the capital structures of predominately middle-market companies that operate in a diverse range of industries. GECC expects to make multi-year investments primarily in secured and senior unsecured debt instruments that it purchases in the secondary markets, though it may also originate investments or acquire them directly from issuers. GECC believes that out-of-favor companies can offer the best risk-adjusted returns and will, therefore, likely invest in companies that have high leverage or operate in industries experiencing cyclical declines. Investments in these companies may trade at discounts to their original issue prices. GECC will seek to protect against risk of loss by investing in borrowers with tangible and intangible assets, where GECM believes asset values are expected to exceed the market value of the cumulative debt through GECC's investment. GECC will seek investments whose total return potential (interest income plus capital appreciation and fees, if any) appropriately recognizes potential investment risks. GECM's investment process includes a focus on an investment's related contractual documents, as it seeks to identify rights that enhance an investment's risk protection and avoid those that compromise potential returns or recoveries. GECC may also make investments in subordinated debt, mezzanine debt, and equity or equity-linked financial instruments.

In the Merger, You Will Have the Right to Receive [     ·     ] Shares of GECC Common Stock per Share of Full Circle Common Stock (page 66)

        If the Merger is completed, each share of Full Circle common stock outstanding immediately prior to the Effective Time will be converted into the right to receive [     ·     ] shares of GECC common stock, subject to the payment of cash instead of fractional shares. To the extent that you have shares represented by stock certificates, you should not send in any stock certificates until you receive written instructions to do so.

        The Merger Agreement provides that the Full Circle Board will declare the Special Distribution, which will be payable after the Merger to the persons who were the record holders of shares of Full Circle common stock immediately before the Effective Time. The aggregate amount of the Special Distribution will be the sum of (1) $5,000,000; plus (2) Full Circle's Undistributed Net Investment Income from March 31, 2016 through and including the Measurement Date; plus (3) the amount of net investment income paid or accrued on Full Circle's investment portfolio and cash from the Measurement Date through the Effective Time. The Special Distribution is expected to be approximately $0.22 per share of Full Circle common stock.

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Special Meeting of Full Circle Common Stockholders (page 36)

        Full Circle plans to hold the special meeting on October [     ·     ], 2016. At the special meeting, holders of Full Circle common stock will be asked to consider and vote on the following proposals:

        You can vote at the special meeting if you owned Full Circle common stock at the close of business on the Record Date. On the Record Date, there were 22,474,243 shares of Full Circle common stock outstanding of which 2,484,461 shares, or 11.06%, were owned beneficially or of record by directors and executive officers of Full Circle.

Comparative Market Price of Securities (page 84)

        The following table shows the closing sale price of Full Circle common stock as reported on NASDAQ on June 23, 2016, the last full trading day before the public announcement of the Merger, and on August [     ·     ], 2016, the last full trading day before the date of this document.

        This table also shows the implied value of the merger consideration proposed for each share of Full Circle common stock, which was calculated by multiplying the pro forma as adjusted net asset value per share of GECC as of June 30, 2016, after giving effect to the Formation Transactions, by [     ·     ], the exchange ratio. Shares of GECC common stock may trade below the implied value in the table below.

       Full Circle
Common Stock
  Implied Value of One
Share of Full Circle
Common Stock*
 

Closing Price at June 23, 2016

  $ 2.71   $ [ · ]  

Closing Price at August [ · ], 2016

  $ [ · ]   $ [ · ]  
*
Not including the Special Distribution.

        The market price of Full Circle common stock will fluctuate before the Merger. You should obtain current stock price quotations for Full Circle common stock. Full Circle common stock trades on NASDAQ under the symbol "FULL" and reports, proxy statements and other information concerning Full Circle can also be inspected at the NASDAQ offices at 1735 K Street, N.W., Washington, D.C. 20006. GECC has applied to list its common stock on NASDAQ under the symbol "GECC" upon completion of the Merger. This is GECC's initial public offering. Accordingly, you will not know the market price of the shares of GECC common stock that you will receive as merger consideration.

Dividends (page 84)

        Because GECC has not yet commenced operations, it has not yet paid any dividend or distribution. However, it intends to distribute monthly distributions to its stockholders, beginning in the second full calendar month after the completion of the Merger.

        The Full Circle Board will declare the Special Distribution before the Effective Time. It will be payable after the Effective Time to the persons that are the record holders of shares of Full Circle common stock immediately before the Effective Time.

        For a history of the dividends and distributions paid by Full Circle since July 1, 2014, see "Market Price, Dividend and Distribution Information."

The Merger Is Intended to Be Tax-Deferred to Full Circle Common Stockholders as to the Shares of GECC Common Stock They Receive (page 56)

        The Merger is intended to qualify as a "reorganization," within the meaning of Section 368(a) of the Code with respect to Full Circle. Accordingly, the Merger should be tax deferred to you for U.S. federal income tax purposes as to the shares of GECC common stock you receive in the Merger, except to the extent of any gain or loss that may result from your receipt of cash instead of fractional shares of GECC common stock.

        The Special Distribution should not be treated for U.S. federal income tax purposes as part of the consideration paid for your shares in the Merger but instead should be treated for U.S. federal income tax purposes

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as a distribution with respect to your Full Circle common stock. If you are a U.S. stockholder, you will generally be required to take the Special Distribution into account as ordinary income or capital gains. If you are a non-U.S. stockholder, the Special Distribution may be subject to U.S. federal withholding tax.

        You should read "Certain Material U.S. Federal Income Tax Considerations" for a more complete discussion of the U.S. federal income tax consequences of the Merger and the Special Distribution. Tax matters can be complicated and the tax consequences to you of the Merger and the Special Distribution will depend on your particular tax situation. You should consult with your tax advisor to confirm the tax consequences to you of the Merger and the Special Distribution.

The Merger Will Be Accounted for as a "Business Combination"

        The Merger will be accounted for as an acquisition of Full Circle by GECC under ASC 805-10, Business Combinations . The acquisition method of accounting requires an acquirer to recognize the assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree based on their fair values as of the date of acquisition. For accounting purposes, GECC will be the acquirer and will make such determinations. As described in more detail in ASC 805-10, goodwill, if any, will be recognized as of the acquisition date, for the excess of the fair value of the consideration transferred over the fair value of identifiable net assets acquired. If the total acquisition date fair value of the identifiable net assets acquired exceeds the fair value of the consideration transferred, the excess will be recognized as a gain.

        The final allocation of the purchase price will be determined after the Merger is completed and after completion of a final analysis to determine the estimated fair values of Full Circle's assets and liabilities. Accordingly, the final purchase accounting adjustments and integration charges may be materially different from the pro forma adjustments presented in this document. Increases or decreases in the estimated fair values of the net assets, commitments, and other items of Full Circle as compared to the information shown in this document may change the amount of the purchase price allocated to goodwill or recognized as income in accordance with ASC 805-10.

Reasons for the Merger (page 45)

        The Special Committee is composed of three independent and disinterested directors, none of whom is affiliated with GECC, Great Elm Capital Group, GECM or MAST or their affiliates, and none of whom is an officer or employee of Full Circle or Full Circle Advisors. The Special Committee unanimously approved the Merger and the other transactions contemplated by the Merger Agreement. The Special Committee unanimously recommended that the Full Circle Board adopt resolutions (1) declaring that the Merger and the other transactions contemplated by the Merger Agreement are advisable, (2) directing (subject to the terms of the Merger Agreement) that the Merger be submitted for consideration at a special meeting of the Full Circle stockholders and (3) resolving to recommend (subject to the terms of the Merger Agreement) that the Full Circle stockholders vote to approve the Merger. Acting upon the Special Committee's recommendation, the Full Circle Board, pursuant to resolutions adopted at a meeting held on June 23, 2016, unanimously:

        In reaching its determination and making its recommendation to the Full Circle Board, the Special Committee consulted with its financial and legal advisors and considered various factors. These factors included:

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        The foregoing list does not include all the factors that the Full Circle Board considered in making its decision. For a further discussion of the material factors considered by the Full Circle Board, see "The Merger—Reasons for the Merger."

Opinion of the Financial Advisor to the Special Committee (page 46)

        On June 23, 2016, Houlihan Lokey verbally rendered its opinion to the Special Committee (which was subsequently confirmed in writing by delivery of Houlihan Lokey's written opinion addressed to the Special Committee dated June 23, 2016), as to, as of June 23, 2016, the fairness, from a financial point of view, to the holders of Full Circle common stock of the Merger Consideration to be received by such holders in the Merger pursuant to the Merger Agreement. For purposes of its analyses and opinion, Houlihan Lokey assumed, based on information provided to it as of the date of its opinion, that the Merger Consideration to be received by Full Circle's stockholders in the Merger would be 0.2169 of a share of GECC common stock per share of Full Circle common stock (which is different from the exchange ratio as ultimately determined pursuant to the Merger Agreement, but which was not known as of the date of Houlihan Lokey's opinion—see "Description of the Merger Agreement—Conversion of Shares; Exchange of Shares").

        Houlihan Lokey's opinion was directed to the Special Committee (in its capacity as such) and only addressed the fairness, from a financial point of view, to the holders of Full Circle common stock of the Merger Consideration to be received by such holders in the Merger pursuant to the Merger Agreement and did not address any other aspect or implication of the Merger or any other agreement, arrangement or understanding entered into in connection therewith or otherwise. The summary of Houlihan Lokey's opinion in this document is qualified in its entirety by reference to the full text of its written opinion, which is attached as Annex B to this document and describes the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Houlihan Lokey in connection with the preparation of its opinion. However, neither Houlihan Lokey's opinion nor the summary of its opinion and the related analyses set forth in this document are

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intended to be, and do not constitute, advice or a recommendation to the Special Committee, the Full Circle Board, any security holder of Full Circle or any other person as to how to act or vote with respect to any matter relating to the Merger.

Risks Relating to the Proposed Merger (page 9)

        The Merger and the other transactions contemplated by the Merger Agreement are subject to many risks. You should carefully consider these risks before deciding how to vote on the proposals to be voted on at the special meeting. See "Risk Factors—Risks Relating to the Merger" for a more detailed discussion of these factors.

        Full Circle will be subject to business uncertainties and contractual restrictions while the Merger is pending. The market price of GECC common stock may be affected by factors different from those affecting Full Circle common stock currently.

        In addition, you should carefully consider the other matters described in "Risk Factors" in determining whether to vote "for" the Merger Proposal. You could lose the value of your investment in GECC stock if any of the events described under "Risk Factors" occurs, which could materially adversely affect GECC's business, net asset value, financial condition and/or results of operations.

The Full Circle Board Unanimously Recommends That You Vote "FOR" Approval of the Merger Proposal (page 45)

        The Full Circle Board, acting on the recommendation of the Special Committee, has determined that the Merger is advisable and unanimously recommends that you vote "FOR" the Merger Proposal and "FOR" the Adjournment Proposal.

Certain Persons Related to Full Circle Have Interests in the Merger that Differ from Your Interests (page 54)

        Certain persons related to Full Circle have financial interests in the Merger that are different from, and/or in addition to, the interests of Full Circle's stockholders. The members of the Full Circle Board were aware of and considered these interests, among other matters, in evaluating and negotiating the Merger Agreement and the Merger and in recommending to the holders of Full Circle common stock that the Merger Proposal be approved. These interests are described in more detail in the section of this document entitled "The Merger—Interests of Certain Persons Related to Full Circle in the Merger."

Full Circle and GECC Agreed When and How Full Circle Can Consider Third-Party Acquisition Proposals (page 74)

        In the Merger Agreement, Full Circle agreed that it will not, and will cause its subsidiaries not to, and will instruct Full Circle's and its subsidiaries' respective officers, directors, employees and other advisors, representatives and agents not to, initiate or solicit or knowingly encourage any inquiry, with respect to, or the making of, any Acquisition Proposal (as defined in the Merger Agreement).

        The Merger Agreement further provides, however, that if Full Circle receives a bona fide Acquisition Proposal from a third party and the Full Circle Board determines in good faith, after consultation with counsel and its

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financial adviser, that failure to take such action could reasonably be expected to be inconsistent with the directors' fiduciary duties, and the person making the Acquisition Proposal is reasonably likely to submit a "Superior Proposal" (as defined in the Merger Agreement), Full Circle may engage in discussions and negotiations with such third party so long as certain notice and other procedural requirements are satisfied. In addition, subject to procedural requirements (including the ability of GECC to revise its offer) and the payment of a $3 million termination fee, Full Circle may terminate the Merger Agreement and enter into an agreement with a third party who makes a Superior Proposal.

The Merger Requires the Approval of Full Circle Stockholders Holding at Least a Majority of Votes Entitled to Be Cast

        The adoption of the Merger Proposal requires the affirmative vote of the holders of at least a majority of the shares of Full Circle common stock outstanding on the Record Date. A failure to vote in person or by proxy will have the same effect as a vote "against" the Merger Proposal.

Conditions That Must Be Satisfied or Waived for the Merger to Occur (page 74)

        As more fully described in this document and in the Merger Agreement, the obligations of Full Circle and GECC to complete the Merger are subject to the satisfaction or, where permissible, waiver of the following conditions, among others:

        Full Circle and GECC cannot be certain when, or if, the conditions to the Merger will be satisfied or waived or whether the Merger will ever be completed.

Termination of the Merger Agreement (page 76)

        The Merger Agreement contains termination rights for Full Circle and GECC. The Merger Agreement may be terminated at any time prior to the Effective Time, whether before or after the approval of the Full Circle stockholders sought by this document, as follows:

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If the Merger Agreement is terminated:

The Rights of Full Circle Common Stockholders Following the Merger Will Not Be Materially Different (page 212)

        The rights of Full Circle's stockholders are currently governed by Maryland law and Full Circle's charter and bylaws. When the Merger is completed, Full Circle's stockholders will become stockholders of GECC, a Maryland corporation, and their rights will be governed by Maryland law and GECC's charter and bylaws. The charter and bylaws of both Full Circle and GECC are substantially similar, and as a result, the rights of Full Circle's stockholders and the rights of GECC's stockholders are substantially similar.

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RISK FACTORS

         The risks set out below, and elsewhere in this document, are not the only risks GECC and Full Circle face. Additional risks and uncertainties not currently known to GECC or Full Circle or that they currently deem to be immaterial also may materially adversely affect their business, financial condition or operating results. If any of the following events occur, GECC or Full Circle's business, financial condition or results of operations could be materially adversely affected. In addition to the other information included in this document, you should carefully consider the matters described below in determining whether to approve the Merger Proposal.

Risks Relating to the Merger

        You cannot be sure of the market value of the Merger Consideration you will receive until after the closing date.  The Exchange Ratio of [     ·     ] shares of GECC common stock for each share of Full Circle common stock was fixed as of the Measurement Date and is not subject to adjustment based on events occurring after that date. Because GECC common stock will not be publicly traded and listed on the NASDAQ Global Select Market before the Effective Time, you cannot know the market value of the shares of GECC common stock issuable to you as merger consideration.

        Sales of shares of GECC's common stock after the completion of the Merger may cause the market price of GECC common stock to fall.  Based on the number of outstanding shares of Full Circle's common stock as of June 23, 2016, GECC would issue approximately 4.9 million shares of GECC common stock to Full Circle's stockholders in exchange for their shares of Full Circle common stock pursuant to the Merger Agreement. If a significant number of Full Circle's former stockholders decide to sell the shares of GECC common stock that they hold, those sales of shares of GECC common stock could depress the prices at which shares of GECC common stock trade.

        You will experience a reduction in percentage ownership and voting power in the combined company as a result of the Merger.  You will experience a substantial reduction in your percentage ownership interests and effective voting power in respect of the combined company relative to your percentage ownership interests in Full Circle prior to the Merger. Consequently, you should expect to exercise less influence over the management and policies of the combined company following the Merger than you currently exercise over the management and policies of Full Circle.

        GECC may be unable to realize the benefits anticipated by the Merger, including estimated cost savings and synergies, or it may take longer than anticipated to achieve such benefits.  The realization of benefits anticipated as a result of the Merger will depend in part on the integration of Full Circle's investment portfolio with GECC's and the integration of Full Circle's business with GECC's. There can be no assurance that Full Circle's investment portfolio or business can be operated profitably or integrated successfully into GECC's in a timely fashion or at all. The dedication of management resources to such integration may detract attention from the day-to-day business of GECC and there can be no assurance that there will not be substantial costs associated with the transition process or there will not be other material adverse effects as a result of these integration efforts. Such effects including, but not limited to, incurring unexpected costs or delays in connection with such integration and failure of Full Circle's investment portfolio to perform as expected, could have a material adverse effect on the financial results of GECC.

        GECC also expects to achieve cost savings and synergies from the Merger when the two companies have fully integrated their portfolios. It is possible that the estimates of the potential cost savings and synergies could turn out to be incorrect. In addition, the cost savings and synergies estimates also assume GECC's ability to refinance Full Circle's debt and to combine the investment portfolios and businesses of GECC and Full Circle in a manner that permits those cost savings and synergies to be fully realized. If the estimates turn out to be incorrect or GECC is not able to successfully refinance or pay down Full Circle's debt and combine the investment portfolios and businesses of the two companies, the anticipated cost savings and synergies may not be fully realized, may take longer to realize than expected or may not be realized at all.

        If the Merger does not close, Full Circle will not benefit from the expenses incurred in its pursuit.  The Merger may not be completed. If the Merger is not completed, Full Circle will have incurred substantial expenses for which no ultimate benefit will have been received. Both companies have incurred out-of-pocket expenses in

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connection with the Merger for investment banking, legal and accounting fees and financial printing and other related charges, much of which will be incurred even if the Merger is not completed.

        Termination of the Merger Agreement could negatively impact Full Circle.  If the Merger Agreement is terminated, there may be various consequences, including:

        Under certain circumstances, Full Circle is obligated to pay GECC a termination fee upon termination of the Merger Agreement.  No assurance can be given that the Merger will be completed. The Merger Agreement provides for the payment by Full Circle to GECC of a termination fee of $3 million if the Merger is terminated under certain circumstances. See "Description of the Merger Agreement—Termination of the Merger Agreement" for a discussion of the circumstances that could result in the payment of a termination fee.

        The Merger Agreement limits Full Circle's ability to pursue alternatives to the Merger.  The Merger Agreement contains provisions that limit Full Circle's ability to discuss, facilitate or commit to competing third-party proposals to acquire all or a significant part of Full Circle. These provisions, which are typical for transactions of this type, and include a $3 million termination fee payable under certain circumstances, might discourage a potential competing acquiror that might have an interest in acquiring all or a significant part of Full Circle from considering or proposing that acquisition even if it were prepared to pay consideration with a higher per share price than that proposed in the Merger or might result in a potential competing acquiror proposing to pay a lower per share price to acquire Full Circle than it might otherwise have proposed to pay.

        The Merger is subject to closing conditions, including stockholder approval, that, if not satisfied or waived, will result in the Merger not being completed, which may result in material adverse consequences to Full Circle's business and operations.  The Merger is subject to closing conditions, including the approval of Full Circle's stockholders that, if not satisfied, will prevent the Merger from being completed. The closing condition that Full Circle's stockholders approve the Merger may not be waived under applicable law and must be satisfied for the Merger to be completed. Under certain circumstances, Full Circle may be obligated to pay an expense reimbursement to GECC in the amount of up to $1–million or a termination fee in the amount of $3–million. The payment of such expenses or termination fee could have a material adverse impact on Full Circle's business and operations. In addition to the required approval of Full Circle's stockholders, the Merger is subject to a number of other conditions beyond Full Circle's control that may prevent, delay or otherwise materially adversely affect its completion. Neither Full Circle nor GECC can predict whether and when these other conditions will be satisfied.

        Certain persons related to Full Circle have interests in the Merger that differ from the interests of Full Circle stockholders.  Certain persons related to Full Circle have financial interests in the Merger that are different from, and/or in addition to, the interests of Full Circle's stockholders. In particular, GECM is expected to retain Gregg Felton, Full Circle's chief executive officer, and John Stuart, Full Circle's chairman, both of whom collectively control Full Circle Advisors, as consultants subsequent to completion of the Merger in view of their collective knowledge of Full Circle's current portfolio investments and Mr. Stuart will serve as a member of GECC's board of directors. In addition, Michael Sell, Full Circle's chief financial officer, has agreed to be retained by GECM and serve as GECC's chief financial officer, treasurer and secretary subsequent to completion of the Merger. These interests are described in more detail in the section of this document entitled "The Merger—Interests of Certain Persons Related to Full Circle in the Merger."

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        Full Circle will be subject to business uncertainties and contractual restrictions while the Merger is pending.  Uncertainty about the effect of the Merger may have an adverse effect on Full Circle and, consequently, on the combined company following completion of the Merger. These uncertainties may impair Full Circle's ability to retain and motivate key personnel until the Merger is consummated and could cause those that deal with Full Circle to seek to change their existing business relationships with Full Circle. Retention of certain employees may be challenging during the pendency of the Merger, as certain employees may experience uncertainty about their future following completion of the Merger. If key Full Circle employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain affiliated with the combined company following completion of the Merger, the combined company's business following the Merger could be harmed. In addition, the Merger Agreement restricts Full Circle from taking actions that it might otherwise consider to be in its best interests, including, but not limited to, making new investments. These restrictions may prevent Full Circle from pursuing certain business opportunities that may arise prior to the completion of the Merger. Please see the section entitled "Description of the Merger Agreement—Conduct of Business Pending Completion of the Merger" for a description of the restrictive covenants to which Full Circle is subject.

        The shares of GECC common stock to be received by Full Circle stockholders as a result of the Merger will have different rights associated with them than shares of Full Circle common stock currently held by them.  The rights associated with Full Circle common stock are different from the rights associated with GECC common stock. See "Comparison of Stockholder Rights."

        The market price of GECC common stock after the Merger may be affected by factors different from those affecting Full Circle common stock currently.  The businesses of GECC and Full Circle differ and, accordingly, the results of operations of the combined company and the market price of GECC common stock after the Merger may be affected by factors different from those currently affecting the independent results of operations of Full Circle. These factors include:

        Accordingly, the historical trading prices and financial results of Full Circle are not indicative of these matters for the combined company following the Merger. For a discussion of the business of GECC and of certain factors to consider in connection with its business, see "GECC." For a discussion of the business of Full Circle and of certain factors to consider in connection with its business, see "Full Circle—Business."

        Full Circle stockholders who hold their shares in certificated form and who do not timely surrender their Full Circle common stock certificates for GECC common stock after the completion of the Merger will be deemed to have elected to receive dividends and other distributions declared after the completion of the Merger with respect to GECC common stock in the form of GECC common stock in accordance with GECC's dividend reinvestment plan and, as a result, may suffer adverse tax consequences.  As soon as reasonably practicable after completion of the Merger, the exchange agent will mail a letter of transmittal to each record holder of Full Circle common stock who holds their shares in certificated form. This mailing will contain instructions on how to surrender Full Circle common stock certificates in exchange for statements indicating book-entry ownership of GECC common stock and a check in the amount of cash to be paid instead of fractional shares. Until Full Circle common stock is surrendered for exchange, any dividends or other distributions declared after the completion of the Merger with respect to GECC common stock into which shares of Full Circle common stock may have been converted will accrue, without interest, but will not be paid. GECC will pay to such former Full Circle stockholders any unpaid dividends or other distributions, without interest, only after they have duly surrendered their Full Circle stock certificates.

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        In addition, any such unpaid dividends or other distributions will be payable in the form of shares of GECC common stock in accordance with GECC's dividend reinvestment plan for stockholders who have not opted out of the plan. Because stockholders who receive distributions in the form of stock generally will be subject to the same U.S. federal, state and local tax consequences as stockholders who elect to receive their distributions in cash, Full Circle stockholders who do not timely surrender their Full Circle common stock certificates for GECC common stock after the completion of the Merger may suffer adverse tax consequences attributable to non-cash income realized with respect to any dividends or other distributions.

Risks Relating to GECC's Business and Structure

        Capital markets experience periods of disruption and instability. These market conditions have materially and adversely affected debt and equity capital markets in the United States and abroad, which had, and may in the future have, a negative impact on GECC's business and operations.  The global capital markets are subject to disruption as evidenced by, among other things, a lack of liquidity in the debt capital markets, significant write-offs in the financial services sector, the re-pricing of credit risk in the broadly syndicated credit market and the failure of certain major financial institutions. The United Kingdom's recent vote to leave the European Union may disrupt global capital markets. Despite actions of the United States federal government and foreign governments, these events contributed to worsening general economic conditions that materially and adversely impacted the broader financial and credit markets and reduced the availability of debt and equity capital for the market as a whole and financial services firms in particular. GECC cannot provide any assurance that these conditions will not significantly worsen. Equity capital may be difficult to raise because as a BDC, GECC is generally not able to issue additional shares of its common stock at a price less than net asset value.

        The expected illiquidity of GECC's investments may make it difficult for GECC to sell such investments if required. As a result, GECC may realize significantly less than the value at which it has recorded its respective investments. In addition, significant changes in the capital markets, including the recent extreme volatility and disruption, have had, and may in the future have, a negative effect on the valuations of GECC's investments and on the potential for liquidity events involving its investments. An inability to raise capital, and any required sale of each of GECC's investments for liquidity purposes, could have a material adverse impact on its business, financial condition or results of operations.

        A significant portion of GECC's total outstanding shares may be sold into the public market in the near future, which could cause the market price of GECC's common stock to drop significantly, even if its business is doing well.  Sales of a substantial number of shares of GECC's common stock in the public market could occur at any time after the Effective Time. These sales, or the market perception that the holders of a large number of shares intend to sell shares, could reduce the market price of GECC's common stock. GECC is obligated to register the resale of all of the shares of GECC common stock issued to the MAST Funds and Great Elm Capital Group in the Formation Transactions. The shares issued in the Formation Transaction will represent approximately 62% of GECC's outstanding shares of common stock upon completion of the Merger.

        The MAST funds will not be prohibited from transferring the shares of GECC common stock issued to the MAST Funds in connection with the Formation Transactions. Any sale by the MAST Funds of all or a portion of their shares could cause the market price of shares of GECC common stock to drop significantly, even if its business is doing well.

        Great Elm Capital Group and the MAST Funds will collectively own a majority of GECC's outstanding common stock and may attempt to exert control over GECC in a manner that is adverse to your interests.  Great Elm Capital Group and the MAST Funds will collectively own a majority of GECC's outstanding common stock and accordingly may control the results of matters submitted to the vote of GECC's stockholders. Great Elm Capital Group and the MAST Funds agreed to vote their shares proportionately to the other stockholders of GECC on certain matters and until they collectively own less than 35 percent of GECC's outstanding common stock. Although there is no agreement between Great Elm Capital Group and the MAST Funds to act in concert with respect to the shares of GECC common stock they own, funds managed by MAST (including the MAST Funds) are the largest stockholder of Great Elm Capital Group and Peter A. Reed, a partner at MAST and chief executive officer of GECC is a member of the board of directors of Great Elm Capital Group. Great Elm Capital Group and the MAST Funds may use their share ownership, ownership of GECM or otherwise exert control over GECC in a manner that is adverse to your interests.

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        You may not receive distributions or GECC's distributions may not grow over time.  GECC intends to make distributions on a monthly basis to its stockholders out of assets legally available for distribution. GECC cannot assure you that it will achieve investment results that will allow it to make a specified level of cash distributions or year-to-year increases in cash distributions. In addition, due to the asset coverage test applicable to GECC as a BDC, GECC may be limited in its ability to make distributions. See "Regulation as a Business Development Company."

        GECC may borrow money, which would magnify the potential for gain or loss on amounts invested and may increase the risk of investing with GECC.  GECC will assume Full Circle's outstanding indebtedness and may in the future borrow additional money, each of which magnifies the potential for gain or loss on amounts invested and may increase the risk of investing with GECC. GECC's ability to service potential debt depends largely on its financial performance and is subject to prevailing economic conditions and competitive pressures. The amount of leverage that GECC could employ at any particular time will depend on its investment adviser's and its board of directors' assessment of market and other factors at the time of any proposed borrowing.

        Any GECC credit facility would impose financial and operating covenants that would restrict its business activities, including limitations that could hinder GECC's ability to finance additional loans and investments or to make the distributions required to qualify, or subsequent thereto, maintain its status as a regulated investment company under the Code (a RIC ). A failure to renew GECC's credit facilities or to add new or replacement debt facilities could have a material adverse effect on GECC's business, financial condition or results of operations.

        Borrowings, also known as leverage, magnify the potential for gain or loss on amounts invested and, therefore, increase the risks associated with investing in GECC's securities. Holders of such debt securities would have fixed dollar claims on GECC's consolidated assets that would be superior to the claims of its common stockholders or any preferred stockholders. If the value of GECC's consolidated assets increases, then leveraging would cause the net asset value per share of its common stock to increase more sharply than it would have had GECC not leveraged.

        Conversely, if the value of GECC's consolidated assets decreases, leveraging would cause net asset value to decline more sharply than it otherwise would have had GECC not leveraged. Similarly, any increase in GECC's consolidated income in excess of consolidated interest payable on the borrowed funds would cause GECC's net income to increase more than it would without the leverage, while any decrease in GECC's consolidated income would cause net income to decline more sharply than it would have had GECC not borrowed. Such a decline could negatively affect GECC's ability to make common stock distribution payments. There can be no assurance that a leveraging strategy will be successful.

        Any amounts that GECC uses to service its indebtedness will not be available for distributions to you.  GECC may issue debt securities and/or borrow money from banks or other financial institutions, referred to collectively as "senior securities," up to the maximum amount permitted by the 1940 Act. Under the provisions of the 1940 Act, GECC will be permitted, as a BDC, to issue senior securities representing indebtedness so long as its asset coverage ratio satisfies the ratio stipulated under the 1940 Act. If the value of GECC's assets declines, GECC may be unable to satisfy these tests. If that happens, GECC may be required to sell a portion of its investments and, depending on the nature of its leverage, repay a portion of its indebtedness at a time when doing so may be disadvantageous. Any amounts that GECC uses to service its indebtedness would not be available for distributions to you.

        GECC may experience fluctuations in its quarterly results.  GECC could experience fluctuations in its quarterly operating results due to a number of factors, including the level of expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which GECC encounters competition in its markets and general economic conditions. Also GECC could experience fluctuations in its quarterly operating results due to a number of other factors, including the interest rates payable on the debt investments GECC makes and the default rates on such investments. As a result of these factors, results for any period should not be relied upon as being indicative of performance in future periods.

        GECC's ability to grow depends on its ability to raise capital and/or access debt financing.  GECC will need to periodically access the capital markets to raise cash to fund new investments. GECC expects to elect to be treated as a RIC under Subchapter M of the Code and operate (assuming the completion of the Merger) in a manner so as to qualify for the U.S. federal income tax treatment applicable to RICs. Among other things, in order to maintain

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GECC's RIC status, GECC must distribute to its stockholders on a timely basis generally an amount equal to at least 90% of its investment company taxable income (as defined by the Code), and, as a result, such distributions will not be available to fund respective investment originations. As a result, GECC must continue to borrow from financial institutions and issue additional securities to fund their respective growth. Unfavorable economic or capital market conditions may increase GECC's funding costs, limit its access to the capital markets or could result in a decision by lenders not to extend credit to either GECC. Over the past several years, the capital markets and the credit markets have been experiencing extreme volatility and disruption and, accordingly, there has been and will continue to be uncertainty in the financial markets in general. An inability to successfully access the capital or credit markets for either equity or debt could limit GECC's ability to grow its business and fully execute its business strategy and could decrease its earnings, if any.

        If the fair value of GECC's assets declines substantially, GECC may fail to maintain the asset coverage ratios imposed upon GECC by the 1940 Act or its lenders. Any such failure, or a tightening or general disruption of the credit markets, would affect GECC's ability to issue senior securities, including borrowings, and pay dividends or other distributions, which could materially impair GECC's business operations.

        In addition, with certain limited exceptions, GECC is only allowed to borrow or issue debt securities or preferred stock such that GECC's asset coverage, as defined in the 1940 Act, equals at least 200% immediately after such borrowing, which, in certain circumstances, may restrict GECC's ability to borrow or issue debt securities or preferred stock. The amount of leverage that GECC may employ will depend on its investment adviser's and its board of directors' assessments of market and other factors at the time of any proposed borrowing or issuance of debt securities or preferred stock. GECC cannot assure you that it will be able to obtain lines of credit at all or on terms acceptable to GECC.

        Economic recessions or downturns could impair GECC's portfolio companies and harm its operating results.  The economy is subject to periodic downturns that, from time to time result in recessions or more serious adverse macroeconomic events. GECC's portfolio companies are susceptible to economic slowdowns or recessions and may be unable to repay loans during these periods. Therefore, GECC's non-performing assets may increase and the value of GECC's portfolio may decrease during these periods as GECC is required to record the market value of its investments. Adverse economic conditions also may decrease the value of collateral securing some of GECC's investments and the value of GECC's equity investments. Economic slowdowns or recessions could lead to financial losses in GECC's portfolio and a decrease in revenues, net income and assets. Unfavorable economic conditions also could increase GECC's funding costs, limit its access to the capital markets or result in a decision by lenders not to extend credit to GECC. These events could prevent GECC from increasing investments and harm its operating results.

        A portfolio company's failure to satisfy financial or operating covenants in its agreements with GECC or other lenders could lead to defaults and, potentially, acceleration of the time when the loans are due and foreclosure on its secured assets, which could trigger cross-defaults under other agreements and jeopardize the portfolio company's ability to meet its obligations under the debt that GECC holds. GECC may incur additional expenses to the extent necessary to seek recovery upon default or to negotiate new terms with a defaulting portfolio company. In addition, if one of GECC's portfolio companies were to go bankrupt, depending on the facts and circumstances, including the extent to which GECC actually provided significant managerial assistance to that portfolio company, a bankruptcy court might recharacterize GECC debt holding and subordinate all or a portion of GECC's claim to that of other creditors.

        Uncertainty about the financial stability of the United States and of several countries in the European Union (EU) and China could have a significant adverse effect on GECC's business, financial condition and results of operations.  Due to federal budget deficit concerns, S&P Global Ratings (formerly Standard & Poor's Rating Services) downgraded the federal government's credit rating from AAA to AA+ for the first time in history on August 5, 2011. Further, Moody's and Fitch Ratings had warned that they may downgrade the federal government's credit rating. Further downgrades or warnings by S&P Global Ratings (formerly Standard & Poor's Rating Services) or other rating agencies, and the United States government's credit and deficit concerns in general, could cause interest rates and borrowing costs to rise, which may negatively impact both the perception of credit

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risk associated with GECC's debt portfolio and GECC's ability to access the debt markets on favorable terms. In addition, a decreased U.S. government credit rating could create broader financial turmoil and uncertainty, which may weigh heavily on GECC's financial performance and the value of GECC's common stock.

        The recent vote of the United Kingdom to leave the EU has caused and is expected to cause increased volatility in capital markets and may signal an increase in protectionism and other governmental causes of recessions and other negative economic factors. In 2010, a financial crisis emerged in Europe, triggered by high budget deficits and rising direct and contingent sovereign debt in Greece, Ireland, Italy, Portugal and Spain, which created concerns about the ability of these nations to continue to service their sovereign debt obligations. Risks resulting from any future debt crisis in Europe or any similar crisis could have a detrimental impact on the global economic recovery, sovereign and non-sovereign debt in these countries and the financial condition of European financial institutions. Market and economic disruptions have affected, and may in the future affect, consumer confidence levels and spending, personal bankruptcy rates, levels of incurrence and defaults on consumer debt and home prices, among other factors. GECC cannot assure you that market disruptions in Europe, including the increased cost of funding for certain governments and financial institutions, will not impact the global economy. To the extent uncertainty regarding the United Kingdom or the EU negatively impacts consumer confidence, market conditions and credit factors, GECC's business, financial condition and results of operations could be materially adversely affected.

        In October 2014, the Federal Reserve announced that it was concluding its bond-buying program, or quantitative easing, which was designed to stimulate the economy and expand the Federal Reserve's holdings of long-term securities. It is unclear what effect, if any, the conclusion of the Federal Reserve's bond-buying program will have on the value of GECC's investments. However, it is possible that, without quantitative easing by the Federal Reserve, these developments, along with the United States government's credit and deficit concerns and the European sovereign debt crisis, could cause interest rates and borrowing costs to rise, which may negatively impact GECC's ability to access the debt markets on favorable terms. The target range for the federal funds rate may increase and cause interest rates and borrowing costs to rise, which may negatively impact GECC's ability to access the debt markets on favorable terms.

        In the second quarter of 2015, stock prices in China experienced a significant drop, resulting primarily from a continued sell-off of shares trading in Chinese markets. In August 2015, Chinese authorities sharply devalued China's currency. These market and economic disruptions affected, and these or similar market and economic disruptions may in the future affect, the U.S. capital markets, which could adversely affect GECC's business.

        In June 2016, the United Kingdom voted to leave the European Union. If the United Kingdom triggers the withdrawal procedures in Article 50 of the Treaty of Lisbon, there will be a two-year period (or longer) during which the arrangements for exit will be negotiated. This vote and the withdrawal process could cause an extended period of uncertainty and market volatility, not just in the United Kingdom but throughout the EU, the European Economic Area and globally. It is not possible to ascertain the precise impact these events may have on GECC from an economic, financial or regulatory perspective but any such impact could have material adverse consequences for each company.

        GECC may acquire other funds, portfolios of assets or pools of debt investments subsequent to the Merger and those acquisitions may not be successful.  GECC may acquire other funds, portfolios of assets or pools of debt investments subsequent to the Merger. Any such acquisition program has a number of risks, including among others:

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        Any failure by GECC to maintain its status as a BDC would reduce GECC's operating flexibility.  GECC intends to elect to be regulated as a BDC under the 1940 Act. The 1940 Act imposes numerous constraints on the operations of BDCs and their external advisers. For example, BDCs are required to invest at least 70% of their gross assets in specified types of securities, primarily in private companies or illiquid U.S. public companies below a certain market capitalization, cash, cash equivalents, U.S. government securities and other high quality debt investments that mature in one year or less. Furthermore, any failure to comply with the requirements imposed on BDCs by the 1940 Act could cause the SEC to bring an enforcement action against GECC and/or expose GECC to claims of private litigants. In addition, upon approval of a majority of GECC's stockholders, GECC may elect to withdraw its status as a BDC. If GECC decides to withdraw its election, or if GECC otherwise fails to qualify, or to maintain its qualification, as a BDC, GECC may be subject to substantially greater regulation under the 1940 Act as a closed-end management investment company. Compliance with such regulations would significantly decrease GECC's operating flexibility, and would significantly increase GECC's costs of doing business.

        Regulations governing GECC's operations as a BDC affect its ability to raise additional capital and the way in which it does so. As a BDC, the necessity of raising additional capital may expose GECC to risks, including the typical risks associated with leverage.  GECC may issue debt securities or preferred stock and/or borrow money from banks or other financial institutions, referred to collectively as "senior securities," up to the maximum amount permitted under the 1940 Act. Under the provisions of the 1940 Act applicable to BDCs, GECC will be permitted to issue senior securities (e.g., notes and preferred stock) in amounts such that GECC's asset coverage ratio, as defined in the 1940 Act, equals at least 200% of gross assets less all liabilities and indebtedness not represented by senior securities, after each issuance of senior securities. If the value of GECC's assets declines, GECC may be unable to satisfy this test. If that happens, GECC may be required to sell a portion of its investments and, depending on the nature of its leverage, repay a portion of its indebtedness at a time when such sales may be disadvantageous. Also, any amounts that GECC uses to service its indebtedness would not be available for distributions to you. Furthermore, as a result of issuing senior securities, GECC would also be exposed to typical risks associated with leverage, including an increased risk of loss.

        If GECC issued preferred stock, the preferred stock would rank "senior" to common stock in GECC's capital structure, preferred stockholders would have separate voting rights on certain matters and might have other rights including, for example, the right to elect one or more directors of GECC, preferences, or privileges more favorable than those of GECC's common stockholders, and the issuance of preferred stock could have the effect of delaying, deferring or preventing a transaction or a change of control that might involve a premium price for holders of GECC's common stock or otherwise be in your best interest.

        GECC is not generally able to issue and sell its common stock at a price below net asset value per share. GECC may, however, sell its common stock, or warrants, options or rights to acquire its common stock, at a price below the then-current net asset value per share of its common stock if its board of directors determines that such sale is in the best interests of GECC and its stockholders approve such sale. In any such case, the price at which GECC's securities are to be issued and sold may not be less than a price that, in the determination of GECC's board of directors, equals the fair value of such securities (less any distributing commission or discount calculated). If GECC raises additional funds by issuing more common stock or senior securities convertible into, or exchangeable for, its common stock, then your percentage ownership at that time will decrease, and you may experience dilution.

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        GECC's common stock price may be volatile and may decrease substantially, and you may lose money in connection with an investment in its shares.  The trading price of GECC's common stock will likely fluctuate substantially. The price of GECC's common stock may increase or decrease, depending on many factors, some of which are beyond GECC's control and may not be directly related to its operating performance. These factors include, but are not limited to, the following:

        If the price of shares of GECC common stock decreases, you may lose money if you were to sell your shares of GECC common stock.

        In addition, following periods of volatility in the market price of a company's securities, securities class action litigation has often been brought against that company. Due to the potential volatility of the price of GECC's securities, GECC may become the target of securities litigation in the future. Securities litigation could result in substantial costs and divert management's attention and resources from GECC's business.

        GECC's board of directors may change its investment objectives, operating policies and strategies without prior notice or stockholder approval, the effects of which may be adverse.  GECC's board of directors has the authority to modify or waive its investment objectives, current operating policies, investment criteria and strategies without prior notice and without stockholder approval. GECC cannot predict the effect any changes to its current operating policies, investment criteria and strategies would have on its business, net asset value, operating results and value of its stock. However, the effects might be adverse, which could negatively impact GECC's ability to pay its stockholders dividends or other distributions and cause you to lose all or part of your investment.

        GECC may have difficulty paying its required distributions under applicable tax rules if GECC recognizes income before or without receiving cash representing such income.  For U.S. federal income tax purposes, GECC may be required to include in income certain amounts before its receipt of the cash attributable to such amounts, such as original issue discount ( OID ), which may arise if GECC receives warrants in connection with the making of a loan or possibly in other circumstances, or payment-in-kind ( PIK ) interest, which represents contractual interest added to the loan balance and due at the end of the loan term. Such original issue discount or increases in loan balances will be included in income before GECC receives any corresponding cash payments. Also, GECC may be required to include in income other amounts that it will not receive in cash, including, for example, non-cash income from payment-in-kind securities, deferred payment securities and hedging and foreign currency transactions. In addition, GECC intends to seek debt investments in the secondary market that represent attractive risk adjusted returns, taking into account both stated interest rates and current market discounts to par value. Such market discount may be included in income before GECC receives any corresponding cash payments.

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        Since GECC may recognize income before or without receiving cash representing such income, GECC may have difficulty meeting the U.S. federal income tax requirement to distribute generally an amount equal to at least 90% of its investment company taxable income to maintain its status as a RIC. Accordingly, GECC may have to sell some of its investments at times it would not consider advantageous, raise additional debt or equity capital or reduce new investment originations to meet these distribution requirements. If GECC is not able to obtain cash from other sources, GECC may fail to qualify as a RIC and thus be subject to additional corporate-level taxes. See "Certain Material U.S. Federal Income Tax Considerations—Tax Consequences of the Merger." See also "Certain Material U.S. Federal Income Tax Considerations—U.S. Federal Income Taxation of GECC."

        GECC may choose to pay distributions in its own stock, in which case you may be required to pay tax in excess of the cash you receive.  GECC may distribute a portion of its taxable distributions that are payable in its stock. Under applicable provisions of the Code, distributions payable in cash or in shares of stock at the election of stockholders may be treated as a taxable distribution. The Internal Revenue Service (the IRS ) has issued private rulings indicating that this rule will apply even if the total amount of cash that may be distributed is limited to no more than 20% of the total distribution. Under these rulings, if too many stockholders elect to receive their distributions in cash, each such stockholder would receive a pro rata share of the total cash to be distributed and would receive the remainder of their distribution in shares of stock. If GECC decides to make any distributions consistent with these rulings that are payable in part in its stock, taxable stockholders receiving such distribution will be required to include the full amount of the distribution (whether received in cash, stock or combination thereof) as ordinary income (or as long-term capital gain to the extent such distribution is properly designated as a capital gain dividend) to the extent of GECC's current and accumulated earnings and profits for United States federal income tax purposes. As a result, a U.S. stockholder may be required to pay tax with respect to such distribution in excess of any cash received. If a U.S. stockholder sells the stock it receives as a distribution in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the distribution, depending on the market prices of GECC's stock at the time of the sale. Furthermore, with respect to non-U.S. stockholders, GECC may be required to withhold U.S. tax with respect to such distribution, including in respect of all or a portion of such distribution that is payable in stock. In addition, if a significant number of GECC's stockholders determine to sell shares of GECC common stock, in order to pay taxes owed on distribution, such sales may put downward pressure on the trading price of its common stock.

        GECC may expose itself to risks if it engages in hedging transactions.  If GECC engages in hedging transactions, it may expose itself to risks associated with such transactions. GECC may utilize instruments such as forward contracts, currency options and interest rate swaps, caps, collars and floors to seek to hedge against fluctuations in the relative values of its portfolio positions from changes in currency exchange rates and market interest rates. Hedging against a decline in the values of GECC's portfolio positions does not eliminate the possibility of fluctuations in the values of such positions or prevent losses if the values of such positions decline. Such hedging transactions may also limit the opportunity for gain if the values of the underlying portfolio positions increase. It may not be possible to hedge against an exchange rate or interest rate fluctuation that is so generally anticipated because GECC may not be able to enter into a hedging transaction at an acceptable price. Moreover, for a variety of reasons, GECC may not seek to establish a perfect correlation between such hedging instruments and the portfolio holdings being hedged. Any such imperfect correlation may prevent GECC from achieving the intended hedge and expose it to risk of loss. In addition, it may not be possible to hedge fully or perfectly against currency fluctuations affecting the value of securities denominated in non-U.S. currencies because the value of those securities is likely to fluctuate as a result of factors not related to currency fluctuations.

        GECC will be subject to corporate-level income tax if it is unable to qualify as a RIC under the Code.  Although GECC expects to elect, assuming completion of the Merger, to be treated as a RIC under the Code, no assurance can be given that GECC will be able to qualify for and maintain RIC status. To maintain RIC tax treatment under the Code, GECC must meet certain annual distribution, income source and asset diversification requirements.

        The annual distribution requirement for a RIC will be satisfied if GECC distributes to its stockholders on an annual basis at least 90% of its net ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any. Because GECC may use debt financing, it may be subject to asset coverage ratio

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requirements under the 1940 Act and financial covenants under loan and credit agreements that could, under certain circumstances, restrict it from making distributions necessary to satisfy the distribution requirement. If GECC is unable to make the required distributions, it could fail to qualify for RIC tax treatment and thus become subject to corporate-level income tax.

        The income source requirement will be satisfied if GECC obtains at least 90% of its income for each year from dividends, interest, gains from the sale of stock or securities or similar sources.

        The asset diversification requirement will be satisfied if GECC meets asset diversification requirements at the end of each quarter of its taxable year. GECC expects to satisfy the asset diversification requirements, but the Initial GECC Portfolio will remain a relatively large and undiversified portion of GECC's total assets. Failure to meet the asset diversification requirements could result in GECC having to dispose of investments quickly in order to prevent the loss of RIC status. Because most of GECC's investments will be relatively illiquid, any such dispositions could be made at disadvantageous prices and could result in substantial losses. Further, the illiquidity of GECC's investments may make them difficult or impossible to dispose of in a timely manner.

        If GECC fails to qualify for RIC tax treatment for any reason and becomes subject to corporate income tax, the resulting corporate taxes could substantially reduce its net assets, the amount of income available for distribution and the amount of its distributions and the value of your GECC shares.

        The incentive fee structure and the formula for calculating the management fee may incentivize GECM to pursue speculative investments, advise GECC to use leverage when it may be unwise to do so, or advise GECC to refrain from reducing debt levels when it would otherwise be appropriate to do so.  The incentive fee payable by GECC to GECM creates an incentive for GECM to pursue investments on GECC's behalf that are riskier or more speculative than would be the case in the absence of such compensation arrangement. The incentive fee payable to GECM is calculated based on a percentage of its return on invested capital. In addition, GECC's base management fee is calculated on the basis of its gross assets, including assets acquired through the use of leverage. This may encourage GECM to use leverage to increase the aggregate amount of and the return on GECC's investments, even when it may not be appropriate to do so, and to refrain from reducing debt levels when it would otherwise be appropriate to do so. The use of leverage increases GECC's likelihood of default, which would impair the value of your shares. In addition, GECM will receive the incentive fee based, in part, upon net capital gains realized on GECC's investments. Unlike that portion of the incentive fee based on income, there will be no hurdle rate applicable to the portion of the incentive fee based on net capital gains. As a result, GECM may have a tendency to invest more capital in investments that are likely to result in capital gains as compared to income producing securities. Such a practice could result in GECC's investing in more speculative securities than would otherwise be the case, which could result in higher investment losses, particularly during economic downturns.

        GECC may invest, to the extent permitted by law, in the securities and instruments of other investment companies, including private funds, and, to the extent GECC so invests, will bear its ratable share of any such investment company's expenses, including management and performance fees. GECC will also remain obligated to pay management and incentive fees to GECM with respect to the assets invested in the securities and instruments of other investment companies. With respect to each of these investments, each of GECC's stockholders will bear his, her or its share of the management and incentive fee payable to GECM as well as indirectly bearing the management and performance fees and other expenses of any investment companies in which GECM invests.

        In addition, if GECC repurchases its debt securities that are outstanding and such repurchase results in its recording a net gain on the extinguishment of debt for financial reporting and tax purposes, such net gain will be included in its pre-incentive fee net investment income for purposes of determining the income incentive fee payable to its investment adviser under GECC's investment management agreement with GECM (the GECC Investment Management Agreement ).

        A general increase in interest rates will likely have the effect of making it easier for GECM to receive incentive fees, without necessarily resulting in an increase in GECC's net earnings.  Given the structure of the GECC Investment Management Agreement, any general increase in interest rates, which are currently at or near historic lows, will likely have the effect of making it easier for GECM to meet the quarterly hurdle rate for payment of income incentive fees under the GECC Investment Management Agreement without any additional increase in

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relative performance on the part of GECM. In addition, in view of the catch-up provision applicable to income incentive fees under the GECC Investment Management Agreement, GECM could potentially receive a significant portion of the increase in GECC's investment income attributable to such a general increase in interest rates. If that were to occur, GECC's increase in net earnings, if any, would likely be significantly smaller than the relative increase in GECM's income incentive fee resulting from such a general increase in interest rates.

        GECM has the right to resign on 60 days' notice, and GECC may not be able to find a suitable replacement within that time, resulting in a disruption in its operations that could adversely affect its financial condition, business and results of operations.  GECM has the right, under the GECC Investment Management Agreement, to resign at any time upon not more than 60 days' written notice, whether GECC has found a replacement or not. If GECM resigns, GECC may not be able to find a new investment adviser or hire internal management with similar expertise and ability to provide the same or equivalent services on acceptable terms within 60 days, or at all. If GECC is unable to do so quickly, its operations are likely to experience a disruption, its financial condition, business and results of operations as well as its ability to pay distributions are likely to be adversely affected and the market price of its shares may decline. In addition, the coordination of GECC's internal management and investment activities is likely to suffer if GECC is unable to identify and reach an agreement with a single institution or group of executives having the expertise possessed by its investment adviser and its affiliates. Even if GECC is able to retain comparable management, whether internal or external, the integration of such management and their lack of familiarity with its investment objective and current investment portfolio may result in additional costs and time delays that may adversely affect its financial condition, business and results of operations and cause you to lose your investment.

        GECC will incur significant costs as a result of being a publicly traded company.  As a publicly traded company, GECC will incur legal, accounting and other expenses, including costs associated with the periodic reporting requirements applicable to a company whose securities are registered under the Exchange Act, as well as additional corporate governance requirements, including requirements under the Sarbanes-Oxley Act, the Dodd-Frank Act and other rules implemented by our government.

        Changes in laws or regulations governing GECC's operations may adversely affect GECC's business or cause GECC to alter its business strategy.  Each of GECC and its portfolio companies are subject to applicable local, state and federal laws and regulations. New legislation may be enacted or new interpretations, rulings or regulations could be adopted, including those governing the types of investments GECC is permitted to make, any of which could harm GECC and you, potentially with retroactive effect. Additionally, any changes to the laws and regulations governing GECC's operations relating to permitted investments may cause GECC to alter its investment strategy in order to avail itself of new or different opportunities. Such changes could result in material differences to the strategies and plans set forth herein and may result in GECC's investment focus shifting from the areas of expertise of GECM to other types of investments in which the investment committee may have less expertise or little or no experience. Thus, any such changes, if they occur, could have a material adverse effect on GECC's results of operations and the value of your investment.

        Pending legislation may allow GECC to incur additional debt.  As a BDC, under the 1940 Act, GECC (assuming GECC's BDC election and completion of the Merger) will generally not be permitted to incur indebtedness unless immediately after such borrowing GECC has an asset coverage for total borrowings of at least 200% (i.e., the amount of debt typically may not exceed 50% of the value of GECC's assets). Recent legislation introduced in the U.S. House of Representatives, if passed, would modify this section of the 1940 Act and increase the amount of debt that BDCs may incur by modifying the asset coverage percentage from 200% to 150%. As a result, GECC may be able to incur additional indebtedness in the future and therefore your risk of an investment may increase.

        There is and will be uncertainty as to the value of GECC's portfolio investments.  Under the 1940 Act, GECC is required to carry its portfolio investments at market value or, if there is no readily available market value, at fair value as determined by it in accordance with its written valuation policy, with its board of directors having final responsibility for overseeing, reviewing and approving, in good faith, its estimate of fair value. Often, there will not be a public market for the securities of the privately held companies in which GECC invests. As a result, GECC will

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value these securities quarterly at fair value based on input from management, third party independent valuation firms and its audit committee, with the oversight, review and approval of its board of directors.

        The determination of fair value and consequently, the amount of unrealized gains and losses in GECC's portfolio, are subjective and dependent on a valuation process approved and overseen by GECC's board of directors. Certain factors that may be considered in determining the fair value of GECC's investments include estimates of the collectability of the principal and interest on GECC's debt investments and expected realization on GECC's equity investments, as well as external events, such as private mergers, sales and acquisitions involving comparable companies. Because such valuations, and particularly valuations of private securities and private companies and small cap public companies, are inherently uncertain, they may fluctuate over short periods of time and may be based on estimates. GECC's determinations of fair value may differ materially from the values that would have been used if a ready market for these securities existed. Due to this uncertainty, GECC's fair value determinations may cause its net asset value on a given date to materially misstate the value that GECC may ultimately realize on one or more of its investments. As a result, investors purchasing GECC's securities based on an overstated net asset value would pay a higher price than the value of GECC's investments might warrant. Conversely, investors selling securities during a period in which the net asset value understates the value of GECC's investments will receive a lower price for their securities than the value of GECC's investments might otherwise warrant.

        GECC's financial condition and results of operations depend on its ability to effectively manage and deploy capital.  GECC's ability to achieve its investment objective depends on its ability to effectively manage and deploy capital, which depends, in turn, on GECM's ability to identify, evaluate and monitor, and its ability to finance and invest in, companies that meet GECC's investment criteria.

        Accomplishing GECC's investment objective on a cost-effective basis is largely a function of GECM's handling of the investment process, its ability to provide competent, attentive and efficient services and its access to investments offering acceptable terms. In addition to monitoring the performance of GECC's existing investments, GECM may also be called upon, from time to time, to provide managerial assistance to some of its portfolio companies. These demands on their time may distract them or slow the rate of investment.

        Even if GECC is able to grow and build upon its investment operations, any failure to manage its growth effectively could have a material adverse effect on its business, financial condition, results of operations and prospects. The results of GECC's operations will depend on many factors, including the availability of opportunities for investment, readily accessible short and long-term funding alternatives in the financial markets and economic conditions. Furthermore, if GECC cannot successfully operate its business or implement its investment policies and strategies as described herein, it could negatively impact GECC's ability to pay distributions.

        GECC may hold assets in cash or short term treasury securities in situations where it or GECM expects downward pricing in the high yield market. GECC's strategic decision not to be fully invested may, from time to time, reduce funds available for distribution and cause downward pressure on the price of GECC's common stock.

        The failure in cyber security systems, as well as the occurrence of events unanticipated in GECC's disaster recovery systems and management continuity planning could impair GECC's ability to conduct business effectively.  The occurrence of a disaster such as a cyber-attack, a natural catastrophe, an industrial accident, a terrorist attack or war, events unanticipated in GECC's disaster recovery systems, or a support failure from external providers, could have an adverse effect on its ability to conduct business and on its results of operations and financial condition, particularly if those events affect its computer-based data processing, transmission, storage, and retrieval systems or destroy data. GECC's ability to effectively conduct its business could be severely compromised.

        GECC depends heavily upon computer systems to perform necessary business functions. GECC's computer systems could be subject to cyber-attacks and unauthorized access, such as physical and electronic break-ins or unauthorized tampering. Like other companies, GECC will experience threats to its data and systems, including malware and computer virus attacks, unauthorized access, system failures and disruptions. If one or more of these events occurs, it could potentially jeopardize the confidential, proprietary and other information processed and

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stored in, and transmitted through, GECC's computer systems and networks, or otherwise cause interruptions or malfunctions in its operations, which could result in damage to GECC's reputation, financial losses, litigation, increased costs, regulatory penalties and/or customer dissatisfaction or loss, respectively.

        Terrorist attacks, acts of war or natural disasters may affect any market for GECC's common stock, impact the businesses in which GECC invests and harm GECC's business, operating results and financial condition.  Terrorist acts, acts of war or natural disasters may disrupt GECC's operations, as well as the operations of the businesses in which GECC invests. Such acts have created, and continue to create, economic and political uncertainties and have contributed to global economic instability. Future terrorist activities, military or security operations, or natural disasters could further weaken the domestic/global economies and create additional uncertainties, which may negatively impact the businesses in which GECC invests directly or indirectly and, in turn, could have a material adverse impact on GECC's business, operating results and financial condition. Losses from terrorist attacks and natural disasters are generally uninsurable.

        Provisions of the Maryland General Corporation Law and GECC's organizational documents could deter takeover attempts and have an adverse impact on the prices of GECC's common stock.  The Maryland General Corporation Law and GECC's organizational documents contain provisions that may discourage, delay or make more difficult a change in control of GECC or the removal of GECC's directors. GECC is subject to the Maryland Business Combination Act, subject to any applicable requirements of the 1940 Act. If GECC's board of directors does not approve a business combination, the Maryland Business Combination Act may discourage third parties from trying to acquire control of GECC and increase the difficulty of consummating such an offer. GECC's bylaws provide that the Maryland Control Share Acquisition Act will not restrict acquisitions of GECC's stock by any person. If GECC were to amend its bylaws to repeal the exemption from the Control Share Acquisition Act, the Control Share Acquisition Act also may make it more difficult for a third party to obtain control of it and increase the difficulty of consummating such a transaction.

        GECC's board of directors is authorized to reclassify any unissued shares of common stock into one or more classes of preferred stock, which could convey special rights and privileges to its owners.  Under Maryland General Corporation Law and GECC's organizational documents, GECC's board of directors is authorized to classify and reclassify any authorized but unissued shares of stock into one or more classes of stock, including preferred stock. Prior to issuance of shares of each class or series, the board of directors will be required by Maryland law and GECC's charter to set the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption for each class or series. Thus, the board of directors could authorize the issuance of shares of preferred stock with terms and conditions which could have the effect of delaying, deferring or preventing a transaction or a change in control that might involve premium prices for holders of GECC's common stock or otherwise be in their best interest. The cost of any such reclassification would be borne by GECC's common stockholders. Certain matters under the 1940 Act require the separate vote of the holders of any issued and outstanding preferred stock. For example, holders of preferred stock would vote as a separate class from the holders of common stock on a proposal to cease operations as a BDC. In addition, the 1940 Act provides that holders of preferred stock are entitled to vote separately from holders of common stock to elect two preferred stock directors. The issuance of preferred shares convertible into shares of common stock may also reduce the net income and net asset value per share of GECC's common stock upon conversion. These effects, among others, could have an adverse effect on your investment in GECC's common stock.

        Because the Formation Transactions will be consummated prior to the filing of GECC's election to be regulated as a BDC under the 1940 Act, the protections and rights afforded to investors under the 1940 Act does not apply with respect to such transactions.  GECC will complete the Formation Transactions prior to the filing of its election to be regulated as a BDC under the 1940 Act. As a result, the protections and rights afforded to investors under the 1940 Act does not apply with respect to such transactions. In particular, GECC is generally prohibited from purchasing securities or other assets from an affiliate absent exemptive relief. As a result, the Formation Transactions and the parties from which GECC acquires its initial portfolio would likely differ substantially to the extent GECC was subject to the requirements and restrictions of the 1940 Act at the time it completes the Formation Transactions.

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        GECM may not be able to achieve the same or similar returns as those achieved by MAST.  MAST's track record and achievements are not necessarily indicative of future results that will be achieved by GECM. GECC cannot assure you that it will be able to achieve the results realized by prior investment vehicles managed by MAST.

        While senior members of GECM's investment team have significant experience investing in debt securities of middle-market companies, GECM is a new entity and has no investment advisory experience, including no experience managing a regulated closed-end management investment company that has elected to be regulated as a BDC. Therefore, GECM may not be able to successfully operate GECC's business or achieve its investment objective. As a result, an investment in GECC's shares may entail more risk than the shares of a comparable company with a substantial operating history.

        The 1940 Act and the Code impose numerous constraints on the operations of registered investment companies, BDCs and RICs that do not apply to the other types of investment vehicles. Moreover, qualification for RIC tax treatment requires satisfaction of source-of-income, diversification and other requirements. The failure to comply with these provisions in a timely manner could prevent GECC from qualifying as a RIC or could force GECC to pay unexpected taxes and penalties, which could be material. GECM's lack of experience in managing a portfolio of assets under such constraints may hinder GECC's ability to take advantage of attractive investment opportunities and, as a result, achieve GECC's investment objective.

        GECC is a new company and has no operating history and GECM has no prior experience managing a BDC.  GECC was formed on April 22, 2016 and has not yet commenced operations. As a BDC, GECC will be subject to the regulatory requirements of the SEC, in addition to the specific regulatory requirements applicable to BDCs under the 1940 Act and RICs under the Code. GECC's investment adviser, GECM, has not had any prior experience operating under this regulatory framework, and GECC may incur substantial additional costs, and expend significant time or other resources, to do so.

        GECC has no operating history on which you can evaluate an investment in GECC or GECC's prior performance. The results of any other funds or clients managed by affiliates of GECM, which have or have had an investment program that is similar to, or different from, GECC's investment program is not indicative of the results that GECC may achieve. GECC expects to have a different investment portfolio and may employ different investment strategies and techniques from other funds and clients advised by affiliates of GECM. Accordingly, GECC's results may differ from and are independent of the results obtained by such other funds and clients. Moreover, past performance is no assurance of future returns. GECC is subject to all of the business risks and uncertainties associated with any new business, including the risk that GECC will not achieve its investment objective and that the value of its common stock could decline substantially or your investment could become worthless.

        GECC is an "emerging growth company" under the JOBS Act, and GECC cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make its securities less attractive to investors.  GECC is and will remain an "emerging growth company" as defined in the JOBS Act until the earlier of (a) the last day of the fiscal year (i) following the fifth anniversary of the completion of the Merger, (ii) in which it has total annual gross revenue of at least $1.0 billion, or (iii) in which it is deemed to be a large accelerated filer, which means the market value of its common stock that is held by non-affiliates exceeds $700 million as of the end of the previous second fiscal quarter, and (b) the date on which it has issued more than $1.0 billion in non-convertible debt during the prior three-year period. For so long as GECC remains an "emerging growth company" it may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies" including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the Sarbanes-Oxley Act ). GECC cannot predict if investors will find its securities less attractive because it will rely on some or all of these exemptions. If some investors find GECC's securities less attractive as a result, there may be a less active and more volatile trading market for GECC's securities.

        In addition, Section 107 of the JOBS Act also provides that an "emerging growth company" may take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an "emerging growth company" can delay the adoption of

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certain accounting standards until those standards would otherwise apply to private companies. GECC has chosen to take advantage of the extended transition period for complying with new or revised accounting standards, which may make it more difficult for investors and securities analysts to evaluate GECC since its financial statements may not be comparable to companies that comply with public company effective dates and may result in less investor confidence.

        There are significant potential conflicts of interest that could impact GECC's investment returns.  Certain of GECC's executive officers and directors, and members of the investment committee of GECM, serve or may serve as officers, directors or principals of other entities and affiliates of GECM and investment funds managed by GECC's affiliates, including MAST. Accordingly, they may have obligations to investors in those entities, the fulfillment of which might not be in the best interests of GECC or its stockholders or that may require them to devote time to services for other entities, which could interfere with the time available to provide services to GECC. For example, Peter Reed, GECC's president and chief executive officer and chairman of GECC's board of directors and GECM's chief investment officer, will continue to have significant responsibilities for funds managed by MAST.

        Although funds managed by MAST or GECM may have different primary investment objectives than GECC, they may from time to time invest in asset classes similar to those targeted by GECC. Neither MAST nor GECM is restricted from raising an investment fund with investment objectives similar to that of GECC. Any such funds may also, from time to time, invest in asset classes similar to those targeted by GECC. MAST and GECM will endeavor to allocate investment opportunities in a fair and equitable manner, and in any event consistent with any duties owed to GECC and such other funds. Nevertheless, it is possible that GECC may not be given the opportunity to participate in certain investments made by investment funds managed by investment managers (including MAST) affiliated with GECM.

        GECC will pay management and incentive fees to GECM, and will reimburse GECM for certain expenses it incurs. In addition, investors in GECC common stock will invest on a gross basis and receive distributions on a net basis after expenses, resulting in, among other things, a lower rate of return than one might achieve through direct investments.

        GECM's management fee is based on a percentage of GECC's total assets (other than cash or cash equivalents but including assets purchased with borrowed funds) and GECM may have conflicts of interest in connection with decisions that could affect GECC's total assets, such as decisions as to whether to incur indebtedness.

        The part of the incentive fee payable by GECC that relates to GECC's pre-incentive fee net investment income is computed and paid on income that may include interest that is accrued but not yet received in cash. If a portfolio company defaults on a loan that is structured to provide accrued interest, it is possible that accrued interest previously used in the calculation of the incentive fee will become uncollectible.

        The GECC Investment Management Agreement renews for successive annual periods if approved by GECC's board of directors or by the affirmative vote of the holders of a majority of GECC's outstanding voting securities, including, in either case, approval by a majority of GECC's directors who are not interested persons. However, both GECC and GECM have the right to terminate the agreement without penalty upon 60 days' written notice to the other party. Moreover, conflicts of interest may arise if GECM seeks to change the terms of the GECC Investment Management Agreement, including, for example, the terms for compensation. While any material change to the GECC Investment Management Agreement must be submitted to stockholders for approval under the 1940 Act, GECC may from time to time decide it is appropriate to seek stockholder approval to change the terms of the agreement. For so long as MAST Funds and Great Elm Capital Group collectively beneficially own 35% or more of GECC's outstanding shares, the MAST Funds and Great Elm Capital Group will vote on any proposed changes to the GECC Investment Management Agreement in the same proportion as GECC's unaffiliated stockholders.

        Pursuant to a separate administration agreement with GECC (the Administration Agreement ), GECM will furnish GECC with administrative services and GECC will pay GECM its allocable portion of overhead and other expenses incurred by GECM in performing its obligations under the Administration Agreement, including GECC's allocable portion of the cost of its chief financial officer and chief compliance officer and their respective staffs.

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        As a result of the arrangements described above, there may be times when the management team of GECC has interests that differ from those of GECC's stockholders, giving rise to a conflict.

        GECC's stockholders may have conflicting investment, tax and other objectives with respect to their investments in GECC. The conflicting interests of individual stockholders may relate to or arise from, among other things, the nature of GECC's investments, the structure or the acquisition of GECC's investments, and the timing of disposition of GECC's investments. As a consequence, conflicts of interest may arise in connection with decisions made by GECM, including with respect to the nature or structuring of GECC's investments, that may be more beneficial for one stockholder than for another stockholder, especially with respect to stockholders' individual tax situations. In selecting and structuring investments appropriate for GECC, GECM will consider the investment and tax objectives of GECC and its stockholders, as a whole, not the investment, tax or other objectives of any stockholder individually.

        Potential Changes in Law or Regulation.  In December 2015, the SEC proposed a new rule to regulate the use of derivatives by registered investment companies, such as GECC. If the rule goes into effect, it could limit the ability of GECC to invest or remain invested in derivatives. In addition, other future regulatory developments may impact GECC's ability to invest or remain invested in certain derivatives. Legislation or regulation may also change the way in which GECC itself is regulated. GECM cannot predict the effects of any new governmental regulation that may be implemented on the ability of GECC to use swaps or any other financial derivative product, and there can be no assurance that any new governmental regulation will not adversely affect GECC's ability to achieve its investment objective.

Risks Relating to GECC's Investments

        GECC will face increasing competition for investment opportunities.  GECC competes for investments with other BDCs and investment funds (including private equity funds, mezzanine funds and small business investment companies), as well as traditional financial services companies such as commercial banks and other sources of funding. Many of GECC's competitors are substantially larger and have considerably greater financial, technical and marketing resources than GECC. For example, some competitors have a lower cost of capital and access to funding sources that are not available to GECC, including from the Small Business Administration. In addition, some of GECC's competitors have higher risk tolerances or different risk assessments than GECC has. These characteristics could allow GECC's competitors to consider a wider variety of investments, establish more relationships and offer better pricing and more flexible structuring than GECC is able to offer. GECC may lose investment opportunities if they do not match their competitors' pricing, terms and structure. If GECC is forced to match its competitors' pricing, terms and structure, GECC may not be able to achieve acceptable returns on its investments or may bear substantial risk of capital loss. A significant part of GECC's competitive advantage stems from the fact that the market for investments in lower middle-market companies is underserved by traditional commercial banks and other financing sources. A significant increase in the number and/or the size of GECC's competitors in this target market could force GECC to accept less attractive investment terms. Furthermore, many of GECC's competitors have greater experience operating under, or are not subject to, the regulatory restrictions that the 1940 Act imposes on GECC as a BDC. GECC believes that competitors will make first and second lien loans with interest rates and returns that are comparable to or lower than the rates and returns that GECC targets. Therefore, GECC does not seek to compete solely on the interest rates and returns that they offer to potential portfolio companies.

        The lack of liquidity in GECC's investments may adversely affect GECC's business.  Often, GECC will invest in companies whose securities are not publicly traded, and whose securities will be subject to legal and other restrictions on resale or will otherwise be less liquid than publicly traded securities. The illiquidity of these investments may make it difficult for GECC to sell these investments when desired. In addition, if GECC is required to liquidate all or a portion of its portfolio quickly, GECC may realize significantly less than the value at which GECC had previously recorded these investments. As a result, GECC does not expect to achieve liquidity in its investments in the near-term. GECC's investments will usually be subject to contractual or legal restrictions on resale or are otherwise illiquid because there is usually no established trading market for such investments. The

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illiquidity of most of GECC's investments may make it difficult for GECC to dispose of them at a favorable price, and, as a result, GECC may suffer losses.

        Changes in the regulatory framework under which the wireless telecommunications industry operates and significant competition in the wireless telecommunications industry could adversely affect GECC's business prospects or results of operations.  GECC will initially hold a large position in Avanti Communications Group plc ( Avanti ), a leading provider of satellite-enabled data communications services in Europe, the Middle East and Africa. As a result of its stake in Avanti, GECC could be exposed to risks associated with the wireless telecommunications sector.

        For example, Avanti's operations are regulated by various foreign governments and international bodies. These regulatory regimes restrict or impose conditions on Avanti's ability to operate in designated areas and to provide specified products or services. In addition, new laws or regulations or changes to the existing regulatory framework could impose additional costs, impair revenue opportunities and potentially impede Avanti's ability to provide services. The further regulation of Avanti's activities could Avanti's ability to compete in the marketplace and limit the return Avanti, and, as a result, GECC, can expect to achieve.

        In addition, GECC's business may also be affected by the significant competition in the wireless telecommunications industry. There is rapid development of new technologies, services and products which brings new competitors to the market. While these changes have enabled companies like Avanti to offer new types of products and services, they have also allowed other providers to broaden the scope of their own competitive offerings. Avanti's ability to compete effectively will depend on, among other things, how successfully Avanti anticipates and responds to various factors affecting its industry, including new technologies and business models, changes in consumer preferences and demand for existing services, demographic trends and economic conditions. If Avanti is not able to respond successfully to these competitive challenges, Avanti may face challenges in meeting its required payments under its debt securities held by GECC, which could result in a material decrease in the fair value of such debt securities, and a corresponding material adverse change in GECC's results of operations.

        GECC's portfolio will lack diversification among portfolio companies which may subject GECC to a risk of significant loss if one or more of these companies defaults on its obligations under any of its debt instruments.  GECC's portfolio is likely to hold a limited number of portfolio companies. Beyond the asset diversification requirements associated with GECC's expected qualification as a RIC under the Code, GECC does not have fixed guidelines for diversification, and GECC's investments are likely to be concentrated in relatively few companies. As GECC's portfolio is less diversified than the portfolios of some funds, GECC is more susceptible to failure if a single loan fails. Similarly, the aggregate returns GECC realize may be significantly adversely affected if a small number of investments perform poorly or if GECC needs to write down the value of any one investment.

        GECC's portfolio will be concentrated in a limited number of industries, which may subject GECC to a risk of significant loss if there is a downturn in a particular industry in which a number of GECC's investments are concentrated.  GECC's portfolio is likely to be concentrated in a limited number of industries. A downturn in any particular industry in which GECC is invested could significantly impact the aggregate returns GECC realizes.

        In addition, GECC may from time to time invest a relatively significant percentage of its portfolio in industries it does not necessarily target. If an industry in which GECC has significant investments suffers from adverse business or economic conditions, as these industries have to varying degrees, a material portion of GECC's investment portfolio could be affected adversely, which, in turn, could adversely affect GECC's financial position and results of operations.

        Any unrealized losses GECC experiences on its loan portfolio may be an indication of future realized losses, which could reduce GECC's income available for distribution.  As a BDC, GECC will be required to carry its investments at fair value as determined in good faith by GECC's board of directors. Decreases in the fair values of GECC's investments are recorded as unrealized depreciation. Any unrealized losses in GECC's portfolio could be an indication of a portfolio company's inability to meet its repayment obligations to GECC with respect to the affected loans. This could result in realized losses in the future and ultimately in reductions of GECC's income available for distribution in future periods.

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        Prepayments of GECC's debt investments by GECC's portfolio companies could adversely impact GECC's results of operations and reduce GECC's returns on equity.  GECC is subject to the risk that investments intended to be held over long periods are, instead, repaid prior to maturity. When this occurs, GECC will generally reinvest these proceeds in temporary investments or repay credit facilities, depending on expected future investment opportunities. These temporary investments will typically have substantially lower yields than the debt being prepaid and GECC could experience significant delays in reinvesting these amounts. Any future investment may also be at lower yields than the debt that was repaid. As a result, GECC's results of operations could be materially adversely affected if one or more of GECC's portfolio companies elect to prepay amounts owed to them. Additionally, prepayments could negatively impact GECC's return on equity, which could result in a decline in the market price of GECC's common stock.

        Because GECC generally does not hold controlling equity interests in its portfolio companies, it may not be in a position to exercise control over its portfolio companies or to prevent decisions by management of its portfolio companies that could decrease the value of its investments.  GECC generally does not hold controlling equity positions in its portfolio companies. As a result, GECC is subject to the risk that a portfolio company may make business decisions with which it disagrees, and that the management and/or stockholders of a portfolio company may take risks or otherwise act in ways that are adverse to its interests. Due to the lack of liquidity of the debt and equity investments that GECC typically holds in its portfolio companies, it may not be able to dispose of its investments if it disagrees with the actions of a portfolio company and may therefore suffer a decrease in the value of its investments.

        Defaults by GECC's portfolio companies will harm GECC's operating results.  A portfolio company's failure to satisfy financial or operating covenants imposed by GECC or other lenders could lead to defaults and, potentially, termination of its loans and foreclosure on its secured assets, which could trigger cross-defaults under other agreements and jeopardize a portfolio company's ability to meet its obligations under the debt or equity securities that GECC holds. GECC may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms, which may include the waiver of financial covenants, with a defaulting portfolio company. If any of these occur, it could materially and adversely affect GECC's operating results and cash flows.

        GECC's investments are very risky and highly speculative, and the lower middle-market companies it targets may have difficulty accessing the capital markets to meet their future capital needs, which may limit their ability to grow or to repay their outstanding indebtedness upon maturity.  

        Senior Secured Loans and Notes.     There is a risk that the collateral securing GECC's loans and notes may decrease in value over time, may be difficult to sell in a timely manner, may be difficult to appraise and may fluctuate in value based upon the success of the business and market conditions, including as a result of the inability of the portfolio company to raise additional capital, and, in some circumstances, GECC's lien could be subordinated to claims of other creditors. In addition, deterioration in a portfolio company's financial condition and prospects, including its inability to raise additional capital, may be accompanied by deterioration in the value of the collateral for the loan or note. Consequently, the fact that a loan or note is secured does not guarantee that GECC will receive principal and interest payments according to the loan's or note's terms, or at all, or that GECC will be able to collect on the loan should it be forced to enforce its remedies.

        Mezzanine Loans.     GECC's mezzanine debt investments will be generally subordinated to senior loans and will be generally unsecured. As such, other creditors may rank senior to GECC in the event of an insolvency, which could likely result in a substantial or complete loss on such investment in the case of such insolvency. This may result in an above average amount of risk and loss of principal.

        Unsecured Loans and Notes.     GECC may invest in unsecured loans and notes. If the issuer defaults or has an event of insolvency, other creditors may rank senior, be structurally senior or have lien protection that effectively renders their claim superior to GECC's rights under its unsecured notes or loans, which could likely in result in a substantial or complete loss on such investment in the case of such insolvency. This may result in an above average amount of risk and loss of principal.

        Equity Investments.     When GECC invests in senior secured loans or mezzanine loans, it may acquire equity securities, including warrants, as well. In addition, GECC may invest directly in the equity securities of portfolio

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companies. The equity interests GECC receives may not appreciate in value and, in fact, may decline in value. Accordingly, GECC may not be able to realize gains from its equity interests, and any gains that it does realize on the disposition of any equity interests may not be sufficient to offset any other losses GECC experiences.

        In addition, investing in middle-market companies involves a number of significant risks, including:

        Investing in middle-market companies involves a high degree of risk and GECC's financial results may be affected adversely if one or more of GECC's portfolio investments defaults on its loans or fails to perform as GECC expects.  GECC's portfolio will consist primarily of debt and equity investments in privately owned lower middle-market companies. Investing in lower middle-market companies involves a number of significant risks. Typically, the debt in which GECC invests is not initially rated by any rating agency; however, GECC believes that if such investments were rated, they would be below investment grade, which are referred to as "junk bonds." Compared to larger publicly owned companies, these middle-market companies may be in a weaker financial position and experience wider variations in their operating results, which may make them more vulnerable to economic downturns and other business disruptions. Typically, these companies need more capital to compete; however, their access to capital is limited and their cost of capital is often higher than that of their competitors. GECC's portfolio companies face intense competition from larger companies with greater financial, technical and marketing resources and their success typically depends on the managerial talents and efforts of an individual or a small group of persons. Therefore, the loss of any of their key employees could affect a portfolio company's ability to compete effectively and harm its financial condition. Further, some of these companies conduct business in regulated industries that are susceptible to regulatory changes. These factors could impair the cash flow of GECC's portfolio companies and result in other events, such as bankruptcy. These events could limit a portfolio company's ability to repay its obligations to GECC's stockholders which may have an adverse effect on the return on, or the recovery of, GECC's investment in these businesses. Deterioration in a borrower's financial condition and prospects may be accompanied by deterioration in the value of the loan's collateral and the fair market value of the loan.

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        Most of the loans in which GECC invests are not structured to fully amortize during their lifetime. Accordingly, if a borrower has not previously pre-paid its loan to GECC's stockholders, a significant portion of the principal amount due on such a loan may be due at maturity.

        In order to create liquidity to pay the final principal payment, borrowers typically must raise additional capital or sell their assets, which could potentially result in the collateral being sold for less than its fair market value. If they are unable to raise sufficient funds to repay GECC or GECC has not elected to enter into a new loan agreement providing for an extended maturity, the loan will go into default, which will require GECC to foreclose on the borrower's assets, even if the loan was otherwise performing prior to maturity. This will deprive GECC from immediately obtaining full recovery on the loan and prevent or delay the reinvestment of the loan proceeds in other, more profitable investments. Moreover, there are no assurances that any recovery on such loan will be obtained.

        Some of these companies cannot obtain financing from public capital markets or from traditional credit sources, such as commercial banks. Accordingly, loans made to these types of companies pose a higher default risk than loans made to companies that have access to traditional credit sources.

        An investment strategy that includes privately held companies presents challenges, including the lack of available information about these companies, a dependence on the talents and efforts of only a few key portfolio company personnel and a greater vulnerability to economic downturns.  GECC will invest in privately held companies. Generally, little public information exists about these companies, and GECC is required to rely on the ability of GECM to obtain adequate information to evaluate the potential returns from investing in these companies. If GECC is unable to uncover all material information about these companies, GECC may not make a fully informed investment decision, and may lose money on its investments. Also, privately held companies frequently have less diverse product lines and smaller market presence than larger competitors. These factors could adversely affect GECC's investment returns as compared to companies investing primarily in the securities of public companies.

        GECC's portfolio companies may incur debt that ranks equally with, or senior to, GECC's investments in such companies.  GECC will invest primarily in senior secured and senior unsecured debt issued by lower middle-market companies. GECC's portfolio companies may have, or may be permitted to incur, other debt that ranks equally with, or in some cases senior to, the debt in which GECC invests. By their terms, such debt instruments may entitle the holders to receive payment of interest or principal on or before the dates on which GECC is entitled to receive payments with respect to the debt instruments in which GECC invests. Also, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company, holders of debt instruments ranking senior to GECC's investment in that portfolio company would typically be entitled to receive payment in full before GECC receives any distribution. After repaying such senior creditors, such portfolio company may not have any remaining assets to use for repaying its obligation to GECC. In the case of debt ranking equally with debt instruments in which GECC invests, GECC would have to share on an equal basis any distributions with other creditors holding such debt in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio company.

        There may be circumstances where GECC's debt investments could be subordinated to claims of other creditors or GECC could be subject to lender liability claims.  Even though GECC may have structured investments as secured loans, if one of GECC's portfolio companies were to go bankrupt, depending on the facts and circumstances, and based upon principles of equitable subordination as defined by existing case law, a bankruptcy court could subordinate all or a portion of GECC's claim to that of other creditors and transfer any lien securing such subordinated claim to the bankruptcy estate. The principles of equitable subordination defined by case law have generally indicated that a claim may be subordinated only if its holder is guilty of misconduct or where the senior loan is re-characterized as an equity investment and the senior lender has actually provided significant managerial assistance to the bankrupt debtor. GECC may also be subject to lender liability claims for actions taken by it with respect to a borrower's business or instances where GECC exercises control over the borrower. It is possible that GECC could become subject to a lender's liability claim, including as a result of actions taken in

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rendering managerial assistance or actions to compel and collect payments from the borrower outside the ordinary course of business.

        Second priority liens on collateral securing loans and notes that GECC invests in may be subject to control by senior creditors with first priority liens. If there is a default, the value of the collateral may not be sufficient to repay in full both the first priority creditors and GECC.  GECC may purchase loans or notes that are secured by a second priority security interest in the same collateral pledged by a portfolio company to secure senior debt owed by the portfolio company to commercial banks or other traditional lenders. Often the senior lender has procured covenants from the portfolio company prohibiting the incurrence of additional secured debt without the senior lender's consent. Prior to and as a condition of permitting the portfolio company to borrow money from GECC secured by the same collateral pledged to the senior lender, the senior lender will require assurances that it will control the disposition of any collateral in the event of bankruptcy or other default. In many such cases, the senior lender will require GECC or the indenture trustee to enter into an "intercreditor agreement" prior to permitting the portfolio company to borrow. Typically the intercreditor agreements expressly subordinate GECC's debt instruments to those held by the senior lender and further provide that the senior lender shall control: (1) the commencement of foreclosure or other proceedings to liquidate and collect on the collateral; (2) the nature, timing and conduct of foreclosure or other collection proceedings; (3) the amendment of any collateral document; (4) the release of the security interests in respect of any collateral; and (5) the waiver of defaults under any security agreement. Because of the control GECC may cede to senior lenders under intercreditor agreements it may enter, GECC may be unable to realize the proceeds of any collateral securing some of its loans and notes.

        Uncertainty relating to the LIBOR calculation process may adversely affect the value of GECC's portfolio of the LIBOR-indexed, floating-rate debt securities.  Concerns have been publicized that some of the member banks surveyed by the British Bankers' Association ( BBA ) in connection with the calculation of LIBOR across a range of maturities and currencies may have been under-reporting or otherwise manipulating the inter-bank lending rate applicable to them in order to profit on their derivatives positions or to avoid an appearance of capital insufficiency or adverse reputational or other consequences that may have resulted from reporting inter-bank lending rates higher than those they actually submitted. A number of BBA member banks have entered into settlements with their regulators and law enforcement agencies with respect to alleged manipulation of LIBOR, and investigations by regulators and governmental authorities in various jurisdictions are ongoing.

        Actions by the BBA, regulators or law enforcement agencies may result in changes to the manner in which LIBOR is determined. Uncertainty as to the nature of such potential changes may adversely affect the market for LIBOR-based securities, including GECC's portfolio of LIBOR-indexed, floating-rate debt securities. In addition, any further changes or reforms to the determination or supervision of LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR, which could have an adverse impact on the market for LIBOR-based securities or the value of GECC's portfolio of LIBOR-indexed, floating-rate debt securities.

        Because GECC expects to use debt to finance its investments, changes in interest rates will affect GECC's cost of capital and net investment income.  Because GECC expects to borrow money to finance its investments, its net investment income will depend, in part, upon the difference between the rate at which GECC borrows funds and the rate at which GECC invests those funds. As a result, GECC can offer no assurance that a significant change in market interest rates will not have a material adverse effect on GECC's respective net investment income if GECC uses debt to finance its investments. In periods of rising interest rates, GECC's cost of funds could increase, which could reduce GECC's net investment income. GECC expects that its fixed-rate investments will be financed primarily with equity and/or long-term debt. GECC may use interest rate risk management techniques in an effort to limit its exposure to interest rate fluctuations. Such techniques may include various interest rate hedging activities to the extent permitted by the 1940 Act. If GECC does not implement these techniques properly, GECC could experience losses on its hedging positions, which could be material.

        GECC may not realize gains from its equity investments.  Certain investments that GECC may make include warrants or other equity securities. Investments in equity securities involve a number of significant risks, including the risk of further dilution as a result of additional issuances, inability to access additional capital and failure to pay current distributions. Investments in preferred securities involve special risks, such as the risk of deferred

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distributions, credit risk, illiquidity and limited voting rights. In addition, GECC may from time to time make non-control, equity investments in portfolio companies. GECC's goal is ultimately to realize gains upon GECC's disposition of such equity interests. However, the equity interests GECC receives may not appreciate in value and, in fact, may decline in value. Accordingly, GECC may not be able to realize gains from its equity interests, and any gains that it does realize on the disposition of any equity interests may not be sufficient to offset any other losses it experiences. GECC also may be unable to realize any value if a portfolio company does not have a liquidity event, such as a sale of the business, recapitalization or public offering, which would allow GECC to sell the underlying equity interests. GECC may seek puts or similar rights to give it the right to sell its equity securities back to the portfolio company issuer. GECC may be unable to exercise these puts rights if the issuer is in financial distress or otherwise lacks sufficient liquidity to purchase the underlying equity investment.

        Investments in foreign securities may involve significant risks in addition to the risks inherent in U.S. investments.  GECC's investment strategy contemplates investments in debt securities of foreign companies. Investing in foreign companies may expose GECC to additional risks not typically associated with investing in U.S. companies. These risks include changes in exchange control regulations, political and social instability, expropriation, imposition of foreign taxes, less liquid markets and less available information than is generally the case in the United States, higher transaction costs, less government supervision of exchanges, brokers and issuers, less developed bankruptcy laws, difficulty in enforcing contractual obligations, lack of uniform accounting and auditing standards and greater price volatility. Such investments will generally not represent "qualifying assets" under Section 55(a) of the 1940 Act.

        Any investments denominated in a foreign currency will be subject to the risk that the value of a particular currency will change in relation to one or more other currencies. Among the factors that may affect currency values are trade balances, the level of short-term interest rates, differences in relative values of similar assets in different currencies, long-term opportunities for investment and capital appreciation, and political developments. GECC may employ hedging techniques to minimize these risks, but GECC can offer no assurance that it will, in fact, hedge currency risk, or that if it does, such strategies will be effective.

        GECC's success depends on the ability of its investment adviser to attract and retain qualified personnel in a competitive environment.  GECC's growth requires that GECM retain and attract new investment and administrative personnel in a competitive market. The ability to attract and retain personnel with the requisite credentials, experience and skills depends on several factors including, but not limited to, its ability to offer competitive wages, benefits and professional growth opportunities. Many of the entities, including investment funds (such as private equity funds and mezzanine funds) and traditional financial services companies, with which it competes for experienced personnel have greater resources than it has.

Comparison of Risks between GECC and Full Circle

        GECC and Full Circle each have a similar investment objective to generate both current income and capital appreciation through debt and equity investments. As such, they are subject to many of the same risks and uncertainties such as, among others, the use of leverage magnifying the potential for gain or loss on amounts invested and increasing the risk of investing in them, uncertainty as to the value of their portfolio investments, investing in illiquid securities for which there is no readily available market value, needing additional capital for growth and being subject to various regulatory requirements in order to operate as a BDC and qualify as a RIC. These and other risks are described in more detail in this section.

        Full Circle and GECC are also subject to certain different risks and uncertainties as a result of differences in their portfolios and operations. These differences include, among others, that GECC is a new company with no operating history and is an "emerging growth company" under the JOBS Act, as well as differences in risks relating to conflicts of interest, as further described herein.

Risks Relating to Full Circle

        For information on the risks relating to Full Circle, see "Full Circle—Risks Relating to Full Circle."

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COMPARATIVE FEES AND EXPENSES

        The following tables are intended to assist you in understanding the costs and expenses that an investor in the common stock of Full Circle and GECC bears directly or indirectly and, based on the assumptions set forth below, the pro forma costs and expenses estimated to be incurred by GECC in the first year following the Merger. Full Circle and GECC caution you that some of the percentages indicated in the table below are estimates and may vary. Except where the context suggests otherwise, whenever this document contains a reference to fees or expenses paid or to be paid by "you," "Full Circle" or "GECC," stockholders will indirectly bear such fees or expenses as investors in Full Circle or GECC, as applicable.

 
  GECC (1)   Full Circle   Pro Forma
Combined
 

Stockholder transaction expenses (as a percentage of offering price)

                   

Sales load paid by Full Circle and GECC (2)

    N/A     None     None  

Offering expenses borne by Full Circle and GECC (2)

    N/A     None     None  

Dividend reinvestment plan expenses (3)

    N/A     None     None  

Total stockholder transaction expenses paid by Full Circle and GECC

    None     None     None  

 

 
  GECC (1)   Full Circle   Pro Forma
Combined
 

Estimated annual expenses (as a percentage of consolidated net assets attributable to common stock) (4)

                   

Management fees (5)

    N/A     2.73 %   1.44 %

Incentive fees (6)

    N/A     1.81 %   1.81 %

Interest payments on borrowed funds (7)

    N/A     4.15 %   2.04 %

Other expenses (8)

    N/A     2.74 %   2.74 %

Total annual expenses (estimated) (9)

    N/A     11.42 %   8.03 %

(1)
GECC is a newly formed entity; accordingly, there is no historical data.

(2)
Purchases of shares of common stock of Full Circle or GECC on the secondary market are not subject to sales charges, but may be subject to brokerage commissions or other charges. The table does not include any sales load (underwriting discount or commission) that stockholders may have paid in connection with their purchase of shares of Full Circle or GECC common stock.

(3)
The expenses of the dividend reinvestment plan are included in "Other expenses."

(4)
"Consolidated net assets attributable to common stock" equals stockholders' equity at March 31, 2016 for Full Circle. For Pro Forma Combined, the stockholders' equity for Pro Forma as of March 31, 2016 was used from the pro forma financial information set forth elsewhere herein.

(5)
Full Circle is, and GECC will be, externally managed by their respective investment advisers. Following completion of the Merger, GECC will be externally managed by GECM and the Pro Forma Combined management fee has been calculated in a manner consistent with the GECC Investment Management Agreement. Full Circle's management fee is currently 1.75% of its gross assets (which includes assets purchased using borrowed amounts and other forms of leverage). GECC's management fee will equal 1.50% of its total assets other than cash and cash equivalents (which includes assets purchased with borrowed amounts and other forms of leverage) as stated in its Pro Forma Condensed Consolidated Balance Sheet. The percentages reflected on the table are calculated based on Full Circle's net assets and GECC's pro forma net assets. See "GECC—GECC Investment Management Agreement."

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(6)
This item represents (a) Full Circle's investment adviser's incentive fees based on annualizing actual amounts earned on its pre-incentive fee net income for the nine months ended March 31, 2016 and assumes that the incentive fees earned at the end of Full Circle's 2016 fiscal year will be based on the actual realized capital gains as of March 31, 2016, computed net of realized capital losses and unrealized capital depreciation, and (b) GECM's estimated incentive fees based on the foregoing annualized pre-incentive fee net investment income and realized capital gains amounts for Full Circle. It also assumes that this fee will remain a constant percentage of GECC's pro forma net assets, although it is based on each of Full Circle's and GECC's performance and will not be paid unless Full Circle or GECC achieve exceed the applicable rates in their respective investment management agreements.

(7)
"Interest payments on borrowed funds" represents an estimate of annualized interest expenses based on actual interest and credit facility expenses incurred for the nine months ended March 31, 2016 by Full Circle, and assumes that GECC maintains a similar amount of leverage and interest expense subsequent to completion of the Merger. During the nine months ended March 31, 2016, Full Circle's average borrowings were $35.8 million and cash paid for interest expense was $2.9 million. GECC presently has no borrowings outstanding. The amount of leverage that Full Circle or GECC may employ at any particular time will depend on, among other things, Full Circle and GECC's boards of directors' and their respective investment adviser's assessment of market and other factors at the time of any proposed borrowing. See "Risk Factors—Risks Relating to GECC's Business and Structure—GECC may borrow money, which would magnify the potential for gain or loss on amounts invested and may increase the risk of investing with GECC." See "Full Circle—Risks Relating to Full Circle—Full Circle borrows money, which magnifies the potential for gain or loss on amounts invested and increases the risk of investing in Full Circle."

This is based on the assumption that borrowings and interest costs after the Merger will remain the same as those costs incurred by Full Circle prior to the Merger.

(8)
Includes overhead expenses, including payments under Full Circle and GECC's respective administration agreements based on their respective allocable portions of overhead and other expenses incurred by their respective administrators in performing their obligations under such administration agreements. The GECC Administration Agreement provides that the allocation of compensation to administrative personnel will be limited to 0.50% of GECC's net asset value for a period of 12 months from the consummation of the Merger. Such expenses are based on estimated amounts for the current fiscal year, and specifically on annualized "Other expenses" for the nine months ended March 31, 2016 incurred by Full Circle, and assume GECC maintains an expense ratio substantially similar to Full Circle's as of March 31, 2016. See "Full Circle—Full Circle Administration Agreement" and "GECC—GECC Administration Agreement."

(9)
"Total annual expenses" as a percentage of consolidated net assets attributable to common stock are higher than the total annual expenses percentage would be for a company that is not leveraged. Full Circle borrows money to leverage and increase its total assets, and GECC is expected to do so subsequent to completion of the Merger. The SEC requires that the "Total annual expenses" percentage be calculated as a percentage of net assets, rather than the total assets, which includes assets that have been funded with borrowed monies or other forms of leverage such as preferred securities.

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Example

        The following example demonstrates the projected dollar amount of total cumulative expenses over various periods with respect to a hypothetical investment in Full Circle or GECC common stock. In calculating the following expense amounts, Full Circle has assumed that it would have no additional leverage, that none of its assets are cash or cash equivalents and that its annual operating expenses would remain at the levels set forth in the table above. In addition, with respect to GECC and the pro forma combined company, expenses were based on the assumption that both GECC and the combined company's respective expense ratio will remain consistent with the Pro Forma Combined expense ratio as of March 31, 2016. Transaction expenses related to the Merger are not included in the following example.

 
  1 year   3 years   5 years   10 years  

You would pay the following expenses on a $1,000 investment, assuming a 5% annual return in (1) :

                         

Full Circle

  $ 106   $ 301   $ 475   $ 830  

GECC (pro forma following the Merger)

  $ 72   $ 212   $ 345   $ 654  

(1)
The above illustration assumes that Full Circle and GECC (pro forma following the Merger) earn a 5% annual return resulting entirely from net realized capital gains. In the case of the pro forma combined company following the Merger, the expenses you would pay, based on a $1,000 investment and assuming GECC will not realize any capital gains computed net of all realized capital losses and unrealized capital depreciation (and therefore not subject it to the capital gain incentive fee), and otherwise making the same assumptions in the example above, would be: 1 year, $62; 3 years, $184; 5 years, $304; and 10 years, $589. However, cash payment of any capital gains incentive fees would be deferred if, during the most recent twelve full calendar quarter period ending on or prior to the date the payment set forth in the example is to be made, the sum of (a) GECC's aggregate distributions to its stockholders and (b) its change in net assets (defined as total assets less indebtedness and before taking into account any incentive fees payable during the period) was less than 7.0% of its net assets at the beginning of such period (as adjusted for any share issuances or [repurchases]).

        The foregoing table is to assist you in understanding the various costs and expenses that an investor in Full Circle or GECC common stock will bear directly or indirectly. While the example assumes, as required by the SEC, a 5% annual return, performance will vary and may result in a return greater or less than 5%. In the case of GECC, the incentive fee under the GECC Investment Management Agreement, which, assuming a 5% annual return, would either not be payable or have an insignificant impact on the expense amounts shown above, is not included in the example in the footnote. If GECC were to achieve sufficient returns on its investments, including through the realization of capital gains, to trigger an incentive fee of a material amount, its expenses, and returns to its investors, would be higher.

        In addition, while the example assumes reinvestment of all dividends and distributions at net asset value, if either Full Circle or GECC's board of directors authorizes and Full Circle or GECC, as applicable, declares a cash distribution, participants in its dividend reinvestment plan who have not otherwise elected to receive cash will receive a number of shares of its common stock determined by dividing the total dollar amount of the distribution payable to a participant by the market price per share of Full Circle or GECC's common stock at the close of trading on the valuation date for the distribution. See "Full Circle—Full Circle Dividend Reinvestment Plan" and "GECC Dividend Reinvestment Plan" for additional information regarding their respective dividend reinvestment plan.

         This example and the expenses in the table above should not be considered a representation of Full Circle's or GECC's (pro forma following the Merger) future expenses. Actual expenses (including the cost of debt or preferred stock issued, if any, and other expenses) may be greater or less than those shown.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

        Some of the statements in this document constitute forward-looking statements, which relate to future events or the future performance or financial condition of GECC or Full Circle. The forward-looking statements contained in this document involve a number of risks and uncertainties, including statements concerning:

        Words such as "anticipates," "believes," "expects," "intends," "will," "should," "may" and similar expressions identify forward-looking statements, although not all forward-looking statements include these words. Actual results and conditions could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in "Risk Factors" and elsewhere in this document.

        The forward-looking statements included in this document have been based on information available to GECC and Full Circle on the date of this document, as appropriate, and neither GECC nor Full Circle assumes any obligation to update any such forward-looking statements. Although neither GECC nor Full Circle undertakes any obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that GECC or Full Circle may make directly to you or through reports that they have filed or in the future may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

        The forward-looking statements in this document are excluded from the safe harbor protection provided by Section 27A of the Securities Act and Section 21E of the Exchange Act.

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THE FULL CIRCLE SPECIAL MEETING

Date, Time and Place of the Special Meeting

        The special meeting will take place on October [     ·     ], 2016, at 9:00 a.m. (Eastern Time), at the offices of Clifford Chance US LLP, 31 West 52nd Street, New York, New York 10019.

Purposes of the Special Meeting

        The purposes of the special meeting are to consider and vote on the following proposals:

         On the recommendation of the Special Committee, the Full Circle Board, unanimously recommends that stockholders vote "FOR" the Merger and the Merger Proposal and "FOR" the Adjournment Proposal.

        Under Maryland law and Full Circle's bylaws, only the matters described in the notice of special meeting (that is, the Merger Proposal and the Adjournment Proposal) may be presented for action at the special meeting or at any adjournment or postponement of the special meeting.

Record Date

        The Full Circle Board has fixed the close of business on August [     ·     ], 2016 as the Record Date for determining which Full Circle stockholders are entitled to notice of and to vote at the special meeting (including if the special meeting is adjourned or postponed). Only holders of record of Full Circle common stock at the close of business on the Record Date, are entitled to notice of and to vote at the special meeting. On the Record Date, approximately 22,474,243 shares of Full Circle common stock were issued and outstanding. Those shares were held on the Record Date by [     ·     ] holders of record. Each holder of Full Circle common stock on the Record Date is entitled to one vote per share on all matters upon which stockholders are entitled to vote.

Vote Required

        The approval of the Merger Proposal requires the affirmative vote of the holders of a majority of the shares of Full Circle's common stock outstanding and entitled to vote as of the Record Date. The approval of the Adjournment Proposal requires the affirmative vote of holders of a majority of the votes cast at the special meeting.

Quorum

        A quorum will be required to be present in order to conduct business at the special meeting. The presence at the special meeting, in person or by proxy, of the holders of a majority of the shares of Full Circle common stock outstanding on the Record Date and entitled to vote will constitute a quorum. For purposes of determining the presence of a quorum, abstentions and broker non-votes, if any, will be included in determining the shares of common stock present and entitled to vote.

Adjournment or Postponement

        If the necessary quorum to transact business is not present, the chairman of the special meeting or the persons named as proxies may propose one or more adjournments or postponements of the special meeting in accordance with applicable law to permit further solicitation of proxies. If the necessary quorum is present, the special meeting may be adjourned to solicit additional proxies if the Adjournment Proposal has been approved by the Full Circle stockholders. In either case, the special meeting may be adjourned to a date that is not more than 120 days after the Record Date without further notice other than announcement at the special meeting.

Voting by Full Circle's Officers and Directors

        At the close of business on the Record Date, Full Circle's executive officers and directors owned, and therefore will be entitled to vote at the special meeting, an aggregate of 2,484,461 shares of Full Circle common stock, representing approximately 11.06% of Full Circle's outstanding shares of common stock. None of Full Circle's executive officers or directors has entered into any voting agreement relating to the Merger; however, each of Full Circle's executive officers and directors has advised Full Circle that he intends to vote his shares of Full Circle common stock in favor of the proposal to approve the Merger.

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Voting: Proxies

        If you were a stockholder of record at the close of business on the Record Date, you may vote your shares in person at the special meeting or by proxy. You have three ways to submit a proxy to vote your shares:

        All shares of Full Circle common stock represented by properly executed proxy cards received before or at the special meeting will be voted at the special meeting in the manner specified in those proxy cards, unless the proxy has been revoked. Properly executed proxies that do not contain voting instructions will be voted "FOR" the approval of each matter to be voted on at the Full Circle special meeting, including approval of the Merger Proposal.

        If a properly executed proxy card is returned and the stockholder has abstained from voting on one or more of the proposals, the shares of Full Circle common stock represented by the proxy will be considered present at the special meeting for purposes of determining whether a quorum is present, but will not be considered to have been voted on the proposals as to which the stockholder has abstained. Abstentions will have the effect of a vote against the Merger Proposal and the Adjournment Proposal.

        Under the applicable rules and regulations of the NYSE, brokers, banks, trusts or other nominees have discretion to vote on routine matters, but do not have discretion to vote on non-routine matters. Each of the proposals to be considered at the special meeting is a non-routine matter for this purpose. Accordingly, if you are not the record holder of your shares of Full Circle common stock and instead you hold those shares in street name, your broker, bank, trust or other nominee will be permitted to vote your shares of Full Circle common stock only if you provide instructions on how to vote those shares. You can provide instructions by following the procedures specified by your broker, bank, trust or other nominee. The only way a "broker non-vote" would result is if you provide your broker, bank, trust or other nominee with instructions on how to vote your shares with respect to one proposal but do not provide it with instructions on how to vote your shares with respect to the other proposal. A broker non-vote will have the effect of a vote against the proposal on which directions are not given.

Revocation of Proxies

        Submitting a proxy on the enclosed form does not preclude a stockholder from revoking such proxy and subsequently voting in person at the Full Circle special meeting. A stockholder may revoke a proxy at any time before it is voted by:

        A stockholder may revoke a proxy by using any of these methods, regardless of the method used to provide the stockholder's previous proxy. Attendance at the special meeting without voting will not by itself revoke a proxy.

Solicitation of Proxies

        Full Circle will bear the cost of solicitation of proxies in the form accompanying this document. The costs and expenses of printing and mailing the registration statement (of which this document forms a part) and all filing and other fees paid to the SEC in connection with the Merger will be borne equally by Full Circle and GECC. In addition to solicitation by mail, directors, executive officers or employees of Full Circle, Full Circle Advisors or GECM, who will not be specially compensated, may solicit proxies from Full Circle's stockholders by telephone, facsimile, telegram or other electronic means or in person. Full Circle has retained Broadridge Financial Solutions, Inc., 51 Mercedes Way, Edgewood, New York 11717 to assist in the solicitation of proxies from

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stockholders for an estimated fee of $20,000 plus out-of-pocket expenses. Arrangements may also be made with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation materials to the beneficial owners of shares held of record by these persons and Full Circle will reimburse them for their reasonable out-of-pocket expenses.

        Full Circle will mail a copy of this document, including the notice of special meeting and the proxy card included with these materials, to each holder of record of its common stock on the Record Date.

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THE MERGER

         The discussion in this document, which includes the material terms of the Merger and the principal terms of the Merger Agreement, is subject to, and is qualified in its entirety by reference to, the Merger Agreement. You should read the Merger Agreement carefully in its entirety, as it is the principal legal document governing the Merger.

Background of the Merger

        Since Full Circle's inception in 2010, the Full Circle Board regularly has considered possible ways of growing Full Circle's equity capitalization and total assets in order to increase stockholder value. The Full Circle Board believes that kind of growth, if achievable, would result in operating efficiencies (by spreading operating costs across a broader asset base) and would allow the development of a broader and more diversified investment portfolio. Growth also potentially would make the market for Full Circle's shares more liquid, making them more attractive to investors. Unfortunately, like other similarly situated BDCs, Full Circle has found it difficult to grow. Full Circle's shares of common stock have consistently traded at a discount to Full Circle's net asset value ( NAV ) per share, and the size of that discount has increased over time. The shares of other similarly situated BDCs also have traded at discounts to NAV for extended periods of time (in many cases since 2014 or earlier). In addition, Full Circle's NAV per share has declined, in part because of credit quality issues affecting some of its investment portfolio assets. In 2015, Full Circle's NAV per share declined by 31.4% or $1.72 per share. Full Circle's most recent equity capital raise occurred in March 2015, when Full Circle completed a rights offering in which it sold shares of its common stock for $3.50 per share. That offering price represented a discount to Full Circle's NAV per share and resulted in immediate pro forma dilution of $0.96 per share. The Full Circle Board has been reluctant to pursue additional equity offerings because of the further dilution that would result from any such offering. The result of these factors has been that Full Circle has been unable to achieve the size and scale that the Full Circle Board believes is necessary for a company of this type to be successful. The Full Circle Board believes the market conditions and other factors that have made it difficult for Full Circle to grow are likely to continue for some time.

        Full Circle is managed by Full Circle Advisors. Pursuant to an investment advisory agreement, Full Circle is required to pay Full Circle Advisors a fee for investment advisory and management services consisting of two components—a base management fee and an incentive fee. In connection with Full Circle's rights offering completed in March 2015 for the periods commencing on April 1, 2015 and ending on June 30, 2015 and commencing on July 1, 2015 and ending on June 30, 2016, Full Circle Advisors agreed to waive a portion of the base management fees and incentive fees that Full Circle Advisors otherwise would be entitled to receive to the extent required in order for Full Circle to earn net investment income sufficient to support the distribution payment on Full Circle's shares of common stock for each monthly distribution declared by Full Circle's Board. The determination of the amount to be waived was finalized as of the end of the fiscal year for each period, with such amounts being accrued on a quarterly basis. Net investment income was defined as net income before net realized gains (losses) and unrealized gains (losses), in each case, as determined in accordance with GAAP. Full Circle Advisors was not entitled to recoup any amount of base management fees that it waived pursuant to this agreement. Full Circle Advisors also agreed to reimburse Full Circle for any operating expenses, excluding interest expenses, investment advisory and management fees, and offering expenses, in excess of 1.5% of Full Circle's net assets, beginning with its fiscal quarter ending September 30, 2014 through June 30, 2015. For the fiscal year ending June 30, 2016 and beyond, Full Circle Advisors had agreed to reimburse Full Circle for any operating expenses, excluding interest expenses, investment advisory and management fees, and offering expenses, in excess of 1.75% of Full Circle's net assets. The fee waiver and expense reimbursement subjected Full Circle Advisors to financial constraints. Those constraints became more severe after Full Circle changed its investment strategy, beginning in late 2015, to reduce new originations in order to create greater flexibility in pursuing strategic alternatives. This was done in order to avoid a situation in which, for example, a prospective acquirer or merger partner might discount newly-originated investments made by Full Circle that did not fit with the counterparty's investment strategies or objectives, resulting in a potential loss of value to Full Circle's stockholders. The change in investment strategy led to a reduction in Full Circle's total assets and income from investments, and this in turn had the effect of further reducing the compensation payable to Full Circle Advisors, subjecting it to additional financial strain.

        Beginning in mid-2015, with the approval of the Full Circle Board, representatives of Full Circle Advisors engaged in preliminary discussions with third parties regarding the possibility of one or more strategic transactions

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that would allow Full Circle to increase the size, scale and diversification of its investment portfolio. Pursuant to this process, Full Circle Advisors contacted 15 parties, of whom 11 entered into confidentiality agreements with Full Circle. By the end of November 2015, four parties had provided preliminary indications of interest regarding possible transactions. One of those parties was a joint venture between MAST and the Great Elm Capital Group, Inc. (the MAST Group ). Full Circle Advisors provided the Full Circle Board with regular updates regarding these activities.

        On November 11, 2015, the Full Circle Board, after reviewing the results of the exploratory process that Full Circle Advisors had initiated, formed the Special Committee to consider various strategic alternatives potentially available to Full Circle. The members of the Special Committee are Mark C. Biderman, Edward H. Cohen and Thomas A. Ortwein, Jr. The Special Committee was authorized to consider, negotiate and potentially implement all strategic alternatives reasonably available to Full Circle, including, but not limited to, the acquisition or disposition of assets, the replacement of Full Circle Advisors as Full Circle's investment adviser, and the sale or merger of Full Circle. The Special Committee was authorized to select and retain its own legal and financial advisers. A primary objective of Full Circle's Board in establishing the Special Committee was to address potential conflicts of interest to which Full Circle Advisors and its principals might be subject in exploring various strategic alternatives.

        Under applicable NASDAQ rules, a member of the Full Circle Board qualifies as an "independent director" if, in the opinion of the Full Circle Board, that person does not have a relationship which would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. These NASDAQ rules also specify certain persons whose relationships with Full Circle would preclude them from being considered independent. The Full Circle Board has determined that each member of the Special Committee is an "independent director" as defined under the applicable NASDAQ rules, and the Full Circle Board also has concluded that each member of the Special Committee is free of any relationship that would interfere with the exercise of his or her independent judgment in carrying out his or her responsibilities as a director or a member of the Special Committee.

        Later in November 2015, the Special Committee retained Clifford Chance US LLP ( Clifford Chance ) as its legal counsel.

        In December 2015, the Special Committee considered and interviewed several investment banks to serve as its financial adviser. The Special Committee decided to retain Houlihan Lokey as its financial adviser based on a variety of factors including Houlihan Lokey's experience and reputation in providing financial advisory services in respect of mergers, acquisitions and other transactions, its familiarity with and understanding of the business sector in which Full Circle operates, and its fee proposal. In selecting Houlihan Lokey, the Special Committee noted that Terence Flynn, who is a member of the Full Circle Board, is a senior investment banker at Houlihan Lokey. Mr. Flynn does not serve on the Special Committee.

        During a telephonic meeting held on December 2, 2015, the Special Committee discussed the four parties (including MAST) that had provided preliminary indications of interest regarding possible transactions with Full Circle. One of these parties, Party A, an investment and fund management firm, had submitted an indication of interest in purchasing a portion of Full Circle investment portfolio that was relatively illiquid.

        On December 3, 2015, Full Circle Advisors delivered a letter to the Special Committee in which Full Circle Advisors reported a decline in its financial position and requested that the Special Committee consider taking action to alleviate the financial burdens on Full Circle Advisors caused by the fee waiver and expense reimbursement that had been in effect since April 2015.

        In December 2015 and January 2016, at the direction of the Special Committee, Houlihan Lokey contacted five of the counterparties previously contacted by Full Circle Advisors and reached out to six additional parties to discuss their interest in a potential transaction.

        On January 11, 2016, the Special Committee held a telephonic meeting at which representatives of its legal and financial advisors were present. During the meeting, the members of the Special Committee reviewed various strategic alternatives potentially available to Full Circle. The strategic alternatives reviewed by the Special Committee included a business combination transaction; a transaction in which Full Circle would issue stock in

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exchange for a contribution of an investment portfolio; the sale of a portion of Full Circle's investment portfolio; a liquidation; the appointment of a new external manager to replace Full Circle Advisors; or a combination of transactions. Representatives of Houlihan Lokey reported on its communications with the 11 potential counterparties, it had been instructed by the Special Committee to contact regarding a potential strategic transaction involving Full Circle, all of which had entered into confidentiality agreements with Full Circle. Four of the potential counterparties had terminated discussions, four of the potential counterparties were actively pursuing potential transactions with Full Circle, and the discussions with the remaining counterparties were still at a preliminary stage. The Special Committee discussed the fact that some parts of Full Circle's investment portfolio were relatively illiquid and difficult to value, and this had been reflected in terms of at least one of the preliminary indications of interest that had been received. The members of the Special Committee discussed the indication of interest that had been received from Party A for the purchase of an illiquid portion of the portfolio, and that completing a transaction of that type, followed by a business combination with a party that was interested in the remainder of Full Circle's assets, could enhance value for Full Circle's stockholders. This was because other potential counterparties had made clear they attributed less value than Party A to the assets Party A was potentially interested in acquiring.

        Subsequently, on January 27, 2016, representatives of Houlihan Lokey reviewed and discussed with the Special Committee the preliminary indications of interest for a business combination transaction received from five parties. The parties included Party A and the MAST Group. The indication of interest received from the MAST Group was dated January 19, 2016 and contemplated a merger of Full Circle with a newly formed entity that would be initially capitalized with $30 million of cash and a portfolio of fixed income investments having a fair market value of approximately $90 million. The Special Committee and its advisors also discussed a sixth preliminary indication of interest for a replacement investment adviser.

        The Special Committee directed its advisers to continue to explore and pursue indications of interest and a potential agreement with Party A for a transaction in which Party A would acquire a portion of Full Circle's investment assets for cash. The Special Committee concluded, based on the various indications of interest that had been received, that this transaction could be a first step toward a business transaction and that because most of the other parties with whom the Special Committee had held discussions assigned less value to the assets that Party A wanted to acquire, proceeding in this way had the potential to generate greater aggregate value for Full Circle's stockholders.

        On February 8, 2016, Full Circle entered into a letter of intent with Party A that contemplated the purchase by Party A of a portfolio of Full Circle's senior secured loans, second lien loans, mezzanine loans and equity securities and related assets, representing approximately 48% of Full Circle's gross assets, for an aggregate purchase price of $63,985,824. The letter of intent contemplated the parties would enter into a definitive agreement after Party A had completed a confirmatory due diligence review of the portfolio to be purchased.

        On February 11, 2016, the Special Committee held a telephonic meeting at which representatives of its legal and financial advisers were present. Representatives of Full Circle Advisors also participated in the meeting. The Special Committee agreed to recommend to the Full Circle Board that Full Circle agree to terminate the fee waiver and expense reimbursement that applied previously and had been agreed to by Full Circle Advisors. The Special Committee did so after determining, based on information provided by Full Circle Advisors, that if the fee waivers and expense reimbursement were left in place, Full Circle Advisors would continue suffering from financial difficulties that could impair its ability to continue serving Full Circle effectively. The Full Circle Board accepted the Special Committee's recommendation and authorized the termination of the fee waiver and expense reimbursement effective as of January 1, 2016.

        Also at the February 11, 2016 meeting, representatives of Houlihan Lokey provided an update regarding the status of discussions authorized by the Special Committee with third parties regarding potential transactions. In addition to Party A, indications of interest for a business combination transaction had been received from four parties, including Party B, an asset management firm focused on direct lending to small and medium sized

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companies in North America, Party C, a publicly-traded BDC, the MAST Group and Party D, a publicly-traded BDC:

        At that meeting, the Special Committee also elected to discontinue negotiations with Party D. Also at the meeting, the Special Committee discussed a possible liquidation of Full Circle. Among other things, the Special Committee discussed the fact that the liquidation process would be executed over an extended period of time and that, during that time period, Full Circle's assets would continue to be subject to market risk, the price that Full Circle would be able to obtain for its assets would be difficult to predict, the costs of liquidation likely would be substantial and there would be significant delay in distributing the full proceeds of the liquidation to Full Circle's stockholders.

        On February 16, 2016, Full Circle issued a press release announcing the formation of the Special Committee and the Special Committee's review of potential strategic alternatives.

        On February 26, 2016, Party A confirmed that the proposal contemplated by its letter of intent had been withdrawn. Subsequently, Party C indicated that it was no longer interested in pursuing a potential transaction.

        On March 10, 2016, the Special Committee held a telephonic meeting that also was attended by representatives of its legal and financial advisors and Full Circle Advisors. Representatives of Houlihan Lokey informed the Special Committee that, following the issuance of the press release announcing the Special Committee's review of strategic alternatives, Houlihan Lokey had received approximately 15 inbound calls from counterparties expressing interest in Full Circle, three of whom entered into confidentiality agreements with Full Circle. Two of the parties subsequently withdrew their interest, and the third party, Party E, a publicly-traded BDC, proposed an acquisition of 100% of the issued and outstanding shares of the common stock of Full Circle, in a stock-for-stock merger, and valuing Party E at the greater of its NAV per share or its stock price and valuing Full Circle at a discount to NAV.

        On March 17, 2016, members of the Special Committee met with representatives of the MAST Group to discuss MAST's capabilities and experience and to receive a presentation from the MAST Group's representatives regarding the MAST Group's visions and proposed investment strategies for the combined company. The Special Committee previously had received background information regarding MAST and its principals.

        From March 14, 2016 to March 30, 2016, the Special Committee and its advisors held conference calls with potential strategic alternative partners to discuss their revised proposals as well as topics such as proposed transaction structure, portfolio diligence and asset diversity and compliance. On March 23, 2016, representatives of Clifford Chance and counsel to the MAST Group had a discussion by telephone regarding transaction structuring. During this period, in response to requests from the Special Committee, the MAST Group made various changes to the terms of its proposal, including by agreeing to reduce the base management fee percentage from 1.75% to 1.50% and by agreeing to an increase in the size of the Special Distribution, from $3.4 million plus accumulated undistributed earnings to $5.0 million plus accumulated undistributed earnings. The parties also agreed in

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principle to a mechanism for setting the exchange ratio based on the NAV-to-NAV concept, including as to the use in certain circumstances of independent third party valuations.

        On April 4, 2016, the Special Committee held a conference call that also was attended by representatives of its legal and financial advisors and of Full Circle Advisors to discuss revised proposals received from Party E and the MAST Group. Representatives of Houlihan Lokey informed the Special Committee that (1) an updated proposal had been received from the MAST Group, (2) updated valuation details ("marks") had been received from Party E and (3) Party B had withdrawn from the process. At the request of the Special Committee, representatives of Houlihan Lokey reviewed and discussed certain preliminary financial analyses with respect to the received proposals, and responded to questions from members of the Special Committee The MAST Group and Party E had each requested exclusivity.

        The Special Committee then discussed the proposals from the MAST Group and Party E in more detail. The Special Committee discussed the respective levels of execution risk associated with the two proposals.

        After further deliberation, the Special Committee directed Houlihan Lokey to ask the MAST Group to improve or clarify certain aspects of its proposal.

        Following this call, representatives from Houlihan Lokey communicated the Special Committee's feedback to representatives of the MAST Group. On April 5, 2016, the MAST Group submitted an updated proposal.

        Also on April 5, 2016, representatives of Houlihan Lokey communicated the Special Committee's feedback on the term sheet received from Party E to Party E and its advisors.

        On April 6, 2016, the Special Committee held a conference call that was also attended by representatives of its legal and financial advisors and Full Circle Advisors to discuss the revised term sheet received from the MAST Group. A representative of Houlihan Lokey provided an update on the recent discussions on behalf of the Special Committee with the MAST Group including the MAST Group's proposal that Full Circle issue a pre-closing special distribution in the amount of $3.4 million to Full Circle stockholders and that the MAST Group would be willing to commit to the combined company implementing a post-closing $10 million share repurchase plan (which was later increased to $15 million). The MAST Group also proposed to make certain commitments regarding the terms of the combined company's post-closing investment management agreement.

        After deliberation, the Special Committee directed Houlihan Lokey to contact the MAST Group to propose (a) a pre-closing special distribution in the amount of $5 million and (b) a two-year period during which no amendments would be made to the combined company's post-closing investment management agreement.

        On April 11, 2016, the Special Committee together with representatives of Clifford Chance and Houlihan Lokey, participated in a conference call with the MAST Group and its counsel. The parties discussed various details of the MAST Group's proposal. Following the call, the Special Committee directed Clifford Chance to prepare an exclusivity agreement with the MAST Group providing for a 30-day exclusivity period.

        From April 4, 2016 through April 14, 2016, multiple drafts of the MAST Group term sheet and exclusivity agreement were exchanged between the parties. On April 14, 2016, the parties finalized the term sheet and executed the exclusivity agreement, which provided for a 30-day exclusivity period.

        On April 18, 2016, the MAST Group provided the Special Committee and its advisors with draft transaction documents.

        On April 22, 2016, the Special Committee held a conference call with its legal and financial advisors to discuss the draft transaction documents that had been provided by the MAST Group.

        On April 26, 2016, at the request of the Special Committee, representatives of Full Circle Advisors and Mr. Sell visited the offices of MAST in Boston, Massachusetts to review financial and other information relating to the MAST portfolio.

        On April 28, 2016, Clifford Chance sent the MAST Group and its counsel comments on the transaction documents. On April 29, 2016, legal counsel for each of the Special Committee and the MAST Group held a conference call to discuss the draft transaction documents. On May 3, 2016, counsel to the MAST Group sent revised drafts of the transaction documents to Clifford Chance.

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        On May 4, 2016, the Special Committee held a telephonic meeting that was also attended by representatives of its legal and financial advisors and Full Circle Advisors to discuss the list of issues in the draft transaction documents which was distributed by Clifford Chance prior to the call. The parties discussed, among other issues, the proposed portfolio to be contributed by MAST prior to the closing of the transaction, the measurement date for valuation of such contribution and potential deal protection provisions. At the conclusion of this call, the Special Committee directed its legal advisors to send the issues list to the MAST Group.

        On May 5, 2016, Mr. Biderman (the chairman of the Special Committee), together with representatives of Full Circle Advisors, Clifford Chance and Houlihan Lokey, met with representatives of the MAST Group and its legal counsel for in-person negotiations at the offices of Skadden, Arps, Slate, Meagher & Flom LLP ( Skadden Arps ). The parties discussed the outstanding issues with respect to the draft transaction documents and next steps.

        Between May 5, 2016 until June 23, 2016, legal advisors to the Special Committee and Full Circle and the MAST Group exchanged multiple drafts of the transaction documents.

        On May 12, 2016, the Special Committee held a telephonic meeting that was also attended by Mr. Sell, representatives of its legal and financial advisors and Full Circle Advisors. The parties discussed the mechanics, composition and valuation of the portfolio to be contributed by MAST as well as the valuation methodology to be used to accomplish the "NAV-to-NAV" concept that had been agreed in principle with the MAST Group. Clifford Chance provided a summary of the process and timing for the transaction after execution of the transaction documents and discussed key issues outstanding in the draft transaction documents. Later that evening, upon the request of the MAST Group, the Special Committee approved a one week extension of the exclusivity period, from May 13, 2016 to May 20, 2016.

        On June 5, 2016, Mr. Biderman, along with representatives from Houlihan Lokey, Clifford Chance and Full Circle Advisors, held a conference call to discuss outstanding issues in the draft transaction documents.

        On June 6, 2016, the Special Committee held a telephonic meeting that was attended by its legal and financial advisors and Full Circle Advisors. At the request of the Special Committee, representatives of Houlihan Lokey reviewed and discussed certain preliminary financial analyses with respect to Full Circle and the proposed transaction and responded to questions from members of the Special Committee. The members of the Special Committee discussed the financial analyses and underlying assumptions at length. Following this discussion, the participants discussed process and next steps.

        On June 7, 2016, the representative of Clifford Chance and the MAST Group participated in a conference call to discuss outstanding issues in the draft transaction documents. Following this call, revised drafts of the transaction documents were exchanged.

        On June 10, 2016, Mr. Biderman and representatives from Clifford Chance and Houlihan Lokey held a conference call to discuss the portfolio to be contributed by MAST and the expected timing for contribution of certain assets. Following a discussion, Mr. Biderman directed Houlihan Lokey to discuss with the MAST Group various issues affecting deal protection provisions and the need for clarity around the composition of the portfolio to be contributed.

        On June 16, 2016, the Special Committee, representatives from Clifford Chance, Houlihan Lokey and Full Circle Advisors, Mr. Sell and Mr. Flynn participated in a telephonic meeting. Representatives from Clifford Chance updated the participants regarding the status of the draft transaction documents and proposed timing for the transaction. Following this, representatives from Houlihan Lokey reviewed and discussed their updated preliminary financial analysis with respect to Full Circle and the proposed transaction and responded to questions from members of the Special Committee. Following this discussion, Messrs. Felton, Sell, Stuart and Flynn left the call. The members of the Special Committee and its legal and financial advisors engaged in further discussions regarding Houlihan Lokey's preliminary financial analyses, as well as certain terms included in the draft transaction documents. Following this, representatives from Clifford Chance discussed a detailed written presentation regarding the terms of the proposed Merger Agreement and other draft transaction documents that had been distributed to the participants in advance of the meeting.

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        From June 17, 2016 to June 23, 2016, Clifford Chance and Full Circle and Full Circle Advisors and Full Circle Service Company, along with their legal counsel, exchanged multiple drafts of a letter (the Termination Letter ) providing for the future termination of Full Circle's existing investment advisory agreement and administration agreement in accordance with the requirements of the Merger Agreement.

        On June 22, 2016, the Special Committee, representatives from Clifford Chance, Houlihan Lokey and Full Circle Advisors and Mr. Flynn held a conference call to discuss status and next steps. The participants discussed outstanding issues in the draft transaction documents and the composition of the proposed portfolio contribution by MAST.

        On June 23, 2016, the Special Committee held a telephonic meeting which was attended by its financial and legal advisors, representatives from Full Circle, Full Circle Advisors and Mr. Sell and Mr. Flynn. Representatives from Clifford Chance updated the participants on any changes since the last conference call in which such parties participated to the draft transaction documents and the Clifford Chance presentation regarding the Merger Agreement and other draft transaction documents, an updated version of which was circulated to the participants prior to the meeting. The participants also discussed the composition of the MAST portfolio to be contributed prior to closing and the status of changes that the Special Committee had requested in the form of post-closing investment management agreement. Following this discussion, at the request of the Special Committee, Houlihan Lokey reviewed and discussed its financial analyses with respect to Full Circle and with respect to GECC after giving effect to the Formation Transactions and the proposed Merger. Thereafter, at the request of the Special Committee, Houlihan Lokey verbally rendered its opinion to the Special Committee (which was subsequently confirmed in writing by delivery of Houlihan Lokey's written opinion addressed to the Special Committee dated June 23, 2016), as to, as of such date, the fairness, from a financial point of view, to holders of Full Circle common stock of the Merger Consideration to be received by such holders in the Merger pursuant to the Merger Agreement.

        Following this discussion, the Special Committee unanimously adopted resolutions recommending that the Full Circle Board adopt resolutions:

        Later that day, following the Special Committee's meeting, the Full Circle Board held a telephonic meeting at which Mr. Sell and representatives of Clifford Chance and Houlihan Lokey also were present.

        Following additional discussion, the members of the Full Circle Board unanimously adopted resolutions in which the Full Circle Board:

        Following this meeting, the Merger Agreement, Subscription Agreement and Termination Letter were executed by the relevant parties.

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Reasons for the Merger; Recommendation of the Full Circle Board

        The Special Committee is composed of three independent disinterested directors, none of whom is affiliated with the MAST Group or its affiliates, and none of whom is an officer or employee of Full Circle or Full Circle Advisors. The Special Committee unanimously approved the Merger and the other transactions contemplated by the Merger Agreement. The Special Committee unanimously recommended that the Full Circle Board adopt resolutions (1) declaring that the Merger and the other transactions contemplated by the Merger Agreement are advisable, (2) directing (subject to the terms of the Merger Agreement) that the Merger be submitted for consideration at a special meeting of the Full Circle stockholders and (3) resolving to recommend (subject to the terms of the Merger Agreement) that the Full Circle stockholders vote to approve the Merger. Acting upon the Special Committee's recommendation, the Full Circle Board, pursuant to resolutions adopted at a meeting held on June 23, 2016, unanimously (i) declared the Merger and the other transactions contemplated by the Merger Agreement advisable, (ii) directed (subject to the terms of the Merger Agreement) that the Merger be submitted for consideration at a special meeting of the Full Circle stockholders and (iii) resolved to recommend (subject to the terms of the Merger Agreement) that the Full Circle stockholders vote to approve the Merger.

        In reaching its determination and making its recommendation to the Full Circle Board, the Special Committee consulted with its financial and legal advisors and considered various factors. These factors included:

Opinion of the Financial Advisor to the Special Committee

        On June 23, 2016, Houlihan Lokey verbally rendered its opinion to the Special Committee (which was subsequently confirmed in writing by delivery of Houlihan Lokey's written opinion addressed to the Special Committee dated June 23, 2016), as to, as of June 23, 2016, the fairness, from a financial point of view, to the

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holders of Full Circle common stock of the Merger Consideration to be received by such holders in the Merger pursuant to the Merger Agreement. In this section, the Formation Transactions, the entry into the GECC Investment Management Agreement and the declaration and payment of the Special Distribution are collectively referred as the " Related Transactions " and, together with the Merger, the " Transaction ."

        For purposes of its analyses and opinion, Houlihan Lokey assumed, based on information provided to it as of the date of its opinion, that the Merger Consideration to be received by Full Circle's stockholders in the Merger would be 0.2169 of a share of GECC common stock per share of Full Circle common stock (which is different from the exchange ratio as ultimately determined pursuant to the Merger Agreement, but which was not known as of the date of Houlihan Lokey's opinion—see "Description of the Merger Agreement—Conversion of Shares; Exchange of Shares").

        Houlihan Lokey's opinion was directed to the Special Committee (in its capacity as such) and only addressed the fairness, from a financial point of view, to the holders of Full Circle common stock of the merger consideration to be received by such stockholders in the Merger pursuant to the Merger Agreement and did not address any other aspect or implication of the Merger or any other agreement, arrangement or understanding entered into in connection therewith or otherwise. The summary of Houlihan Lokey's opinion in this document is qualified in its entirety by reference to the full text of its written opinion, which is attached as Annex B to this document and describes the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Houlihan Lokey in connection with the preparation of its opinion. However, neither Houlihan Lokey's opinion nor the summary of its opinion and the related analyses set forth in this document is intended to be, and do not constitute, advice or a recommendation to the Special Committee, the Full Circle Board, any stockholder of Full Circle or any other person as to how to act or vote with respect to any matter relating to the Merger.

        In arriving at its opinion, Houlihan Lokey, among other things:

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        Houlihan Lokey relied upon and assumed, without independent verification, the accuracy and completeness of all data, material and other information furnished, or otherwise made available, to it, discussed with or reviewed by it, or publicly available, and did not assume any responsibility with respect to such data, material and other information. Management of MAST advised Houlihan Lokey, and Houlihan Lokey assumed, that the MAST Projections for GECC were reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of such management as to the future financial results and condition of GECC after giving effect to the Transaction. In addition, the Special Committee advised Houlihan Lokey, and Houlihan Lokey assumed, that the Adjusted Projections for GECC reflected the best currently available estimates and judgments of the Special Committee as to the future financial results and condition of GECC after giving effect to the Transaction. Houlihan Lokey expressed no opinion with respect to the MAST Projections for GECC, the Adjusted Projections for GECC or, in each case, the assumptions on which they were based. Houlihan Lokey was advised by the Special Committee that the Full Circle Financial Information and the Adjusted Projections for GECC were a reasonable basis to evaluate Full Circle and the Merger and was directed to use and rely upon the Full Circle Financial Information and the Adjusted Projections for GECC for purposes of Houlihan Lokey's analyses and opinion. Houlihan Lokey relied upon and assumed, without independent verification, that there had been no change in the business, assets, liabilities, financial condition, results of operations, cash flows or prospects of Full Circle or the Initial GECC Portfolio since the respective dates of the most recent financial statements and other information, financial or otherwise, provided to Houlihan Lokey that would be material to Houlihan Lokey's analyses or opinion, and that there was no information or any facts that would make any of the information reviewed by Houlihan Lokey incomplete or misleading.

        Houlihan Lokey relied upon and assumed, without independent verification, that: the representations and warranties of all parties to the Merger Agreement, the Subscription Agreement and all other related documents and instruments referred to therein were true and correct; each party to all such agreements and such other related documents and instruments would fully and timely perform all of the covenants and agreements required to be performed by such party; all conditions to the consummation of the Transaction would be satisfied without waiver thereof, and; the Transaction would be consummated in a timely manner in accordance with the terms described in all such agreements and such other related documents and instruments, without any amendments or modifications thereto. Houlihan Lokey also assumed, with the Special Committee's consent, that the Transaction would qualify as a reorganization under the provisions of Section 368(a) of the Code.

        Houlihan Lokey relied upon and assumed, without independent verification, that the Transaction would be consummated in a manner that complies in all respects with all applicable federal and state statutes, rules and regulations; and all governmental, regulatory, and other consents and approvals necessary for the consummation of the Transaction would be obtained and that no delay, limitations, restrictions or conditions would be imposed or amendments, modifications or waivers made that would result in the disposition of any assets of Full Circle or the Initial GECC Portfolio, or otherwise have an effect on the Transaction, Full Circle, GECC or any expected benefits of the Transaction that would be material to Houlihan Lokey's analyses or opinion.

        In addition, Houlihan Lokey relied upon and assumed, without independent verification, that the final forms of any draft documents identified above would not differ in any respect from the drafts of said documents.

        Furthermore, in connection with its opinion, Houlihan Lokey was not requested to make, and did not make, any physical inspection or independent appraisal or evaluation of any of the assets, properties or liabilities (fixed, contingent, derivative, off-balance-sheet or otherwise) of Full Circle or the MAST Funds or any other party, and, other than as described above and the appraisals or evaluations conducted in the ordinary course of business as part of their reporting obligations by or on behalf of Full Circle and the MAST Funds of their respective assets and liabilities, Houlihan Lokey was not provided with any such appraisal or evaluation. Houlihan Lokey did not

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estimate, and expressed no opinion regarding, the liquidation value of any entity or business. Houlihan Lokey did not undertake any independent analysis of any potential or actual litigation, regulatory action, possible unasserted claims or other contingent liabilities, to which Full Circle, GECC, the MAST Funds, MAST or Great Elm Capital Group was or may have been a party or was or may have been subject, or of any governmental investigation of any possible unasserted claims or other contingent liabilities to which Full Circle, GECC, the MAST Funds, MAST or Great Elm Capital Group was or may have been a party or was or may have been subject.

        The opinion was necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to Houlihan Lokey as of, the date of the opinion. As the Special Committee was aware, some of the information and assumptions upon which Houlihan Lokey was authorized to rely for purposes of its analyses and opinion were subject to change, and consequently the merger consideration assumed for purposes of Houlihan Lokey's analyses and opinion may differ from the actual merger consideration as ultimately calculated in accordance with the terms of the Merger Agreement. Houlihan Lokey did not undertake, and is under no obligation, to update, revise, reaffirm or withdraw its opinion, or otherwise comment on or consider events occurring or coming to Houlihan Lokey's attention after the date of its opinion. Houlihan Lokey did not express any opinion as to what the value of the Full Circle common stock, or GECC common stock actually would be when exchanged or issued pursuant to the Transaction or the price or range of prices at which the Full Circle common stock or GECC common stock may be purchased or sold, or otherwise be transferable, at any time. Houlihan Lokey assumed that the GECC common stock to be issued in the Merger to the holders of Full Circle common stock would be listed on the NASDAQ Global Select Market.

        Houlihan Lokey's opinion was furnished for the use of the Special Committee (in its capacity as such) in connection with its evaluation of the Merger and may not be used for any other purpose without Houlihan Lokey's prior written consent. Under the terms of its engagement by the Special Committee, neither Houlihan Lokey's opinion nor any other advice or services rendered by it in connection with the proposed Transaction or otherwise should be construed as creating, and Houlihan Lokey should not be deemed to have, any fiduciary duty to or agency relationship with the Special Committee, the Full Circle Board, Full Circle, any security holder or creditor of Full Circle or any other person, regardless of any prior or ongoing advice or relationships. The opinion is not intended to be, and does not constitute, a recommendation to the Special Committee, the Full Circle Board, any security holder or any other party as to how to act or vote with respect to any matter relating to the Transaction or otherwise.

        Houlihan Lokey's opinion only addressed the fairness, from a financial point of view, to the holders of Full Circle common stock of the merger consideration to be received by the holders of Full Circle common stock in the Merger pursuant to the Merger Agreement and, other than assuming the consummation of the Formation Transactions and the payment of the Special Distribution, did not address any other aspect or implication of the Merger or any aspect or implication of any related transaction or any agreement, arrangement or understanding entered into in connection with the Transaction or otherwise, including, without limitation, the Subscription Agreement or the GECC Investment Management Agreement. Houlihan Lokey was not requested to opine as to, and its opinion did not express an opinion as to or otherwise address, among other things: the underlying business decision of the Special Committee, the Full Circle Board, Full Circle, its security holders or any other party to proceed with or effect the Transaction; the terms of any arrangements, understandings, agreements or documents related to, or the form, structure or any other portion or aspect of, the Transaction or otherwise (other than the merger consideration to the extent expressly specified in the opinion); the fairness of any portion or aspect of the Transaction to the holders of any class of securities, creditors or other constituencies of Full Circle, GECC, the MAST Funds, MAST, Great Elm Capital Group, or to any other party, except if and only to the extent expressly set forth in the last sentence of the opinion; the relative merits of the Transaction as compared to any alternative business strategies or transactions that might have been available for Full Circle or any other party; the fairness of any portion or aspect of the Transaction to any one class or group of Full Circle's or any other party's security holders or other constituents vis-à-vis any other class or group of Full Circle's or such other party's security holders or other constituents (including, without limitation, the fairness of the merger consideration relative to the number of shares of GECC, as the surviving corporation in the Merger, into which shares of GECC outstanding prior to the Merger were converted or any allocation of any consideration amongst or within such classes or groups

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of security holders or other constituents); whether or not Full Circle, GECC, the MAST Funds, MAST, Great Elm Capital Group, their respective security holders or any other party is receiving or paying reasonably equivalent value in the Transaction; the solvency, creditworthiness or fair value of Full Circle, GECC, the MAST Funds, MAST, Great Elm Capital Group or any other participant in the Transaction, or any of their respective assets, under any applicable laws relating to bankruptcy, insolvency, fraudulent conveyance or similar matters; or the fairness, financial or otherwise, of the amount, nature or any other aspect of any compensation to or consideration payable to or received by any officers, directors or employees of any party to the Transaction, any class of such persons or any other party, relative to the merger consideration or otherwise.

        Furthermore, Houlihan Lokey did not express any opinion, counsel or interpretation regarding matters that require legal, regulatory, environmental, executive compensation, accounting, insurance, tax or other similar professional advice. Houlihan Lokey assumed that such opinions, counsel or interpretations had been or would be obtained from the appropriate professional sources. Furthermore, Houlihan Lokey relied, with the consent of the Special Committee, on the assessments by the Special Committee, the Full Circle Board, Full Circle and their respective advisors, as to all legal, regulatory, environmental, executive compensation, accounting, insurance and tax matters with respect to Full Circle and the Transaction or otherwise.

        In preparing its opinion to the Special Committee, Houlihan Lokey performed a variety of analyses, including those described below. The summary of Houlihan Lokey's analyses is not a complete description of the analyses underlying Houlihan Lokey's opinion. The preparation of such an opinion is a complex process involving various quantitative and qualitative judgments and determinations with respect to the financial, comparative and other analytical methods employed and the adaptation and application of these methods to the unique facts and circumstances presented. As a consequence, neither Houlihan Lokey's opinion nor its underlying analyses is readily susceptible to summary description. Houlihan Lokey arrived at its opinion based on the results of all analyses undertaken by it and assessed as a whole and did not draw, in isolation, conclusions from or with regard to any individual analysis, methodology or factor. While the results of each analysis were taken into account in reaching Houlihan Lokey's overall conclusion with respect to fairness, Houlihan Lokey did not make separate or quantifiable judgments regarding individual analyses. Accordingly, Houlihan Lokey believes that its analyses and the following summary must be considered as a whole and that selecting portions of its analyses, methodologies and factors, without considering all analyses, methodologies and factors, could create a misleading or incomplete view of the processes underlying Houlihan Lokey's analyses and opinion.

        In performing its analyses, Houlihan Lokey considered general business, economic, industry and market conditions, financial and otherwise, and other matters as they existed on, and could be evaluated as of, the date of its opinion. No company, transaction or business used in Houlihan Lokey's analyses for comparative purposes is identical to Full Circle or the proposed Merger and an evaluation of the results of those analyses is not entirely mathematical. The estimates contained in the MAST Projections for GECC and the Adjusted Projections for GECC and the implied reference range values indicated by Houlihan Lokey's analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than those suggested by the analyses. In addition, any analyses relating to the value of assets, businesses or securities do not purport to be appraisals or to reflect the prices at which businesses or securities actually may be sold, which may depend on a variety of factors, many of which are beyond the control of Full Circle. Much of the information used in, and accordingly the results of, Houlihan Lokey's analyses are inherently subject to substantial uncertainty.

        Houlihan Lokey's opinion was only one of many factors considered by the Special Committee in evaluating the proposed Merger. Neither Houlihan Lokey's opinion nor its analyses were determinative of the merger consideration or of the views of the Special Committee with respect to the Merger. The type and amount of consideration payable in the Merger were determined through negotiation among Full Circle and the MAST Group, and the decision to enter into the Merger Agreement was solely that of the Special Committee and the Board.

        The following is a summary of the material financial analyses performed by Houlihan Lokey in connection with the preparation of its opinion and reviewed with the Special Committee on June 23, 2016. The order of the analyses does not represent relative importance or weight given to those analyses by Houlihan Lokey. The analyses

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summarized below include information presented in tabular format. The tables alone do not constitute a complete description of the analyses. Considering the data in the tables below without considering the full narrative description of the analyses, as well as the methodologies underlying, and the assumptions, qualifications and limitations affecting, each analysis, could create a misleading or incomplete view of Houlihan Lokey's analyses.

        For purposes of its analyses, Houlihan Lokey compared the implied equity valuation reference ranges per share of Full Circle common stock being exchanged in the Merger to the implied equity valuation reference ranges of the merger consideration. The Special Committee advised Houlihan Lokey and directed Houlihan Lokey to assume that, for purposes of its analyses and opinion, immediately prior to the Merger, the only assets and liabilities of GECC would be (A) the $30 million in cash contributed by Great Elm Capital Group to GECC in the Formation Transactions, (B) the Initial GECC Portfolio, and (C) expenses incurred by GECC, and, in accordance with the Subscription Agreement, the expenses of MAST and Great Elm Capital Group in connection with the Transaction, which for purposes of Houlihan Lokey's analyses and opinion the Special Committee directed Houlihan Lokey to assume would be $1.1 million; the net asset value of the Initial GECC Portfolio immediately prior to the Merger would be $90 million; the net asset value of Full Circle would, immediately prior to the Merger, be $73.1 million; the number of shares of Full Circle common stock issued and outstanding immediately prior to the Merger would be 22,472,243 shares; the number of shares of GECC common stock issued and outstanding immediately following the Merger would be 12,803,978 shares; and the Merger Consideration would be 0.2169 of a share of GECC common stock for each share of Full Circle common stock.

        In addition, for purposes of its analyses and opinion, Houlihan Lokey treated the Special Distribution as if paid prior to the consummation of the Merger and consequently did not include the Special Distribution in the value of the shares of Full Circle common stock being exchanged in the Merger.

        For purposes of its analyses, Houlihan Lokey reviewed a number of financial metrics, including:

        Unless the context indicates otherwise, share prices used in the selected companies analysis described below were based on the closing price of the common stock of the selected companies listed below as of June 22, 2016, and transaction values for the selected transactions analysis described below were calculated on an equity value basis based on the announced transaction equity price and other public information available at the time of the announcement. The estimates of future financial performance of GECC relied upon for the financial analyses described below were based on the Adjusted Projections for GECC. The estimates of the future financial performance of the selected companies listed below were based on publicly available research analyst estimates for those companies.

Selected Companies Analysis .

        Houlihan Lokey reviewed certain financial data for selected companies with publicly traded equity securities that Houlihan Lokey deemed relevant.

        With respect to Full Circle, the financial data reviewed included:

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        With respect to GECC, the financial data reviewed included:

The selected companies were:

         Market Capitalization in Excess of $250 million:

         Market Capitalization of Less than $250 million:

Capitala Finance Corp.

Gladstone Investment Corporation

WhiteHorse Finance, Inc.

Monroe Capital Corporation

Gladstone Capital Corporation

Alcentra Capital Corporation

Garrison Capital Inc.

 

Stellus Capital Investment Corporation

OFS Capital Corporation

CM Finance Inc

Saratoga Investment Corp.

Harvest Capital Credit Corporation

OHA Investment Corporation

        Houlihan Lokey calculated multiples of Price-to-LTM Net Investment Income, Price-to-2017E Net Investment Income, 2017E Dividend Yields and Price-to-Net Asset Value. This analysis indicated the following low, mean, median, and high multiples and dividend yields:

 
  Low   Mean   Median   High

Market Capitalization in Excess of $250 million

               

Price-to-LTM Net Investment Income

  5.1x   7.2x   7.3x   9.1x

Price-to-2017E Net Investment Income

  6.2x   7.8x   7.7x   9.3x

2017E Dividend Yield

  9.8%   13.3%   12.8%   16.9%

Price-to-Net Asset Value Per Share

  0.67x   0.86x   0.87x   1.02x

Market Capitalization of Less than $250 million

 

 

 

 

 

 

 

 

Price-to-LTM Net Investment Income

  5.2x   7.7x   8.0x   10.4x

Price-to-2017E Net Investment Income

  6.8x   8.1x   7.9x   9.6x

2017E Dividend Yield

  9.8%   11.9%   11.2%   14.2%

Price-to-Net Asset Value Per Share

  0.50x   0.81x   0.80x   1.00x

        Full Circle.  Taking into account the results of the selected companies analysis, Houlihan Lokey applied selected multiple ranges of 7.0x to 8.0x to Full Circle's LTM Net Investment Income Per Share and 0.75x to 0.85x to Full Circle's Net Asset Value Per Share. The selected companies analysis indicated implied equity valuation reference ranges per share of Full Circle common stock after giving effect to the Special Distribution of $2.58 to $2.98 based on LTM Net Investment Income and $2.48 to $2.84 based on Net Asset Value.

        GECC.  Taking into account the results of the selected companies analysis, Houlihan Lokey applied selected multiple ranges of 7.0x to 8.0x to GECC's estimated 2017E Net Investment Income Per Share, 0.90x to 1.02x to GECC's Net Asset Value Per Share, and a selected dividend yield range of 11.0% to 13.0% to GECC's estimated 2017E dividend. The selected companies analysis indicated implied valuation reference ranges for the Merger

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Consideration after giving effect to the Transaction of $3.58 to $4.09 per share of Full Circle common stock based on estimated 2017E Net Investment Income, $2.93 to $3.32 per share of Full Circle common stock based on Net Asset Value, and $3.45 to $4.08 per share of Full Circle common stock based on estimated 2017E dividend yield.

Selected Transactions Analysis—Full Circle

        Houlihan Lokey considered certain financial terms of certain transactions involving target companies that Houlihan Lokey deemed relevant. The financial data reviewed included transaction value as a multiple of Net Asset Value, and the selected transactions and corresponding multiples were:

Date Announced   Target   Acquiror   Transaction Value/
Net Asset Value
May 2016   American Capital Ltd.   ARES Capital Corporation   0.86x
April 2015   MCG Capital Corp.   PennantPark Floating Rate Capital   0.95x
Oct. 2009   Allied Capital Corp.   ARES Capital Corporation   0.48x
Aug. 2009   Patriot Capital   Prospect Capital   0.54x

        Taking into account the results of the selected transactions analysis, Houlihan Lokey applied a selected multiple range of 0.86 to 0.95x to Full Circle's Net Asset Value. The selected transactions analysis indicated an implied equity value reference range per share of Full Circle common stock after giving effect to the Special Distribution of $2.88 to $3.20.

Discounted Dividend Analysis—GECC

        Houlihan Lokey performed a discounted dividend analysis of GECC after giving effect to the Transaction based on the Adjusted Projections for GECC. Houlihan Lokey applied a range of terminal value multiples of 0.95x to 1.05x to GECC's projected Net Asset Value as of September 30, 2021 and discount rates ranging from 10.5% to 12.5%. The discounted dividend analysis of GECC indicated an implied valuation reference range for the Merger Consideration after giving effect to the Transaction of $3.40 to $3.84 per share of Full Circle common stock.

Other Matters

        Houlihan Lokey was engaged by the Special Committee to act as its financial advisor in connection with a possible merger, consolidation, business combination, sale or other similar strategic transaction. The Special Committee engaged Houlihan Lokey based on Houlihan Lokey's experience and reputation. Houlihan Lokey is regularly engaged to provide financial advisory services in connection with mergers and acquisitions, financings, and financial restructurings. Pursuant to its engagement by the Special Committee, Houlihan Lokey is entitled to a transaction fee based on the value of the Transaction currently estimated to be approximately $1.2 million, of which $500,000 became payable to Houlihan Lokey upon the rendering of its opinion to the Special Committee and the remainder of which is contingent upon the consummation of the Merger. Full Circle has also agreed to reimburse Houlihan Lokey for certain expenses and to indemnify Houlihan Lokey, its affiliates and certain related parties against certain liabilities and expenses arising out of or relating to Houlihan Lokey's engagement.

        In the ordinary course of business, certain of Houlihan Lokey's employees and affiliates, as well as investment funds in which they may have financial interests or with which they may co-invest, may acquire, hold or sell, long or short positions, or trade, in debt, equity, and other securities and financial instruments (including loans and other obligations) of, or investments in, Full Circle, the MAST Funds, MAST, Great Elm Capital Group or any other party that may be involved in the Transaction and their respective affiliates or any currency or commodity that may be involved in the Transaction.

        Houlihan Lokey and certain of its affiliates have in the past provided investment banking, financial advisory and/or other financial or consulting services to MAST, or one or more security holders, affiliates and/or portfolio companies of investment funds affiliated or associated with MAST (collectively, with MAST, the MAST Capital Group ) and, more than three years ago and prior to MAST acquiring an interest in Great Elm Capital Group, Great Elm Capital Group, for which Houlihan Lokey and its affiliates have received compensation, including, among other things, during the past two years having acted as financial advisor to MAST as a secured creditor in connection with LightSquared, Inc.'s chapter 11 plan of reorganization, which was confirmed in March 2015. Houlihan Lokey and certain of its affiliates may provide investment banking, financial advisory and/or other

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financial or consulting services to Full Circle, GECC, members of the MAST Capital Group, Great Elm Capital Group, other participants in the Transaction or certain of their respective affiliates or security holders in the future, for which Houlihan Lokey and its affiliates may receive compensation. In addition, Houlihan Lokey and certain of its affiliates and certain of Houlihan Lokey and their respective employees may have committed to invest in private equity or other investment funds managed or advised by MAST, other participants in the Transaction or certain of their respective affiliates, and in portfolio companies of such funds, and may have co-invested with members of the MAST Capital Group, other participants in the Transaction or certain of their respective affiliates or security holders, and may do so in the future. Furthermore, in connection with bankruptcies, restructurings, and similar matters, Houlihan Lokey and certain of its affiliates may have in the past acted, may currently be acting and may in the future act as financial advisor to debtors, creditors, equity holders, trustees, agents and other interested parties (including, without limitation, formal and informal committees or groups of creditors) that may have included or represented and may include or represent, directly or indirectly, or may be or have been adverse to, Full Circle, members of the MAST Capital Group, Great Elm Capital Group, other participants in the Transaction or certain of their respective affiliates or security holders, for which advice and services Houlihan Lokey and its affiliates have received and may receive compensation. As the Special Committee is aware, an employee of Houlihan Lokey is a member of the Full Circle Board, and was previously a member of the Special Committee but resigned from the Special Committee in connection with Houlihan Lokey becoming engaged as the Special Committee's financial advisor, and owns shares of Full Circle common stock.

Interests of Certain Persons Related to Full Circle in the Merger

        Certain of Full Circle's directors and officers have interests in the Merger that are different from, or in addition to, the interests of Full Circle's stockholders in general. When the members of the Special Committee evaluated the Merger and negotiated the Merger Agreement, they were aware of and took into account the potentially differing interests of certain of Full Circle's directors and officers described below. The Full Circle Board also was aware of and took into account these differing interests when it decided to accept the Special Committee's recommendation that it approve the Merger and declare it advisable.

Special Committee Compensation .

        In consideration of the time and effort required of the Special Committee, in connection with exploring and evaluating strategic attributes available to Full Circle, Mr. Biderman, as the chairman of the Special Committee has been paid a fee of $25,000 and the other members of the Special Committee have been paid a fee of $15,000 each.

Continuing Directors .

        Pursuant to the Merger Agreement with effect from the Effective Time, Mark C. Biderman, a member of the Full Circle Board and chairman of the Special Committee, and John E. Stuart, a member of the Full Circle Board, will each become a member of the board of directors of GECC.

Consulting and Employment Arrangements .

        John E. Stuart and Gregg J. Felton are the owners of Full Circle Advisors and serve as directors and officers of Full Circle. GECM has offered to enter into a three-year consulting agreement with each of them, pursuant to which they collectively will receive aggregate payments equal to 26% of the management fee received by GECM under the GECC Investment Management Agreement. Michael J. Sell, who is Full Circle's chief financial officer, treasurer and secretary, will serve as the chief financial officer, treasurer and secretary of GECC, for which he will be paid an annual salary and a discretionary bonus.

        Certain of Full Circle's directors and officers are beneficial owners of shares of Full Circle common stock. See "Full Circle—Control Persons and Principal Stockholders of Full Circle".

Indemnification Insurance .

        The Merger Agreement provides for certain indemnification rights for Full Circle's directors and officers and for the purchase of a "tail" liability insurance policy. See "Description of the Merger Agreement—Additional Covenants—Indemnification; Directors' and Officers' Insurance."

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Regulatory Approvals Required for the Merger

        Under the Merger Agreement, the parties' obligations to complete the Merger are subject to GECM having become registered as an investment adviser under the Advisers Act and GECC becoming subject to regulation as a BDC, under the 1940 Act, and to the shares of the surviving corporation's common stock having been authorized for listing on the NASDAQ Global Select Market. Full Circle and GECC are not aware of any other regulatory approvals applicable to the Merger that have not been obtained.

Third Party Consents Required for the Merger

        Other than the Full Circle stockholders' approval, there are no third party consents that are a condition to the closing of the Merger.

Public Trading Markets

        GECC intends to apply to have its common stock listed on the NASDAQ Global Select Market under the symbol "GECC." Full Circle common stock trades on NASDAQ under the symbol "FULL." Upon completion of the Merger, Full Circle common stock will be delisted from NASDAQ and thereafter will be deregistered under the Exchange Act.

Board of Directors and Management of the Combined Company Following Completion of the Merger

        Upon completion of the Merger, GECM will be GECC's investment adviser and administrator replacing Full Circle Advisors and Full Circle Service Company LLC.

        The directors of GECC are expected to be:

Director   Term Expires at the GECC annual meeting in
Mark C. Biderman   2017
Eugene I. Davis   2017
Mark Kuperschmid   2018
John E. Stuart   2018
Peter A. Reed   2019

        The officers of GECC are expected to be:

Name   Office
Peter A. Reed   Chief Executive Officer and President
Michael J. Sell   Chief Financial Officer, Treasurer and Secretary
Robert Wilson   Chief Compliance Officer

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CERTAIN MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

         The following discussion summarizes certain material U.S. federal income tax consequences to Full Circle's stockholders of the Merger, the Special Distribution and the receipt of shares of GECC common stock in the Merger in exchange for shares of Full Circle common stock. This discussion is based on the Code, applicable U.S. Treasury regulations, judicial authority and administrative rulings and practice (including administrative practices expressed in private letter rulings which are binding on the IRS only with respect to the particular taxpayers who requested and received those rulings), all as of the date of this document and all of which are subject to change, including changes with retroactive effect. The discussion below does not address any state, local or foreign taxes or the tax on net investment income. Your tax treatment may vary depending upon your particular situation. You also may be subject to special rules not discussed below if you are a certain kind of Full Circle stockholder, including, but not limited to: an insurance company; a tax-exempt organization; a financial institution or broker-dealer; a holder of Full Circle common stock as part of a hedge, straddle or conversion transaction; a person or entity that does not hold Full Circle common stock as a capital asset at the time of the Merger; an entity taxable as a partnership for U.S. federal income tax purposes (or a holder of interests in such an entity); a trader in securities that elects to use a mark-to-market method of accounting for securities holdings; a stockholder whose functional currency is not the U.S. dollar; non-U.S. stockholders (as defined below) engaged in a trade or business in the United States; persons who have ceased to be U.S. citizens or to be taxed as resident aliens or; individual non-U.S. stockholders present in the United States for 183 days or more during a taxable year.

         Neither Full Circle nor GECC has requested an advance ruling from the IRS as to the U.S. federal income tax consequences of the Merger or any related transactions, nor will such a ruling be requested. The IRS could adopt positions contrary to those discussed below and such positions could be sustained. You are urged to consult with your tax advisors and financial planners as to the particular tax consequences of the Merger to you, including the applicability and effect of any state, local or foreign laws and the effect of possible changes in applicable tax laws.

        You are a "U.S. stockholder" if you are a beneficial owner of shares of Full Circle common stock (and, after the Merger, of GECC common stock) and for U.S. federal income tax purposes you are:

        You are a "non-U.S. stockholder" if you are a beneficial owner of shares of Full Circle common stock (and, after the Merger, of GECC common stock) and for U.S. federal income tax purposes you are:

        If a partnership or other entity that is classified as a partnership for U.S. federal income tax purposes holds the GECC common stock, the U.S. tax treatment of the partnership and each partner generally depends on the status of the partner, the activities of the partnership and certain determinations made at the partner level. A partnership that holds shares of Full Circle common stock should consult its tax advisors regarding the U.S. federal income tax consequences of the Merger and of the subsequent ownership and disposition of any shares of GECC common stock acquired in the Merger by the partnership.

Tax Consequences of the Merger

        GECC and Full Circle intend that the Merger will qualify as a "reorganization," within the meaning of Section 368(a) of the Code, with respect to Full Circle and its stockholders. Provided the Merger qualifies as a

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reorganization, and subject to the discussion below regarding the receipt of cash instead of a fractional share of GECC common stock, generally for U.S. federal income tax purposes:

        The Merger may not qualify as a "reorganization" within the meaning of Section 368(a) of the Code with respect to GECC. Consequently, GECC may be required to recognize gain or loss as a result of the Merger, generally reflecting any change in the value of the Initial GECC Portfolio between the time it was acquired by GECC and the date of the Merger. GECC expects that any such gain or loss would be negligible.

Cash Instead of a Fractional Share

        The Merger Agreement provides that no fractional shares of GECC common stock will be issued in the Merger and that cash will be paid in lieu of any fractional share. If you receive cash instead of a fractional share of GECC common stock you will be treated as having received the fractional share of GECC common stock pursuant to the Merger and as having then sold that fractional share of GECC common stock for cash. As a result, you generally will recognize gain or loss equal to the difference between the amount of cash received and your tax basis in your fractional share of GECC common stock. This gain or loss generally will be a capital gain or loss and will be long-term capital gain or loss if, as of the effective time, your holding period for the shares (including the holding period of Full Circle common stock surrendered therefor) is greater than one year. The deductibility of capital losses is subject to limitations.

GECC's Pre-Merger Status as a Regulated Investment Company

        GECC will not qualify as a RIC, and the Merger will not take place, during GECC's first taxable year. GECC expects to adopt a fiscal and taxable year ending on [        ,        ] and accordingly GECC expects that its first taxable year will end on [        ,        ] (GECC's First Taxable Year ). Before the end of its First Taxable Year, GECC will acquire the Initial GECC Portfolio and file an election to be regulated as a BDC under the 1940 Act. The Merger will not occur until the start of the following taxable year, which will end on [        ,        ], 2017 (GECC's Second Taxable Year ). GECC expects to elect and qualify to be treated as a RIC beginning in its Second Taxable Year.

        Because GECC will not have been a RIC since its formation, the election by GECC to be treated as a RIC commencing with its Second Taxable Year will have the following tax consequences. First, U.S. tax rules prohibit a RIC from having accumulated earnings and profits at the end of its taxable year from any period that precedes it becoming a RIC. To comply with this requirement, GECC will be required to distribute all of its earnings and profits from its First Taxable Year to its stockholders, before the end of its Second Taxable Year. Second, GECC will be required to pay U.S. corporate income tax on income it earns during its First Taxable Year. GECC expects, based on the nature of the Initial GECC Portfolio and the relatively short period of time since the Formation Transactions, that any such corporate income tax liability will be negligible. Third, GECC may be required to pay

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U.S. corporate income tax on any appreciation in the Initial GECC Portfolio that occurred in GECC's First Taxable Year, if GECC later sells or otherwise recognizes gain on the disposition of any of Initial GECC Portfolio. Because GECC expects to own the Initial GECC Portfolio for only a short time before the close of its First Taxable Year, GECC expects that any such appreciation will be negligible. Any payments of such corporate income tax would reduce the amount of cash that is available for distributions to you.

        GECC expects to elect RIC status in its taxable year that includes the Merger, and to be treated as a RIC in that taxable year and in all subsequent taxable years. Accordingly, except as described in the preceding paragraph, GECC believes that following the Merger it will not be subject to U.S. federal income tax liability to the extent that that it makes distributions of its taxable income and gains to its stockholders on an annual basis.

Full Circle's Pre-Merger Income and Gains and the Special Distribution

        Full Circle's taxable year will end on the day the Merger becomes effective. Under applicable U.S. tax rules, Full Circle will be required to declare to its stockholders of record one or more distributions of all of its previously undistributed net investment income and net realized capital gain, in order to maintain Full Circle's treatment as a RIC with respect to its taxable year ending on the date of the Merger and to avoid being subject to any corporate-level U.S. federal income tax on its taxable income for such taxable year. It is expected that the Special Distribution will equal or exceed all of Full Circle's previously undistributed net investment income and net realized capital gains and that as a result Full Circle will not be subject to corporate-level U.S. federal income tax with respect to its final taxable year ending on the date on which the Effective Time occurs.

        The Special Distribution should be treated as a distribution with respect to the Full Circle common stock. Accordingly, if you are a U.S. stockholder, the Special Distribution generally will (subject to the last sentence in this paragraph) be taxable to you as ordinary income or capital gains depending on the type and amount of Full Circle's income to which the Special Distribution is attributable. Distributions of Full Circle's investment company taxable income (which is, generally, Full Circle's net ordinary income plus realized net short-term capital gains in excess of realized net long-term capital losses) will be taxable as ordinary income to the extent of Full Circle's current or accumulated earnings and profits. To the extent any portion of the Special Distribution is attributable to dividends from U.S. corporations and certain qualified foreign corporations, that portion may be eligible for taxation at a preferential rate if you are taxed at individual rates. In this regard, it is anticipated that the Special Distribution will generally not be attributable to dividends and, therefore, generally will not qualify for the preferential rate. Distributions of Full Circle's net capital gains (which are generally Full Circle's realized net long-term capital gains in excess of realized net short-term capital losses) and properly reported by Full Circle as "capital gain dividends" will be taxable to you as long-term capital gains that are currently taxable at a maximum rate of 20% (without taking into account the net investment income tax or U.S. state or local taxes) if you are taxed at individual rates. Distributions in excess of Full Circle's earnings and profits first will reduce your adjusted tax basis in your Full Circle common stock and, after the adjusted basis is reduced to zero, will constitute capital gains to you.

        If you are a non-U.S. stockholder, the Special Distribution generally will be subject to withholding of U.S. federal tax at a 30% rate (or lower rate if you are eligible for a reduced rate under an applicable income tax treaty) to the extent attributable to a distribution of Full Circle's "investment company taxable income" out of current and accumulated earnings and profits, unless the distributions are properly designated as (1) paid by Full Circle in respect of Full Circle's "qualified net interest income" or (2) paid by Full Circle in connection with Full Circle's "qualified short-term capital gains" (each term, as defined below under "—Taxation of Non-U.S. Stockholders"). If any portion of the Special Distribution is attributable to Full Circle's net capital gains or is in excess of Full Circle's current and accumulated earnings and profits, that portion of the Special Distribution generally will not be subject to U.S. federal income tax. If the Special Distribution is effectively connected with your conduct of a U.S. trade or business, you will not be subject to U.S. federal withholding tax, but you generally will be subject to tax on the Special Distribution in the same manner as a U.S. stockholder, as described in the preceding paragraph.

        If at the time the Merger becomes effective GECC has generated net investment income or net realized capital gain, and has not distributed that income or gain before the Merger, a portion of your subsequent distributions from GECC on the GECC common stock you acquire in the Merger may be treated for tax purposes as a

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distribution of such net investment income or realized capital gain, even though that net investment income or capital gain was realized before you acquired your GECC common stock. Similarly, if you acquire GECC common stock in the Merger and GECC holds appreciated securities, a portion of your subsequent distributions from GECC if and when GECC sells the appreciated securities may be treated for tax purposes as distributions of that capital gain, even though the appreciation in the value of the securities occurred before you acquired your GECC common stock.

Full Circle's Pre-Merger Capital Loss Carryforwards and Unrealized Losses

        On the date of the Merger, Full Circle expects to have significant accumulated capital loss carryforwards and unrealized capital losses (i.e., unrealized losses reflecting the excess of Full Circle's tax basis in its capital assets over their fair market value). Because Full Circle may experience an "ownership change" (described below) as a result of the Merger, the use of Full Circle's pre-Merger accumulated capital loss carryforwards and certain unrealized capital losses (when realized) may be subject to an annual limitation under Sections 382 and 383 of the Code (a Section 382 Limitation ). The annual limitation will equal the product of the fair market value of Full Circle's equity immediately prior to the Merger and the "long-term tax-exempt rate," published by the IRS, in effect at such time. The applicable long-term tax-exempt rate for August 2016 was [     ·     ]%.

        Losses that are subject to the Section 382 Limitation do not expire, and may be carried forward to subsequent taxable years indefinitely. However, if the Section 382 Limitation applies, it may delay GECC's ability to realize a benefit from Full Circle's capital losses, and any such benefit will be shared by all of the stockholders of GECC at the time the losses are used. Therefore, you may receive more capital gain dividends, or receive capital gain dividends sooner, than you otherwise would have received from Full Circle if the Merger had not occurred.

        In general, an "ownership change" occurs if Full Circle's stockholders hold 50% or less of the outstanding shares of GECC immediately following the Merger. Because Full Circle's stockholders are expected to own approximately 38% of GECC's common stock after the Merger, an ownership change may occur and the Section 382 Limitation may apply to GECC after the Merger.

        Additionally, in GECC's taxable year that includes the Merger, the percentage of GECC's capital gain net income (excluding capital loss carryforwards) that can be offset by Full Circle's capital loss carryforwards (not otherwise subject to the Section 382 Limitation) is limited to the percentage of GECC's taxable year that remains following the Merger.

        As of June 30, 2015, for U.S. federal income tax purposes Full Circle had approximately $8.5 million of accumulated capital losses and $24.1 million of unrealized capital losses. These figures will change by the time of the Merger.

U.S. Federal Income Taxation of GECC

        GECC expects to elect to be taxed as a RIC beginning with its Second Taxable Year (the taxable year that will include the Merger). Subject to the matters discussed above under "—Tax Consequences of the Merger—GECC's Pre-Merger Status as a Regulated Investment Company" regarding GECC's initial non-RIC taxable year, GECC generally will not be subject to corporate-level U.S. federal income taxes on any ordinary income or capital gains that GECC earns or recognizes so long as it distributes (or is deemed to distribute) such income and gain to its stockholders as dividends on an annual basis and otherwise meets the requirements to be taxed as a RIC (including, among other things, the 90% Income Test, the Diversification Tests, and the Annual Distribution Requirement, each as described below). GECC will be subject to U.S. federal income tax at regular corporate rates on any net income or net capital gains not distributed to its stockholders.

        In order to qualify as a RIC for U.S. federal income tax purposes, GECC must, among other things:

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        In addition, to qualify for the special tax treatment as a RIC, GECC must distribute to its stockholders, for each taxable year, at least 90% of its "investment company taxable income," which is generally its ordinary income plus the excess of its realized net short-term capital gains over its realized net long-term capital losses (the Annual Distribution Requirement ).

        GECC will be subject to a 4% nondeductible U.S. federal excise tax on certain undistributed income unless it distributes in a timely manner after the end of the calendar year an amount at least equal to the sum of (1) 98% of its net ordinary income for each calendar year, (2) 98.2% of its capital gain net income for the one-year period ending October 31 in that calendar year and (3) any income recognized, but not distributed, in preceding years (the Excise Tax Avoidance Requirement). For this purpose, however, any ordinary income or capital gain net income retained by GECC that is subject to corporate income tax will be considered to have been distributed. GECC generally will endeavor in each taxable year to make sufficient distributions to its stockholders to avoid any U.S. federal excise tax on its earnings.

GECC Investments

        Certain of the investment practices that GECC expects to follow may subject GECC to special and complex U.S. federal income tax provisions that may, among other things, (1) disallow, suspend or otherwise limit the allowance of certain losses or deductions, including the dividends received deduction, (2) convert lower taxed long-term capital gains and qualified dividend income into higher taxed short-term capital gains or ordinary income, (3) convert ordinary loss or a deduction into capital loss (the deductibility of which is more limited), (4) cause GECC to recognize income or gain without a corresponding receipt of cash, (5) adversely affect the time as to when a purchase or sale of stock or securities is deemed to occur, (6) adversely alter the characterization of certain complex financial transactions and (7) produce income that will not qualify as good income for purposes of the 90% Gross Income Test. GECC will monitor its transactions and may make tax elections and may be required to borrow money or dispose of securities to mitigate the effect of these rules and to prevent GECC's disqualification as a RIC but there can be no assurance that GECC will be successful in this regard.

        GECC may be required to recognize taxable income in circumstances in which GECC does not receive cash. For example, if GECC holds debt obligations that are treated under applicable tax rules as having original issue discount (such as debt instruments with PIK interest or, in certain cases, with increasing interest rates or issued with warrants), GECC must include in income each year a portion of the original issue discount that accrues over the life of the obligation, regardless of whether cash representing such income is received in the same taxable year. GECC may also have to include in income other amounts that it has not yet received in cash, such as deferred loan origination fees that are paid after origination of the loan or are paid in non-cash compensation such as warrants or stock. Because any original issue discount or other amounts accrued will be included in GECC's investment company taxable income for the year of accrual, GECC may be required to make a distribution to its stockholders in order to satisfy the Annual Distribution Requirement, even though it will not have received any corresponding cash amount. Although it does not presently expect to do so, GECC is authorized to borrow funds, to sell assets and to make taxable distributions of its stock and debt securities in order to satisfy distribution requirements. GECC's ability to dispose of assets to meet its distribution requirements may be limited by (1) the illiquid nature of its portfolio and/or (2) other requirements relating to its qualification as a RIC, including the Diversification Tests. If GECC disposes of assets in order to meet the Annual Distribution Requirement or the Excise Tax Avoidance

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Requirement, GECC may make such dispositions at times that, from an investment standpoint, are not advantageous. If GECC is unable to obtain cash from other sources to satisfy the Annual Distribution Requirement, GECC may fail to qualify as a RIC and become subject to tax as an ordinary corporation.

        Under the 1940 Act, GECC is not permitted to make distributions to its stockholders while its debt obligations and other senior securities are outstanding unless certain "asset coverage" tests are met. If GECC is prohibited from making distributions, it may fail to qualify as a RIC and become subject to tax as an ordinary corporation.

        Gain or loss recognized by GECC from warrants it acquires, as well as any loss attributable to the lapse of such warrants, generally will be treated as capital gain or loss and may not offset ordinary income from original issue discount associated with the issuance of such warrants. Such gain or loss will be long-term or short-term capital gain or loss, depending on how long GECC has held the particular warrant. Net capital losses of GECC will not offset GECC's ordinary income (including ordinary income that may arise from original issue discount).

        GECC may in the future purchase securities that are treated for U.S. federal income tax purposes as shares in a passive foreign investment company (a PFIC ). GECC may be subject to U.S. federal income tax on its allocable share of a portion of any "excess distribution" received on, or any gain from the disposition of, such shares even if such income or gain is distributed as a taxable dividend to GECC's stockholders. Additional charges in the nature of interest generally will be imposed on GECC in respect of deferred taxes arising from any such excess distribution or gain. If GECC elects to treat a PFIC as a "qualified electing fund" under the Code (a QEF ), in lieu of the foregoing required inclusions, GECC will be required to include in income each year its proportionate share of the ordinary earnings and net capital gains of the QEF, even if such income is not distributed by the QEF. Alternatively, GECC may elect mark-to-market treatment for a PFIC; in which case, GECC will recognize as ordinary income its allocable share of any increase in the value of such shares, and as ordinary loss its allocable share of any decrease in such value to the extent that any such decrease does not exceed prior increases included in GECC's income. Under either election, GECC may be required to recognize in a year income in excess of distributions from PFICs and proceeds from dispositions of PFIC shares during that year, and GECC must distribute such income to satisfy the Annual Distribution Requirement and the Excise Tax Avoidance Requirement.

        If GECC holds more than 10% of the shares in a foreign corporation that is treated as a controlled foreign corporation ( CFC ), it may be treated as receiving a deemed distribution (taxable as ordinary income) ( subpart F income ) each year from such foreign corporation in an amount equal to its pro rata share of the corporation's income for the taxable year (including both ordinary earnings and capital gains), whether or not the corporation makes an actual distribution during such year. In general, a foreign corporation will be classified as a CFC if more than 50% of the shares of the corporation, measured by reference to combined voting power or value, is owned (directly, indirectly or by attribution) by U.S. Stockholders. A "U.S. Stockholder," for this purpose, is any U.S. person that possesses (actually or constructively) 10% or more of the combined voting power of all classes of shares of a corporation. If GECC is treated as receiving a deemed distribution from a CFC, it will be required to include such distribution in its investment company taxable income regardless of whether it receives any actual distributions from such CFC, and it must distribute such income to satisfy the Annual Distribution Requirement and the Excise Tax Avoidance Requirement.

        Although the Code generally provides that income inclusions from a QEF and subpart F income will be "good income" for purposes of the 90% Income Test to the extent it is distributed to a RIC in the year it is included in the RIC's income, the Code does not specifically provide whether income inclusions from a QEF and subpart F income for which no distribution is received during the RIC's taxable year would be "good income" for the 90% Income Test. The IRS has issued a series of private rulings in which it has concluded that all income inclusions from a QEF and subpart F income included in a RIC's income would constitute "good income" for purposes of the 90% Income Test. Such rulings are not binding on the IRS except with respect to the taxpayer to whom such rulings were issued. Accordingly, although GECC believes that the income inclusions from a QEF and subpart F income that it is required to include in its taxable income would be "good income" for purposes of the 90% Income Test, no guaranty can be made that the IRS would not assert that such income would not be "good income" for purposes of the 90% Income Test. If such income were not considered "good income" for purposes of the 90% Income Test, GECC may fail to qualify as a RIC.

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Failure to Qualify as a Regulated Investment Company

        If GECC is unable to qualify for treatment as a RIC, GECC would be subject to tax on all of its taxable income at regular corporate rates, regardless of whether GECC makes any distributions to its stockholders. Distributions would not be required, and any distributions made to GECC's stockholders would be treated as ordinary dividend income that, subject to certain limitations, may be eligible for preferential tax rates applicable to individuals, to the extent of GECC's current and accumulated earnings and profits. Subject to certain limitations under the Code, corporate distributees would be eligible for the dividends-received deduction. Distributions in excess of GECC's current and accumulated earnings and profits would be treated first as a return of capital to the extent of the stockholder's tax basis in the shares of GECC common stock, and any remaining distributions would be treated as a capital gain from a sale or exchange of the stock. If GECC fails to qualify as a RIC for a period greater than two taxable years, to qualify as a RIC in a subsequent year GECC may be subject to regular corporate tax on any net built-in gains with respect to certain of its assets (i.e., the excess of the aggregate gains, including items of income, over aggregate losses that would have been realized with respect to such assets if it had been liquidated) that GECC elects to recognize on requalification or when recognized over the next ten years.

        The remainder of this discussion assumes that GECC qualifies as a RIC at all times following the Merger.

Taxation of U.S. Stockholders

        If you are a U.S. stockholder, distributions by GECC generally will be taxable to you as ordinary income or capital gains. Distributions of GECC's "investment company taxable income" (which is, generally, GECC's net ordinary income plus realized net short-term capital gains in excess of realized net long-term capital losses) will be taxable as ordinary income to the extent of GECC's current or accumulated earnings and profits, whether paid in cash or reinvested in additional common stock. To the extent you are taxed at individual rates, such distributions paid by GECC to you that are attributable to dividends from U.S. corporations and certain qualified foreign corporations ( Qualifying Dividends ) may be eligible for taxation at a preferential rate. It is anticipated, however, that distributions paid by GECC generally will not be attributable to dividends and therefore generally will not qualify for the preferential rate applicable to Qualifying Dividends. Distributions of GECC's net capital gains (which are generally GECC's realized net long-term capital gains in excess of realized net short-term capital losses) and properly reported by GECC as "capital gain dividends" will be taxable to you as long-term capital gains that are currently taxable at a maximum rate of 20% (without taking into account the net investment income tax or U.S. state or local taxes) if you are taxed at individual rates, regardless of your holding period for your GECC common stock and regardless of whether paid in cash or reinvested in additional common stock. Distributions in excess of GECC's earnings and profits first will reduce your adjusted tax basis in your GECC common stock and, after the adjusted basis is reduced to zero, will constitute capital gains to you from a sale or exchange of the stock.

        Although GECC currently intends to distribute realized net long-term capital gains (i.e., net long term capital gains in excess of net short term capital losses), if any, at least annually, GECC may in the future retain some or all of its realized net long-term capital gains in excess of realized net short-term capital losses, but designate the retained net capital gains as a "deemed distribution." In that case, among other consequences, GECC will pay tax on the retained amount, you will be required to include your share of the deemed distribution in income as if it had been actually distributed to you, and you will be entitled to claim a credit equal to your allocable share of the tax paid thereon by GECC. Because GECC expects to pay tax on any retained capital gains at its regular corporate tax rate, and because that rate currently is higher than the maximum rate payable by U.S. stockholders taxed at individual rates on long-term capital gains, the amount of tax that individual U.S. stockholders will be treated as having paid will exceed the tax they owe on the capital gain distribution and that excess generally may be refunded or claimed as a credit against the U.S. stockholder's other U.S. federal income tax obligations. The amount of the deemed distribution net of such tax will be added to your cost basis for your GECC common stock. In order to utilize the deemed distribution approach, GECC must provide written notice to its stockholders within 60 days after the close of the relevant taxable year. GECC cannot treat any of its investment company taxable income as a "deemed distribution."

        For purposes of determining (1) whether the Annual Distribution Requirement is satisfied for any year and (2) the amount of capital gain dividends paid for that year, GECC may, under certain circumstances, elect to treat a

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dividend that is paid during the following taxable year as if it had been paid during the taxable year in question. If GECC makes such an election, you will still be treated as receiving the dividend in the taxable year in which the distribution is made. However, any dividend declared by GECC in October, November or December of any calendar year, payable to stockholders of record on a specified date in such a month and actually paid during January of the following year, will be treated as if it had been received by you on December 31 of the year in which the dividend was declared.

        Tax items that are treated differently for alternative minimum tax ( AMT ) purposes must be apportioned between GECC and its stockholders, and this may affect your AMT liabilities. Although regulations explaining the precise method of apportionment have not yet been issued, such items generally will be apportioned in the same proportion that dividends paid to you bear to GECC's taxable income (determined without regard to the dividends paid deduction), unless a different method for a particular item is warranted under the circumstances.

Sale or other Disposition of the GECC common stock

        You will generally recognize taxable gain or loss if you sell or otherwise dispose of your shares of GECC common stock. The amount of gain or loss will be measured by the difference between your adjusted tax basis in the GECC common stock sold and the amount of the proceeds received in exchange therefor. If you acquired GECC common stock in the Merger, your adjusted basis in the GECC common stock will equal your adjusted basis in your Full Circle common stock that was exchanged in the Merger for GECC common stock, as further adjusted after the Merger. Any gain or loss arising from such sale or disposition generally will be treated as long-term capital gain or loss if you held your GECC common stock and the Full Circle common stock for which you received those shares of GECC common stock in the Merger for a combined holding period of more than one year. Otherwise, the gain or loss will be classified as short-term capital gain or loss. However, any capital loss arising from the sale or disposition of shares of GECC common stock held for six months or less will be treated as long-term capital loss to the extent of the amount of capital gain dividends received, or undistributed capital gain deemed received, with respect to such shares. In addition, all or a portion of any loss recognized upon a disposition of shares of GECC common stock may be disallowed if other shares of GECC common stock are purchased (whether through reinvestment of distributions or otherwise) within 30 days before or after the disposition.

        GECC intends to send to you, as promptly as possible after the end of each calendar year, a notice reporting the amounts includible in your taxable income for such year as ordinary income and as long-term capital gain. In addition, the U.S. federal tax status of each year's distributions generally will be reported to the IRS (including the amount of dividends, if any, eligible to be taxed at preferential rates). Dividends that GECC pays generally will not be eligible for the dividends-received deduction or the preferential tax rate applicable to Qualifying Dividends because GECC's income generally will not consist of dividends. Distributions may also be subject to additional state, local and foreign taxes depending on your situation.

Tax Shelter Reporting Requirements

        Under applicable Treasury regulations, if you recognize a loss with respect to shares of $2 million or more (if you are a non-corporate U.S. stockholder) or $10 million or more (if you are a corporate U.S. stockholder) in any single taxable year (or a greater loss over a combination of years), you must file with the IRS a disclosure statement on IRS Form 8886. Had you held the securities held by GECC directly, in many cases you would have been excepted from this reporting requirement, but under current guidance, U.S. stockholders of a RIC are not excepted. Future guidance may extend the current exception from this reporting requirement to U.S. stockholders of most or all RICs. The fact that a loss is reportable under these regulations does not affect the legal determination of whether your treatment of the loss is proper. You should consult your tax advisors to determine the applicability of these regulations in light of your individual circumstances.

Taxation of Non-U.S. Stockholders

        If you are a non-U.S. stockholder, distributions to you of GECC's investment company taxable income will be subject to withholding of U.S. federal tax at a 30% rate (or lower rate if you are eligible for a reduced rate under an income tax treaty) to the extent of GECC's current and accumulated earnings and profits unless an applicable exception applies. If the distributions are effectively connected with your conduct of a U.S. trade or business, GECC will not be required to withhold U.S. federal tax if you comply with applicable certification and disclosure

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requirements, although the distributions will be subject to U.S. federal income tax at the rates applicable to U.S. persons and if you are a corporation you may be subject to the branch profits tax. (Special certification requirements apply to a non-U.S. foreign partnership or a foreign trust, and such entities are urged to consult their tax advisors.)

        Subject to the discussion below regarding FATCA, actual or deemed distributions to you of GECC's net capital gains, and gains you realize upon the sale of the GECC common stock, will not be subject to U.S. federal withholding tax and generally will not be subject to U.S. federal income tax unless the distributions or gains, as the case may be, are effectively connected with your conduct of a U.S. trade or business. The tax consequences to non-U.S. stockholders entitled to claim the benefits of an applicable tax treaty or that are individuals that are present in the U.S. for 183 days or more during a taxable year may be different from those described herein. Non-U.S. stockholders are urged to consult their tax advisors with respect to the procedure for claiming the benefit of a lower treaty rate and the applicability of foreign taxes.

        Distributions to you that are properly designated by GECC are generally exempt from U.S. federal withholding tax (subject to the discussion below regarding FATCA), when they are (a) paid by GECC in respect of GECC's "qualified net interest income" (generally, GECC's U.S. source interest income, other than certain contingent interest and interest from obligations of a corporation or partnership in which GECC is at least a 10% stockholder, reduced by expenses that are allocable to such income), or (b) paid by GECC in connection with GECC's "qualified short-term capital gains" (generally, the excess of GECC's net short-term capital gains over GECC's net long-term capital losses for such taxable year). However, depending on the circumstances, GECC may designate all, some or none of its potentially eligible distributions as derived from such qualified net interest income or from such qualified short-term capital gains, and a portion of such distributions (e.g., derived from interest from non-U.S. sources or any foreign currency gains) would be ineligible for this potential exemption from withholding. To qualify for this exemption from withholding, you must comply with applicable certification requirements relating to your non-U.S. status (including, in general, furnishing the appropriate IRS withholding certificate). Thus, an investment in the GECC common stock by a non-U.S. stockholder may have adverse tax consequences as compared to a direct investment in the assets in which GECC will invest.

        If GECC distributes its net capital gains in the form of deemed rather than actual distributions, you will be entitled to a U.S. federal income tax credit or tax refund equal to your allocable share of the tax GECC pays on the capital gains deemed to have been distributed. In order to obtain the refund, you must obtain a U.S. taxpayer identification number and file a U.S. federal income tax return even if you would not otherwise be required to obtain a U.S. taxpayer identification number or file a U.S. federal income tax return. If you are a corporate non-U.S. stockholder, distributions (both actual and deemed), and gains realized upon the sale of GECC common stock that are effectively connected to a U.S. trade or business may, under certain circumstances, be subject to an additional "branch profits tax" at a 30% rate (or at a lower rate if provided for by an applicable treaty).

        Non-U.S. persons should consult their tax advisors with respect to the U.S. federal income tax and withholding tax, and state, local and foreign tax consequences of an investment in the GECC common stock.

Backup Withholding

        If you are a U.S. stockholder, Full Circle and GECC may be required to withhold U.S. federal income tax (backup withholding) from all distributions to you (unless you are a corporation, a financial institution, or a stockholder that otherwise qualifies for an exemption) (1) if you fail to furnish Full Circle or GECC (as applicable), or the relevant paying agent, with a correct taxpayer identification number or a certificate that you are exempt from backup withholding or (2) if the IRS notifies Full Circle or GECC that you have failed to properly report certain interest and dividend income to the IRS and to respond to notices to that effect. An individual's taxpayer identification number is his or her social security number.

        If you are a non-U.S. stockholder who is a non-resident alien individual and who is otherwise subject to withholding of federal income tax, you will be subject to information reporting, but you may not be subject to backup withholding on taxable dividends or distributions if you provide Full Circle or GECC (as applicable) or the relevant paying agent with an IRS Form W-8BEN, IRS Form W-8BEN-E, or an acceptable substitute form.

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        Backup withholding is not an additional tax. Any amounts withheld from payments made to you may be refunded or credited against your U.S. federal income tax liability, if any, provided that the required information is timely furnished to the IRS.

Foreign Account Tax Compliance

        The Foreign Account Tax Compliance provisions of the U.S. Hiring Incentives to Restore Employment Act (FATCA), and the Treasury regulations promulgated thereunder, generally impose a withholding tax of 30% on (i) certain payments of U.S. source interest, dividends and other fixed or determinable annual or periodical gains, profits, and income and (ii) beginning on January 1, 2019, payments of gross proceeds from the sale, exchange, redemption, retirement or other taxable disposition of property of a type that can produce U.S. source interest or dividends, in each case, to certain non-U.S. entities, including certain foreign financial institutions and investment funds, unless such non-U.S. entity complies with certain reporting and withholding requirements regarding its U.S. account holders and its U.S. owners. Accordingly, the entity through which the GECC common stock is held will affect the determination of whether such withholding is required.

        Consult your tax advisor regarding FATCA's applicability to you and regarding any other tax reporting requirements that may apply to you, including investments made or held through an intermediary.

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DESCRIPTION OF THE MERGER AGREEMENT

        The following summary, which includes the material terms of the Merger Agreement, is qualified by reference to the complete text of the Merger Agreement, which is attached as Annex A to this document.

Structure of the Merger

        Subject to the terms and conditions of the Merger Agreement, Full Circle will merge with and into GECC and the separate corporate existence of Full Circle will cease. GECC will be the surviving entity of the Merger and will succeed to and assume all the rights and obligations of Full Circle and will continue its existence as a corporation under Maryland General Corporation Law. The time when the Merger will become effective is the Effective Time.

Closing; Completion of the Proposed Merger

        The closing of the Merger will occur not later than three business days after satisfaction or waiver of all of the conditions that must be met to consummate the Merger as described in the Merger Agreement (other than conditions that by their terms are to be satisfied at the closing, but subject to the satisfaction or waiver of such conditions at the closing).

Merger Consideration

        If the Merger is consummated, each share of Full Circle common stock issued and outstanding immediately prior to the Effective Time will be automatically converted into the amount of shares of GECC common stock, equal to the Exchange Ratio, without any interest and subject to the payment of cash instead of fractional shares (the Merger Consideration ).

        If at any time between the date of the Merger Agreement and the Effective Time the number of shares of issued or outstanding common stock of Full Circle or GECC has changed as a result of any reclassification, recapitalization, share split (including a reverse share split), or combination, exchange or readjustment of shares, or any share dividend or distribution (including any dividend or distribution of securities convertible into Full Circle common stock or GECC common stock) with a record date during such period, the Exchange Ratio will be equitably adjusted to reflect such change.

        Holders of shares of Full Circle common stock will not receive any fractional shares of GECC common stock in the Merger. Instead, each Full Circle stockholder will be paid an amount in cash (rounded to the nearest whole cent), without interest, equal to the product of (1) the fraction of a share of GECC common stock to which such holder of shares of Full Circle common stock would be entitled and (2) the average of the per share closing prices of Full Circle common stock reported on NASDAQ for the three consecutive trading days ending on and including the trading day immediately preceding the closing day of the Merger.

Dividends and Distributions

        No dividends or other distributions with respect to shares of GECC common stock will be paid to any former Full Circle stockholders who held certificated or book-entry shares and who have not surrendered their certificates to the exchange agent for shares of GECC common stock until such certificates or book-entry shares are surrendered in accordance with the letter of transmittal. Following the surrender of any such certificates or book-entry shares in accordance with the letter of transmittal, the record holders of such certificates or book-entry shares shall be entitled to receive, without interest, the amount of the Special Distribution payable in respect of such shares and the amount of any dividends or other distributions (1) with a record date after the Effective Time payable with respect to shares of GECC common stock exchangeable for such certificates or book-entry shares and previously paid and (2) at the appropriate payment date, the amount of dividends or other distributions with a record date after the Effective Time and a payment date subsequent to the surrender of the certificates or book-entry shares.

        The Merger Agreement provides that the Full Circle Board will authorize the Special Distribution (after the satisfaction or waiver of all of the conditions to the Merger, other than conditions that by their terms are to be satisfied at the Closing), but before the day (such day, the Effectiveness Day ) on which the Merger will become effective. The Full Circle Board will set the close of business on the Effectiveness Day as the record date for determining the holders of record of Full Circle common stock entitled to receive the Special Distribution. After the

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Effective Time, GECC shall cause the exchange agent, as agent for and on behalf of Full Circle, to pay the Special Distribution to such holders of record of Full Circle common stock.

        " Special Distribution " means a special distribution, payable in cash, in an aggregate amount equal to the sum of:

Conversion of Shares; Exchange of Shares

        The Exchange Ratio was determined as of the Measurement Date by:

        At the Effective Time, each share of Full Circle common stock issued and outstanding prior to the Effective Time will no longer be outstanding and will be cancelled and automatically converted into the amount of shares of GECC common stock equal to the Exchange Ratio, subject to the payment of cash instead of fractional shares. Each certificate previously representing any such shares will thereafter represent only (1) the right to receive the Merger Consideration; (2) the right to receive the Special Distribution; and (3) the right to any dividends or other distributions as described in "Description of the Merger Agreement—Dividends and Distributions".

        After the Effective Time, there will be no transfer on the stock transfer books of Full Circle of the shares of Full Circle common stock that were outstanding immediately prior to the Effective Time. If, after the Effective Time, certificates or book entry shares representing shares of Full Circle common stock are presented to GECC or the exchange agent for any reason, they will be cancelled and exchanged for shares of GECC common stock and cash in lieu of fractional shares. At the Effective Time, each share of Full Circle common stock issued and outstanding prior to the Effective Time will no longer be outstanding and will be cancelled and automatically converted into the amount of shares of GECC common stock equal to the Exchange Ratio, subject to the payment of cash instead of fractional shares. Each certificate previously representing any such shares will thereafter represent only (1) the right to receive, without any interest, for each such share of GECC common stock the Merger Consideration; (2) the right to receive the Special Distribution; and (3) the right to any dividends or other distributions as described in "Description of the Merger Agreement—Dividends and Distributions".

Letter of Transmittal

        Promptly after the Effective Time, but in any event within five business days, the exchange agent will mail to the holders of Full Circle common stock immediately prior to the Effective Time who held their shares in

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certificated or book-entry form a letter of transmittal and instructions for use in surrendering their certificate(s) in exchange for the Merger Consideration, the Special Distribution; and any dividends or other distributions payable with respect to the shares of GECC common stock exchangeable for such certificate(s) as described in "Description of the Merger Agreement—Dividends and Distributions".

        If a holder's certificate for shares of Full Circle common stock has been lost, stolen or destroyed, upon the making of an affidavit by such holder and, if reasonably required by GECC or the exchange agent, the posting of a bond in such reasonable and customary amount as GECC or the exchange agent may require, the exchange agent will deliver in exchange for such lost, stolen or destroyed shares of Full Circle common stock, the shares of GECC common stock and cash in lieu of fractional shares and the amount of the Special Distribution to which such holder is entitled.

Withholding

        GECC and the exchange agent will be entitled to deduct and withhold from any amounts otherwise payable to any Full Circle stockholder such amounts as may be required to be deducted and withheld with respect to the making of such payment under applicable tax laws. To the extent that any amounts are so deducted or withheld and are paid over to the applicable governmental entity, such deducted or withheld amounts will be treated for all purposes as having been paid to the stockholders in respect of whom they were deducted or withheld. U.S. stockholders that properly complete and execute, and submit, the IRS Form W-9 that will be provided with the letter of transmittal sent to Full Circle stockholders after the Merger generally will not be subject to U.S. tax withholding.

Representations and Warranties

        The Merger Agreement contains customary representations and warranties of Full Circle and GECC relating to their respective businesses. Each of the representations and warranties must be true and correct in all respects as of the date of the Merger Agreement and as of the closing date, except for (a) with respect to Full Circle, any failure to be true and correct that would not have a Company Material Adverse Effect (as defined in the Merger Agreement), and (b) with respect to GECC, de minimis inaccuracies.

        In determining whether a Company Material Adverse Effect of Full Circle has occurred or is reasonably likely to occur, the parties will disregard

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        The representations and warranties in the Merger Agreement do not survive the completion of the Merger. The Merger Agreement contains customary representations and warranties by each of GECC and Full Circle, subject to specified exceptions and qualifications, relating to, among other things:

Additional Representations and Warranties

        Full Circle has also made certain representations and warranties to GECC regarding the inapplicability of state takeover laws and absence of appraisal right.

        GECC has also made certain representations and warranties to Full Circle regarding its investment adviser.

        The representations and warranties described above and included in the Merger Agreement were made by each of Full Circle and GECC to the other. These representations and warranties were made as of specific dates, may be subject to important qualifications and limitations agreed to by Full Circle and GECC in connection with negotiating the terms of the Merger Agreement and may have been included in the Merger Agreement for the purpose of allocating risk between Full Circle and GECC rather than to establish matters as facts. The Merger Agreement is described in, and included as Annex A to, this document only to provide you with information

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regarding its terms and conditions and not to provide you with any factual information regarding Full Circle, GECC or their respective businesses.

Conduct of Business Pending Completion of the Merger

        Full Circle agreed to restrictions on it until completion of the Merger. In general, each of Full Circle and GECC agreed that before the completion of the Merger, except as contemplated by the Merger Agreement and subject to certain agreed upon exceptions, Full Circle will, and will cause its consolidated subsidiaries to:

        In addition, before the completion of the Merger, Full Circle has agreed that, subject to applicable law and certain agreed upon exceptions and except as expressly contemplated by the Merger Agreement, without the prior written consent of GECC, it will not, and will not permit its subsidiaries to, among other things, directly or indirectly:

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        In addition, before the completion of the Merger, GECC agreed, subject to applicable law and certain agreed upon exceptions and except as expressly contemplated by the Merger Agreement, it will not, among other things:

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        GECC will procure that, during the period from the date of the Merger Agreement to the earlier of the effective time and the date on which the Merger Agreement is terminated, except (1) as required by law or, (2) with the prior written consent of the Full Circle, which consent shall not be unreasonably withheld, delayed or conditioned, MAST and the investment funds managed by MAST will manage the MAST Portfolio to be acquired by GECC pursuant to the Subscription Agreement in the ordinary course consistent with past practice and, without limiting the generality of the foregoing, none of MAST or the investment funds managed by MAST will subject any of the assets included in the MAST Portfolio to any encumbrance that would prohibit the transfer of such assets to GECC under the Subscription Agreement.

        The MAST Funds will provide Full Circle prompt notice if any of them (1) agree to any modification of or waiver or forbearance under any loan document in respect of the MAST Portfolio, or waive or fail to enforce any material right under any such loan document or (2) consent to any release of collateral relating to any asset included in the MAST Portfolio. GECC will procure that, during the period from the Measurement Date to the earlier of the effective time and the date, if any, on which the Merger Agreement is terminated, neither MAST nor any of the investment funds managed by MAST will execute any trade with respect to any asset included in the MAST Portfolio except (a) as may be required by law, (b) with the prior written consent of Full Circle, which consent shall not be unreasonably withheld, delayed or conditioned, or (c) as required by the Merger Agreement.

        The Merger Agreement also contains covenants relating to the preparation of this document and the holding of the special meeting of Full Circle stockholders, access to information of the other company and obtaining certain other confirmations, approvals, notices and filings. Full Circle and GECC have also agreed to use their reasonable best efforts to promptly prepare all necessary documentation to effect all notices and filings and to obtain as promptly as practicable all governmental permits, consents, approvals and authorizations necessary or advisable to consummate the transactions contemplated by the Merger Agreement.

        GECC also agreed to use reasonable best efforts to cause the GECC common stock to be issued in the Merger to be approved for listing on the NASDAQ Global Market as promptly as possible.

Additional Covenants

Efforts of Full Circle to Obtain Required Stockholder Votes

        Full Circle agreed to take all action necessary to hold a meeting of its stockholders as soon as reasonably practicable after the registration statement has been declared effective by the SEC (but in any event no later than 45 days after such declaration of effectiveness) for the purpose of obtaining approval from the Full Circle stockholders of the Merger Proposal.

        The Full Circle Board or any committee thereof may, at any time prior to receipt of stockholder approval, (1) approve, endorse or recommend a Superior Proposal (as defined in the Merger Agreement) and cause Full Circle to terminate the Merger Agreement to enter into a definitive agreement with respect to Superior Proposal or modify, amend or withdraw its recommendation that the Full Circle stockholders approve the Merger Proposal, if (in either case) the Full Circle Board determines, in good faith, after consultation with counsel, that the failure to take such action could reasonably be expected to be inconsistent with the directors' fiduciary duties under applicable law.

Indemnification; Directors' and Officers' Insurance

        GECC agrees that all rights to exculpation indemnification and advancement of expenses existing as of the date of the Merger Agreement in favor of (i) the current or former directors, managers, officers and employees of Full Circle or any of its subsidiaries, (ii) each person who served as a director, manager, officer, member, trustee or fiduciary of another corporation, partnership, joint venture, trust, pension or other employee benefit plan or enterprise if such service was at the request or for the benefit of Full Circle or any of its subsidiaries, and (iii) Full Circle Advisors, Full Circle Service Company, each of their respective members, and their respective officers, managers, partners, agents, employees, controlling persons, members and any other person affiliated with any of

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them (each, an Indemnified Party ) as provided in the respective articles of incorporation and bylaws (or equivalent organizational documents) of Full Circle or any of its subsidiaries and in any Indemnification Agreement (as defined below) will survive the Merger and will continue in full force and effect, to the fullest extent such rights to exculpation, indemnification and advancement of expenses are permitted under applicable law. For a period of six years from the Effective Time, GECC will contain and maintain in effect the exculpation, indemnification and advancement of expenses provisions of such articles of incorporation, bylaws and indemnification agreements as in effect as of the date of the Merger Agreement, and will not amend, repeal or otherwise modify any such provisions in any manner that would adversely affect the rights thereunder of the Indemnified Party. Indemnification Agreement means any indemnification or exculpation agreement or provision between Full Circle or any of its Subsidiaries on the one hand and on the other hand an Indemnified Party, including under the Investment Advisory Agreement, dated as of July 13, 2010, by and between Full Circle and Full Circle Advisors, and the Administration Agreement, dated as of July 14, 2010, by and between Full Circle and Full Circle Service Company, as in effect on the date of this Agreement.

        From and after the Effective Time, GECC will indemnify, defend and hold harmless each Indemnified Party against all costs and expenses (including reasonable attorneys' fees and expenses), judgments, fines, losses, claims, damages, liabilities, penalties and amounts paid in settlement or compromise in connection with any actual or threatened claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, whenever asserted (any of the foregoing a Legal Proceeding ), arising out of, relating to or in connection with an action, omission, circumstance or state of affairs occurring or existing or alleged to have occurred or existed at or prior to the Effective Time and related to or arising out of an Indemnified Party's service as a director, manager, officer, employee, investment adviser, administrator or fiduciary of Full Circle or any of its subsidiaries (including any Legal Proceeding relating to the Merger Agreement, the Merger or other transactions contemplated by the Merger Agreement), whether asserted or claimed prior to, at or after the Effective Time, in each case to the fullest extent permitted by law.

        The Merger Agreement requires Full Circle to purchase a tail policy of directors' and officers' liability insurance and fiduciary liability insurance for the Indemnified Parties and any other employees, agents or other individuals otherwise covered by such insurance policies prior to the Effective Time (collectively, the Insured Parties ) with respect to matters occurring at or prior to the Effective Time (including the Merger and the other transactions contemplated by the Merger Agreement). GECC will be required to cause that insurance policy to be maintained in full force and effect, for its full term, and to cause all obligations thereunder to be honored by GECC.

No Solicitation by Full Circle

        Full Circle has agreed that it will not, and will cause its subsidiaries not to, and will instruct Full Circle's and its subsidiaries' respective officers, directors, employees, managers, members, partners, agents, potential financing sources or advisors (including attorneys, accountants, investment bankers and consultants) of a party (collectively, "Representatives") (whether acting in such capacity or otherwise) not to (1) initiate or solicit or knowingly encourage any inquiries with respect to, or the making of, any "Acquisition Proposal" (as defined below) or (2) (A) engage in negotiations or discussions with or provide any information or data to, any person that reasonably could be expected to lead to an Acquisition Proposal, (B) approve, endorse or recommend, or propose publicly to approve, endorse or recommend, any Acquisition Proposal or (C) execute or enter into any letter of intent, agreement in principle, Merger or other similar agreement relating to any Acquisition Proposal. From and after the date of the Merger Agreement, the Full Circle Board (in its capacity as such) will not (x) take any steps to encourage or otherwise facilitate any direct or indirect transaction or series of transactions that could result in (1) an assignment (as defined under the 1940 Act) of Full Circle's investment advisory agreement with Full Circle Advisors, (2) termination or modification of Full Circle's existing investment advisory agreement with Full Circle Advisors, or (3) entry into a new investment advisory agreement, including any sub-advisory agreement, in each case including but not limited to any authorization or approval thereof by the Full Circle Board or solicitation of approval thereof from the stockholders of Full Circle, or (y) authorize or approve a liquidation of Full Circle. Full Circle shall, and shall direct each of its representatives to, immediately cease (and not resume) any solicitations, discussions or negotiations with any person (other than MAST, Great Elm Capital Group, GECC and their affiliates) conducted before the date of the Merger Agreement with respect to any Acquisition Proposal or that

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reasonably could be expected to lead to an Acquisition Proposal and promptly request the return or destruction of confidential information related thereto.

        For purposes of the Merger Agreement, the term " Acquisition Proposal " means any inquiry, offer or proposal made by any person or group of persons (other than MAST, Great Elm Capital Group, GECC and their affiliates), relating to any direct or indirect acquisition or purchase, or that could result in ownership, of securities of Full Circle representing more than 25% of the outstanding voting capital stock of Full Circle or Full Circle's assets or any tender offer, exchange offer, merger, reorganization, consolidation, share exchange or other business combination that if consummated would result in any person or group of persons beneficially owning more than 25% of the outstanding voting capital stock of Full Circle or Full Circle's assets.

        If at any time prior to obtaining approval of the Merger from Full Circle's stockholders, Full Circle receives a bona fide Acquisition Proposal that is not received in violation of relevant provisions of the Merger Agreement, Full Circle, the Full Circle Board or any committee thereof may participate in discussions or negotiations with, or furnish any information to, any person making such Acquisition Proposal and its Representatives or potential sources of financing if the Full Circle Board determines in good faith, after consultation with counsel and its financial advisor, that such person is reasonably likely to submit to Full Circle a Superior Proposal (as defined below) and that failure to consider such proposal could reasonably be expected to be inconsistent with the fiduciary duties of its directors, subject to certain limitations on the provision of nonpublic information to such person.

        Full Circle is required promptly (and in any event within 48 hours) to notify GECC of the receipt by Full Circle of any Acquisition Proposal, and of the material terms of, and identity of the person(s) making, such Acquisition Proposal (including a copy thereof and any financing commitment papers submitted therewith, if such Acquisition Proposal is in writing). Full Circle is required to keep GECC reasonably informed of the status and material terms and conditions of any such Acquisition Proposal (and in any event within 48 hours) and of any amendments or proposed amendments thereto and is required promptly (and in any event within 48 hours) to notify GECC of any determination by the Full Circle Board that such an Acquisition Proposal constitutes a Superior Proposal.

        The Full Circle Board or any committee thereof may, at any time before Full Circle's stockholders vote to approve the Merger, (1) approve, endorse or recommend a Superior Proposal and cause Full Circle to terminate the Merger Agreement to enter into a definitive agreement with respect to a Superior Proposal or (2) modify or amend in a manner adverse to GECC or withdraw the board of directors' recommendation that the stockholders of Full Circle approve the Merger Agreement (any action described in (1) or (2) above being referred to as a Change in Recommendation ), provided that before any such Change in Recommendation, the Full Circle Board is required to have determined, in good faith (after consultation with its counsel), that failure to take such action could reasonably be expected to be inconsistent with the directors' fiduciary duties of its directors.

        For purposes of the Merger Agreement, the term Superior Proposal means any bona fide written Acquisition Proposal received after the date of the Merger Agreement that the Full Circle Board determines in good faith, after consultation with its outside legal and financial advisors, to be reasonably likely to be consummated in accordance with its terms and to be more favorable to Full Circle and its stockholders from a financial point of view than the Merger; provided that for purposes of this definition references to 25% in the definition of "Acquisition Proposal" shall be deemed to be references to 50%.

Conditions to the Merger

Conditions to Each Party's Obligations to Effect the Merger

        The obligations of Full Circle and GECC to complete the Merger are subject to the satisfaction or, where permissible, waiver of the following conditions:

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Conditions to the Obligations of GECC to Effect the Merger

        The obligation of GECC to complete the Merger is subject to the satisfaction or waiver of the following conditions:

Conditions to the Obligations of Full Circle to Effect the Merger

        The obligation of Full Circle to complete the Merger is subject to the satisfaction or waiver of the following conditions:

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Termination of the Merger Agreement

Right to Terminate

        The Merger Agreement may be terminated at any time prior to the Effective Time, whether before or after the Full Circle stockholders vote to approve the Merger, as follows:

        Neither Full Circle nor GECC has the right to terminate the Merger Agreement if its breach of its obligations under the Merger Agreement is a proximate cause of the basis for termination.

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Effect of Termination

        If the Merger Agreement is terminated, it will become null and void, and there will be no damages or liability on the part of GECC or Full Circle or their respective directors, officers, employees, stockholders, representatives, agents or advisors, except that (1) termination of the Merger Agreement will not relieve a party of liability for fraud or for any knowing or intentional breach of any obligation under the Merger Agreement and (2) the confidentiality provisions of the Merger Agreement and the termination fee and expenses reimbursement provisions described below will survive.

        If the Merger Agreement is terminated:

        No more than one Termination Fee will be payable under the Merger Agreement.

        For purposes of the Merger Agreement, the term Alternative Transaction means any of the following events: (1) any tender or exchange offer, merger, consolidation, share exchange or business combination transaction involving Full Circle, with any person other than GECC, Great Elm Capital Group, MAST or any affiliate thereof (a Third Party ) or (2) the acquisition by a Third Party of 50% or more of the outstanding shares of Full Circle common stock, or of 50% or more of the assets or operations of Full Circle and its subsidiaries, taken as a whole, in a single transaction or a series of related transactions (excluding, however, sales or other dispositions of portfolio assets in the ordinary course).

Expenses and Fees

        In general, each of GECC and Full Circle will be responsible for all costs and expenses incurred by it in connection with the negotiation and completion of the transactions contemplated by the Merger Agreement whether or not the Merger is consummated. Each of GECC and Full Circle are responsible for the payment of 50% of the estimated cost to print and distribute this document.

Amendment and Waiver of the Merger Agreement

        Subject to applicable law, the parties may, by written agreement, amend the Merger Agreement, waive any inaccuracies in the representations and warranties of the other party or waive compliance by the other party with any of the agreements or conditions to that party's obligation to complete the Merger.

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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

        The Merger Agreement provides that the holders of Full Circle common stock will be entitled to receive [     ·     ] shares of GECC common stock for each share of Full Circle common stock held by them immediately prior to the Effective Time. This is estimated to result in approximately [     ·     ] million shares of GECC common stock being issued in connection with the Merger. The unaudited pro forma condensed consolidated financial information has been derived from and should be read in conjunction with the historical consolidated financial statements and the related notes of Full Circle, GECC and the Special Purpose Schedule of Investments, which are included elsewhere in this document. See "Index to Financial Statements."

        The following unaudited pro forma condensed consolidated financial information and explanatory notes illustrate the effect of the Merger and the Formation Transactions on GECC's financial position using the acquisition method of accounting with GECC treated as the accounting acquirer.

        In accordance with generally accepted accounting principles in GAAP, the assets and liabilities of Full Circle will be recorded by GECC at their estimated fair values as of the date the Merger is completed. The unaudited pro forma condensed combining balance sheet as of March 31, 2016 assumes the Formation Transactions and the Merger took place on that date.

        The unaudited pro forma condensed combining balance sheet is presented for illustrative purposes only and does not necessarily indicate the results of operations or the combined financial position that would have resulted had the Formation Transactions or the Merger been completed on the date presented. In addition, as explained in more detail in the accompanying notes to the unaudited pro forma condensed combining balance sheet, the allocation of the pro forma purchase price reflected in the unaudited pro forma condensed combining balance sheet involves estimates, is subject to adjustment and may vary significantly from the actual purchase price allocation that will be recorded upon completion of the Merger.

        After completion of the Formation Transactions, GECC will have $30 million of cash and own a portfolio of debt instruments that MAST valued at approximately $90 million as of June 30, 2016.

        The following unaudited pro forma condensed combining balance sheet gives effect to the Merger and the Formation Transactions. Specifically, GECC presents the pro forma condensed combining balance sheet pro forma condensed combining balance sheet as if on March 31, 2016:

        In order to make the unaudited pro forma condensed combining balance sheet easier to read, the unaudited pro forma condensed combined financial statements, associated adjustments and related information are referred to as the "pro forma financial statements" throughout this document. All such statements and information are condensed unaudited, and also combined.

        The pro forma financial statements are based on, and should be read in conjunction with, the separate historical consolidated financial statements and accompanying notes of Full Circle, the balance sheet of GECC and the special purpose statement of investments included in this document.

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GREAT ELM CAPITAL CORP.
UNAUDITED CONDENSED COMBINING PRO FORMA BALANCE SHEET
AS OF MARCH 31, 2016

 
  Full Circle   GECC   Initial GECC
Portfolio
  Formation
Transactions
Adjustments
  Merger
Adjustments
  Pro-Forma  

Assets

                                     

Control investments at fair value

  $ 130,000                           $ 130,000  

Affiliate investments at fair value

    3,787,728                             3,787,728  

Non-control/non-affiliate investments at fair value

    87,357,234         $ 90,000,000                 177,357,234  

Total investments at fair value

    91,274,962           90,000,000                 181,274,962  

Cash

    19,778,639   $ 30,000,000               $ (6,098,038) (c)     43,680,601  

Interest receivable

    1,098,038                             1,098,038  

Principal receivable

    27,578                             27,578  

Due from affiliates

    246,929                             246,929  

Due from portfolio investments

    256,340                             256,340  

Receivable for investments sold

    2,849,194                             2,849,194  

Prepaid expenses

    148,547                             148,547  

Other Assets

    28,483                             28,483  

Deferred offering expenses

    367,807                       (367,807) (e)      

Deferred credit facility fees

    50,624                       (50,624) (e)      

Total assets

  $ 116,127,141   $ 30,000,000   $ 90,000,000               $ 229,610,672  

Liabilities

                                     

Due to affiliates

  $ 716,479                           $ 716,479  

Accrued liabilities

    289,282                             289,282  

Distributions payable

    786,529                             786,529  

Interest payable

    45,062                             45,062  

Other liabilities

    187,826               $ 1,600,000  (a)     2,848,000  (b)     4,635,826  

Notes payable

    33,072,290                       936,607  (d)     34,008,897  

Total liabilities

    35,097,468                         40,482,075  

Commitments and contingencies

                                 

Net assets

  $ 81,029,673   $ 30,000,000   $ 90,000,000               $ 189,128,597  

Components of net assets

                                     

Common Stock, par value $0.01 per share

  $ 224,722   $ 20,000   $ 60,000     (1,067) (a)     (176,666) (e)   $ 126,989  

Paid-in capital in excess of par

    130,072,314     29,980,000     89,940,000     (1,598,933) (a)     (59,391,773) (e)     189,001,608  

Distributions in excess of net investment income

    (763,276 )                     763,276  (e)      

Accumulated net realized losses

    (21,149,983 )                     21,149,983  (e)      

Accumulated net unrealized losses

    (27,354,104 )                     27,354,104  (e)      

Net assets

  $ 81,029,673   $ 30,000,000   $ 90,000,000               $ 189,128,597  

Net asset value per share (See Note 6)

  $ 3.61                           $ 14.89  

   

The accompanying notes are an integral part of this financial statement.

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GREAT ELM CAPITAL CORP.
NOTES TO THE UNAUDITED CONDENSED COMBINING PRO FORMA BALANCE SHEET
MARCH 31, 2016

Note 1. Basis of Presentation

         General .    The accompanying pro forma condensed combining balance sheet reflects the impact of the Formation Transactions and the Merger on GECC's balance sheet. The pro forma condensed consolidating balance sheet is based on the historical financial statements and accounting records of Full Circle, giving effect to the Formation Transactions and the Merger and pro forma adjustments as described in these notes.

        The pro forma condensed consolidating balance sheet is presented as if the Merger and the Formation Transactions had occurred on March 31, 2016 and as if GECC had been incorporated on that date.

        The historical financial statements of Full Circle, the balance sheet of GECC and the special purpose schedule of investments are adjusted to give effect to pro forma events that are (1) directly attributable to the Merger or the Formation Transactions and (2) factually supportable.

         Purchase Accounting .    The pro forma condensed consolidating balance sheet was prepared using the acquisition method of accounting under existing GAAP, with GECC as the acquirer in the Merger for accounting purposes. Under the acquisition method of accounting, GECC will measure the total estimated purchase price (consideration transferred) as described in Note 4, "Estimate of Consideration Expected to be Transferred," at the Effective Time using the market price of GECC common stock and number of outstanding shares of Full Circle common stock at that time. Therefore, this may result in a per share equity value that is different from that assumed for the purposes of preparing this pro forma condensed consolidating balance sheet. GECC has assumed that Full Circle's assessment of the fair market value of its assets is correct and will revise the valuation of Full Circle's assets and liabilities at the Effective Time as additional information becomes available and as GECC performs additional valuation work.

        Once the Merger has closed, GECC will complete the purchase price allocation after performing a valuation of Full Circle's assets and liabilities at the level of detail necessary to finalize the purchase price allocation. Differences between these preliminary estimates and the final acquisition accounting will occur and these differences could have a material impact on the pro forma condensed consolidating balance sheet and GECC's future results of operation and financial position.

         Transaction Costs .    Acquisition related transaction costs (e.g., investment banker, advisory, legal, valuation, and other professional fees) have not been included as a component of consideration transferred, but instead must be expensed as incurred. The pro forma balance sheet reflects the anticipated transaction costs of both companies as accrued expenses with a corresponding decrease in stockholders equity and net asset value in the pro forma condensed consolidating balance sheet. The costs that Full Circle, MAST, Great Elm Capital Group and GECC may ultimately incur could differ materially from these amounts.

         Accounting Policies .    In order to prepare the pro forma financial statements, GECC performed a preliminary review of Full Circle's accounting policies to identify significant differences. After the Merger is completed, GECC will conduct an additional review of GECC's accounting policies to determine if differences in accounting policies require further adjustment or reclassification of Full Circle's results of operations, assets or liabilities to conform to GECC's accounting policies and classifications. As a result of that review, GECC may identify additional differences between the accounting policies of the two companies that, when conformed, could have a material impact on the pro forma financial statements. GECC will have a December 31 fiscal year end and Full Circle has a June 30 fiscal year end.

         Limitations .    The pro forma condensed combining balance sheet is presented for informational purposes only and the pro forma condensed combining balance sheet is not necessarily indicative of what GECC's financial position would actually have been had GECC been incorporated, the Formation Transactions been completed or the Merger had been completed on the date indicated. In addition, the pro forma condensed consolidating balance sheet does not purport to project the future financial position of GECC. There were no material transactions among Full Circle, the MAST Funds, Great Elm Capital Group or GECC that would need to be eliminated.

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Note 2. The Merger

        Upon completion of the Merger, Full Circle stockholders will receive [     ·     ] shares of GECC common stock for each share of Full Circle common stock. The exchange ratio is fixed and will not be adjusted for changes in the market value of shares of Full Circle common stock or net asset value.

        The Merger Agreement provides that before the Effective Time, the Full Circle Board will declare the Special Distribution. The amount of the Special Distribution will be $5,000,000, plus Full Circle's Undistributed Net Investment Income from March 31, 2016 through the Measurement Date, plus the amount of net investment income paid or accrued on Full Circle's investment portfolio and cash from the Measurement Date through the Effective Time.

        The exchange ratio will be determined based on Full Circle's and GECC's respective net asset values as of the Measurement Date. GECC's net asset value is to be determined giving effect to the transactions contemplated by the Subscription Agreement as if such transactions had been completed as of the Measurement Date.

        The pro forma condensed consolidating balance sheet is presented as if the Measurement Date were March 31, 2016, although the Measurement Date was subsequent to March 31, 2016. Full Circle's and GECC's net asset value will continue to fluctuate until the Merger is completed and the market value of the GECC common stock issued as merger consideration is unknown. As a result, the consideration assumed for purposes of this pro forma condensed consolidating balance sheet will differ, and that difference may be material.

Note 3. The Formation Transactions

        Pursuant to the Subscription Agreement, on June 23, 2016, Great Elm Capital Group contributed $30,000,000 to GECC in exchange for 30 shares of GECC common stock and on the Measurement Date, GECC will issue additional shares of its common stock to Great Elm Capital Group so that the total number of shares held by Great Elm Capital Group immediately before the Merger will equal (a) $30,000,000 minus 25% of GECC's costs associated with the Merger and the Formation Transactions divided by (b) $15.00.

        Pursuant to the Subscription Agreement, the MAST Funds will contribute a portfolio of debt investments to GECC. The special purpose schedule of investments included in this document describes that portfolio as of June 30, 2016. The MAST Funds may adjust the portfolio in certain respects as of the Measurement Date. GECC will issue shares of its common stock equal to (a) the fair market value of the securities contributed by the MAST Funds as of the Measurement Date minus 75% of GECC's costs associated with the Merger and the Formation Transactions divided by (b) $15.00.

        GECC agreed to reimburse MAST and Great Elm Capital Group's transaction costs if the transactions are completed. GECC has estimated its, MAST's and Great Elm Capital Group's aggregate transaction costs through the Effective Time will be approximately $1,600,000.

Note 4. Estimate of Consideration Expected to be Transferred

        In estimating the fair value of the merger consideration, or purchase price, GECC has assumed a price per share of GECC common stock of $15.00. The following is a preliminary estimate of the purchase price:

Full Circle net asset value as of the Measurement Date (a)

  $ 81,029,673  

Special distribution (b)

    (6,098,038 )

Estimated Full Circle transaction costs not deducted in determining net asset value as of the Measurement Date (c)

    (2,848,000 )

Estimate of consideration to be transferred

  $ 72,447,635  
(a)
Represents Full Circle's net asset value as of March 31, 2016.

(b)
Full Circle's accrued and unpaid interest as of March 31, 2016 was $1,098,038. There is no factual basis for estimating Full Circle Undistributed Net Investment Income from March 31, 2016 through the Effective Time. This amount includes the $5,000,000 fixed distribution specified in the Merger Agreement.

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(c)
Full Circle's total transaction costs are estimated at $2,900,000 of which approximately $52,000 had been paid or accrued as of March 31, 2016.

Note 5. Pro Forma Adjustments

(a)
To record estimated GECC's transaction costs (including reimbursement of costs incurred by Great Elm Capital Group and MAST in connection with the Formation Transactions and the Merger).

(b)
To record estimated Full Circle transaction costs in excess of those which were accrued on or before March 31, 2016.

(c)
Estimated amount of the Special Distribution to be declared by Full Circle immediately before the Effective Time and payable after the Effective Time.

(d)
To adjust the carrying value of Full Circle's debt to market value as of March 31, 2016.

(e)
To eliminate historical Full Circle accounts and otherwise record purchase accounting adjustments.

Note 6. Pro Forma Shares

        Historical net asset value per share for Full Circle is calculated based on 22,427,243 shares of Full Circle common stock outstanding on March 31, 2016. For purposes of calculating pro forma net asset value per share, pro forma shares outstanding were determined as follows:

 
  Full Circle   Great Elm
Capital Group
  MAST Funds   Total  

Net asset value (a)

  $ 72,083,365   $ 29,600,000   $ 88,800,000   $ 190,483,365  

Shares (b)

    4,805,576     1,973,333     5,920,000     12,698,909  
(a)
Reflects the amount in the applicable party's financial statements included in this document adjusted as contemplated in Note 5.

(b)
Reflects the GECC shares issuable per the Merger Agreement and the Subscription Agreement respectively as if the Measurement Date were March 31, 2016 and the Merger and the Formation Transactions were consummated as of such date.

        Reflects the GECC shares issuable per the Merger Agreement and the Subscription Agreement respectively as if the Measurement Date were March 31, 2016 and the Merger and the Formation Transactions were consummated as of such date.

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CAPITALIZATION

        The following table sets forth GECC's (1) actual capitalization at June 30, 2016, (2) as adjusted capitalization after completion of the Formation Transactions and (3) as adjusted capitalization after the Formation Transactions and the Merger. You should read this table together with GECC's and Full Circle's balance sheets and the pro forma financial information included elsewhere in this document.

 
  Historical   As Adjusted
for the
Contribution
of the Initial
Great Elm
Portfolio
  As Adjusted for
the Formation
Transactions
and the Merger
 

Cash and cash equivalents

  $ 30,000,000   $ 28,400,000   $ 43,680,601  

Indebtedness:

   
 
   
 
   
 
 

8.25% Notes payable due June 30, 2020

                34,008,897  

Stockholders equity:

   
 
   
 
   
 
 

Common Stock, par value $0.01 per share, 100,000,000 shares authorized (30 shares outstanding historical, 7,893,333 shares outstanding after the Formation Transactions, and 12,698,909 shares outstanding after the Formation Transactions and the Merger)

        78,933     126,989  

Additional paid in capital

    30,000,000     118,321,067     189,001,608  

Realized gains (losses)

                   

Accumulated unrealized gains (losses)

                   

Accumulated undistributed earnings

                   

Total stockholders equity

  $ 30,000,000   $ 118,400,000   $ 189,128,597  

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MARKET PRICE, DIVIDEND AND DISTRIBUTION INFORMATION

        Full Circle common stock trades on the NASDAQ Global Market under the symbol "FULL." Full Circle common stock has historically traded at prices both above and below net asset value. GECC common stock may trade below net asset value following the Merger.

        The following table sets forth, for each fiscal quarter during the last two fiscal years and the current fiscal year, the net asset value per share of Full Circle's common stock, the range of high and low closing sales prices of Full Circle common stock, the closing sales price as a percentage of net asset value and the distributions declared by Full Circle.

 
   
   
   
  Premium
(Discount) of
High Sales
Price to
NAV (2)
  Premium
(Discount) of
Low Sales
Price to
NAV (2)
   
 
 
   
  Price Range    
 
 
   
  Cash
Distributions
per Share (3)
 
 
  NAV (1)   High   Low  

Fiscal 2017

                                     

Second Quarter (through [ · ], 2016)

    *   $ [          ]   $ [          ]     *     *   $ 0.000  

First Quarter (through July 29, 2016)

    *     [2.72]     [2.60]     *     *     0.000  

Fiscal 2016

                                     

Fourth Quarter

    *     2.95     2.28                 0.000  

Third Quarter

  $ 3.61     2.64     2.04     (27 )%   (43 )%   0.000  

Second Quarter

    3.76     3.27     2.41     (13 )%   (36 )%   0.105  

First Quarter

    4.00     3.60     3.00     (10 )%   (25 )%   0.105  

Fiscal 2015

                                     

Fourth Quarter

    4.30     3.84     3.46     (11 )%   (20 )%   0.105  

Third Quarter

    4.43     5.00     3.48     13 %   (21 )%   0.105  

Second Quarter

    5.48     6.58     4.43     20 %   (19 )%   0.201  

First Quarter

  $ 6.24   $ 7.98   $ 6.05     28 %   (3 )% $ 0.201  
(1)
Net asset value per share is determined as of the last day in the relevant quarter and therefore may not reflect the net asset value per share on the date of the high and low sales prices. The net asset values shown are based on outstanding shares at the end of each period.

(2)
Calculated as the respective high or low sales price less NAV, divided by NAV.

(3)
Represents the cash distribution declared in the specified quarter. Full Circle's monthly distributions, if any, will be determined by its board of the Full Circle Board on a quarterly basis.

*
Not determinable at the time of filing.

        On August [     ·     ], 2016, the last reported sales price of Full Circle's common stock was $[     ·     ] per share.

        Shares of BDCs may trade at a market price that is less than the value of the net assets attributable to those shares. Since Full Circle's initial public offering in August 2010, its shares of common stock have traded at both a discount and premium to the net assets attributable to those shares. As of June 23, 2016, Full Circle's shares of common stock traded at a discount equal to approximately 24% of the net assets attributable to those shares based upon its net asset value as of March 31, 2016. It is possible that the shares of GECC common stock will trade below net asset value. Closed-end fund shares trade frequently at a discount from net asset value, which creates a risk of loss for investors acquiring shares in the initial public offering.

        Full Circle will declare a Special Distribution to record holders of shares of Full Circle common stock immediately before the Effective Time. See "Description of the Merger Agreement—Dividends and Distributions."

        Both Full Circle and GECC intend to distribute a minimum of 90% of their ordinary income and net realized short-term capital gains in excess of realized net long-term capital losses, if any, to their stockholders. The amount of such distributions will be determined by each of their board of directors. To the extent the taxable earnings for

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any fiscal year fall below the total amount of distributions for that fiscal year, a portion of those distributions may be deemed a tax return of capital to stockholders. Thus, the source of a distribution to a stockholder may be the original capital invested by the stockholder rather than taxable ordinary income or capital gains.

        You should read any written disclosure accompanying a distribution payment carefully and should not assume that the source of any distribution is taxable ordinary income or capital gains.

        There can be no assurance that Full Circle or GECC will achieve investment results or maintain a tax status that will permit any particular level of distribution payment. Their respective ability to make distributions is limited by the asset coverage requirements under the 1940 Act. For a more detailed discussion, see "Regulation as a Business Development Company."

        Both Full Circle and GECC have adopted a dividend reinvestment plan. If your shares of common stock are registered in your own name, your distributions will automatically be reinvested under such dividend reinvestment plan in additional whole and fractional shares of common stock, unless you opt out of such dividend reinvestment plan by delivering a written notice to the distribution paying agent. If your shares are held in the name of a broker or other nominee, you should contact the broker or nominee for details regarding opting out of such dividend reinvestment plan.

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GECC

Business of GECC

        GECC is a newly formed, externally managed non-diversified closed-end management investment company that intends to elect to be regulated as a BDC under the 1940 Act prior to the consummation of the Merger. GECC is an "emerging growth company" within the meaning of the JOBS Act, and, as such, is subject to reduced public company reporting requirements. GECC's investment objective is to seek to generate both current income and capital appreciation, while seeking to protect against risk of capital loss, by investing predominantly in the debt securities of middle market companies, which GECM defines as companies with enterprise values between $100 million and $2 billion. GECC's investment objectives may be changed without a vote of the holders of a majority of voting securities. GECC will be managed by GECM, which will also provide the administrative services necessary for GECC to operate.

        GECC will seek to generate current interest and capital appreciation by investing in the capital structures of predominately middle-market companies that operate in a diverse range of industries. GECC expects to make multi-year investments primarily in secured and senior unsecured debt instruments that it purchases in the secondary markets, though it may also originate investments or acquire them directly from issuers. GECC believes that out-of-favor companies can offer the best risk-adjusted returns and will, therefore, likely invest in companies that have high leverage or operate in industries experiencing cyclical declines. Investments in these companies may trade at discounts to their original issue prices. GECC will seek to protect against risk of loss by investing in borrowers with tangible and intangible assets, where GECM believes asset values are expected to or do exceed the market value of the debt that is senior or ranks in parity with GECC's investment. GECC will seek investments whose total return potential (interest income plus capital appreciation and fees, if any) appropriately recognizes potential investment risks. GECM's investment process includes a focus on an investment's related contractual documents, as it seeks to identify rights that enhance an investment's risk protection and avoid those that compromise potential returns or recoveries. GECC may also make investments in subordinated debt, mezzanine debt, and equity or equity-linked financial instruments.

Investment Manager and Administrator

        GECC will be managed by GECM, whose investment team has an aggregate of more than 100 years of experience in the aggregate financing and investing in leveraged middle market companies. GECM's team is led by Peter A. Reed, who has been employed by MAST since 2004. Senior members of GECM's investment team are expected to include Adam M. Kleinman, John S. Ehlinger and Adam W. Yates. The GECM investment team has deployed more than $17 billion into more than 550 issuers across 20+ jurisdictions over its 14 year history under MAST.

        GECC expects to benefit from the ability of GECM's investment team to identify attractive risk-adjusted investment opportunities, conduct diligence on and value prospective investments, negotiate investment terms, secure collateral against GECC's loans and notes and manage and monitor a portfolio of those investments. GECM's investment team members have broad investment backgrounds, with prior experience at investment banks, commercial banks, investment firms, other financial services companies and law firms, as well as in operating roles, and have collectively developed a broad network of contacts to provide GECC with its principal source of investment opportunities.

Investment Selection

        GECM employs a team of investment professionals with extensive experience in leveraged finance. The sector-focused research team performs rigorous fundamental research at both the industry and company level. Through in-depth industry coverage, GECM's investment team seeks to develop a thorough understanding of the fundamental market, sector drivers, mergers and acquisition activity, security pricing and trading and new issue trends. GECM's investment team believes that understanding industry trends is an element of investment success. The members of GECM's investment team believe that by concentrating intensive research efforts on a smaller selection of credits, they can obtain a significant competitive advantage and deliver outperformance over a credit cycle.

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Idea Generation, Origination and Refinement

        Idea generation and origination is maximized through long-standing and extensive relationships with industry contacts, brokers, commercial and investment bankers, financial advisors, other investors, services providers such as lawyers and accountants, as well as current and former clients, portfolio companies and investors. GECM's investment team is expected to supplement these lead sources by also utilizing broader research efforts, such as attendance at prospective borrower industry conferences and an active calling effort to brokers and investment bankers. They will focus their idea generation and origination efforts on middle-market companies. In screening potential investments, GECM's investment team utilizes a value-oriented investment philosophy with analysis and research focused on the preservation of capital. GECC has identified several criteria that it believes are important in identifying and investing in prospective portfolio companies. GECM's process requires focus on the terms of the applicable contracts and instruments perfecting security interests. GECM's criteria provide general guidelines for GECM investment committee's decisions; however, not all of these criteria will be met by each prospective portfolio company in which they choose to invest.

        Asset Based Investments.  Debt issued by firms with negative free cash flow but where GECM's investment thesis is based on the value of the collateral or the issuer's assets. This type of investment focuses on expected realizable value of the issuer's assets.

        Enterprise Value Investments.  Debt issued by firms whose business generates free cash flow to service the debt with a margin of safety and the enterprise value of the firm represents the opportunity for principal to be repaid by refinancing or in connection with a merger and acquisition transaction. These investments focus on the going concern value of the enterprise.

        Other Loans.  The issuer has the ability to pay interest and principal of its debt out of expected free cash flows from its business. These investments focus on the sustainability and defensibility of cash flows from the business.

Due Diligence

        GECM's due diligence typically includes:

    Analysis of the credit documents by GECM's investment team (including the members of the team with legal training and years of professional experience). GECM will engage outside counsel when necessary as well;

    review of historical and prospective financial information;

    research relating to the company's management, industry, markets, customers, products and services and competitors and customers;

    verification of collateral;

    interviews with management, employees, customers and vendors of the potential portfolio company; and

    informal or formal background and reference checks.

        Upon the completion of due diligence and a decision to proceed with an investment in a company, the investment professionals leading the diligence process present the opportunity to GECM's investment committee, which then determines whether to pursue the potential investment. Additional due diligence with respect to any investment may be conducted on GECC's behalf by attorneys and independent accountants prior to the closing of the investment, as well as other outside third-party advisers, as appropriate.

Approval of Investment Transactions

        GECM's procedures call for each new investment under consideration by the GECM's analysts to be preliminarily reviewed at weekly meetings of GECM's investment team. GECM's investment team then prepares a summary of the investment, including a financial model and risk cases and a legal review checklist. GECM's investment committee then will hold a formal review meeting and following approval of a specific investment, authorization is given to GECM's traders, including execution guidelines.

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        GECM's investment analysts will conduct periodic reviews of the positions for which they are responsible with members of GECM's investment committee. On a quarterly basis, formal reviews of each position are to be conducted by GECM's investment committee.

        GECM's investment analysts and members of the GECM investment committee will jointly decide when to sell a position. The sale decision will then be given to GECM's traders, who will execute the trade in consultation with the analyst and the applicable member of GECM's investment committee.

Ongoing Relationship with Portfolio Companies

        As a business development company, GECC will offer, and must provide upon request, significant managerial assistance to certain of its portfolio companies. This assistance could involve, among other things, monitoring the operations of GECC's portfolio companies, participating in board and management meetings, consulting with and advising officers of portfolio companies and providing other organizational and financial guidance.

        GECM's investment team will monitor GECC's portfolio companies on an ongoing basis. It will monitor the financial trends of each portfolio company and its respective industry and to assess the appropriate course of action for each investment. GECC's ongoing monitoring of a portfolio company will include both a qualitative and quantitative analysis of the company and its industry.

Valuation Procedures

        GECC will value its assets, pursuant to which its net asset value is determined, consistent with GAAP and the 1940 Act. GECC's valuation procedures are set forth in more detail below:

        Securities for which market quotations are readily available on an exchange will be valued at such price as of the closing price on the day of valuation.

        For securities for which a trading market exists that is not an exchange, GECC will obtain quotes from pricing services or brokers or dealers in order to value assets. When doing so, GECC will determine whether the quote obtained is sufficient to determine the fair value of the security.

        Securities for which reliable market quotations are not readily available or for which the pricing source does not provide a valuation or methodology or provides a valuation or methodology that, in the judgment of GECM or GECC's board of directors, does not represent fair value will each be valued as follows:

    each portfolio company or investment is initially valued by the investment professionals responsible for the portfolio investment;

    preliminary valuation conclusions are documented and discussed with GECC's senior management;

    independent third-party valuation firms engaged by, or on behalf of, GECC's board of directors will conduct independent appraisals and/or review management's preliminary valuations or make their own assessment for all material assets; and

    GECC's board of directors will discuss valuations and determine the fair value of each investment in GECC's portfolio in good faith based on the input of the investment adviser and, where appropriate, the respective third-party valuation firms.

        The recommendation of fair value is generally based on the following factors, as relevant:

    the nature and realizable value of any collateral;

    the portfolio company's ability to make payments;

    the portfolio company's earnings and discounted cash flow;

    the markets in which the issuer does business; and

    comparisons to publicly traded securities.

        Securities for which market quotations are not readily available or for which a pricing source is not sufficient may include, but are not limited to, the following:

    private placements and restricted securities that do not have an active trading market;

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    securities whose trading has been suspended or for which market quotes are no longer available;

    debt securities that have recently gone into default and for which there is no current market;

    securities whose prices are stale;

    securities affected by significant events; and

    securities that the investment adviser believes were priced incorrectly.

        Determination of fair value involves subjective judgments and estimates.

Staffing

        GECC does not currently have any employees. Mr. Reed is GECC's chief executive officer and president and GECM's chief investment officer. The services of Mr. Sell, who is expected to be appointed GECC's chief financial officer, treasurer and secretary upon completion of the Merger, and Robert Wilson, GECC's chief compliance officer, will be provided by GECM under the Administration Agreement.

Competition

        GECC competes for investments with other BDCs and investment funds (including private equity funds, hedge funds, mutual funds, mezzanine funds and small business investment companies), as well as traditional financial services companies such as commercial banks, direct lending funds and other sources of funding. Additionally, because competition for investment opportunities generally has increased among alternative investment vehicles, such as hedge funds, those entities have begun to invest in areas they have not traditionally invested in, including making investments in the types of portfolio companies GECC intends to target. Many of these entities have greater financial and managerial resources than GECC does.

Properties

        GECC's executive offices are located at 200 Clarendon Street, 51st Floor, Boston, MA 02116 and are provided by GECM under the Administration Agreement. GECC believes that its office facilities are suitable and adequate for its business as it is currently contemplated to be conducted.

Legal Proceedings

        Neither GECC nor GECM is currently subject to any material legal proceedings, nor, to GECC's knowledge, is any material legal proceeding threatened against GECC or against GECM. From time to time, GECC or GECM may be a party to legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of GECC's rights under contracts with GECC's portfolio companies.

Expected Operating Plans

Investments

        GECC's investment strategy is described above under "Business of GECC."

Revenues

        GECC plans to generate revenue primarily from:

    interest accrued on its debt investments;

    accretion of market discounts that are ultimately realized in the sale, payoff or refinancing of its debt investments;

    commitment, origination, structuring, consent or diligence fees; and

    appreciation of equity.

Expenses

        GECC's primary operating expenses will include the payment of:

    investment advisory fees to GECM

    GECC's allocable portion of overhead and other expenses incurred by GECM in performing its obligations under the Administration Agreement;

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    interest expenses; and

    other operating expenses as detailed below.

        GECC's investment advisory fee will compensate GECM for its work in identifying, evaluating, negotiating, closing, monitoring and servicing GECC's investments. See "GECC Investment Management Agreement." GECC will bear all other expenses of its operations and transactions, including (without limitation):

    organizational expenses of GECC and all of Great Elm Capital Group's and the MAST Funds' out of pocket costs incurred in connection with the transactions contemplated by the Subscription Agreement;

    fees and expenses, including reasonable travel expenses, actually incurred by GECM or payable to third parties related to the investments of GECC, including, among others, professional fees (including the fees and expenses of counsel, consultants and experts) and fees and expenses relating to, or associated with, evaluating, monitoring, researching and performing due diligence on investments and prospective investments (including payments to third party vendors for financial information services);

    out-of-pocket fees and expenses, including reasonable travel expenses, actually incurred by GECM or payable to third parties related to the provision of managerial assistance to those portfolio companies of GECC that request such assistance from GECC and to which GECC agrees to provide such services to under the 1940 Act (exclusive of the compensation of any investment professionals of GECM);

    interest or other costs associated with debt, if any, incurred to finance GECC's business;

    fees and expenses in connection with GECC's membership in investment company organizations;

    brokers' commissions;

    investment advisory and management fees;

    fees and expenses associated with calculating GECC's net asset value (including the costs and expenses of any independent valuation firm);

    fees and expenses relating to offerings of GECC's common stock and other securities;

    legal, auditing or accounting expenses;

    federal, state and local taxes and other governmental fees;

    the fees and expenses of GECM, in its role as the administrator, and any sub-administrator to GECC, GECC's transfer agent or sub-transfer agent, and any other amounts payable under the Administration Agreement, or any similar administration agreement or sub-administration agreement to which GECC may become a party;

    the cost of preparing stock certificates or any other expenses, including clerical expenses of issue, redemption or repurchase of securities of GECC;

    the expenses of and fees for registering or qualifying shares of GECC for sale and of maintaining the registration of GECC and registering GECC as a broker or a dealer;

    the fees and expenses of the directors of GECC who are not interested persons (as defined in the 1940 Act);

    the cost of preparing and distributing reports, proxy statements and notices to stockholders, the SEC and other governmental or regulatory authorities;

    costs of holding stockholders meetings;

    listing fees;

    the fees or disbursements of custodians of GECC's assets, including expenses incurred in the performance of any obligations enumerated by the articles of incorporation or bylaws of GECC insofar as they govern agreements with any such custodian;

    any amounts payable under the Administration Agreement;

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    GECC's allocable portion of the fidelity bond, directors and officers/errors and omissions liability insurance, and any other insurance premiums;

    GECC's allocable portion of the costs associated with maintaining any computer software, hardware or information technology services (including information systems, Bloomberg or similar terminals, cybersecurity and related consultants and email retention) that are used by GECC or by GECM or its respective affiliates on behalf of GECC (which allocable portion shall exclude any such costs related to investment professionals of GECM providing services to GECC);

    direct costs and expenses incurred by GECC or GECM in connection with the performance of administrative services on behalf of GECC, including printing, mailing, long distance telephone, cellular phone and data service, copying, secretarial and other staff, independent auditors and outside legal costs;

    all other expenses incurred by GECC or GECM in connection with administering GECC's business (including payments under the Administration Agreement based upon GECC's allocable portion of GECM's overhead in performing its obligations under the Administration Agreement, including rent and the allocable portion of the cost of GECC's chief financial officer and chief compliance officer and their respective staffs (including reasonable travel expenses); and

    costs incurred by GECC in connection with any claim, litigation, arbitration, mediation, government investigation or dispute in connection with the business of GECC and the amount of any judgment or settlement paid in connection therewith, or the enforcement of GECC's rights against any person and indemnification or contribution expenses payable by GECC to any person and other extraordinary expenses of GECC not incurred in the ordinary course of GECC's business.

Financial Condition, Liquidity and Capital Resources

        GECC will generate earnings on Full Circle's cash and investment portfolio, the Initial GECC Portfolio and investment of the cash contributed by Great Elm Capital Group and subsequent investments of proceeds from these assets, borrowings and potential future equity financings.

        GECC's asset base will initially be comprised of Full Circle's cash and investment portfolio, the Initial GECC Portfolio and the cash contributed by Great Elm Capital Group. GECC will become a party to Full Circle's subordinated notes. GECC expects to enter into a credit facility allowing it to increase its asset base without diluting stockholders' pro rata interests in GECC.

        GECC's primary use of funds will be investments in portfolio companies, cash distributions to holders of GECC's common stock (primarily from investment net income and net realized capital gains), and the payment of operating expenses. As of March 31, 2016, GECC's pro forma cash resources were approximately $43.7 million and on a pro forma basis it had approximately $33.7 million of indebtedness, at face value.

        As a BDC, GECC will generally have an ongoing need to raise additional capital for investment purposes. As a result, GECC expects, from time to time, to access the debt and equity markets when GECC believes it is necessary and appropriate to do so. In this regard, GECC will explore various options for obtaining additional debt or equity capital for investments. This may include the issuance of additional shares of GECC common stock, possibly at prices below GECC's then current net asset value per share. If GECC is unable to obtain leverage or raise equity capital on terms that are acceptable to GECC, GECC's ability to grow its portfolio will be substantially impacted.

Distribution Policy

        GECC intends to distribute monthly distributions to its stockholders, beginning in the second full calendar month after the Effective Time. GECC's distributions, if any, will be determined by GECC's board of directors. Any dividends or other distributions to GECC's stockholders will be declared out of assets legally available for distribution.

        GECC intends to elect, and intends to qualify annually thereafter, to be taxed as a RIC beginning with its taxable year ending [                      ], 2017, which is the taxable year that will include the Merger. To obtain and maintain RIC tax treatment, GECC must, among other things, distribute at least 90% of its ordinary income and

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realized net short-term capital gains in excess of realized net long-term capital losses, if any. GECC currently intends to distribute during each calendar year an amount at least equal to the sum of:

    98% of its ordinary income for the calendar year;

    98.2% of its capital gains in excess of capital losses for the one-year period ending on October 31 of the calendar year; and

    any ordinary income and net capital gains for preceding years that were not distributed during such years and on which GECC paid no federal income tax.

        In addition, although GECC currently intends to distribute realized net capital gains (i.e., net long term capital gains in excess of short term capital losses), if any, at least annually, GECC may in the future decide to retain such capital gains for investment and elect to treat such gains as deemed distributions to you. If this happens, you will be treated as if you had received an actual distribution of the capital gains GECC retains and reinvested the net after tax proceeds in GECC. In this situation, you would be eligible to claim a tax credit (or, in certain circumstances, a tax refund) equal to your allocable share of the tax GECC paid on the capital gains deemed distributed to you. See "Certain Material U.S. Federal Income Tax Considerations."

        GECC's current intention is to make any distributions in additional shares of GECC's common stock under GECC's dividend reinvestment plan out of assets legally available therefor, unless you elect to receive your distributions and/or long-term capital gains distributions in cash. See "GECC—Dividend Reinvestment Plan." If you hold shares in the name of a broker or financial intermediary, you should contact the broker or financial intermediary regarding your election to receive distributions in cash.

        GECC can offer no assurance that it will achieve results that will permit the payment of any cash distributions and, if it issues senior securities, it will be prohibited from making distributions if doing so causes it to fail to maintain the asset coverage ratios stipulated by the 1940 Act or if distributions are limited by the terms of any of its borrowings.

Exemptive Relief

        Following the Merger, GECC intends to apply to the SEC for exemptive relief that will allow GECC to co-invest, together with other investment vehicles managed by GECM or MAST, in specific investment opportunities. GECC is unable to predict whether or not the SEC will grant the requested exemption. If the SEC does not provide the requested exemption, GECM will allocate investment opportunities to different investment vehicles in accordance with its allocation policies.

Stock Repurchase Program

        Following the Merger, GECC will implement a stock repurchase program for the 18 months following the closing of the Merger pursuant to Rule 10b5-1 of the Exchange Act to repurchase shares of GECC in an aggregate amount of up to $15 million at market prices at any time the shares trade below 90% of NAV, subject to compliance by GECC with any of its liquidity, covenant, leverage and regulatory requirements.

Formation Transactions

        On June 23, 2016, concurrent with signing the Merger Agreement, GECC entered into the Subscription Agreement. Per the Subscription Agreement, Great Elm Capital Group contributed $30 million to GECC. Prior to the Merger and the filing of GECC's election to be regulated as a BDC under the 1940 Act, per the Subscription Agreement, GECC will acquire the Initial GECC Portfolio from the MAST Funds. The portfolio investments to be acquired in connection with the Initial GECC Portfolio acquisition will represent the entire investment portfolio of GECC prior to the Merger.

        As a result of the transactions contemplated by the Subscription Agreement, the MAST Funds will own approximately 75% of the pre-Merger outstanding shares of GECC common stock and Great Elm Capital Group will own 25% of the pre-Merger outstanding shares of GECC common stock.

        The net asset value of each GECC and Full Circle will be calculated as set forth in the disclosure letter each party delivered to the other. Not later than the 15th day of every calendar month after June 30, 2016, and until the registration statement on Form N-14 (of which this document is a part) is first mailed to Full Circle's stockholders,

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(1) Full Circle will deliver to GECC a calculation of Full Circle's net asset value and (2) GECC will deliver to Full Circle a calculation of GECC's pro forma net asset value, in each case as of the last day of the calendar month immediately preceding the date of delivery. Full Circle and GECC each will give the other party and its representatives reasonable access to the individuals who have prepared each such calculation and to such information, books, records and work papers as may be reasonably requested in order to assist it with its review of such calculation.

Initial GECC Portfolio

        The following table sets forth certain information as of June 30, 2016 for each portfolio company included in the Initial GECC Portfolio. Percentages shown for class of investment securities held by GECC represent percentage of the class owned and do not necessarily represent voting ownership. Percentages shown for equity securities, other than warrants or options, represent the actual percentage of the class of security held before dilution. Percentages shown for warrants and options held represent the percentage of class of security GECC may own assuming GECC exercises its warrants or options before dilution.

        GECC directly or indirectly owns less than 5% of the outstanding voting securities, and is therefore not deemed to be an affiliate, of each of the portfolio companies listed on the table below. GECC offers to make significant managerial assistance to certain of GECC's portfolio companies. GECC may also receive rights to observe the meetings of GECC's portfolio companies' boards of directors.

Name and Address of
Portfolio Company
  Industry   Type of
Investment
  Interest   Maturity   % of
Class Held
  Fair
Value
 
Avanti Communications Group plc, Cobham House, 20 Black Friars Lane, London, EC4V 6EB, United Kingdom   Wireless
Telecommunications
Services
  Sr.
Secured
Notes
    10.00 %   10/1/2019       + $ 56,571,582  
                                   
Everi Payments Inc., 7250 S. Tenaya Way, Suite 100, Las Vegas, NV 89113   Hardware   Sr.
Unsecured
Notes
    10.00 %   1/15/2022       + $ 10,261,315  
                                   
Optima Specialty Steel, Inc., 200 S. Biscayne Blvd., Suite 5500, Miami, FL 33131   Metals and Mining   Sr.
Secured
Notes
    12.50 %   12/15/2016       + $ 12,457,500  
                                   
Tallage Lincoln, LLC, 165 Tremont Street, Suite 305, Boston, MA 02111   Real Estate Services   Sr.
Secured
Term
Loan
    10.00 %   5/21/2018       + $ 476,954  
                                   
Tallage Adams, LLC, 165 Tremont Street, Suite 305, Boston, MA 02111   Real Estate Services   Sr.
Secured
Term
Loan
    10.00 %   12/12/2016       + $ 207,649  
                                   
Trilogy International Partners, LLC, P.O. Box 1988, Bellevue, WA 98009   Wireless
Telecommunications
Services
  Sr.
Secured
Notes
    13.375 %   5/15/2019       + $ 10,025,000  
+
Investment is a debt instrument and thus the percentage of class does not apply.

Portfolio Company Descriptions

        Set forth below is a brief description of each portfolio company representing greater than 5% of the fair market value of the Initial GECC Portfolio.

        Avanti Communications.  Avanti is a leading provider of satellite-enabled data communications services in Europe, the Middle East and Africa. Avanti's network consists of: two high throughput satellites, HYLAS 1 and HYLAS 2; a multiband satellite, Artemis; two satellites that are not yet launched, HYLAS 3 and HYLAS 4; and an international fiber network connecting data centers in several countries. Avanti's satellites primarily operate in the

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Ka band frequency range. The Ka band allows for the delivery of greater capacity at faster speeds than Ku band capacity.

        Trilogy International.  Trilogy International Partners ( Trilogy) is a privately held wireless telecom operator based in the U.S., with majority stakes in operating businesses in Bolivia and New Zealand. Trilogy provides data and voice services to cellular customers in Bolivia and New Zealand, and wireline connectivity services to residential customers and enterprises in New Zealand. Trilogy has over 3,700,000 subscribers globally, approximately 1.5x the number of subscribers they serviced 5 years ago.

        Optima Specialty Steel.  Optima Specialty Steel, Inc. ( Optima) is a leading independent manufacturer and processor of special bar quality and merchant bar quality hot rolled steel bars, value-added precision-tolerance, cold drawn seamless tubes and high quality engineered cold finished steel bars in the U.S. Optima sells its products directly to original equipment manufacturers, as well as to distributors. Furthermore, Optima sells its products into diversified end markets such as transportation (including automotive), energy (including oil and gas shale extraction), agriculture, power generation and yellow goods/construction equipment end markets.

        Everi Holdings.  Everi Holdings Inc. ( Everi) provides a variety of products and services to the gaming industry in North America, operating in two key business segments (1) the Payments division; and (2) the Games division. In the Payments division, Everi is a market-share leading provider of payment products and solutions to the casino industry; these products range from ATM and credit card transaction processing to data analytics and full-service kiosks on the casino floor. In the Games division, Everi generates revenue by selling and leasing slot machines to casino operators.

Portfolio Composition

        Set forth below is a list of the industries that comprised the Initial GECC Portfolio as of June 30, 2016, in each case calculated as a percentage of the total Initial GECC Portfolio investments as of such date.

Targeted Industries   Fair Value   % of Total Investments (at fair value)  

Wireless Telecommunications Services

  $ 66,301,518     73.67 %

Metals and Mining

    12,759,500     14.18 %

Real Estate Services

    677,667     0.75 %

Hardware

    10,261,315     11.40 %

  $ 90,000,000     100.00 %

Management

        The business and affairs of GECC are managed under the direction of GECC's board of directors. The responsibilities of the board of directors include, among other things, the quarterly valuation of GECC's assets. Subsequent to completion of the Merger, GECC's board of directors will consist of [     ·     ] members, [     ·     ] of whom will not be "interested persons" of GECC as defined in Section 2(a)(19) of the 1940 Act. GECC refers to these individuals as GECC's independent directors. GECC's board of directors elects GECC's officers, who will serve at the discretion of GECC's board of directors. GECC's board of directors maintains an audit committee, a compensation committee and a nominating and corporate governance committee, and may establish additional committees from time to time as necessary.

Board of Directors

        Under GECC's charter, GECC's directors will be divided into three classes. Directors are elected for staggered terms, with the term of office of only one of these three classes of directors expiring at each annual meeting of stockholders. Each director will hold office for the term to which he or she is elected and until his or her successor is duly elected and qualifies. The first class of directors will serve a one-year term, the second class of directors will serve a two-year term and the third class of directors will serve a three-year term, with each class of directors beginning at the Effective Time, after which each class of directors will serve three year terms.

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        Information regarding the board of directors subsequent to completion of the Merger is as follows:

Name   Age   Position   Director Since   Expiration of Term

Independent Directors

               

Mark C. Biderman

  70   Director   *   2017

Eugene I. Davis

  [    ]   Director   2016   2017

Mark Kuperschmid

  53   Director   2016   2018

Interested Directors

 

 

 

 

 

 

 

 

Peter A. Reed

  36   Director and Chairman of the Board   2016   2019

John E. Stuart

  50   Director   *   2018
*
A current director of Full Circle that is expected to be appointed to GECC's board of directors concurrent with consummation of the Merger.

        In addition, Richard S. Chernicoff, age 51, is a current director of GECC who will resign as director before the Effective Time. The address for each director is c/o GECC, 200 Clarendon Street, 51 st  Floor, Boston, Massachusetts 02116.

         Mark C. Biderman serves as a member of the Full Circle Board and as chairman of Full Circle's audit committee. Mr. Biderman also serves as the chairman of the Special Committee. Mr. Biderman currently serves as a member of the board of directors and audit committees of Apollo Commercial Real Estate Finance, Inc., a real estate investment trust, and Apollo Residential Mortgage, Inc., a real estate finance company. Mr. Biderman also serves as a director and as the chairman of the audit committee of Atlas Energy Group, LLC. Mr. Biderman served as a member of the board of directors and audit committee of Atlas Energy GP, LLC, the general partner of Atlas Energy, L.P., a midstream energy service provider, from February 2011 until February 2015. Mr. Biderman served as a member of the board of directors of Atlas Energy, Inc., an independent natural gas producer, from July 2009 through February 2011. Mr. Biderman served as vice chairman of National Financial Partners, Corp. ( NFP ), a financial services company focused on distributing financial products, from September 2008 through December 2008. From November 1999 until September 2008, Mr. Biderman served as NFP's executive vice president and chief financial officer. From May 1987 to October 1999, Mr. Biderman served as managing director and head of the Financial Institutions Group at CIBC World Markets, an investment banking firm, and its predecessor, Oppenheimer & Co., Inc. ( Oppenheimer ). Prior to investment banking, he was an equity research analyst covering the commercial banking industry. Mr. Biderman was on the "Institutional Investor" All American Research Team from 1973 to 1985 and was First Team Bank Analyst in 1974 and 1976. Mr. Biderman chaired the Due Diligence Committee at CIBC and served on the Commitment and Credit Committees. Mr. Biderman serves on the Board of Governors and as treasurer of Hebrew Union College-Jewish Institute of Religion and on the Advisory Council of the Program in Judaic Studies of Princeton University. Mr. Biderman is a Chartered Financial Analyst and brings extensive financial expertise to the board of directors as well as to the audit committee. Mr. Biderman earned a B.S.E. from Princeton University in 1967 and an M.B.A. from Harvard Graduate School of Business Administration in 1969.

         Eugene I. Davis is the chairman and chief executive officer of PIRINATE Consulting Group, LLC, a consulting company. Prior to founding PIRINATE Consulting in 1999, Mr. Davis served as chief operating officer of Total-Tel Communications, Inc, a communications company. Prior to that, Mr. Davis served as president, vice chairman and director of Emerson Radio Corp, a consumer electronics company. Mr. Davis also practiced law as partner/stockholder & head of Corporate & Securities Practice for Holmes, Millard & Duncan, P.C., in Dallas, Texas; as partner at Arter & Hadden in Dallas, Texas; and as an associate at Akin, Gump, Strauss, Hauer & Feld in Dallas, Texas, where he specialized in corporate and securities law and was involved in numerous public and private debt and equity securities offerings, asset based financing transactions, debt restructurings, and domestic and international acquisitions. Mr. Davis earned a B.A. in International Politics, a Master's Degree in International Affairs, and a J.D. from Columbia University. He continues to serve Columbia College as a Member of the Board of Visitors.

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         Mark Kuperschmid has been a private investor/advisor during the past decade across a variety of industries, and he has served in operating roles or provided strategic consulting services with respect to several investments. He previously served as Co-Head of Technology Investment Banking for Banc of America Securities and ran Trammell Crow Company's Northern California commercial real estate operation. He began his career as a financial analyst with Morgan Stanley in New York. Mark received his MBA from the Stanford Graduate School of Business and attended the University of Pennsylvania where he earned a B.S. in Finance and a B.A. in Economics, magna cum laude.

         Peter A. Reed is GECC's chairman and has served as one of Great Elm Capital Group's directors since May 2015. Mr. Reed is a Portfolio Manager and partner at MAST, a Boston-based registered investment adviser. Mr. Reed currently serves as a director of International Wire Group Holdings Inc., a wire products manufacturing company, and the chairman of the board of Nebraska Book Holdings, Inc, a retailer in the college bookstore industry. Prior to joining MAST in 2004, Mr. Reed was an investment banking analyst at Brown, Gibbons, Lang & Company where he worked on mergers and acquisitions, in-cou