WHEREAS, each of Parent and the Company has previously elected to be regulated as a business development company (“BDC”),
as defined in Section 2(a)(48) of the Investment Company Act;
WHEREAS, the Company Board and the board of directors of Acquisition Sub have unanimously approved and declared advisable, and each of the Parent Board and
Parent as the sole stockholder of Acquisition Sub has approved or adopted, this Agreement and the transactions contemplated hereby, including (i) the first step being a merger of Acquisition Sub with and into the Company (the “First Step”), with the Company surviving as a wholly-owned Subsidiary of Parent (sometimes referred to in such capacity as the “First Step Surviving Corporation”),
upon the terms and subject to the conditions and limitations set forth in this Agreement and in accordance with the Delaware General Corporation Law (the “DGCL”), and (ii) the second step being a merger of the
First Step Surviving Corporation with and into Parent (the “Second Step” and, together with the First Step, the “Merger”), with Parent as the surviving company in the
Second Step (sometimes referred to in such capacity as the “Surviving Corporation”), upon the terms and subject to the conditions and limitations set forth in this Agreement and in accordance with the DGCL and
the General Corporation Law of the State of Maryland (the “MGCL”);
WHEREAS, it is intended that the First Step be mutually interdependent with and a condition precedent to the Second Step and that the Second Step shall be
effected immediately after the First Step without further approval, authorization or direction from or by any of the parties hereto;
WHEREAS, it is intended that the First Step and the Second Step shall be considered together as a single integrated transaction for United States federal
income Tax purposes and the Merger shall qualify as a Reorganization;
WHEREAS, Parent External Adviser desires to pay the Cash Consideration at the Closing as specified herein; and
WHEREAS, each of Parent, Acquisition Sub, Parent External Adviser and the Company desires to make certain representations, warranties, covenants and
agreements in connection with the Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the representations, warranties and covenants and subject to the conditions herein contained, and
intending to be legally bound hereby, the parties hereto hereby agree as follows:
Except as disclosed in the Parent SEC Documents filed by Parent prior to the date of this Agreement (but in each case excluding any risk factor or similar
disclosure under the headings “Risk Factors” or “Forward Looking Statements” or any similar non-specific, predictive, precautionary or forward-looking statements) or as disclosed in the Parent Disclosure Letter, Parent and Acquisition Sub hereby
jointly and severally represent and warrant to the Company as follows:
The Parent External Adviser hereby represents and warrants to the Company as follows:
(b) Subject to the earlier termination of this Agreement in accordance with Article
VIII, the Company shall, as soon as practicable following the effectiveness of the Form N‑14, duly call, give notice
of, convene
(on a date selected by the Company in consultation with Parent, which date is intended to be the date of the Parent Stockholders’ Meeting) and hold a meeting of its stockholders (the “
Company Stockholders’ Meeting”) for the purpose of seeking the Company Stockholder Approval and shall not submit any other proposal to such stockholders in connection with the Company Stockholders’ Meeting without
prior written consent of Parent; provided that the Company may postpone or adjourn to a later date the Company Stockholders’ Meeting (i) with the written consent of Parent (which consent shall not be unreasonably withheld, conditioned or delayed),
(ii) for the absence of a quorum, (iii) to allow reasonable additional time to solicit additional proxies if the Company has not received proxies representing a sufficient number of shares of Company Common Stock to adopt this Agreement, whether or
not a quorum is present, (iv) if required by Applicable Law or (v) to allow reasonable additional time for the filing and dissemination of any supplemental or amended disclosure if, in the good faith judgment of the Company Board (after consultation
with outside legal counsel), the failure to do so would be reasonably likely to be inconsistent with its fiduciary duties or obligations under Applicable Law. If the Company Board has not made a Company Adverse Recommendation Change, the Company
shall, through the Company Board, make the Company Recommendation, and shall include such Company Recommendation in the Joint Proxy Statement, and use its reasonable best efforts to lawfully solicit from its stockholders proxies in favor of the
adoption of this Agreement. Except as expressly permitted in
Section 6.6, neither the Company Board nor any committee thereof shall (x) withhold, withdraw or modify or qualify, or propose publicly to withhold, withdraw or modify or qualify
the Company Recommendation, in each case in a manner materially adverse to Parent, (y) fail to include the Company Recommendation in the Joint Proxy Statement or (z) approve, determine to be advisable, or recommend, or propose publicly to approve,
determine to be advisable, or recommend, any Competing Proposal ((x),
(y) and
(z) being referred to as a “
Company Adverse Recommendation Change”).
Notwithstanding any Company Adverse Recommendation Change, unless this Agreement is terminated in accordance with its terms, the obligations of the parties hereunder shall continue in full force and effect and such obligations shall not be affected
by the commencement, public proposal, public disclosure or communication to the Company of any Competing Proposal (whether or not a Superior Proposal) or the occurrence of a Company Adverse Recommendation Change.
(c) Subject to the earlier termination of this Agreement in accordance with Article
VIII, Parent shall, as soon as practicable following the effectiveness of the Form N‑14,
duly call, give notice of, convene (on a date selected by Parent in consultation with the Company, which date is intended to be the date of the Company Stockholders’ Meeting) and hold a meeting of its stockholders (the “
Parent Stockholders’ Meeting”) for the purpose of seeking the Parent Stockholder Approval and shall not submit any other proposal to such stockholders in connection with the Parent Stockholders’ Meeting without prior written consent
of the Company; provided that Parent may postpone or adjourn to a later date the Parent Stockholders’ Meeting (i) for the absence of a quorum, (ii) to allow reasonable additional time to obtain regulatory approval or solicit additional proxies if
Parent has not received proxies representing a sufficient number of shares of Parent Common Stock to approve the Parent Stockholder Approval matters, whether or not a quorum is present, (iii) if required by Applicable Law or (iv) to allow reasonable
additional time for the filing and dissemination of any supplemental or amended disclosure if, in the good faith judgment of the Parent Board (after consultation with outside legal counsel), the failure to do so would be reasonably likely to be
inconsistent with its fiduciary obligations under Applicable Law. Neither the Parent Board nor any committee thereof shall (x) withhold, withdraw, modify, qualify, or propose publicly to withhold, withdraw, modify or qualify the Parent
Recommendation, in each case in a manner materially adverse to the Company or (y) fail to include the Parent Recommendation in the Joint Proxy Statement.
Section
6.4.
Appropriate Action; Consents; Filings.
(a) Subject to the terms and conditions of this Agreement (including the limitations set forth in
Section 6.6 (
No Solicitation)), the parties hereto will use
their respective reasonable best efforts to consummate and make effective the transactions contemplated hereby and to cause the conditions to the First Step set forth in
Article VII to be satisfied, including using reasonable best efforts to
accomplish the following: (i) the obtaining of all necessary actions or non-actions, consents and approvals from Governmental Authorities or other Persons necessary in connection with the consummation of the transactions contemplated hereby,
including the First Step, and the making of all necessary registrations and filings (including filings with Governmental Authorities, if any) and the taking of all commercially reasonable steps as may be reasonably necessary to obtain an approval
from, or to avoid a Proceeding by, any Governmental Authority or other Persons necessary in connection with the consummation of the transactions contemplated hereby, including the First Step; (ii) the defending of any lawsuits or other legal
Proceedings, whether judicial or administrative, challenging this Agreement or the consummation of the transactions contemplated hereby, including the First Step, including seeking to have any stay or temporary restraining order entered by any court
or other Governmental Authority vacated or reversed; and (iii) the execution and delivery of any additional instruments reasonably necessary to consummate the First Step and any other transactions to be performed or consummated by such party in
accordance with the terms of this Agreement and to carry out fully the purposes of this Agreement. To the extent required by Applicable Law, each of the parties hereto shall promptly make and not withdraw (without the Company’s consent, such consent
not to be unreasonably withheld, conditioned or delayed) its respective filings under the HSR Act, and make any other applications and filings as reasonably determined by the Company and Parent under other applicable Antitrust Laws with respect to
the transactions contemplated hereby as promptly as practicable, but in no event later than as required by Law. Parent and the Company shall each be responsible for fifty percent (50%) of all filing fees incurred in connection with the HSR Act.
(b) Parent and Acquisition Sub agree to use their reasonable best efforts to take (and to cause their Affiliates to take) promptly steps necessary to avoid or eliminate each and every impediment and obtain all
Consents under any Antitrust Laws that may be required by any foreign or United States federal, state or local Governmental Authority, in each case with competent jurisdiction, so as to enable the parties to consummate the transactions contemplated
hereby as promptly as practicable, including committing to or effecting, by consent decree, hold separate orders, trust, or otherwise, the sale or disposition of such assets or businesses as are required to be divested in order to avoid the entry of,
or to effect the dissolution of or vacate or lift, any Order, that would otherwise have the effect of preventing or materially delaying the consummation of the transactions contemplated hereby;
provided,
however, that Parent and
Acquisition Sub shall not be required to take any actions that would or would reasonably be expected to result in either a Parent Material Adverse Effect or a Company Material Adverse Effect. Further, and for the avoidance of doubt, Parent will take
any and all actions necessary in order to ensure that (i) no requirement for any non-action by or consent or approval of the Antitrust Division, the Federal Trade Commission, or other Governmental Authority with respect to any Antitrust Laws, (ii) no
decree, judgment, injunction, temporary restraining order or any other Order in any Proceeding with respect to any Antitrust Laws, and (iii) no other matter relating to any Antitrust Laws would preclude consummation of the First Step by the
Termination Date.
(c) In connection with and without limiting the efforts referenced in this
Section 6.4, the Company, Parent and Acquisition Sub hereto will furnish to the other such necessary information and reasonable
assistance as the other may reasonably request in connection with the preparation of any required governmental filings or submissions and will cooperate in responding to any investigation or other
inquiry from
a Governmental Authority or in connection with any Proceeding initiated by a private party, including immediately informing the other party of such
inquiry, consulting in advance before making any presentations
or submissions to a Governmental Authority, or in connection with any Proceeding initiated by a private party, to any other Person, and supplying each other with copies of all material correspondence, filings or communications between either party
and any Governmental Authority, or in connection with any Proceeding initiated by a private party, between either party and any other Person with respect to this Agreement. In addition, each of the parties hereto will give reasonable notice to and
consult with the other in advance of any meeting or conference with any Governmental Authority, or in connection with any Proceeding by a private party, with any other Person, and to the extent permitted by the Governmental Authority or other Person,
give the other the opportunity to attend and participate in such meeting or conference.
Section 6.5.
Access to Information; Confidentiality.
(a) Upon reasonable notice, the Company shall (and shall cause each of its Subsidiaries to) afford reasonable access to Parent’s Representatives, in a manner not disruptive to the operations of
the business of the Company and its Subsidiaries, during normal business hours and upon reasonable notice throughout the period prior to the Effective Time (or until the earlier termination of this Agreement), to the properties, books and records of
the Company and its Subsidiaries and the officers of the Company and personnel of the Company Investment Adviser and, during such period, shall (and shall cause each of its Subsidiaries to) furnish promptly to such Representatives all information
concerning the business, properties and personnel of the Company and its Subsidiaries as may reasonably be requested (which, for the avoidance of doubt, shall include, but shall not be limited to, (x) requests to evaluate the amount or calculation of
any proposed Tax Dividend and the Company’s monthly financial results, financial forecasts, quarterly RIC testing and RIC tax liability modeling, ICTI modeling, Net Capital Gain modeling, asset sales, investment valuations and cash balances/forecasts
and (y) the valuation committee minutes of the Company’s valuation committee);
provided,
however, that nothing herein shall require the Company or any of its Subsidiaries to disclose any information to Parent or Acquisition Sub if
such disclosure would, in the reasonable judgment of the Company, (i) cause material competitive harm to the Company or its Subsidiaries if the transactions contemplated by this Agreement are not consummated, (ii) violate Applicable Law or the
provisions of any Contract to which the Company or any of its Subsidiaries is a party or (iii) jeopardize any attorney-client, attorney work product or any other legal privilege. The Chief Financial Officer of the Company shall meet with
representatives of Parent no less frequently than monthly at a time mutually agreeable to the officers of the Company and Parent to discuss the Company’s monthly financial results, financial forecasts, quarterly RIC testing and RIC tax liability
modeling, ICTI modeling, Net Capital Gain modeling, asset sales, investment valuations and cash balances/forecasts. No investigation or access permitted pursuant to this
Section 6.5(a)
shall affect or be deemed to modify any representation or warranty made by the Company hereunder. Parent and the Parent External Adviser agree that it and they will not, and will cause its and their Representatives not to, use any information
obtained pursuant to this
Section 6.5(a) for any competitive or other purpose unrelated to the transactions contemplated by this Agreement. The Confidentiality Agreement shall apply
with respect to information furnished by the Company, its investment adviser, its Subsidiaries and the Company’s officers, employees and other Representatives hereunder.
(b) Upon reasonable notice,
Parent shall (and shall cause each of its Subsidiaries and Acquisition Sub to) afford reasonable access to the Company’s Representatives, in a manner not disruptive to the operations of the business of Parent and its Subsidiaries, during normal
business hours and upon reasonable notice throughout the period prior to the Effective Time (or until the earlier termination of this Agreement), to the properties, books and records of Parent and its Subsidiaries and the officers of Parent and the
personnel of the Parent External Adviser and, during such period, shall (and shall cause each of its Subsidiaries (including Acquisition Sub) to) furnish promptly to such Representatives all information concerning the business, properties and
personnel of Parent, its Subsidiaries (including Acquisition Sub) and the Parent External Adviser, as may reasonably be requested;
provided,
however, that nothing herein shall require Parent or any of its Subsidiaries (including
Acquisition Sub) to disclose any information to the Company if such disclosure would, in the reasonable judgment of Parent, (i) cause significant competitive harm to Parent or its Subsidiaries (including Acquisition Sub) if the transactions
contemplated hereby are not consummated, (ii) violate Applicable Law or the provisions of any Contract to which Parent or any of its Subsidiaries (including Acquisition Sub) is a party or (iii) jeopardize any attorney-client, attorney work product or
any other legal privilege. No investigation or access permitted pursuant to this
Section 6.5(b) shall affect or be deemed to modify any representation or warranty made by Parent or
Acquisition Sub hereunder. The Company agrees that it will not, and will cause its Representatives not to, use any information obtained pursuant to this
Section 6.5(b) for any
competitive or other purpose unrelated to the transactions contemplated by this Agreement. The Confidentiality Agreement shall apply with respect to information furnished by Parent, the Parent External Adviser, its Subsidiaries, Acquisition Sub and
Parent’s officers, employees and other Representatives hereunder.
Section 6.6.
No Solicitation.
(a) Subject to
Section 6.6(c), the
Company shall, and shall cause its Representatives and its Subsidiaries to, immediately cease and cause to be terminated immediately any existing solicitation of, or discussions or negotiations with, any Third Party relating to any Competing Proposal
or any inquiry, discussion, offer or request that would reasonably be expected to lead to a Competing Proposal (an “
Inquiry”). The Company shall promptly demand that each Person
(other than Parent or its Representatives) that has heretofore executed a confidentiality agreement with respect to the Company’s potential consideration of a Competing Proposal immediately return or destroy all confidential information heretofore
furnished to such Person and immediately terminate all physical and electronic data room access previously granted to any such Person, its Subsidiaries or any of their respective Representatives with respect to any Competing Proposal.
(b) Except as otherwise expressly provided in this Agreement (including this Section 6.6), until the Effective Time or, if earlier, the termination of this Agreement in accordance with its terms, the
Company shall not, and shall cause its Representatives and Subsidiaries not to, (i) directly or indirectly initiate, solicit or knowingly encourage or facilitate (including by way of furnishing or disclosing information) any Inquiries or the making,
submission or implementation of any Competing Proposal, (ii) enter into any agreement, arrangement, discussions or understanding with respect to any Competing Proposal (including any letter of intent, agreement in principle, memorandum of
understanding or confidentiality agreement) or enter into any Contract or understanding (including any letter of intent, agreement in principle, memorandum of understanding or confidentiality agreement) requiring it to abandon, terminate or fail to
consummate the Merger, or (iii) initiate or engage in any way in negotiations or discussions with respect to a Competing Proposal (it being understood that the Company may inform Persons of the provisions contained in this Section 6.6 and
shall be permitted to grant a waiver of, or terminate, any “standstill” or similar obligation of any Third Party with respect to the Company to allow such Third Party to submit a Competing Proposal).
(c) Notwithstanding anything to the contrary in this Agreement, at any time prior to the date that the Company Stockholder Approval is obtained, in the event that the Company (or its
Representatives on the Company’s behalf) receives directly an unsolicited bona fide written Competing Proposal or Inquiry from any Third Party that did not result from a breach of this
Section 6.6, (i) after compliance with
Section 6.6(e)
below, the Company and its Representatives may contact such Third Party solely to clarify the terms and conditions thereof (without the Company Board being required to make the determination in clause (ii) of this
Section 6.6(c)) and (ii) the
Company and the Company Board and its Representatives may engage or participate in negotiations or substantive discussions with, or furnish any information and other access to, any Third Party making such Inquiry or Competing Proposal and its
Representatives, Affiliates and prospective debt and equity financing sources if the Company Board determines in good faith (after consultation with its financial advisors and outside legal counsel) that (I) such Inquiry or Competing Proposal either
constitutes a Superior Proposal or would reasonably be expected to lead to a Superior Proposal and (II) a failure to do so would reasonably be expected to be inconsistent with its fiduciary duties or obligations under Applicable Law;
provided
that (x) Competing Proposal did result from any material breach of any of the provisions set forth in this
Section 6.6, (y) prior to furnishing any material non-public information concerning the Company and its Subsidiaries the Company
receives from such Person, to the extent such Person is not already subject to a confidentiality agreement with the Company, a confidentiality agreement containing confidentiality terms that are not materially less favorable in the aggregate to the
Company than those contained in the Confidentiality Agreement (unless the Company offers to amend the Confidentiality Agreement to reflect such more favorable terms) (it being understood and agreed that such confidentiality agreement need not
restrict the making of Competing Proposals (and related communications) to the Company Board and the Company has waived any such restrictions in the Confidentiality Agreement) (an “
Acceptable Confidentiality Agreement”),
and (z) the Company shall (subject to the terms of any confidentiality agreement existing prior to the date hereof) within twenty-four (24) hours provide or make available to Parent any material written non-public information concerning it or its
Subsidiaries that it provides to any Third Party given such access that was not previously made available to Parent or its Representatives. It is understood and agreed that any contacts, disclosures, discussions or negotiations permitted under this
Section 6.6, including any public announcement that the Company or the Company Board has made any determination required under this
Section 6.6(c) to take or engage in any such actions (
provided that the Company Board expressly
publicly reaffirms the Company Recommendation in connection with such public disclosure), shall not constitute a Notice of Adverse Recommendation or otherwise constitute a basis for Parent to terminate this Agreement pursuant to
Section 8.1 (
Termination).
(d) Except as otherwise provided in this Agreement, (i) neither the Company Board nor any committee of the Company Board shall effect a Company Adverse Recommendation Change and (ii)
the Company Board shall not approve or recommend, or allow the Company or any of its Subsidiaries to execute or enter into, any letter of intent, memorandum of understanding or definitive merger or similar agreement with respect to any Competing
Proposal (other than an Acceptable Confidentiality Agreement). Notwithstanding anything in this Agreement to the contrary, at any time prior to the receipt of the Company Stockholder Approval, the Company Board may (x) effect a Company Adverse
Recommendation Change if, upon the occurrence of an Intervening Event, the Company Board determines in good faith, after consultation with its outside legal counsel, that failure to do so would reasonably be expected to be inconsistent with its
fiduciary duties or obligations under Applicable Law or (y) if the Company has received an unsolicited bona fide written Competing Proposal that did not result from a breach of
Section 6.6 and that the Company Board has determined in good
faith, after consultation with its financial advisor, constitutes a Superior Proposal, authorize, adopt or approve such Superior Proposal and cause or permit the Company to enter into a definitive agreement with respect to such Superior Proposal (an
“
Alternative Acquisition Agreement”) concurrently with the termination of this Agreement in accordance with
Section 8.1(c)(ii), and,
provided that, in the case of either clause (x) or (y):
(i) the Company shall have provided prior written notice to Parent, at least three (3) Business Days in advance, that it intends to effect a Company Adverse
Recommendation Change (a “
Notice of Adverse Recommendation”) and/or terminate this Agreement pursuant to
Section 8.1(c)(ii) (a “
Notice of Superior Proposal”),
which notice shall specify in reasonable detail the basis for the Company Adverse Recommendation Change and/or termination and (A) in the case of a Superior Proposal, the identity of the Person or group of Persons making such Superior Proposal
accompanied by a copy of the written Competing Proposal and any related transaction or financing documents and a written summary of any material terms and conditions of the Competing Proposal that are not in writing, or
(B) in the case of an Intervening Event, reasonable detail regarding the Intervening Event;
(ii) after providing such notice and prior to effecting such Company Adverse Recommendation Change and/or terminating this Agreement pursuant to
Section
8.1(c)(ii), the Company shall have negotiated, and shall have caused its Representatives to be available to negotiate, with Parent and Acquisition Sub in good faith (to the extent Parent and Acquisition Sub desire to negotiate) during such
three (3) Business Day period to make such adjustments to the terms and conditions of this Agreement as would obviate the need for the Company to effect the Company Adverse Recommendation Change and/or terminate this Agreement pursuant to
Section
8.1(c)(ii) (it being understood that any change to the financial terms or other material terms of the Superior Proposal giving rise to a Notice of Superior Proposal shall require a new notice and a new three (3) Business Day Period); and
(iii) following the end of such three (3) Business Day period, the Company Board shall have determined in good faith, after consultation with its outside legal counsel and, with respect to
clause (A) below, its financial advisor, taking into account any changes to this Agreement proposed in writing by Parent in response to the Notice of Superior Proposal, that (A) the Superior Proposal giving rise to the Notice of Superior Proposal
continues to be a Superior Proposal or (B) in the case of an Intervening Event, the failure of the Company Board to effect a Company Adverse Recommendation Change would continue to reasonably be expected to be inconsistent with its fiduciary duties
or obligations under Applicable Law.
(e) The Company shall promptly (and in any event within twenty-four (24) hours) advise Parent in writing of any Inquiry, Competing Proposal (including the identity of the Person (or
group of Persons) making such Inquiry or Competing Proposal and the Company shall promptly provide to Parent copies of any written materials received by the Company in connection with any of the foregoing. The Company agrees that it shall keep
Parent informed on a reasonably current basis of the status and material terms and conditions (including amendments or proposed amendments) of any such Inquiry or Competing Proposal.
(f) Nothing contained in this
Section 6.6 or elsewhere in this Agreement shall be deemed to prohibit the Company or the
Company Board or any committee thereof from (i) complying with its disclosure obligations under Applicable Law or applicable NYSE rules and regulations, including taking and disclosing to its stockholders a position contemplated by Rule 14d‑9 or Rule
14e‑2(a) under the Exchange Act (or any similar communication to stockholders) or (ii) making any “stop-look-and-listen” communication to stockholders of the Company pursuant to Rule 14d‑9(f) under the Exchange Act (or any similar communications to
stockholders of the Company, including any such similar communication in response to a Competing Proposal that is not a tender offer or exchange offer);
provided,
however, (x) that any disclosure made as permitted under clause (i) of
this
Section 6.6(f) (other than any “stop-look-and-listen” or similar communication or a factually accurate public statement by the Company that escribes the Company’s receipt of a Competing Proposal and the operation of this Agreement with
respect thereto) that relates to a Competing Proposal shall be deemed to be a Company Adverse Recommendation Change unless the Company Board expressly publicly reaffirms the Company Recommendation in connection with such disclosure and (y) neither
the Company nor the Company Board (nor any committee thereof) shall be permitted to recommend any Competing Proposal or otherwise effect a Company Adverse Recommendation Change with respect thereto, except as otherwise permitted by this Agreement.
(g) For purposes of this Agreement:
(i) “
Competing Proposal” shall mean any inquiry,
proposal, discussions, negotiations or offer from any Third Party (A) with respect to a merger, consolidation, tender offer, exchange offer, stock acquisition, asset acquisition, share exchange, business combination, recapitalization, liquidation,
dissolution, joint venture or similar transaction involving the Company or any of its Subsidiaries, or (B) relating to any direct or indirect acquisition, in one transaction or a series of transactions, of (1) assets or businesses (including any
mortgage, pledge or similar disposition thereof but excluding any bona fide financing transaction) that constitute or represent, or would constitute or represent if such transaction is consummated, twenty percent (20%) or more of the total assets,
net revenue or net income of the Company and such its Subsidiaries, taken as a whole, for the 12-month period ending on the last day of the Company’s then most recently completed fiscal quarter, or (2) twenty percent (20%) or more of the outstanding
shares of capital stock of, or other equity or voting interests in, the Company or in any of its Subsidiaries, in each case other than the Merger.
(ii) “
Superior Proposal” shall mean an unsolicited Competing Proposal (with all percentages in the definition of Competing
Proposal increased to fifty percent (50%)) made by a Third Party that did not result from a breach of this
Section 6.6 that the Company Board determines in good faith, after consultation with its financial advisor and outside legal advisor,
and considering such factors as the Company Board considers to be appropriate, (x) is more favorable from a financial point of view to the Company’s stockholders than the transactions contemplated hereby (including any revisions to the terms of this
Agreement committed to by Parent to the Company in writing in response to such Competing Proposal made to the Company under the provisions of
Section 6.6(d)), (y) is reasonably likely to be consummated (taking into account, among other
things, legal, financial, regulatory and other aspects of such proposal, including any conditions and the identity of the offeror) on a timely basis, and (z) in respect of which any financing required has been determined by the Company Board to be
reasonably likely to be obtained as evidenced by a written commitment of a reputable financing source.
Section 6.7.
Directors’ and Officers’ Indemnification and Insurance.
(a) Parent and Acquisition Sub agree that all rights to exculpation and
indemnification for acts or omissions occurring at or prior to the Effective Time, whether asserted or claimed prior to, at or after the Effective Time (including any matters arising in connection with the transactions contemplated hereby), now
existing in favor of the current or former directors, officers, managers, or employees, as the case may be, of the Company, its Subsidiaries or the Company’s Affiliates, including but not limited to officers and employees of the Company’s investment
advisor, Company Investment Adviser (collectively, the “
D&O Indemnified Parties”) as provided in their respective organizational documents as in effect on the date of this Agreement or in any Contract shall
survive the Merger and shall continue in full force and effect. Parent shall indemnify, defend and hold harmless, and advance expenses to the D&O Indemnified Parties with respect to all acts or omissions by them in their capacities as such at
any time prior to or at the Effective Time (including any matters arising in connection with this Agreement or the transactions contemplated hereby), and to the fullest extent permitted by Applicable Law and as required by the organizational
documents of the Company or its Subsidiaries as in effect on the date of this Agreement;
provided,
however, that all rights to indemnification in respect of any action pending or asserted or any claim made within such period shall
continue until the disposition of such action or resolution of such claim. To the maximum extent permitted by the Laws of the State of Maryland, for a period of six (6) years following the Effective Time, Parent shall cause its and the Surviving
Corporation’s (and any of their respective successors’) articles of incorporation, bylaws or other organizational documents to contain provisions with respect to indemnification, advancement of expenses and limitation of director, officer and
employee liability that are no less favorable to the D&O Indemnified Parties than those set forth in the Company’s and its Subsidiaries’ organizational documents as of the date of this Agreement, which provisions thereafter shall not be amended,
repealed or otherwise modified in any manner that would adversely affect the rights thereunder of the D&O Indemnified Parties.
(b) Without limiting the provisions of
Section 6.7(a), to the fullest
extent permitted by Applicable Law or otherwise required by the organizational documents of the Company or its Subsidiaries as in effect on the date hereof or in any Contract disclosed or made available to Parent prior to the date hereof, Parent
shall: (i) indemnify and hold harmless each D&O Indemnified Party against and from any costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, claims, damages, liabilities and amounts paid in settlement in connection
with any claim, Proceeding or investigation, whether civil, criminal, administrative or investigative, to the extent such claim, Proceeding or investigation arises out of or pertains to: (A) any alleged action or omission in such D&O Indemnified
Party’s capacity as a director, officer or employee of the Company, its investment adviser or any of its Subsidiaries prior to the Effective Time; or (B) this Agreement or the transactions contemplated hereby; and (ii) pay in advance of the final
disposition of any such claim, Proceeding or investigation the expenses (including attorneys’ fees) of any D&O Indemnified Party upon receipt of an undertaking by or on behalf of such D&O Indemnified Party to repay such amount if it shall
ultimately be determined that such D&O Indemnified Party is not entitled to be indemnified by Applicable Law. Any determination required to be made with respect to whether the conduct of any D&O Indemnified Party complies or complied with
any applicable standard shall be made by independent legal counsel selected by the D&O Indemnified Party, which counsel shall be reasonably acceptable to Parent, and the reasonable fees of such counsel shall be paid by Parent. Notwithstanding
anything to the contrary contained in this
Section 6.7(b) or elsewhere in this Agreement, Parent shall not settle or compromise or consent to the entry of any judgment or otherwise seek
termination with respect to any claim, Proceeding or investigation, unless such settlement, compromise, consent or termination includes an unconditional release of all of the D&O Indemnified Parties covered by the claim, Proceeding or
investigation from all liability arising out of such claim, Proceeding or investigation.
(c) Parent shall, and shall cause its Subsidiaries to purchase and maintain in full force and effect a six (6) year “tail” policy, on terms and conditions no less advantageous to the
D&O Indemnified Parties, or any other Person entitled to the benefit of this
Section 6.7, as applicable, than the existing directors’ and officers’ liability insurance and fiduciary insurance maintained by the Company as of the date of
this Agreement, covering claims arising from facts, events, acts or omissions that occurred at or prior to the Effective Time, including the transactions contemplated hereby (
provided that Parent shall not be required to pay an annual premium
for such insurance in excess of three hundred percent (300%) of the aggregate annual premiums currently paid by the Company on an annualized basis, but in such case shall purchase as much of such coverage as possible for such amount). Parent shall
not, and shall not permit its Subsidiaries to, take any action that would reasonably be expected to prejudice the rights of, or otherwise reasonably be expected to impede recovery by, the beneficiaries of any such insurance, whether in respect of
claims arising before or after the Effective Time.
(d) The D&O Indemnified Parties to whom this Section 6.7 applies shall be third-party beneficiaries of this Section 6.7. The provisions of this Section 6.7 are intended to be for the
benefit of each D&O Indemnified Party and his or her successors, heirs or representatives. Parent shall pay all reasonable expenses, including reasonable attorneys’ fees, that may be incurred by any D&O Indemnified Party in enforcing its
indemnity and other rights under this Section 6.7. Notwithstanding any other provision of this Agreement, this Section 6.7 shall survive the consummation of the Merger indefinitely and shall be binding, jointly and severally, on all
successors and assigns of Parent and the Surviving Corporation, and shall be enforceable by the D&O Indemnified Parties and their successors, heirs or representatives.
Section 6.8.
Notification of Certain Matters. Subject to Applicable Law, the Company shall give prompt
notice to Parent, and Parent shall give prompt notice to the Company, of (a) any notice or other communication received by such party from any Governmental Authority in connection with this Agreement, the Merger or the transactions contemplated
hereby, or from any Person alleging that the consent of such Person is or may be required in connection with the Merger or the transactions contemplated hereby, if the subject matter of such communication or the failure of such party to obtain such
consent could be material to the Company, the Surviving Corporation or Parent, (b) any claims, investigations or Proceedings commenced or, to such party’s Knowledge, threatened against, relating to or involving or otherwise affecting such party or
any of its Subsidiaries which relate to this Agreement, the Merger or the transactions contemplated hereby and (c) any notice or other communication received by such party from any Borrower of any breach or default of any Acquired Investment document
or, to such party’s Knowledge, the occurrence of any event that with the giving of notice, lapse of time or both would be a breach or a default under any Acquired Investment document.
Section 6.9.
Public Announcements. Except as otherwise contemplated by
Section 6.6 (and, for the avoidance of doubt, nothing
herein shall limit the rights of the Company or the Company Board under
Section 6.6 (
No Solicitation)), prior to any Company Adverse Recommendation Change, the Company, Parent and Acquisition Sub shall
consult with each other before issuing any press release or public announcement with respect to this Agreement or the transactions contemplated hereby, and none of the parties or their Affiliates shall issue any such press release or public
announcement prior to obtaining the other parties’ consent (which consent shall not be unreasonably withheld or delayed), except that no such consent shall be necessary to the extent disclosure may be required by Law, Order or applicable stock
exchange rule or any listing agreement of any party hereto. The Company may, without Parent or Acquisition Sub’s consent, communicate to its employees, Portfolio Companies, customers, suppliers and consultants in a manner consistent with prior
communications of the Company or is consistent with a communications plan previously agreed to by Parent and the Company in which case such communications may be made consistent with such plan.
Section 6.10.
Acquisition Sub. Parent will take all actions necessary to (a) cause Acquisition Sub to perform its obligations under
this Agreement and to consummate the First Step on the terms and conditions set forth in this Agreement and (b) ensure that, prior to the First Step Effective Time, Acquisition Sub shall not conduct any business, or incur or guarantee any
indebtedness or make any investments, other than as specifically contemplated by this Agreement.
Section 6.11.
No Control of the Other Party’s Business.
(a) Nothing contained in this Agreement is intended to give Parent, directly or indirectly, the right to control or direct the operations of the Company or its Subsidiaries prior to the Effective Time. Prior to
the Effective Time, the Company shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its Subsidiaries’ operations.
(b) Nothing contained in this Agreement is intended to give the Company, directly or indirectly, the right to control or direct the operations of Parent or its Subsidiaries prior to the Effective Time. Prior to
the Effective Time, Parent shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its Subsidiaries’ operations.
Section 6.12.
Rule 16b‑3 Matters. Prior to the Effective Time, Parent and the Company shall take all such steps as may be required to
cause any dispositions of Company Common Stock (including derivative securities with respect to Company Common Stock) or acquisitions of Parent Common Stock (including derivative securities with respect to Parent Common Stock) resulting from the
transactions contemplated hereby by each individual who is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to the Company or will become subject to such reporting requirements with respect to Parent, to be
exempt under Rule 16b‑3 under the Exchange Act, to the extent permitted by Applicable Law.
Section 6.13.
Repayment of Existing Credit Facilities and Existing Notes.
(a) At least five (5) Business Days prior to the Closing Date, the Company shall deliver to Parent a draft copy of one or more customary payoff letters (and applicable Lien releases providing that all Liens and
all guarantees in connection therewith related to the assets and properties of the Company and its Subsidiaries securing such obligations shall automatically and permanently be, released and terminated upon the payment of the applicable payoff amount
on the Closing Date) in form reasonably acceptable to Parent, in each case from each holder of Indebtedness of the Company and its Subsidiaries required to be repaid on the Closing Date (including, in respect of the Existing Credit Facilities and
other funded Indebtedness of the Company and its Subsidiaries but excluding the Existing Notes) (collectively, the “Payoff Letters”; and such Indebtedness, the “Closing Date
Indebtedness”), and, on or prior to the Closing Date, the Company shall deliver to Parent an executed copy of the Payoff Letters to be effective upon the Closing. The Company shall, and shall cause its Subsidiaries to, deliver all the
documents required for the termination of commitments under the Closing Date Indebtedness, subject to the occurrence of the Closing and the repayment in full of all obligations then outstanding thereunder.
(b) At least fifteen (15) Business Days prior to the Closing Date, Parent shall deliver a notice to the Company setting forth its intent to redeem or assume the Existing Notes. At least five (5) Business Days
prior to the Closing Date, the Company shall deliver to Parent draft documentation in form and substance satisfactory to fulfill the conditions precedent and other requirements for such election in accordance with the terms of the Existing Notes
Indenture and, at the instruction of Parent, shall provide such documentation to the trustee in respect of the Existing Notes in order to fulfill such conditions precedent and other requirements. Effective as of the Closing, Parent shall, and shall
cause the Surviving Corporation to, take all such steps as may be necessary to assume or cause to be assumed or redeem or cause to be redeemed in accordance with the Existing Notes Indenture for the assumption of, or the redemption of the full amount
of principal and accrued interest, and any and all of the fees, costs, expenses, penalties and other amounts payable under, the Existing Notes.
Section 6.14.
Certain Tax Matters.
(a) For United States federal
income Tax purposes, (i) the parties intend that the (A) First Step and the Second Step shall be considered together as a single integrated transaction for United States federal income Tax purposes, (B) the Merger will qualify as a “reorganization”
within the meaning of Section 368(a)(1)(A) of the
Code (a “
Reorganization”), and (C) the Cash Consideration shall be treated by the holders of Company Common Stock as the
receipt of ordinary income and by Parent External Adviser as the payment of a support payment that is deductible by Parent External Adviser under any federal, state and local Tax law (the parties’ intended tax treatment specified in this
Section 6.14(a)(i) shall be, collectively, the “
Intended Tax Treatment”), and (ii) this Agreement is intended to be, and
is hereby adopted as, a “plan of reorganization” for purposes of Section 354 and 361 of the
Code and Treasury Regulations Section 1.368‑2(g) and 1.368‑3(a), to which the Company, Parent and Acquisition Sub are
parties under Section 368(b) of the
Code.
(b) Each of the Company, Parent and Acquisition Sub shall use its reasonable best efforts to accomplish the Intended Tax Treatment, including by not taking any action that such party knows is reasonably likely to
prevent such treatment. Each of the Company, Parent and Acquisition Sub shall report the First Step and the Second Step, the Merger, Cash Consideration and the other transactions contemplated hereby in a manner consistent with the Intended Tax
Treatment.
(c) To the extent necessary, Company, Parent and Acquisition Sub shall work together in good faith to effect the combination contemplated by this Agreement using an alternative structure that would be tax-free
to the extent of the Share Consideration in the event that the Reorganization cannot be achieved.
(d) During the period from the date of this Agreement to the Effective Time, except as expressly contemplated or permitted by this Agreement,
(i) Parent shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, without the prior written consent of Company take any action, or knowingly fail to take any action, which action or failure to act is reasonably likely to cause Parent to fail to qualify as a
RIC, and (ii) the Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, without the prior written consent of Parent, take any action, or knowingly fail to take any action, which action or failure to act is
reasonably likely to cause the Company to fail to qualify as a RIC.
(i) During the period from the date of this Agreement to October 31, 2020, the Company and its Subsidiaries shall use commercially reasonable efforts to reduce its
undistributed Net Capital Gain to $0.00 by recognizing (for U.S. federal income tax purposes) losses on the list of assets in
Section 6.14(e) of the Company Disclosure Letter; provided that no such loss will be taken into account on the Final
October 31 RIC Tax Schedule if such loss is not, in the reasonable judgment of Parent’s Tax Return preparers, at least more likely than not to be permitted to be utilized by the Company;
(ii) To the extent that the Company would otherwise have positive undistributed Net Capital Gain for the taxable year ending October 31,
2020, the Company shall designate Net Capital Gain as distributed to shareholders of the Company pursuant to an election made under Section 852(b)(3)(D) of the Code with respect to the taxable year of the Company ending on October 31, 2020, timely
file IRS Form 2438, IRS Form 2439 and any other forms required to timely make such election (and a corresponding election under any applicable state and local tax laws), and pay the corresponding Tax imposed under Section 852(b)(3)(A) of the Code
prior to Closing (if due and payable on before the Closing Date). As soon as practicable after filing of such forms and payment of such Taxes by the Company to a Governmental Authority pursuant to this
Section 6.14(e)(ii), the Company shall
deliver to Parent the original or certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such filing and payment reasonably satisfactory to Parent.
For the avoidance of doubt, the election described in this
Section 6.14(e)(ii) is the sole method by which the Company shall reduce any positive undistributed Net Capital Gain for the taxable year ending October 31, 2020. The Company shall
not make any distribution to its stockholders to reduce such positive undistributed Net Capital Gain for such taxable year.
(iii) During the period from November 1, 2020 to the Closing Date, the Company and its Subsidiaries shall use commercially reasonable efforts to reduce undistributed Net Capital Gain to $0.00 by
recognizing (for U.S. federal income tax purposes) losses on the list of assets in Section 6.14(e) of the Company Disclosure Letter to the extent such losses were not recognized in the taxable year ending October 31, 2020; provided that no
such loss will be taken into account on the Final RIC Tax Schedule if such loss is not, in the reasonable judgment of Parent’s Tax Return preparers, at least more likely than not to be permitted to be utilized by the Company.
(iv) To the extent that the Company would otherwise have positive undistributed Net Capital Gain for the taxable period from November 1, 2020 to the Closing Date, the
Company shall designate Net Capital Gain as distributed to shareholders of the Company pursuant to an election made under Section 852(b)(3)(D) of the Code with respect to the taxable period of the Company ending on the Closing Date, timely file IRS
Form 2438, IRS Form 2439 and any other forms required to timely make such election (and a corresponding election under any applicable state and local tax laws), and pay the corresponding Tax imposed under Section 852(b)(3)(A) of the Code prior to
Closing (if due and payable on before the Closing Date). As soon as practicable after filing of such forms and payment of such Taxes by the Company to a Governmental Authority pursuant to this
Section 6.14(e)(iv), the Company shall deliver
to Parent the original or certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such filing and payment reasonably satisfactory to the Parent. For
the avoidance of doubt, the election under this Section 6.14(e)(iv) is the sole method by which the Company shall reduce such otherwise positive undistributed Net Capital Gain for the taxable period from November 1, 2020 to the Closing Date. The
Company shall not make any distribution to its stockholders to reduce such positive undistributed Net Capital Gain for such taxable period.
(v) No later than thirty (30) Business Days prior to October 31, 2020, the Company shall deliver to Parent (a) a calculation, substantially in the form of the
estimated calculation attached hereto as
Exhibit B, of the net asset value per share of the Company Common Stock as of October 31, 2020, which shall be prepared in good faith on a pro forma basis after giving effect to the transactions
contemplated by this Agreement, the payment by the Company of all Company expenses incurred in connection with this Agreement and the transactions contemplated hereby and the other adjustments set forth in
Exhibit B (the
“October 31 Pro Forma NAV”), and (b) a calculation, substantially in the form of the estimated
calculation attached hereto as
Exhibit C, of (1) the undistributed ICTI of the Company for the taxable year ending October 31, 2020 and (2) the undistributed Net Capital Gain and the RIC Tax Liability for the taxable year ending October 31,
2020, which shall be prepared in good faith on a pro forma basis after giving effect to the transactions contemplated by this Agreement, the payment by the Company of all Company expenses incurred in connection with this Agreement and the
transactions contemplated hereby, the transactions contemplated by
Section 6.14(e)(i) and
(ii), and any other adjustments set forth in
Exhibit C (the
“October 31 Pro Forma ICTI,” and together with the October 31 Pro Forma NAV, the “
Estimated October 31 RIC Tax Schedule”), together with any supporting documentation requested
by Parent (as updated, or if Parent makes no comments to the Estimated October 31 RIC Tax Schedule, or as adjusted pursuant to the determination of an Independent Accounting Firm, the “
Final October 31 RIC Tax
Schedule”). The Estimated October 31 RIC Tax Schedule shall be subject to Parent’s review and approval, which shall not be unreasonably withheld, delayed or conditioned. If Parent does not object to the Estimated October 31 RIC Tax
Schedule by written notice to Company within ten (10) Business Days after receipt, then the Estimated October 31 RIC Tax Schedule shall be the Final October 31 RIC Tax Schedule and shall be deemed to have been accepted and agreed upon, and final and
conclusive, for all purposes of this Agreement. If Parent objects to all or a portion of the Estimated October 31 RIC Tax Schedule, it shall notify the Company in writing within ten (10) Business Days of receipt a description of, and the basis for,
any objection, and Parent and the Company shall act in good faith to resolve any such dispute for a period of ten (10) Business Days after the Company’s receipt of such notice. If the Company and Parent do not reach an agreement regarding any
disputed item with respect to the Estimated October 31 RIC Tax Schedule during such time period, then the dispute shall be presented to an accounting firm of national reputation mutually agreed upon by the Company and Parent (an “
Independent Accounting Firm”) for final resolution. The Independent Accounting Firm shall make its decision solely based on such written submissions and shall not conduct an independent investigation. The
Independent Accounting Firm shall be directed to promptly, and in any event within five (5) Business Days after its appointment pursuant to this
Section 6.14(e), render its written decision on such matters under dispute (it being understood
that in making such determination, the Independent Accounting Firm shall be functioning as an expert and not as an arbitrator). The Independent Accounting Firm’s determination shall be binding upon the parties, and the Final October 31 RIC Tax
Schedule shall reflect the Independent Accounting Firm’s determination. The Company shall prepare and file or otherwise furnish to the appropriate
party (or cause to be prepared and filed or so furnished) in a timely manner
all
Tax Returns relating to the
Company or any of its Subsidiaries with respect to its taxable year ending October 31, 2020 that are due on or before the
Closing
Date
(each such Tax Return, the “
October 31 Tax Return”). All such
October 31 Tax Returns shall be prepared on a basis consistent with the most recent
Tax Returns of the
Company and its Subsidiaries except as required by Applicable Law
. No later than thirty (30) Business Days prior to the due date of such October 31 Tax
Return, Parent shall have a reasonable opportunity to review such October 31 Tax Return. The October 31 Tax Return shall be subject to the Parent’s review and approval, which shall not be unreasonably withheld, delayed or conditioned.
(vi) In addition to the requirements under Section 6.14(e)(v) and Section 6.21(Update to Schedules), no later than thirty
(30) Business Days prior to the Effective Time, the Company shall deliver to Parent (a) a calculation, substantially in the form of the estimated calculation attached hereto as Exhibit D, of the net asset value per share of the Company Common
Stock as of the last day of the then most recent completed month, which shall be prepared in good faith on a pro forma basis after giving effect to the transactions contemplated by this Agreement, the payment by the Company of all Company expenses
incurred in connection with this Agreement and the transactions contemplated hereby and the other adjustments set forth in Exhibit D (the “Closing
Pro Forma NAV”), and (b) a calculation, substantially in the form of the estimated calculation attached hereto as Exhibit E, of (1) the undistributed ICTI of the Company for
the taxable period from November 1, 2020 to the Effective Time and (2) the undistributed Net Capital Gain and the RIC Tax Liability for the taxable period from November 1, 2020 to the Effective Time, which shall be prepared in good faith on a pro
forma basis after giving effect to the transactions contemplated by this Agreement, the payment by the Company of all Company expenses incurred in connection with this Agreement and the transactions contemplated hereby, the transactions contemplated
by Section 6.14(e)(i), (ii), (iii) and (iv), and any other adjustments set forth in Exhibit E (the “Closing Pro
Forma ICTI,” and together with the Closing Pro Forma NAV, the “Estimated RIC Tax Schedule”), together with any supporting documentation requested by Parent (as updated, or if Parent makes no comments
to the Estimated RIC Tax Schedule, or as adjusted pursuant to the determination of an Independent Accounting Firm, the “Final RIC Tax Schedule”). No later than thirty (30) Business Days prior to the Closing
Date, Parent shall have a reasonable opportunity to review such Estimated RIC Tax Schedule. The Estimated RIC Tax Schedule shall be subject to Parent’s review and approval, which shall not be unreasonably withheld, delayed or conditioned. If Parent
does not object to the Estimated RIC Tax Schedule by written notice to Company within ten (10) Business Days after receipt, then the Estimated RIC Tax Schedule shall be the Final RIC Tax Schedule and shall be deemed to have been accepted and agreed
upon, and final and conclusive, for all purposes of this Agreement. If Parent objects to all or a portion of the Estimated RIC Tax Schedule, it shall notify the Company in writing within ten (10) days of receipt a description of, and the basis for,
any objection, and Parent and the Company shall act in good faith to resolve any such dispute for a period of ten (10) Business Days after the Company’s receipt of such notice. If the Company and Parent do not reach an agreement regarding any
disputed item with respect to the Estimated RIC Tax Schedule during such time period, then the dispute shall be presented to the Independent Accounting Firm for final resolution. The Independent Accounting Firm shall make its decision solely based
on such written submissions and shall not conduct an independent investigation. The Independent Accounting Firm shall be directed to promptly, and in any event within five (5) Business Days after its appointment pursuant to this Section 6.14(e),
render its written decision on such matters under dispute (it being understood that in making such determination, the Independent Accounting Firm shall be functioning as an expert and not as an arbitrator). The Independent Accounting Firm’s
determination shall be binding upon the parties, and the Final RIC Tax Schedule shall reflect the Independent Accounting Firm’s determination. The fees and expenses of the Independent Accounting Firm in connection with the resolution of any dispute
under this Section 6.14(e) shall be paid fifty percent (50%) by Parent and fifty percent (50%) by the Company. The Final RIC Tax Schedule may only be amended or revised to the extent mutually agreed to by Parent and the Company in writing.
Section 6.15.
Stock
Exchange Listing. Parent shall use its best efforts to cause the shares of Parent Common Stock to be issued in connection with the First Step to be listed on the NYSE, subject to official notice of issuance, prior to the Effective
Time.
Section 6.16.
Takeover Statutes and Provisions. None of the Company, Parent or Acquisition Sub will take any action that would cause
the Merger and related transactions to be subject to requirements imposed by any Takeover Statutes. Each of the Company and Parent shall take all necessary steps within its control to exempt (or ensure the continued exemption of) the Merger from, or
if necessary to challenge the validity or applicability of, any applicable Takeover Statute, as now or hereafter in effect.
Section 6.17.
Stockholder Litigation. The parties to this Agreement shall reasonably cooperate and consult with one another in
connection with the defense and settlement of any Proceeding by the Company’s stockholders or Parent’s stockholders against any of them or any of their respective directors, officers or Affiliates with respect to this Agreement or the transactions
contemplated hereby. Each of Parent and the Company (a) shall keep the other party reasonably informed of any material developments in connection with any such Proceeding brought by its stockholders and (b) shall not settle any such Proceeding
without the prior written consent of the other party (such consent not to be unreasonably delayed, conditioned or withheld).
Section 6.18.
Tax Dividends; Coordination of Dividends.
(a) On or prior to October 31, 2020, the Company shall declare and pay a Tax Dividend to the extent necessary to ensure the Company has no undistributed amounts of (i) ICTI (determined without regard to Section
852(b)(2)(D) of the Code) for the taxable year ending October 31, 2020, (ii) any prior year shortfall as determined under Section 4982(b)(2) of the Code and, (iii) amounts constituting the excess of (A) the amount specified in Section 852(a)(1)(B)(i)
of the Code over (B) the amount specified in Section 852(a)(1)(B)(ii) of the Code.
(b) Prior to the Closing Date, the Company shall declare and pay a Tax Dividend to the extent necessary to ensure the Company has no undistributed amounts of (i) ICTI (determined without regard to Section
852(b)(2)(D) of the Code) for the taxable period from November 1, 2020 to the Closing Date, or for any prior taxable period, (ii) any prior year shortfall as determined under Section 4982(b)(2) of the Code and, (iii) amounts constituting the excess
of (A) the amount specified in Section 852(a)(1)(B)(i) of the Code over (B) the amount specified in Section 852(a)(1)(B)(ii) of the Code.
(c) The Company shall coordinate with Parent in advance on the calculation and amount of any Tax Dividend and no dividend or distribution to its stockholders, including a Tax
Dividend, shall be declared or made without Parent’s prior written consent,
provided, that Parent shall not unreasonably withhold, delay or condition its consent with respect to any Tax Dividend. In the event that a dividend or distribution
with respect to the shares of Company Common Stock permitted under the terms of this Agreement has (i) a record date prior to the Effective Time and (ii) has not been paid as of the Effective Time, the holders of shares of Company Common Stock shall
be entitled to receive such dividend or distribution pursuant to and in accordance with
Section 2.2 (
Exchange of Certificates).
(d) Effective upon the date of this Agreement, the Company shall suspend its quarterly dividend program, and shall not declare or pay any quarterly or other dividend not expressly contemplated by this Agreement
without Parent’s prior written consent.
Section 6.20.
Credit Support Agreement; Parent Trading Plan.
(a) Promptly following the Closing, the Parent External Adviser and Parent shall enter into a credit support agreement to be prepared in reasonable consultation with the Company on or
prior to the Closing Date, providing for enhancement of shareholder credit in an aggregate amount of $23,000,000 on substantially the terms set forth on
Exhibit F.
(b) On the Closing Date, the Parent Board shall announce Parent’s commitment to purchase up to $15,000,000 worth of shares of Parent Common Stock in the aggregate in open market transactions, at the then-current
market price, if the shares of Parent Common Stock trade below the target net asset value per share discount set forth in Section 6.20 of the Parent Disclosure Letter, during the twelve (12) month period commencing upon the filing of the
first quarterly report on Form 10-Q after the Closing Date, subject to Parent’s compliance with its covenant and regulatory requirements (the “Parent Trading Plan”). Purchases made pursuant to the Parent
Trading Plan shall be in accordance with Rule 10b-18 under the Exchange Act.
Section
6.21.
Update to Schedules. No later than close of business on the tenth (10th) Business Day immediately following the end of each calendar month ending after the date of this Agreement and no later than 12:00 p.m. (New York, New York
time) on the Business Day immediately preceding the Closing Date, (a) the Company shall deliver to Parent a revised Acquired Loan Schedule and Equity Interest Schedule, each updated as necessary to reflect changes to the information contained therein
between the Cut-off Time and such calendar month-end or the Closing Cut-off Time, as applicable, including without limitation the addition of Acquired Investments to, or deletion of Acquired Investments from, the relevant schedule and (b) the Company
shall deliver to Parent a certificate setting forth the projected NAV of the Company as of the Closing Cut-off Time and, during the period from the date of this Agreement to October 31, 2020, a draft of the Estimated October 31 RIC Tax Schedule and,
during the period from November 1, 2020 to the Closing Date, a draft of the Estimated RIC Tax Schedule;
provided that the certificate delivered on the Business Day immediately preceding the Closing Date shall set forth the final NAV of the
Company and the final undistributed ICTI of the Company, each as of the Closing Cut-off Time.
Section 6.22.
Election to Parent Board. Promptly after the Effective Time, Parent shall increase the size of its board of directors in order to cause
one (1) current member of the Company Board who will be mutually selected by the Company and Parent between the date hereof and prior to the Closing Date to be appointed to the Parent Board on the Closing Date, and shall cause such Person to be so
elected in a director class to be determined by Parent between the date hereof and the Closing Date.
Section 6.23.
Company Advisory Agreement. The Company covenants and agrees that the Company Board shall, consistent with the requirements of Section 15 of the Investment
Company Act, take, or cause to be taken, all steps necessary to ensure, the effectiveness of Company Investment Advisory Agreement at all times between the date of this Agreement and the earlier of the Effective Time and the date, if any, on which
this Agreement is validly terminated pursuant to
Section 8.1 (
Termination).
Section 6.24.
Company-TTGA Parallel Facilities. Prior to the Closing, the Company shall make a recommendation to TTGA C-I MMF LP (“
TTGA”) in respect of the Acquired Loan Documents relating to those Portfolio Companies listed on
Section 6.24 of the Company Disclosure Letter, that the Parent (in its capacity as the successor of Company)
shall continue as the collateral agent under such Acquired Loan Documents in respect of each such Acquired Loan Document following the Closing. In addition, prior to the Closing, the Company shall use its reasonable best efforts to enter into an
intercreditor agreement with TTGA or modify the appropriate Acquired Loan Documents
in form and substance acceptable to Parent in its sole discretion in respect of the investments in each of those Portfolio
Companies set forth on
Section 6.24 of the Company Disclosure Letter providing or to provide, among other things, (w) that TTGA’s investments in such Portfolio Companies shall not be secured by any assets or guaranteed by any obligors not
securing or guaranteeing, as applicable, the Company’s investments in such Portfolio Companies (unless such assets or obligor shall substantially concurrently become a part of the Company’s collateral securing or guaranteeing, as applicable, its
investments) and vice versa with respect to the Company’s investments in such Portfolio Companies, (x) that the Liens on the collateral securing TTGA’s investments in such Portfolio Companies (to the extent validly perfected and not subject to other
Liens ranking senior to the Liens securing TTGA’s investments in such Portfolio Companies but junior to the Liens securing the Company’s investments in such Portfolio Companies) shall rank equal in priority to the Liens on the collateral securing the
Company’s investments in such Portfolio Companies and vice versa with respect to the Liens on the collateral securing the Company’s investments in such Portfolio Companies, (y) that
neither TTGA
nor
the Company shall amend or otherwise modify any documents relating to, exercise any enforcement or other remedies with respect to or otherwise take any action with respect to its investments in such Portfolio Companies without
the prior
written
consent of
the Company
or TTGA, as applicable, other than immaterial amendments to
such documents (provided that the Company or TTGA, as applicable, shall provide at least three (3) Business Days advance notice of any such immaterial amendments) and (z) for other customary
pari passu
intercreditor provisions.
Section 6.25.
Security Holdings. The Company shall use its reasonable best efforts to cause the Security Holdings Stockholders Agreement to be
amended prior to the Closing Date in form reasonably acceptable to Parent solely to reflect the substitution of Riga Capital S.A. by SIA Mindport and assignment of all of the rights and interests of Riga Capital S.A. under the Security Holdings
Stockholders Agreement to SIA Mindport.
Section 7.1.
Conditions to the Obligations of Each Party
. The respective obligations of each party to consummate the Merger are subject to the satisfaction or (to the extent permitted by Law) waiver by the Company and Parent at or prior to the Effective Time of the following conditions:
(a) the Company shall have obtained the Company Stockholder Approval and Parent shall have obtained the Parent Stockholder Approval;
(b) the issuance of Parent Common Stock in connection with the First Step and the issuance of shares of Parent Common Stock upon the conversion of any instruments exchangeable therefor or convertible thereto
shall have been approved for listing on the NYSE, subject to official notice of issuance;
(c) the Form N‑14 shall have become effective under the Securities Act and shall not be the subject of any stop order or Proceedings seeking a stop order;
(d) any applicable waiting period (and any extension thereof) under Antitrust Laws relating to the consummation of the Merger shall have expired or early termination thereof shall have been granted; and
(e) no Governmental Authority of competent jurisdiction shall have issued or entered any Law or Order which is then in effect and has the effect of restraining, enjoining or otherwise prohibiting or making
unlawful the consummation of
the Merger.
Section 7.2.
Conditions to Obligations of Parent and Acquisition Sub to Effect the Merger. The obligations
of Parent and Acquisition Sub to effect the Merger are subject to the satisfaction or (to the extent permitted by Law) waiver by Parent at or prior to the Effective Time of the following additional conditions:
(a) each of the representations and warranties of the Company contained in
(i)
Section 3.2(a) (
Capitalization) shall be true and correct in all respects (other than
de minimis
inaccuracies) when made and as of the Closing Date as though made on the Closing Date, (ii)
Section 3.1 (
Organization and Qualification),
Section
3.2(c) (
Capitalization),
Section 3.3(a) (
Authority
Relative to Agreement),
Section 3.3(b) (
Authority Relative to Agreement),
Section 3.14 (
Taxes),
Section 3.19 (
Vote Required),
Section 3.20 (
Brokers),
Section 3.21 (
Opinion of Financial Advisor) and
Section 3.26(f) (
Security Holdings) (collectively, the “
Company Fundamental Representations”) that (A) are
not qualified by Company Material Adverse Effect or other materiality qualifications shall be true and correct in all material respects as of the date hereof and as of the Closing Date as though made on and as of such date (except to the extent such
representations and warranties are expressly made as of a specific date, in which case such representations and warranties shall be so true and correct as of such specific date only) and (B) that are qualified by Company Material Adverse Effect or
other materiality qualifications will be true and correct in all respects (without disregarding such Company Material Adverse Effect or other materiality qualifications) as of the date hereof and as of the Closing Date as though made on and as of
such date (except to the extent such representations and warranties are expressly made as of a specific date, in which case such representations and warranties shall be so true and correct as of such specific date only) and (iii) this Agreement
(other than the Company Fundamental Representations), without giving effect to any materiality or “
Company Material Adverse Effect” qualifications therein, shall be true and correct as of the date hereof and as of the Closing
Date as though made on and as of such date (except to the extent such representations and warranties are expressly made as of a specific date, in which case such representations and warranties shall be so true and correct as of such specific date
only), except for such failures to be true and correct as would not reasonably be expected to have a Company Material Adverse Effect;
(b) the Company shall have performed or complied
in all material respects with its obligations required under this Agreement to be performed or complied with on or prior to the Closing Date;
(c) Parent shall have received a certificate signed by an executive officer of the Company certifying as to the matters set forth in
Section 7.2(a),
Section 7.2(b), Section 7.2(d) and Section 7.2(e);
(d) since the date of this Agreement, there shall not have occurred and be
continuing any Company Material Adverse Effect;
(e) the Company shall have unrestricted cash in an aggregate amount of at least $49,000,000 plus the amount of net cash proceeds received by the Company from the sale of FOLIOfn, Inc.
less the amount of any Tax Dividend or RIC Tax Liability actually paid by the Company prior to the Effective Time, which amount shall be immediately available to repay the Existing Notes;
(f) the administration agreement by and between the Company and its administrator, as amended from time to time, and the Company Investment Advisory Agreement shall have
been terminated; and
(g) the Company and its Subsidiaries shall have delivered to Parent or the applicable controlled Affiliates of Parent the documents described in, and otherwise complied with Section 6.13 (Repayment of Existing Credit Facilities and Existing Notes) and Section 6.14(e) (RIC Tax Issues).
Section
7.3.
Conditions to Obligation of the Company to Effect the Merger. The obligation of the Company to effect the Merger is further subject to the satisfaction or (to the extent permitted by
Law) waiver by the Company at or prior to the Effective Time of the following additional conditions:
(a) each of the representations and warranties of Parent, Acquisition Sub and
the Parent External Adviser contained in (i) Section
4.2(a) (
Capitalization) shall be true and correct in all respects (other than
de minimis inaccuracies) when
made and as of the Closing Date as though made on the Closing Date, (ii)
Section 4.1 (
Organization and Qualification),
Section 4.2(c) (
Capitalization),
Section
4.3(a) (
Authority Relative to Agreement),
Section 4.3(b) (
Authority Relative to Agreement),
Section
4.15 (
Taxes),
Section 4.20 (
Vote Required),
Section 4.21 (
Brokers),
Section
4.22 (
Opinion of Financial Advisor),
Section 5.1 (
Organization and Qualification),
Section
5.2(a) (
Authority Relative to Agreement) and
Section 5.2(b) (
Authority Relative to Agreement) (collectively, the “
Parent
Fundamental Representations”) that (A) are not qualified by Parent Material Adverse Effect, Adviser Material Adverse Effect or other materiality qualifications shall be true and correct in all material respects as of the date hereof and as
of the Closing Date as though made on and as of such date (except to the extent such representations and warranties are expressly made as of a specific date, in which case such representations and warranties shall be so true and correct as of such
specific date only) and (B) that are qualified by Parent Material Adverse Effect, Adviser Material Adverse Effect or other materiality qualifications will be true and correct in all respects (without disregarding such Parent Material Adverse Effect
or other materiality qualifications) as of the date hereof and as of the Closing Date as though made on and as of such date (except to the extent such representations and warranties are expressly made as of a specific date, in which case such
representations and warranties shall be so true and correct as of such specific date only) and (iii) this Agreement (other than the Parent Fundamental Representations), without giving effect to any materiality, “
Parent Material
Adverse Effect” or “Adviser Material Adverse Effect” qualifications therein, shall be true and correct as of the date hereof and as of the Closing Date as though made on and as of such date (except to the extent such representations and warranties
are expressly made as of a specific date, in which case such representations and warranties shall be so true and correct as of such specific date only), except for such failures to be true and correct as would not reasonably be expected to have a
Parent Material Adverse Effect or an Adviser Material Adverse Effect;
(b) Parent, Acquisition Sub and the Parent External Adviser shall have performed or complied in all material respects with its obligations required under this Agreement to be performed
or complied with on or prior to the Closing Date;
(c) the Company shall have received a certificate signed by an executive officer of Parent certifying as to the matters set forth in
Section 7.3(a),
Section 7.3(b),
Section 7.3(d) and
Section 7.3(e);
(d) since the date of this Agreement, there shall
not have occurred and be continuing any Parent Material Adverse Effect; and
(e) since the date of this Agreement, there shall not have occurred and be
continuing any Adviser Material Adverse Effect.
Section 7.4.
Frustration of Closing Conditions. None of Parent, Acquisition Sub or the Company may rely either as a basis for not
consummating the Merger or any of the other transactions contemplated hereby or terminating this Agreement and abandoning the Merger on the failure of any condition set forth in
Article VII to be satisfied if such failure was primarily caused
by such party’s failure to perform or comply with any of its obligations under this Agreement.
TERMINATION, AMENDMENT AND WAIVER
Section 8.1.
Termination. Notwithstanding anything contained in this Agreement to the contrary, this Agreement may be terminated at any time prior to the Effective Time, whether before or after the Company Stockholder
Approval or the Parent Stockholder Approval is obtained (except as otherwise expressly noted), as follows:
(a) by mutual written consent of each of Parent and the Company; or
(b) by either Parent or the Company, if:
(i) the First Step shall not have been consummated on or before 5:00 p.m. (New York, New York time) on February 10, 2021 (the “
Termination Date”);
provided that the right to terminate this Agreement pursuant to this
Section 8.1(b)(i) shall not be available to any party if the failure of such party to perform or comply with
any of its obligations under this Agreement has been the principal cause of or resulted in the failure of the Closing to have occurred on or before the Termination Date;
(ii) prior
to the Effective Time, any Governmental Authority of competent jurisdiction shall have issued or entered any Law or Order or taken any other action permanently restraining, enjoining or otherwise prohibiting or making unlawful the consummation of the
transactions contemplated hereby, and such Law or Order or other action shall have become final and non-appealable;
provided,
however, that the party seeking to terminate this Agreement pursuant to this
Section 8.1(b)(ii) shall have used its reasonable best efforts to remove such Law or Order or other action; and
provided,
further, that the right to terminate this
Agreement under this
Section 8.1(b)(ii) shall not be available to a party if the issuance of such Law or Order or taking of such action was proximately caused by the failure of such
party, and in the case of Parent, including the failure of Acquisition Sub, to perform or comply with any of its obligations under this Agreement; or
(iii) (A) the Company Stockholders’ Meeting (including any adjournments or postponements thereof) shall have
been duly held and completed and the Company Stockholder Approval shall not have been obtained at such
Company Stockholders’ Meeting (or at any adjournment or postponement thereof) at which a vote on
the adoption of this Agreement is taken or (B) the Parent Stockholders’ Meeting (including any adjournments or postponements thereof) shall have been duly held and completed and the Parent Stockholder Approval shall not have been obtained at such
Parent Stockholders’ Meeting (or at any adjournment or postponement thereof) at which a vote on the approval of the Parent Stock Issuance and/or the Parent Below-NAV Issuance is taken; or
(c) by the Company if:
(i) Parent, Acquisition Sub or the Parent External Adviser shall have breached or failed to perform any of their respective representations,
warranties, covenants or other agreements set forth in this Agreement, which breach or failure to perform (A) would result in the failure of a condition set forth in
Section 7.1 (
Conditions to the Obligations of Each Party) or
Section 7.3 (
Conditions to the Obligation of the Company to Effect the Merger) and (B) is not capable of being cured
by Parent, Acquisition Sub, or the Parent External Adviser, as applicable, by the Termination Date or, if capable of being cured, shall not have been cured by Parent, Acquisition Sub or the Parent External Adviser, as applicable, on or before the
earlier of (x) the Termination Date and (y) the date that is thirty (30) calendar days following the Company’s delivery of written notice to Parent of such breach or failure to perform;
provided that the Company shall not have the right to
terminate this Agreement pursuant to this
Section 8.1(c)(i) if the Company is then in material breach of any of its representations, warranties, covenants or obligations under this Agreement so as to cause any of the conditions set forth in
Section
7.1 (
Conditions to the Obligations of Each Party) or
Section 7.2 (
Conditions to the Obligations
of Parent and Acquisition Sub to Effect the Merger) not to be satisfied;
provided,
further, that the Company may not terminate this Agreement pursuant to this
Section 8.1(c)(i) if Parent’s breach has been primarily
caused by a breach of any provision of this Agreement by the Company;
(ii)
at any time prior to receipt of the Company Stockholder Approval, in order to concurrently enter into an Alternative Acquisition Agreement providing for a Superior Proposal to the extent permitted by, and subject to the applicable terms and
conditions of,
Section 6.6 (
No Solicitation);
provided that (A) such proposal did not arise from a breach of any of the provisions set forth
in
Section 6.6 (
No Solicitation) and (B) prior to or simultaneously with such termination the Company pays Parent the Company Termination Fee,
plus the Expenses actually incurred by Parent and
the Parent External Adviser on or prior to the termination of this Agreement; or
(iii) at any time prior to the First Step Effective Time, if (A) all of the conditions set forth in
Section 7.1 (
Conditions to the Obligations of Each Party) and
Section 7.2 (
Conditions to the Obligations of Parent and Acquisition Sub to Effect the Merger) have been, and continue to be, satisfied or waived (other than those conditions that by their nature are to be satisfied at the
Closing, each of which shall be capable of being satisfied if the Closing Date were the date of such termination, and, solely with respect to
Section 7.1 (
Conditions to the Obligations of Each Party), if the failure of such conditions to be satisfied is primarily caused by a material breach by Parent, Acquisition Sub or the Parent External Adviser of any of their respective covenants
or agreements contained in
Section 6.3 (
Preparation of Form N-14 and the Joint Proxy Statement; Stockholders’ Meetings),
Section 6.4 (
Appropriate Action; Consents; Filings), or
Section 6.15 (
Takeover Statutes and Provisions) of this Agreement), (B) Parent and Acquisition Sub do not consummate the First Step on or prior to
the date the Closing is required to occur pursuant to Article
I (
The Merger), (C) the Company shall have irrevocably confirmed in writing to Parent that (x) it is ready, willing and able to complete the
Closing on the date of such confirmation and throughout the three (3) Business Day period following delivery of such confirmation, and (y) intends to terminate this Agreement pursuant to this
Section 8.1(c)(iii) if Parent and Acquisition Sub
fail to effect the Closing on the date required pursuant to
Article I (
The Merger), (D) Parent and Acquisition Sub fail to effect the Closing within three (3) Business Days following delivery of such
confirmation and the date required pursuant to
Article I (
The Merger); or
(d) by Parent if:
(i) the Company shall have breached or failed to perform any of its representations, warranties, covenants or other agreements set forth in this Agreement, which breach or failure to perform (A)
would result in the failure of a condition set forth in
Section 7.1 (
Conditions to the Obligations of Each Party) or
Section 7.2 (
Conditions to the Obligations of Parent and Acquisition Sub to Effect the Merger) and (B) is not capable of being cured by the Company by the Termination Date or, if capable of being cured, shall not have been
cured by the Company on or before the earlier of (x) the Termination Date and (y) the date that is thirty (30) calendar days following Parent’s delivery of written notice to the Company of such breach or failure to perform;
provided that
Parent shall not have the right to terminate this Agreement pursuant to this
Section 8.1(d)(i) if Parent, Acquisition Sub or the Parent External Adviser is then in material breach of any of its representations, warranties, covenants or
Agreement so as to cause any of the conditions set forth in
Section 7.1 (
Conditions to the Obligations of Each Party) or
Section 7.3 (
Conditions to the Obligation of the Company to Effect the Merger) not to be satisfied;
provided,
further, that Parent may not terminate this Agreement pursuant to this
Section 8.1(d)(i) if
the Company’s breach has been primarily caused by a breach of any provision of this Agreement by Parent; or
(ii) at any time prior to the receipt of the Company Stockholder Approval, if (x) the Company Board (or any committee thereof) shall have made a Company Adverse Recommendation Change, (y)
the Company shall have willfully breached (as defined below) its obligations under
Section 6.6 (
No Solicitation), and such breach remains uncured for five (5) Business Days following the written notice
thereof by Parent to the Company or (z) in the event a Competing Proposal structured as a tender offer for the Company’s Common Stock is commenced and, within ten (10) Business Days after the public announcement thereof, the Company shall not have
issued a public statement (and filed a Schedule 14D-
9) reaffirming the Company Recommendation and recommending that the stockholders of the Company reject such Competing Proposal.
Section 8.2.
Effect of Termination. In the event that this Agreement is terminated and the Merger abandoned pursuant to
Section 8.1 (
Termination), written notice thereof shall be given by the terminating party to the other party, specifying the provisions hereof pursuant to which such termination is made, and this Agreement shall forthwith
become null and void and of no effect without liability on the part of any party hereto, and all rights and obligations of any party hereto shall cease; provided, however, that, except as otherwise provided in
Section 8.3 (
Termination Fees; Expenses) or in any other provision of this Agreement, no such termination shall relieve any party hereto of any liability or damages (which the parties acknowledge and agree shall not be limited
to reimbursement of expenses or out-of-pocket costs), which shall be deemed in any such event to be damages of such party resulting from any intentional or willful breach of this Agreement prior to such termination or fraud, in which case, except as
provided in
Section 8.3 (
Termination Fees; Expenses), the aggrieved party shall be entitled to all remedies available at law or in equity; and provided, further, that the Confidentiality Agreement,
this
Section 8.2,
Section 8.3 (
Termination Fees; Expenses),
Section 8.6 (
Expenses; Transfer
Taxes) and
Article IX (
General Provisions) shall survive any termination of this Agreement pursuant to
Section 8.1 (
Termination). For purposes
of this Agreement, “
willful breach” means a material breach of this Agreement that is the consequence of an act or omission by a party with the actual knowledge or intention that the taking of such act or
omission would, or would reasonably be expected to, constitute a material breach of this Agreement.
Section 8.3.
Termination Fees; Expenses.
(a) If, but only if, this Agreement is terminated by:
(i) Parent pursuant to
Section 8.1(d)(i) (
Breach of Agreement by the Company) (but only if the breach giving rise
to such termination under
Section 8.1(d)(i) was a willful breach), Parent or the Company pursuant to
Section 8.1(b)(iii)(A) (
Requisite Company Stockholder Vote Not Obtained), and in either such case (x) prior to such termination (or of the Company Stockholders’ Meeting in the case of termination pursuant to
Section 8.1(b)(iii)(A) (
Requisite Company Stockholder Vote Not Obtained)), a Competing Proposal that has been made after the date of this Agreement shall
have been publicly disclosed or otherwise communicated to the Company’s Board of Directors and not withdrawn prior to such date and (y) within twelve (12) months after such termination, the Company enters into an Alternative Acquisition Agreement
with respect to any Competing Proposal with a Third Party, and such Competing Proposal is subsequently consummated (regardless of whether such consummation happens prior to or following such twelve (12)-month period) (provided, however, that for
purposes of this
Section 8.3
(a)(i), the references to “
twenty percent (20%)” in the definition of Competing Proposal shall be deemed to be references to “
fifty percent (50%)”);
(ii) the Company pursuant to
Section 8.1(c)(ii) (
Alternative
Acquisition Agreement); or
(iii) Parent pursuant to
Section 8.1(d)(ii) (
Company Adverse Recommendation Change and Related
Matters),
then, in any such case, the Company shall pay, or cause to be paid, to Parent the Company Termination Fee, and with respect to any termination by the Company pursuant to
Section 8.1(c)(ii) (
Alternative Acquisition Agreement) or by Parent pursuant to
Section 8.1(d)(ii) (
Company Adverse Recommendation Change and Related Matters), the Expenses actually
incurred by Parent and the Parent External Adviser.
Any payments required to be made under this Section 8.3(a) shall be made by wire transfer of same day funds to the account or accounts designated by Parent, (x) in the case of clause (i) above, on the same day as the consummation of the
transaction contemplated therein, (y) in the case of clause (ii) above, immediately prior to or concurrently with such termination and (z) in the case of clause (iii) above, promptly, but in no event later than three (3) Business Days after the date
of such termination.
(b) If, but only if, this Agreement is terminated by
the Company
pursuant to
Section 8.1(c)(i) (
Breach of Agreement by Parent or Acquisition Sub) (but only if the breach giving rise to such termination under
Section
8.1(c)(i) (
Breach of Agreement by Parent, Acquisition Sub or Parent External Adviser) was a willful breach) or
Section 8.1(c)(iii) (
Parent, Acquisition Sub or
the Parent External Adviser Fail to Consummate the Closing), then, in any such case, Parent shall pay, or cause to be paid, to the Company the Parent Termination Fee.
Any payments required to be made under this Section 8.3(b) shall be made by wire transfer of same day funds to the account or accounts designated by the Company immediately prior to or substantially concurrently with any such termination
by Parent and promptly, but in no event later than three (3) Business Days after the date of such termination by the Company.
(c) Notwithstanding anything to the contrary set forth in this Agreement, the parties agree that in no event shall the Company be required to pay the Company Termination Fee on more than one occasion or shall
Parent be required to pay the Parent Termination Fee on more than one occasion.
(d) Notwithstanding anything to the contrary set forth in this Agreement, but subject to
Section 9.9 (
Specific Performance; Remedies), except in cases involving fraud, Parent’s right to receive payment from the Company of the Company Termination Fee pursuant to
Section 8.3(a) (
Company Termination Fee), shall constitute the sole and exclusive monetary remedy of Parent, Parent External Adviser and Acquisition Sub against the Company and its Subsidiaries and any of
their respective former, current or future general or limited partners, stockholders, members, managers, directors, officers, employees, agents, Representatives or assignees (collectively, the “
Company Related Parties”)
for all losses and damages suffered as a result of the failure of the transactions contemplated hereby to be consummated or for a breach or failure to perform hereunder or otherwise, and upon payment of such amounts, none of the Company Related
Parties shall have any further liability or obligation relating to or arising out of this Agreement or the transactions contemplated hereby (except that the Company shall remain obligated to comply with the provisions of this Agreement that survive
termination pursuant to
Section 8.2). Notwithstanding anything to the contrary set forth in this Agreement, but subject to
Section 9.9 (
Specific Performance; Remedies), except in cases
involving fraud, the Company’s right to receive payment from Parent of the Parent Termination Fee pursuant to
Section 8.3(b) (
Parent Termination Fee), shall, in circumstances in which the Parent
Termination Fee is owed, constitute the sole and exclusive monetary remedy of the Company against Parent, the Parent External Adviser and Acquisition Sub and their respective Subsidiaries and any of their respective former, current or future general
or limited partners, stockholders, members, managers, directors, officers, employees, agents, Representatives or assignees (collectively, the “
Parent Related Parties”) for all losses and damages suffered as a
result of the failure of the transactions contemplated hereby to be consummated or for a breach or failure to perform hereunder or otherwise, and upon payment of such amounts, none of the Parent Related Parties shall have any further liability or
obligation relating to or arising out of this Agreement or the transactions contemplated hereby (except that Parent shall remain obligated to comply with the provisions of this Agreement that survive termination pursuant to
Section 8.2).
(e) Each of the parties hereto acknowledges that (i) the agreements contained in this
Section 8.3 are an integral part of the transactions contemplated hereby, (ii) each of
the Company Termination Fee and the Parent Termination Fee is not a penalty, but is liquidated damages, in a reasonable amount that will compensate the Company or Parent, as applicable, in the circumstances in which such fee or expenses are payable
for the efforts and resources expended and opportunities foregone while negotiating this Agreement and in reliance on this Agreement and on the expectation of the consummation of the transactions contemplated hereby, which amount would otherwise be
impossible to calculate with precision, and (iii) without these agreements, the parties would not enter into this Agreement; accordingly, if the Company or Parent, as applicable, fails to timely pay any amount due pursuant to this
Section 8.3
and, in order to obtain such payment, Parent or the Company, as applicable, commences a suit that results in a judgment against the other for the payment of any amount set forth in this
Section 8.3, the Company or Parent, as applicable, shall
pay the other’s costs and expenses in connection with such suit, together with interest on such amount at the prime rate as published in
The Wall Street Journal in effect on the date such payment was required
to be made through the date such payment was actually received, or such lesser rate as is the maximum permitted by Applicable Law.
Section 8.4.
Amendment. Subject to Applicable Law, the parties hereto may only modify or amend this Agreement, by written agreement executed and
delivered by the duly authorized officers of each of the respective parties; provided that no amendment shall be made to this Agreement after the Effective Time; provided, further, that after receipt of the Company Stockholder Approval or the Parent
Stockholder Approval, if any such amendment shall by Applicable Law require further approval of the stockholders of the Company or Parent, as applicable, the effectiveness of such amendment shall be subject to the approval of the stockholders of the
Company or Parent, as applicable.
Section 8.5.
Extension; Waiver. The conditions to each of the parties’ obligations to consummate the Merger are for the sole benefit of such
party and may be waived by such party (without the approval of the stockholders of the Company or Parent) in whole or in part to the extent permitted by Applicable Law. At any time prior to the Effective Time, the Company or Parent may (a) waive or
extend the time for the performance of any of the obligations or other acts of Parent, Acquisition Sub or the Parent External Adviser, in the case of the Company, or the Company, in the case of Parent, or (b) waive any inaccuracies in the
representations and warranties contained in this Agreement or in any document delivered pursuant to this Agreement on the part of Parent, Acquisition Sub or the Parent External Adviser, in the case of the Company, or the Company, in the case of
Parent. Any agreement on the part of a party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party and expressly setting forth the nature of such extension or waiver. The failure
of any party to this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of such
rights.
Section 8.6.
Expenses; Transfer Taxes . Except as expressly set forth herein (including
Section 8.3 (
Termination
Fees; Expenses)), all expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expenses, provided that Parent and the Company shall each be responsible for
one-half of all filing fees incurred in connection with the HSR Act or any Independent Accounting Firm engaged pursuant to Section
6.14(e) (
Certain Tax Matters—RIC Tax Issues). Other than Taxes imposed
upon holders of Company Common Stock, the Company shall pay (and file any related Tax Returns for) all (a) transfer, stamp and documentary Taxes or fees and (b) sales, use, gains, real property transfer and other similar Taxes or fees arising out of
or in connection with this Agreement.
Section 9.1.
Non-Survival of Representations, Warranties and Agreements. The representations and warranties
and covenants and agreements (to the extent such covenant or agreement contemplates or requires performance prior to the Closing) in this Agreement and any certificate delivered pursuant hereto by any Person shall terminate at the Effective Time or,
except as provided in
Section 8.2 (
Effect of Termination), upon the termination of this Agreement pursuant to
Section 8.1 (
Termination), as the case may be, except that this
Section 9.1 shall not limit any covenant or agreement of the parties which by its terms contemplates performance after the Effective Time or after termination of this Agreement, including
those contained in
Section 6.7 (
Directors’ and Officers’ Indemnification and Insurance).
Section 9.2.
Notices. All notices, consents and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given
upon receipt) by hand delivery (with concurrent email delivery), by prepaid overnight courier (providing written proof of delivery) (with concurrent email delivery) or by confirmed electronic mail, addressed as follows:
if to Parent, Acquisition Sub or the Parent External Adviser:
Barings BDC, Inc.
300 South Tryon Street, Suite 2500
Charlotte, North Carolina
|
Email:
|
jonathan.bock@barings.com
jonathan.landsberg@barings.com
|
with a copy (which shall not constitute notice) to:
Dechert LLP
1900 K Street NW
Washington, DC 20006
|
Email:
|
harry.pangas@dechert.com
gregory.schernecke@dechert.com
|
|
Attention:
|
Harry Pangas, Esq.
Gregory A. Schernecke, Esq.
|
if to the Company:
MVC Capital, Inc.
287 Bowman Avenue, 2nd Floor
|
Email:
|
mtokarz@tokarzgroup.com
|
|
Attention:
|
Michael Tokarz
|
with a copy (which shall not constitute notice) to:
Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036
Phone: (212) 715-9100
|
Email:
|
gsilfen@kramerlevin.com
|
|
Attention:
|
George M. Silfen
|
or to such other address, electronic mail address for a party as shall be specified in a notice given in accordance with this
Section 9.2;
provided that any notice received by
facsimile transmission or electronic mail or otherwise at the addressee’s location on any Business Day after 5:00 p.m. (addressee’s local time) or on any day that is not a Business Day shall be deemed to have been received at 9:00 a.m. (addressee’s
local time) on the next Business Day;
provided,
further, that notice of any change to the address or any of the other details specified in or pursuant to this
Section 9.2 shall
not be deemed to have been received until, and shall be deemed to have been received upon, the later of the date specified in such notice or the date that is five (5) Business Days after such notice would otherwise be deemed to have been received
pursuant to this
Section 9.2.
Section 9.3.
Interpretation; Certain Definitions.
(a) The parties have participated collectively in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as
if drafted collectively by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.
(b) Disclosure of any fact, circumstance or information in any Section of the Company Disclosure Letter or Parent Disclosure Letter shall be deemed to be disclosure of such fact,
circumstance or information with respect to any other Section of the Company Disclosure Letter or Parent Disclosure Letter, respectively, if it is reasonably apparent on the face of such disclosure that such disclosure relates to any such other
Section. The inclusion of any item in the Company Disclosure Letter or Parent Disclosure Letter shall not be deemed to be an admission or evidence of materiality of such item, nor shall it establish any standard of materiality for any purpose
whatsoever.
(c) The words “
hereof,” “
herein,” “
hereby,” “
hereunder” and “
herewith” and words of similar
import shall refer to this Agreement as a whole and not to any particular provision of this Agreement. References to articles, sections, paragraphs, exhibits, annexes and schedules are to the articles, sections and paragraphs of, and exhibits,
annexes and schedules to, this Agreement, unless otherwise specified, and the table of contents and headings in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever
the words “
include,” “
includes” or “
including” are used in this Agreement, they shall be deemed to be followed by the phrase “
without limitation.” Words
describing the singular number shall be deemed to include the plural and vice versa, words denoting any gender shall be deemed to include all genders, words denoting natural persons shall be deemed to include business entities and vice versa and
references to a Person are also to its permitted successors and assigns. The phrases “
the date of this Agreement” and “
the date hereof” and terms or phrases of similar import shall be deemed to refer to
the date first set forth above, unless the context requires otherwise. References to any statute shall be deemed to refer to such statute as amended from time to time and to any rules or regulations promulgated thereunder (
provided that for
purposes of any representations and warranties contained in this Agreement that are made as of a specific date or dates, references to any statute shall be deemed to refer to such statute, as amended, and to any rules or regulations promulgated
thereunder, in each case, as of such date). Terms defined in the text of this Agreement have such meaning throughout this Agreement, unless otherwise indicated in this Agreement, and all terms defined in this Agreement shall have the meanings when
used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. Any Contract, instrument or Law defined or referred to herein or in any agreement or instrument that is referred to herein means such
Contract, instrument or Law as from time to time amended, modified or supplemented, including (in the case of statutes) by succession of comparable successor Laws (
provided that for purposes of any representations and warranties contained in
this Agreement that are made as of a specific date or dates, references to any statute shall be deemed to refer to such statute, as amended, and to any rules or regulations promulgated thereunder, in each case, as of such date). All references to “
$” refer to currency of the United States. The phrase “the ordinary course of business” means “the ordinary course of business consistent with past practice.” The term “or” is not exclusive.
Section 9.4.
Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void, unenforceable or against its regulatory policy, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in order that the First Step be consummated as originally contemplated to the fullest extent possible.
Section 9.5.
Assignment.
Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of Law or otherwise) without the prior written consent of the other parties. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective permitted successors and assigns. Any attempted assignment in violation of this
Section 9.5 shall be null and void.
Section 9.6.
Entire Agreement. This Agreement (including the exhibits, annexes and appendices hereto) constitutes, together with the
Confidentiality Agreement, the Company Disclosure Letter and the Parent Disclosure Letter, the entire agreement, and supersedes all other prior agreements and understandings, both written and oral, among the parties, or any of them, with respect to
the subject matter hereof.
Section 9.7.
No Third-Party Beneficiaries. This Agreement is not intended to and shall not confer upon any Person other than the parties hereto any rights or remedies hereunder; provided, however, that it is
specifically intended that the D&O Indemnified Parties (with respect to
Section 6.7 (
Directors’ and Officers’ Indemnification and Insurance)
and this
Section 9.7 from and after the Effective Time), are intended third-party beneficiaries hereof.
Section 9.8.
Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement shall be governed and
construed in accordance with the Laws of the State of Delaware applicable to contracts made and performed entirely within such state, without regard to any applicable conflicts of law principles that would cause the application of the Laws of another
jurisdiction, except to the extent governed by the Investment Company Act, in which case the latter shall control. The parties hereto agree that any Proceeding brought by any party to enforce any provision of, or based on any matter arising out of
or in connection with, this Agreement or the transactions contemplated hereby shall be brought in the Delaware Court of Chancery, or if jurisdiction over the matter is vested exclusively in federal courts, the United States District Court for the
District of Delaware, and the appellate courts to which orders and judgments therefore may be appealed (collectively, the “
Acceptable Courts”). Each of the parties
hereto submits to the jurisdiction of any
Acceptable Court in any Proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the
transactions contemplated hereby, and hereby irrevocably waives the benefit of jurisdiction derived from present or future domicile or otherwise in such Proceeding. Each party hereto irrevocably waives, to the fullest extent permitted by Law, any
objection that it may now or hereafter have to the laying of the venue of any Proceeding in any such
Acceptable Court or that any such Proceeding brought in any such
Acceptable Court has been brought in an inconvenient forum. EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY. Each
party hereto
(a) certifies that no representative of any other party has represented, expressly or otherwise, that such other party would not, in the event of any action, suit or proceeding, seek to enforce the foregoing
waiver,
(b) certifies that it makes this waiver voluntarily and
(c) acknowledges that it and the other parties hereto have been induced to enter into this Agreement, by, among other things,
the mutual waiver and certifications in this Section
9.8.
Section 9.9.
Specific Performance; Remedies. The parties agree that irreparable damage for which
monetary damages, even if available, would not be an adequate remedy, would occur in the event that any party hereto does not perform the provisions of this Agreement (including failing to take such actions as are required of it hereunder to
consummate this Agreement) in accordance with its specified terms or otherwise breaches such provisions. Accordingly, the parties acknowledge and agree that the parties shall be entitled to an injunction, specific performance and other equitable
relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof (without proof of actual damages), in addition to any other remedy to which they are entitled at law or in equity. Each of the parties agrees
that it will not oppose the granting of an injunction, specific performance and other equitable relief on the basis that any other party has an adequate remedy at law or that any award of specific performance is not an appropriate remedy for any
reason at law or in equity. Any party seeking an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement shall not be required to provide any bond or other security in
connection with any such order or injunction. Notwithstanding anything to the contrary contained herein, this
Section 9.9 is not intended and shall not be construed to limit in any way
the provisions of
Section 8.3(d) (
Termination Fees; Expenses).
Section 9.10.
Counterparts. This Agreement may be executed in multiple counterparts, all of which shall
together be considered one and the same agreement. Delivery of an executed signature page to this Agreement by electronic transmission shall be as effective as delivery of a manually signed counterpart of this Agreement.
[Remainder of page intentionally left blank; signature page follows.]
IN WITNESS WHEREOF, Parent, Acquisition Sub, the Parent External Adviser and the Company have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly
authorized.
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BARINGS BDC, INC.
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By:
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/s/ Jonathan Bock
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Name:
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Jonathan Bock
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Title:
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Chief Financial Officer
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MUSTANG ACQUISITION SUB, INC.
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By:
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/s/ Jonathan Landsberg
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Name:
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Jonathan Landsberg
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Title:
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President
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BARINGS LLC
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By:
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/s/ Eric Lloyd
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Name:
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Eric Lloyd
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Title:
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Managing Director
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MVC CAPITAL, INC
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By:
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/s/ Michael Tokarz
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Name:
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Michael Tokarz
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Title:
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Chairman
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[Signature Page to Agreement and Plan of Merger]
As used in this Agreement, the following terms shall have the following meanings:
“
Acceptable Confidentiality Agreement” shall have the meaning set forth in
Section 6.6(c).
“Acquired Equity Interests” shall mean all of the equity interests in Portfolio Companies owned by the Company and its
Subsidiaries, each of which is identified on the Equity Interest Schedule, as updated pursuant to Section 6.21 (Updates to Schedules).
“Acquired Investments” shall mean the Acquired Equity Interests and the Acquired Loans.
“Acquired Loan Documents” shall mean the credit and financing agreements, guarantees (including third-party guarantees),
subordination agreements, Acquired Loan Notes, mortgages, deeds of trust, security agreements (including pledge and control agreements), financing statements, intercreditor agreements, and other instruments and documents affecting the Company’s and
its Subsidiaries’ ownership, economic or other rights with respect to the Acquired Loans or in which the Company or its Subsidiaries has an interest, in connection with the Acquired Loans (together with all modifications, amendments and supplements
thereto and waivers, extensions, cancellations and releases thereunder).
“Acquired Loan Notes” shall mean the original executed promissory notes (or copies, to the extent that only copies of
such promissory notes are in the Company’s or its Subsidiaries’ possession or control) issued to the order of the Company or its Subsidiaries, or copies of a “master” note if no such note was issued to the Company or its Subsidiaries or an allonge
endorsing a note in favor of the Company or its Subsidiaries, evidencing indebtedness owing to the Company or its Subsidiaries under an Acquired Loan.
“Acquired Loan Schedule” shall mean the schedule attached hereto as Section A-5 of the Company Disclosure Letter, which identifies
(i) each Acquired Loan (ii) the name of the Borrower of each Acquired Loan, (iii) the interest rate on each Acquired Loan, (iv) the maturity date of each Acquired Loan, (v) the outstanding unpaid principal amount of each Acquired Loan as of the
Cut-off Time (as updated in accordance with Section 6.21 (Updates to Schedules)), (vi) the amount of accrued interest for each Acquired Loan; (vii) the amount of accrued but unpaid fees or other
amounts (other than accrued interest) for each Acquired Loan; and (viii) the currency for each Acquired Loan; (ix) any undrawn commitments with respect to each Acquired Loan.
“Acquired Loans” shall mean all of the loans owned by the Company or its Subsidiaries as of the date hereof, each of
which is identified on the Acquired Loan Schedule, as updated pursuant to Section 6.21 (Updates to Schedules).
“Acquisition Sub” shall have the meaning set forth in the Preamble.
“
Adviser Material Adverse Effect” shall mean any fact, circumstance, event, change, occurrence or effect that would, individually or in the aggregate, have or would reasonably be
expected to have a material adverse effect on
(1) the business, condition (financial or otherwise), properties, liabilities, assets or
results of operations of the Parent External Adviser, or (2) the ability of the Parent External Adviser or Parent to timely perform its or their obligations under this Agreement or consummate the transactions contemplated hereby;
provided,
however,
that none of the following shall constitute or be taken into account in determining whether an Adviser Material Adverse Effect shall have occurred or exists or would reasonably be expected to occur or exist, with respect to
clause (1) above:
(i) changes in general economic, financial market, business or
geopolitical conditions; (ii) general changes or developments in any of the industries or markets in which the Parent External Adviser operates (or applicable portions or segments of such industries or markets);
(iii) changes in any Applicable Law or applicable accounting regulations or principles or interpretations thereof; (iv) any change in the fair value, price or trading volume of Parent’s
securities, in and of itself (
provided that the facts or occurrences giving rise to or contributing to such change that are not otherwise excluded from the definition of “Adviser Material Adverse Effect” shall be taken into account in
determining whether there has been an Adviser Material Adverse Effect); (v) any failure by the Parent External Adviser to meet published analyst estimates or expectations of the Parent External Adviser’s revenue, earnings or other financial
performance or results of operations for any period, in and of itself (
provided that the facts or occurrences giving rise to or contributing to such failure that are not otherwise excluded from the definition of “Adviser Material Adverse
Effect” shall be taken into account in determining whether there has been an Adviser Material Adverse Effect); (vi) any failure by the Parent External Adviser to meet its internal or published projections, budgets, plans or forecasts of its revenues,
earnings or other financial performance or results of operations, in and of itself (
provided that the facts or occurrences giving rise to or contributing to such failure that are not otherwise excluded from the definition of “Adviser Material
Adverse Effect” shall be taken into account in determining whether there has been an Adviser Material Adverse Effect);
(vii) any outbreak or escalation of hostilities or war or any act of
terrorism, or any acts of God, natural disasters, epidemic, pandemic or disease outbreak (including the COVID-19 virus); (viii) the negotiation, existence, announcement of this Agreement or the performance of the transactions contemplated by this
Agreement, including (A) the initiation of litigation by any Person with respect to this Agreement or the transactions contemplated hereby, (B) any termination of, reduction in or similar negative impact on relationships, contractual or otherwise,
with any customers, suppliers, distributors, partners or employees of the Parent External Adviser (other than with respect to the Parent External Adviser’s relationship with Parent and its Subsidiaries) or (C) any loss or diminution of rights or
privileges (including any redemption or repayment of investments), or any creation of, increase in or acceleration of obligations, pursuant to any Contract or otherwise, on the part of the Parent External Adviser, in each case due to the negotiation,
announcement, existence or performance of this Agreement or the identity of the parties to this Agreement (or any communication by the Company regarding the plans or intentions of the Company with respect to the conduct of the business of Parent or
any of its Subsidiaries), or the consummation of the transactions contemplated hereby, including compliance with the covenants set forth herein (in each case, other than with respect to any Contracts of the Parent External Adviser with Parent or any
of its Subsidiaries); (ix) any action taken by the Parent External Adviser which is required or permitted by or resulting from or arising in connection with this Agreement; and (x) any actions taken (or omitted to be taken) at the request of the
Company;
provided that the facts, circumstances, events, changes, occurrences or effects set forth in
clauses (i)
through (iii)
and (vii) above shall be taken into account in determining whether an Adviser Material Adverse Effect has occurred to the extent (but only to such extent) such facts, circumstances, events,
changes, occurrences or effects have a disproportionate adverse impact on the Parent External Adviser, taken as a whole, relative to the other participants in the industries in which Parent and its Subsidiaries operate.
“
Affiliate” of a
Person shall mean any other Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with the first Person (it being understood that no
Portfolio Company shall be an Affiliate of such Person).
“Agreement” shall have the meaning set forth in the Preamble.
“Alternative Acquisition Agreement” shall have the meaning set forth in Section 6.6(d).
“Antitrust Division” shall mean the Antitrust Division of the United States Department of Justice.
“
Antitrust Laws” shall have the meaning set forth in
Section 3.4.
“Applicable Law” shall mean any domestic or foreign federal, state or local statute, law (whether statutory or common law), ordinance, rule, administrative interpretation,
regulation, order, writ, judgment or directive (including those of any self-regulatory organization) applicable to and legally binding on the Parent External Adviser, Company, Parent, Acquisition Sub or any of their respective Affiliates, directors,
employees or agents, as the case may be.
“Articles of Merger” shall mean the First Step Certificate of Merger and the Second Step Articles of Merger.
“Bankruptcy and Equity Exception” shall have the meaning set forth in Section 3.3(a).
“BDC” shall have the meaning set forth in the Recitals.
“
Blue Sky Laws” shall mean state securities or “
blue sky” laws.
“Book-Entry Shares” shall have the meaning set forth in Section 2.1(a)(ii).
“Borrowers” shall mean those Persons who constitute
“borrowers”, “guarantors”, “credit parties”, “loan parties” (or any similarly defined entity) under the Acquired Loan Documents.
“Business Day” shall mean any day other than a Saturday, Sunday or a day on which all banking institutions in New York, New York are authorized or obligated by Law or executive
order to close.
“CARES Act” shall mean the Coronavirus Aid, Relief, and Economic Security Act, as may be amended or modified.
“Cash Consideration” shall have the meaning set forth in Section 2.1(a)(ii).
“Certificates” shall have the meaning set forth in Section 2.1(a)(ii).
“
Closing” shall have the meaning set forth in
Section 1.2.
“Closing Cut-off Time” shall mean 5:00 p.m. (New York, New York time) on the second Business Day immediately prior to
the Closing Date.
“
Closing Date” shall have the meaning set forth in
Section 1.2.
“Closing Date Total FX Linked Adjustment” shall mean that amount indicated on Exhibit A-1 as the TOTAL FX Linked Adjustment calculated in accordance with the principles and example
calculations set forth on Exhibit A-1 by replacing all amounts shown on Exhibit A-1 as relating to or as of July 31 with corresponding amounts relating to or as of the Closing Date.
“Closing Date Indebtedness” shall have the meaning set forth in Section 6.13.
“Closing Pro Forma ICTI” shall having that meaning set forth in Section 6.14(e).
“Closing Pro Forma NAV” shall having that meaning set forth in Section 6.14(e).
“
Code” shall mean the Internal Revenue Code of 1986, as amended.
“Company” shall have the meaning set forth in the Preamble.
“
Company Adverse Recommendation Change” shall have the meaning set forth in
Section 6.3(b).
“Company Board” shall have the meaning set forth in the Recitals.
“Company Common Stock” shall have the meaning set forth in the Recitals.
“Company Disclosure Letter” shall mean the disclosure letter delivered by the Company to Parent simultaneously with the execution of this Agreement.
“Company Fundamental Representations” shall have the meaning set forth in Section 7.2(a).
“Company IPR” shall mean all Intellectual Property Rights owned, in whole or part, by the Company or its Subsidiaries.
“
Company Material Adverse Effect” shall mean any fact, circumstance, event, change, occurrence or effect that would have or would, individually or in the aggregate, reasonably be
expected to have a material adverse effect on
(1) the business, condition (financial or otherwise), properties, liabilities, assets or
results of operations of the Company and its Subsidiaries, taken as a whole, or (2) the ability of the Company to timely perform its obligations under this Agreement or consummate the transactions contemplated hereby;
provided,
however,
that none of the following shall constitute or be taken into account in determining whether a Company Material Adverse Effect shall have occurred or exists or would reasonably be expected to occur or exist, with respect to
clause (1) above:
(i)
changes in general economic, financial market, business or geopolitical conditions; (ii) general changes or developments in any of the industries or markets in which the Company, any of its Subsidiaries, or any of the Portfolio Companies operate (or
applicable portions or segments of such industries or markets);
(iii) changes in any Applicable Law or applicable accounting regulations or principles or interpretations thereof; (iv) any
change in the fair value, price or trading volume of the Company’s or any of the Portfolio Companies’ securities, in and of itself (
provided that the facts or occurrences giving rise to or contributing to such change that are not otherwise
excluded from the definition of “Company Material Adverse Effect” shall be taken into account in determining whether there has been a Company Material Adverse Effect); (v) any failure by the Company or any of the Portfolio Companies to meet published
analyst estimates or expectations of the Company’s or such Portfolio Company’s revenue, earnings or other financial performance or results of operations for any period, in and of itself (
provided that the facts or occurrences giving rise to or
contributing to such failure that are not otherwise excluded from the definition of “Company Material Adverse Effect” shall be taken into account in determining whether there has been a Company Material Adverse Effect); (vi) any failure by the
Company, any of its Subsidiaries, or any Portfolio Company to meet its internal or published projections, budgets, plans or forecasts of its revenues, earnings or other financial performance or results of operations, in and of itself (
provided
that the facts or occurrences giving rise to or contributing to such failure that are not otherwise excluded from the definition of “Company Material Adverse Effect” shall be taken into account in determining whether there has been a Company Material
Adverse Effect);
(vii) any outbreak or escalation of hostilities or war or any act of terrorism, or any acts of God, natural disasters, epidemic, pandemic or disease outbreak (including the
COVID-19 virus); (viii) the negotiation, existence, announcement of this Agreement or the performance of the transactions contemplated by this Agreement, including (A) the initiation of litigation by any Person with respect to this Agreement or the
transactions contemplated hereby, (B) any termination of, reduction in or similar negative impact on relationships, contractual or otherwise, with any Portfolio Companies or any customers, suppliers, distributors, partners or employees of the Company
and its Subsidiaries or (C) any loss or diminution of rights or privileges (including any redemption or repayment of investments), or any creation of, increase in or acceleration of obligations, pursuant to any Contract or otherwise, on the part of
the Company, any of its Subsidiaries or any Portfolio Company, in each case due to the negotiation, announcement, existence or performance of this Agreement or the identity of the parties to this Agreement (or any communication by Parent regarding
the plans or intentions of Parent with respect to the conduct of the business of the Company or any of its Subsidiaries), or the consummation of the transactions contemplated hereby, including compliance with the covenants set forth herein; (ix) any
action taken by the Company, any of its Subsidiaries, any Portfolio Company, in each case which is required or permitted by or resulting from or arising in connection with this Agreement; and (x) any actions taken at the express written request of
Parent;
provided that the facts, circumstances, events, changes, occurrences or effects set forth in
clauses (i)
through (iii)
and (vii) above shall be taken into account in determining whether a Company Material Adverse Effect has occurred to the
extent (but only to such extent) such facts, circumstances, events, changes, occurrences or effects have a disproportionate adverse impact on the Company and its Subsidiaries, taken as a whole, relative to the other participants in the industries in
which the Company and its Subsidiaries operate.
“
Company Material Contract” shall have the meaning set forth in
Section
3.15(a).
“Company Recommendation” shall mean the recommendation of the Company Board that the stockholders of the Company adopt this Agreement.
“
Company Related Parties” shall have the meaning set forth in
Section 8.3(d).
“
Company SEC Documents” shall have the meaning set forth in
Section 3.6(a).
“
Company Stockholder Approval” shall have the meaning set forth in
Section
3.19.
“
Company Stockholders’ Meeting” shall have the meaning set forth in
Section 6.3(b).
“Company Strategic Review Committee” shall have the meaning set forth in the Recitals.
“Company Termination Fee” shall mean $2,937,938.00.
“Company’s Bylaws” shall have the meaning set forth in Section 3.1.
“Company’s Charter” shall have the meaning set forth in Section 3.1.
“Company Data” shall mean the Company and Subsidiaries proprietary or confidential data, including customer data and Personal Data owned, controlled, processed or otherwise held by
the Company and its Subsidiaries.
“Company Investment Adviser” shall mean The Tokarz Group Advisers LLC.
“Company Investment Advisory Agreement” shall mean the agreement entered into by the Company Investment Adviser with the Company for the purpose of providing investment advisory or
investment management services.
“
Competing Proposal” shall have the meaning set forth in
Section
6.6(g)(i).
“Confidentiality Agreement” shall mean the mutual nondisclosure agreement, effective as of June 3, 2020, between Parent, the Parent External Adviser and the Company.
“Consent” shall have the meaning set forth in Section 3.4.
“Contract” shall mean any written agreement, contract, subcontract, lease, sublease, investment advisory agreement, administration agreement, conditional sales contract, purchase
order, sales order, task order, delivery order, license, indenture, note, bond, loan, instrument, understanding, permit, concession, franchise, commitment or other agreement.
“
Control” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership
of voting securities or partnership or other interests, by contract or otherwise. For purposes of this definition, a general partner or managing member of a Person shall always be considered to Control such Person. The terms “
Controlling” and “
Controlled” shall have correlative meanings.
“Control Investment” shall mean any company (i) the voting securities of which the Company beneficially owns, either directly or through one or more controlled companies, more than
25%, (ii) that the Company is otherwise deemed to “control” under Section 2(a)(9) of the Investment Company Act or (iii) is otherwise set forth on Section A-4 of the Company Disclosure Letter. Each Control Investment of the Company and its
Subsidiaries as of the date hereof is scheduled on Section A-4 of the Company Disclosure Letter.
“Cut-off Time” shall mean 5:00 p.m. (New York, New York time) on the second Business Day immediately preceding the date
of this Agreement.
“D&O Indemnified Parties” shall have the meaning set forth in Section 6.7(a).
“DGCL” shall have the meaning set forth in the Recitals.
“Dissenting Shares” shall have the meaning set forth in Section 2.3.
“Effective Time” shall have the meaning set forth in Section 1.3(b).
“Environmental Laws” shall mean all applicable and legally enforceable Laws relating to pollution or protection of the environment, including Laws relating to Releases of Hazardous
Materials and the manufacture, processing, distribution, use, treatment, storage, Release, transport or handling of Hazardous Materials, including the Federal Water Pollution Control Act (33 U.S.C. §1251 et seq.), the Resource Conservation and
Recovery Act of 1976 (42 U.S.C. §6901 et seq.), the Safe Drinking Water Act (42 U.S.C. §3000(f) et seq.), the Toxic Substances Control Act (15 U.S.C. §2601 et seq.), the Clean Air Act (42 U.S.C. §7401 et seq.), the Oil Pollution Act of 1990 (33
U.S.C. §2701 et seq.), the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. §9601 et seq.), the Endangered Species Act of 1973 (16 U.S.C. §1531 et seq.), and other similar state and local statutes, in effect as
of the date hereof.
“Equity Governing Documents” shall mean, with respect to an Acquired Equity Interest, the certificate or articles of
incorporation, certificate of formation or partnership, limited liability company or partnership agreement, stockholders agreement, option or warrant agreement, registration rights agreement, buy-sell arrangement and any other document that governs
or otherwise affects the terms of any Acquired Equity Interest (together with all modifications, amendments and supplements thereto and waivers, extensions, cancellations and releases thereunder).
“Equity Interest Schedule” shall mean the schedule attached hereto as Section A-6 of the Company Disclosure
Letter, which identifies (i) each share of common or preferred stock, limited liability company or limited partnership interest, or option or warrant to acquire any share of common or preferred stock, limited liability company or limited partnership
interest of a Portfolio Company; (ii) the issuer of such Acquired Equity Interest and (iii) any undrawn commitments with respect to each Acquired Equity Interest.
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” shall mean any corporation or trade or business (whether or not incorporated) which is treated with any other Person as a single employer within the meaning of
Section 414 of the Code.
“Estimated October 31 RIC Tax Schedule” shall have the meaning set forth Section 6.14(e)(v).
“Estimated RIC Tax Schedule” shall having that meaning set forth in Section 6.14(e).
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“
Exchange Agent” shall have the meaning set forth in
Section 2.2(a).
“
Exchange Fund” shall have the meaning set forth in
Section 2.2(a).
“Exchange Ratio” shall have the meaning set forth in Section 2.1(a)(ii).
“Existing Credit Facilities” shall mean the credit facilities under the following credit agreements: (i) that certain Secured Revolving Credit Agreement, dated July 31, 2013, among
the Company and Branch Banking and Trust Company and (ii) that certain Credit and Security Agreement, dated January 29, 2019, by and between the Company, certain Subsidiary guarantors, the lenders from time to time party thereto and People’s United
Bank, National Association, as agent, each as amended from time to time.
“Existing Notes” shall mean the 6.25% senior notes due November 30, 2022 in the initial principal amount of $115,000,000 issued pursuant to the
Existing Notes Indenture.
“Existing Notes Indenture” shall mean that certain Indenture dated as of February 26, 2013, by and between the Company and U.S. Bank National Association, as amended pursuant to
the Second Supplemental Indenture, dated as of November 15, 2017.
“Expenses” shall mean, with respect to any Person, all reasonable and documented out-of-pocket fees and expenses (including all fees and expenses of counsel, accountants, financial
advisors, and investment bankers of such Person and its Affiliates), incurred by such Person or on its behalf in connection with or related to the authorization, preparation, negotiation, execution, and performance of this Agreement and any
transactions related thereto, any litigation with respect thereto, the preparation, printing, filing, and mailing of the Joint Proxy Statement and Form N-14, the filing of any required notices under the HSR Act or other Antitrust Laws, or in
connection with other regulatory approvals, and all other matters related to the Merger, the Parent Stock Issuance, and the other transactions contemplated by this Agreement up to an amount not to exceed $1,175,175.00.
“FCPA” shall mean the United States Foreign Corrupt Practices Act of 1977.
“Final October 31 RIC Tax Schedule” shall have the meaning set forth Section 6.14(e)(v).
“Final RIC Tax Schedule” shall having that meaning set forth in Section 6.14(e).
“First Step” shall have the meaning set forth in the Recitals.
“First Step Certificate of Merger” shall have the meaning set forth in Section 1.3(a).
“First Step Effective Time” shall have the meaning set forth in Section 1.3(a).
“First Step Surviving Corporation” shall have the meaning set forth in the Recitals.
“
Forecasts” shall have the meaning set forth in
Section 4.28.
“
Form N‑14” shall have the meaning set forth in
Section 3.7.
“GAAP” shall mean the United States generally accepted accounting principles, consistently applied in accordance with past practice.
“Governmental Authority” shall mean any United States (federal, state or local) or foreign government, or any governmental, regulatory, judicial or administrative authority, agency
or commission.
“Hazardous Materials” shall mean all hazardous or toxic substances, materials or wastes, pollutants or contaminants defined as such by, or regulated as such under, any
Environmental Laws.
“HSR Act” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder.
“ICTI” shall mean “investment company taxable income” within the meaning of Section 852(b) of the Code.
“
Indebtedness”
shall mean (i) any indebtedness or other obligation
for borrowed money, whether current, short-term or long-term and whether secured or unsecured, (ii) any indebtedness evidenced by a note, bond, debenture or other Security or similar instrument, (iii) any liabilities or obligations with respect to
interest rate swaps, collars, caps and similar hedging obligations or other financial agreements or arrangements entered into for the purpose of limiting or managing interest rate risks, (iv) any capitalized lease obligations, (v) all obligations of
any Person as an account party in respect of letters of credit, surety bond, performance bonds, bankers acceptances or similar obligations or instruments, in each
case, to the extent drawn, (vi) any indebtedness secured by a Lien on such Person’s assets,
(vii) guarantees, endorsements and assumptions in respect of any of the foregoing
clauses
(i) through
(vi) and
(viii) all principal, accrued and unpaid interest, fees, prepayment and redemption
premiums or penalties (if any), unpaid fees or expenses, breakage costs, “make-whole amounts”, indemnity and expense reimbursement obligations and other monetary obligations in connection therewith in respect of the items described in the foregoing
clauses (i) through
(vii).
“Independent Accounting Firm” shall having that meaning set forth in Section 6.14(e)(v).
“
Inquiry” shall have the meaning set forth in
Section 6.6(a).
“Intellectual Property Rights” shall have the meaning set forth in Section 3.13(a).
“
Intended Tax Treatment” shall have the meaning set forth in
Section 6.14(a).
“
Intervening Event” shall mean a material event, occurrence, development or change in circumstances with respect to the Company and its Subsidiaries, taken as a whole, that
occurred or arose after the date of this Agreement, which was unknown to, nor reasonably foreseeable by, the Company Board as of the date of this Agreement and becomes known to or by the Company Board prior to the time the Company Stockholder
Approval is obtained;
provided,
however, that none of the following will constitute, or be considered in determining whether there has been, an Intervening Event: (i) the receipt, existence of or terms of an
Inquiry or Competing Proposal or any matter relating thereto or consequence thereof; and
(ii) changes in the market price or trading volume of the Company
Common Stock or meeting or exceeding any Forecasts (
provided,
however, that the underlying causes of such change or fact shall not be excluded by this
clause (
ii)).
“Investment Advisers Act” shall mean the Investment Advisers Act of 1940, as amended, and the rules and regulations of the SEC promulgated thereunder.
“Investment Company Act” shall mean the Investment Company Act of 1940, as amended, and the rules and regulations of the SEC promulgated thereunder.
“IRS” shall mean the United States Internal Revenue Service.
“Joint Proxy Statement” shall have the meaning set forth in Section 3.7.
“
Knowledge” shall mean (i) with respect to the Company, the actual knowledge of those natural Persons set forth in
Section A-1 of the Company Disclosure Letter, after reasonable inquiry by such Person, (ii) with respect to Parent, the actual knowledge of those natural Persons set forth in
Section A-2 of the Parent Disclosure Letter, after reasonable inquiry by such Person and (iii) with respect to the Parent External Adviser, the actual knowledge of those natural Persons set forth in
Section A-3 of the Parent Disclosure Letter, after reasonable inquiry by such Person.
“Law” shall mean any and all domestic (federal, state or local) or foreign laws, rules, regulations, orders, judgments or decrees promulgated by any Governmental Authority.
“Lien” shall mean liens, claims, mortgages, encumbrances, pledges, security interests, charges, bailments (in the nature of a pledge or for purposes of security), deeds of trust,
easements, options, rights of first refusal or first offer, rights of way, licenses, deeds of restriction, leases, encroachments, other transfer restrictions thereon or servitudes of any kind.
“made available” shall mean, with respect to any document or other information, such document or other item of information was filed with the SEC or included in the virtual data
room established by the Company or Parent, as the case may be, in connection with the Merger or the other transactions contemplated by this Agreement, in each case at least one (1) Business Day prior to the date of this Agreement.
“Merger” shall have the meaning set forth in the Recitals.
“Merger Consideration” shall have the meaning set forth in Section 2.1(a)(ii).
“MGCL” shall have the meaning set forth in the Recitals.
“NAV” shall mean, with respect to the Company or Parent, net asset value (within the meaning of the Investment Company Act) of the applicable entity, as determined in good faith
consistent with past practice by such entity (i.e., the Company determines its NAV and Parent determines its NAV).
“Net Capital Gain” shall mean “net capital gain” within the meaning of Section 1222(11) of the Code.
“Notice of Adverse Recommendation” shall have the meaning set forth in Section 6.6(d)(i).
“Notice of Superior Proposal” shall have the meaning set forth in Section 6.6(d)(ii).
“NYSE” shall mean the New York Stock Exchange.
“October 31 Pro Forma ICTI” shall have the meaning set forth Section 6.14(e)(v).
“October 31 Pro Forma NAV” shall have the meaning set forth Section 6.14(e)(v).
“October 31 Tax Return” shall have the meaning set forth Section 6.14(e)(v).
“Order” shall mean any decree, order, judgment, injunction, temporary restraining order or other order in any Proceeding by or with any Governmental Authority.
“Parent” shall have the meaning set forth in the Preamble.
“Parent Below-NAV Issuance” shall have the meaning set forth in the Recitals.
“Parent Board” shall have the meaning set forth in the Recitals.
“Parent Common Stock” shall have the meaning set forth in Section 2.1(a)(ii).
“Parent Data” shall mean Parent and its Subsidiaries proprietary or confidential data, including customer data and Personal Data owned, controlled, processed or otherwise held by
Parent and its Subsidiaries.
“Parent Disclosure Letter” shall mean the disclosure letter delivered by Parent to the Company simultaneously with the execution of this Agreement.
“Parent External Adviser” shall have the meaning set forth in the Preamble.
“Parent External Adviser Documents” shall mean Parent External Adviser’s articles of formation, as amended to date, as currently in effect, together with the Parent External
Adviser’s limited liability company agreement.
“Parent External Adviser Permits” shall have the meaning set forth in Section 5.4(a).
“Parent Forecasts” shall have the meaning set forth in Section 3.29.
“Parent Fundamental Representations” shall have the meaning set forth in Section 7.3(a).
“Parent Investment Advisory Agreement” shall mean the agreement entered into by the Parent External Adviser with Parent for the purpose of providing investment advisory or
investment management services.
“Parent Investment Advisory Agreement Amendment” shall have the meaning set forth in Section 4.20.
“Parent IPR” shall mean all Intellectual Property Rights owned (or purported to be owned), in whole or part, by or exclusively licensed to the Parent or its Subsidiaries.
“
Parent Material Adverse Effect” shall mean any fact, circumstance, event, change, occurrence or effect that would, individually or in the aggregate, have or would reasonably be
expected to have a material adverse effect on
(1) the business, condition (financial or otherwise), properties, liabilities, assets or
results of operations of Parent and its Subsidiaries, taken as a whole, or (2) the ability of Parent to timely perform its obligations under this Agreement or consummate the transactions contemplated hereby;
provided,
however, that
none of the following shall constitute or be taken into account in determining whether a Parent Material Adverse Effect shall have occurred or exists or would reasonably be expected to occur or exist, with respect to
clause (1) above:
(i) changes in general economic, financial market, business or
geopolitical conditions; (ii) general changes or developments in any of the industries or markets in which Parent or its Subsidiaries operate (or applicable portions or segments of such industries or markets);
(iii) changes in any Applicable Law or applicable accounting regulations or principles or interpretations thereof; (iv) any change in the fair value, price or trading volume of Parent’s
securities, in and of itself (
provided that the facts or occurrences giving rise to or contributing to such change that are not otherwise excluded from the definition of “Parent Material Adverse Effect” shall be taken into account in
determining whether there has been a Parent Material Adverse Effect); (v) any failure by Parent to meet published analyst estimates or expectations of Parent’s revenue, earnings or other financial performance or results of operations for any period,
in and of itself (
provided that the facts or occurrences giving rise to or contributing to such failure that are not otherwise excluded from the definition of “Parent Material Adverse Effect” shall be taken into account in determining whether
there has been a Parent Material Adverse Effect); (vi) any failure by Parent to meet its internal or published projections, budgets, plans or forecasts of its revenues, earnings or other financial performance or results of operations, in and of
itself (
provided that the facts or occurrences giving rise to or contributing to such failure that are not otherwise excluded from the definition of “Parent Material Adverse Effect” shall be taken into account in determining whether there has
been a Parent Material Adverse Effect);
(vii) any outbreak or escalation of hostilities or war or any act of terrorism, or any acts of God, natural disasters, epidemic, pandemic or disease
outbreak (including the COVID-19 virus); (viii) the negotiation, existence, announcement of this Agreement or the performance of the transactions contemplated by this Agreement, including (A) the initiation of litigation by any Person with respect to
this Agreement or the transactions contemplated hereby, (B) any termination of, reduction in or similar negative impact on relationships, contractual or otherwise, with any customers, suppliers, distributors, partners or employees of Parent and its
Subsidiaries or (C) any loss or diminution of rights or privileges (including any redemption or repayment of investments), or any creation of, increase in or acceleration of obligations, pursuant to any Contract or otherwise, on the part of Parent or
any of its Subsidiaries, in each case due to the negotiation, announcement, existence or performance of this Agreement or the identity of the parties to this Agreement (or any communication by the Company regarding the plans or intentions of the
Company with respect to the conduct of the business of Parent or any of its Subsidiaries), or the consummation of the transactions contemplated hereby, including compliance with the covenants set forth herein; (ix) any action taken by Parent or any
of its Subsidiaries, in each case which is required or permitted by or resulting from or arising in connection with this Agreement and (x) any actions taken at the express written request of the Company;
provided that the facts,
circumstances, events, changes, occurrences or effects set forth in
clauses (i)
through (iii) and
(vii) above shall be taken into account in determining whether a Parent Material Adverse Effect has occurred to the extent (but only to such extent) such facts, circumstances, events, changes,
occurrences or effects have a disproportionate adverse impact on Parent and its Subsidiaries, taken as a whole, relative to the other participants in the industries in which Parent and its Subsidiaries operate.
“
Parent Material Contract” shall have the meaning set forth in
Section 4.16(a).
“Parent Organizational Documents” shall mean the articles of incorporation and bylaws, each as amended to date, of each of Parent and Acquisition Sub.
“Parent Recommendation” shall mean the recommendation of the Parent Board that the stockholders of Parent approve the Parent Stock Issuance.
“
Parent Related Parties” shall have the meaning set forth in
Section 8.3(d).
“Parent SEC Documents” shall have the meaning set forth in Section 4.6(a).
“Parent Stock Issuance” shall have the meaning set forth in the Recitals.
“Parent Stockholder Approval” shall have the meaning set forth in Section 4.20.
“Parent Termination Fee” shall mean $4,700,701.00.
“Parent Trading Plan” shall have the meaning set forth in Section 6.20.
“Payoff Letter” shall have the meaning set forth in Section 6.13.
“Permit” shall mean any license, permit, variance, exemption, approval, qualification, or Order of any Governmental Authority.
“
Permitted Lien” shall mean (i) any Lien for Taxes not yet due and payable, being contested in good faith by appropriate proceedings by the Company or any Subsidiary and for which
adequate accruals or reserves have been established, (ii) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen, repairmen and other Liens imposed by Law, (iii) Liens incurred or deposits made in the ordinary course
of business in connection with workers’ compensation, unemployment insurance or other types of social security or foreign equivalents, (iv) zoning, building
codes, and other land use Laws regulating the use or
occupancy of leased real property or the activities conducted thereon that are imposed by any Governmental Authority having jurisdiction over such leased real property and which are not violated by the current use and operation of such leased real
property or the operation of the business of the Company and its Subsidiaries, (v) with respect to all leased real property, all Liens encumbering the interest of the fee owner or any superior lessor, sublessor or licensor, (vi) Liens securing
indebtedness or liabilities that are reflected in the Company SEC Documents or incurred in the ordinary course of business since the date of the most recent annual report on Form 10-K filed with the SEC by the Company and Liens securing indebtedness
or liabilities that have otherwise been disclosed to Parent in writing, (vii) such Liens or other imperfections of title, if any, that do not have a Company Material Adverse Effect, Parent Material Adverse Effect or Adviser Material Adverse Effect
(as applicable), including Liens for any supplemental Taxes or assessments not shown by the public records, (viii) Liens disclosed on existing title reports or existing surveys, (ix) Liens securing acquisition financing with respect to the applicable
asset, including refinancing thereof, (x) Lien described in
Appendix A to the Company Disclosure Letter or the Parent Disclosure Letter
(as applicable), (xi) in the case of Intellectual Property Rights, third party license agreements entered into in the ordinary course of business, (xii) any other Liens that will be release on or prior to the Closing Date, and (xiii) the replacement,
extension or renewal of any of the foregoing.
“
Person” shall mean an individual, a corporation, a limited liability company, a partnership, an
association, a trust or any other entity or organization, including a Governmental Authority.
“Personal Data” shall mean any information relating to an identified or identifiable natural person including (i) a natural person’s name, street address, telephone number, email
address, photograph, passport number, credit card number, bank information, or account number, and (ii) any other piece of non-publicly available information that allows the identification of such natural person or is otherwise considered personally
identifiable information or personal information under Applicable Law.
“
Portfolio Company” shall mean any entity in which the Company or any of its Subsidiaries has made, makes or proposes to make a
Portfolio Investment.
“Portfolio Investment” shall mean any debt or equity investment (including any guarantee) that is or would be reflected in the Company’s Schedule of Investments included in the
Company’s quarterly or annual reports.
“Proceeding” shall mean an action, suit, arbitration, investigation, examination, litigation, lawsuit or other proceeding, whether civil, criminal or administrative, by or before a
Governmental Authority.
“Regulatory Documents” shall mean, with respect to a Person, all forms, reports, registration statements, schedules and other documents filed, or required to be filed, by such
Person pursuant to applicable Securities Laws or the applicable rules and regulations of any United States or foreign governmental or non-governmental self-regulatory organization, agency or authority.
“Release” shall mean any actual or threatened release, spill, emission, discharge, leaking, pumping, injection, deposit, disposal, dispersal, leaching or migration of Hazardous
Materials, including the movement of Hazardous Materials through or in the air, soil, surface water, groundwater or real property.
“Reorganization” shall have the meaning set forth in Section 6.14(a).
“Representative” shall mean, with respect to any Person, such Person’s Affiliates and its and their respective officers, directors, managers, partners, employees, agents,
accountants, counsel, financial advisors, consultants and other advisors or representatives.
“RIC” shall have the meaning set forth in Section 3.14(k).
“RIC Tax Liability” shall mean any Tax liability imposed on the Company under Section 852(b)(3)(A) of the Code (or any corresponding provision in any state or local Tax law) in
connection with Net Capital Gain that is deemed distributed to shareholders of the Company pursuant to an election made under Section 852(b)(3)(D) of the Code (or any corresponding election pursuant to any state or local Tax law) with respect to the
taxable year of the Company ending on October 31, 2020 and/or the taxable period of the Company ending on the Closing Date, as determined based on the Final October 31 RIC Tax Schedule or Final RIC Tax Schedule, as applicable.
“SDAT” shall have the meaning set forth in Section 1.3(b).
“SEC” shall mean the United States Securities and Exchange Commission.
“Security Holdings” shall have the meaning set forth in Section 3.26(f).
“Security Holdings Stockholders Agreement” shall have the meaning set forth in Section 3.26(f).
“Second Step” shall have the meaning set forth in the Recitals.
“Second Step Articles of Merger” shall have the meaning set forth in Section 1.3(b).
“Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Securities Laws” shall mean the Securities Act, the Exchange Act, the Investment Company Act, the Investment Advisers Act, Blue Sky Laws, all similar foreign securities laws, and
the rules and regulations promulgated thereunder.
“Security” shall mean, with respect to any Person, any series of common stock, preferred stock and any other equity securities or capital stock of such Person (including interests
convertible into or exchangeable or exercisable for any equity interest in any such series of common stock, preferred stock, and any other equity securities or capital stock of such Person), however described and whether voting or non-voting.
“Share Consideration” shall have the meaning set forth in Section 2.1(a)(i).
“
Subsidiary” shall mean, as to any Person, any corporation, partnership, limited liability company, association or other
business entity that is consolidated with such Person for financial reporting purposes under GAAP.
“Superior Proposal” shall have the meaning set forth in Section 6.6(g)(ii).
“Surviving Corporation” shall have the meaning set forth in the Recitals.
“Takeover Statutes” shall have the meaning set forth in Section 3.18.
“Tax” or “Taxes” shall mean any and all taxes, fees, levies, duties, tariffs, imposts, assessments, obligations and other similar charges
(together with any and all interest, penalties and additions to tax) imposed by any Governmental Authority or Taxing Authority including taxes or other charges on or with respect to income, franchises, windfall or other profits, gross receipts,
alternative or add-on minimum, property, sales, use, capital stock, payroll, employment, social security, workers’ compensation, unemployment compensation, or net worth, and taxes or other charges in the nature of excise, withholding, ad valorem,
stamp, transfer, value added, or gains taxes.
“Tax Dividend” shall mean a dividend or dividends, with respect to any applicable tax year or period, which is deductible pursuant to the dividends paid deduction under Section 562
of the Code, and shall have the effect of distributing to the Company’s stockholders all of its previously undistributed (i) ICTI (determined without regard to Section 852(b)(2)(D) of the Code), (ii) any prior year shortfall as determined under
Section 4982(b)(2) of the Code and (iii) amounts constituting the excess of (A) the amount specified in Section 852(a)(1)(B)(i) of the Code over (B) the amount specified in Section 852(a)(1)(B)(ii) of the Code.
“Tax Returns” shall mean returns, forms, statements, schedules, reports, claims for refund, information statements or other documents, including any amendment, schedule or
attachment thereto, with respect to Taxes required to be filed with the IRS or any other Governmental Authority or Taxing Authority.
“Taxing Authority” shall mean any Governmental Authority having jurisdiction over the assessment, determination, collection or other imposition of any Tax.
“Termination Date” shall have the meaning set forth in Section 8.1(b)(i).
“Third Party” shall mean any Person or group of Persons other than Parent, Acquisition Sub and their respective Affiliates.
“TTGA” shall have the meaning set forth in Section 6.25.
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
MVC CAPITAL, INC.
1. Name. The name of the Corporation is MVC Capital, Inc.
2. Registered Office and Agent. The address of the Corporation’s registered office in the State of Delaware is Corporation Trust Company, 1209 Orange Street, Wilmington, New Castle County, DE 19801. The name
of the Corporation’s registered agent at such address is The Corporation Trust Company.
3. Purpose. The purposes for which the Corporation is formed are to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware and to possess and
exercise all of the powers and privileges granted by such law and any other law of Delaware.
4. Authorized Capital. The aggregate number of shares of stock which the Corporation shall have authority to issue is One Hundred (100) shares, all of which are of one class and are designated as Common Stock
and each of which has a par value of $0.01. Except as otherwise provided by law, the Common Stock shall have the exclusive right to vote for the election of directors and for all other purposes. Each share of Common Stock shall have one vote,
and the Common Stock shall vote together as a single class.
5. Bylaws. The board of directors of the Corporation is authorized to adopt, amend or repeal the bylaws of the Corporation, except as otherwise specifically provided therein.
6. Elections of Directors. Elections of directors need not be by written ballot unless the bylaws of the Corporation shall so provide.
7. Right to Amend. The Corporation reserves the right to amend any provision contained in this Certificate as the same may from time to time be in effect in the manner now or hereafter prescribed by law, and
all rights conferred on stockholders or others hereunder are subject to such reservation.
8. Limitation on Liability. The directors of the Corporation shall be entitled to the benefits of all limitations on the liability of directors generally that are now or hereafter become available under the
General Corporation Law of Delaware. Without limiting the generality of the foregoing, no director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. Any repeal or modification of this Section 9 shall be prospective only, and shall not affect, to the
detriment of any director, any limitation on the personal liability of a director of the Corporation existing at the time of such repeal or modification.
9. Business Combinations with Interested Stockholders. The Corporation elects not to be governed by Section 203 of the Delaware General Corporation Law.
Exhibit A-1
Exhibit A-1
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|
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EURO Investment FX Adjustment
|
|
|
|
|
|
|
|
|
|
|
€/$
|
|
|
|
|
7/31/2020
|
|
1.1771
|
Reference Rates
|
|
|
|
7/30/2020
|
|
1.1847
|
|
4/30
|
7/31 Average
|
|
7/29/2020
|
|
1.1792
|
€/$
|
1.0955
|
1.17756
|
|
7/28/2020
|
|
1.1716
|
|
|
|
|
7/27/2020
|
|
1.1752
|
|
|
|
|
Average
|
|
1.17756
|
|
|
|
|
|
|
|
MVC Automotive
|
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EURO
|
|
|
|
|
|
4/30 Valuation @ 1.0955
|
7/31 Average Valuation @ 1.17756
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|
|
|
|
Euro Investment Value
|
20,687,786
|
20,687,786
|
|
|
|
|
$ Investment Value
|
22,663,470
|
24,361,110
|
|
|
|
|
$ Debt
|
8,454,470
|
8,454,470
|
|
|
|
|
$ Equity
|
14,209,000
|
15,906,640
|
|
|
|
|
|
|
|
|
|
|
|
$ Value Adjustment
|
|
1,697,640
|
|
|
|
|
|
|
|
|
|
|
|
Security Holdings
|
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EURO
|
|
|
|
|
|
4/30 Valuation @ 1.0955
|
7/31 Average Valuation @ 1.17756
|
|
|
|
|
Euro Investment Value
|
29,065,419
|
29,065,419
|
|
|
|
|
$ Investment Value
|
31,841,166
|
34,226,274
|
|
|
|
|
$ Debt
|
13,907,166
|
13,907,166
|
|
|
|
|
$ Equity
|
17,934,000
|
20,319,108
|
|
|
|
|
$ Letter of Credit
|
(184,712)
|
(198,548)
|
|
|
|
|
|
|
|
|
|
|
|
$ Value Adjustment
|
|
2,371,272
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL FX Linked Adjustment
|
4,068,912
|
|
|
|
|
EXHIBIT B
OCTOBER 31 PRO FORMA NAV SCHEDULE
A) Net Asset Value based on last formal monthly close:
B) Adjustments1:
1) Estimated Income accruals from last monthly close through 10/31/2020
2) Estimated expenses from last monthly close through 10/31/2020 (include estimated merger expenses through that date)
3) Estimated transactions from last monthly close through 10/31/2020 versus previous mark to estimate realized gain or loss and change
in unrealized appreciation (depreciation)
4) Update current marks for current F/X rates
5) Estimated Dividends Paid, if any
C) Proforma 10/31/2020 NAV2:
1 - An excel tab will be included for each adjustment category which will provide detail behind the adjustment
2 - Proforma NAV will not include an estimate of valuation changes from the 10/31/2020 valuation process
EXHIBIT C
OCTOBER 31 PRO FORMA ICTI SCHEDULE
ICTI
A) Estimated Undistributed ICTI based on the August 31, 2020 tax provision prepared by the Company’s fund administrator and reviewed by Company’s tax return preparer:
B) Adjustments to the August 31, 2020 provision1:
1) Estimated book net operating income through 10/31/2020 (include estimated merger expenses through that
date)
2) Estimated book to tax differences related to book net operating income through 10/31/2020
3) Estimated taxable ordinary income or losses from portfolio company transactions through 10/31/2020
4) Estimated dividends paid through 10/31/2020, if any
5) Estimated GILTI tax inclusion for FY 2020
6) Estimated dividends to be paid, if any
C) Estimated proforma undistributed ICTI for 10/31/2020
Undistributed Net Capital Gain and RIC Tax Liability
A) Estimated Undistributed Net Capital Gain based on the August 31, 2020 tax provision prepared by the Company’s fund administrator and reviewed by Company’s tax return preparer:
B) Adjustments to the August 31, 2020 provision1:
1) Estimated taxable net capital gains (losses) from portfolio company transactions through 10/31/2020
2) Estimated capital gains dividends paid, if any
C) Estimated proforma undistributed Net Capital Gains (Losses) for 10/31/2020
D) Deemed Distribution Required based on Estimated proforma undistributed Net Capital Gains (Losses) for 10/31/2020
E) Estimated Federal Income payable on the shareholders behalf
1 - An excel tab will be included for each adjustment category which will provide detail behind the adjustment
EXHIBIT D
CLOSING PRO FORMA NAV SCHEDULE
A) Net Asset Value based on last formal monthly close:
B) Adjustments1:
1) Estimated Income accruals from last monthly close through Closing Cut-off Time
2) Estimated expenses from last monthly close through Closing Cut-off Time (include estimated merger expenses through
that date)
3) Estimated transactions from last monthly close through Closing Cut-off Time versus previous mark to estimate
realized gain or loss and change in unrealized appreciation (depreciation)
4) Update current marks for current F/X rates
5) Estimated Dividends Paid, if any
C) Proforma Closing Cut-off Time NAV2:
1 - An excel tab will be included for each adjustment category which will provide detail behind the adjustment
2 - Proforma NAV will not include an estimate of valuation changes since the last quarterly valuation process
EXHIBIT E
CLOSING PRO FORMA ICTI
ICTI
A) Calculations1:
1) Estimated book net operating income from 11/1/2020 through Effective Time (include estimated merger expenses
through that date)
2) Estimated book to tax differences related to book net operating income from 11/1/2020 through
3) Estimated taxable ordinary income or losses from portfolio company transactions from 11/1/2020 through
Effective Time
4) Estimated dividends paid from 11/1/2020 through Effective Time, if any
5) Other estimated potential adjustments (GILTI, MVC PE Fund Schedule K-1, etc.)2
B) Estimated proforma undistributed ICTI from 11/1/2020 through Effective Time
Undistributed Net Capital Gain and RIC Tax Liability
A) Calculations1:
1) Estimated taxable net capital gains (losses) from portfolio company transactions from 11/1/2020 through
Effective Time
2) Estimated capital gains dividends paid from 11/1/2020 through Effective Time, if any
B) Estimated proforma undistributed Net Capital Gains (Losses) from 11/1/2020 through Effective Time
C) RIC Tax Liability based on Estimated proforma undistributed Net Capital Gains (Losses) from 11/1/2020 through Effective Time
1 - An excel tab will be included for each adjustment category which will provide detail behind the adjustment
2 - Other estimated adjustments are to be determined based on discussion with tax advisers
Exhibit F
Terms of Credit Support Agreement
Summary Term Sheet—Credit Support Agreement
Issuer
|
• [Affiliate of Barings LLC]
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Policy holder
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• [Affiliate of Barings BDC, Inc.]
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Maximum obligation
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• $23,000,000
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Upfront fee
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• None
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Effective date
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• [Date of transaction close between Barings BDC, Inc. and MVC Capital]
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Designated settlement / payment date
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• The earlier of [January 1, 2031] or the time at which the entire Reference Portfolio has been realized or written off
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Reference portfolio
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• Investments acquired from MVC Capital (“Reference Portfolio”) [held in the [legal entity]]
o [#] of Non-control/Non-affiliated investments
o [#] of Affiliate investments
o [#] of Control investments
o See schedule in [Appendix] [To include a detailed list of the loan/equity details for each portfolio company]
• Investments that are restructured, amended, extended or otherwise modified (including to new securities) will continue to be included in the Reference Portfolio until such
time as these investments are realized or written off entirely
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Reference portfolio value
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• Aggregate purchase price of Reference Portfolio of $[ ]
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Obligation basis
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• Change in the market value of the Reference Portfolio
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Calculation of obligation
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• Net cumulative unrealized and realized gains/losses of the Reference Portfolio from the Effective Date to the calculation date (“CSA Account Value”)
• In the event the CSA Account Value is positive, no obligation will exist
• As defined above, the maximum obligation shall be $23,000,000
o For the avoidance of doubt, if the CSA Account Value is less than negative $23,000,000, any losses in excess of this amount shall be borne by the Policy Holder
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Reporting
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• Policy Holder shall submit detailed calculation of CSA Account Value no later than [30] days following each measurement period
• In the event of a realization, restructuring, amendment, extension or other modification of an investment in the Reference Portfolio, Policy Holder shall submit [reference
documentation] within [30] days following such event
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Settlement mechanics
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• On the Designated Settlement date, following the final calculation of the CSA Account Value, the Issuer will make a cash payment to the Policy Holder
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