Ares Capital以约26亿美元现金+股票收购同业BDC MidCap Financial，每股对价10.88美元

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported)
October
26, 2026
ARES CAPITAL CORPORATION
(Exact Name of Registrant as Specified in
Charter)
Maryland
814-00663
33-1089684
(State or Other Jurisdiction
of Incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
245 Park Avenue
,
44th Floor
,
New York
,
NY
10167
(Address of Principal Executive Offices)
(Zip Code)
Registrant’s telephone number, including
area code
(
212
)
750-7300
(Former Name or Former Address, if Changed
Since Last Report)
Check the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions
(see General Instruction A.2. below):
x
Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of
the Act:
Title of each class
Trading symbol
Name of each exchange on which registered
Common stock, $0.001 par value
ARCC
NASDAQ Global Select Market
Indicate by check mark whether the registrant
is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter)
or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging
growth company
¨
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange
Act.
¨
Item 1.01.
Entry into a Material Definitive Agreement.
Merger Agreement
On October 26, 2026,
Ares Capital Corporation, a Maryland corporation (“ARCC”), entered into an Agreement and Plan of Merger (the “Merger
Agreement”) with MidCap Financial Investment Corporation, a Maryland corporation (“MFIC”), Union Acquisition Sub Inc.,
a Maryland corporation and a wholly-owned subsidiary of ARCC (“Acquisition Sub 1”), Union Acquisition Sub LLC, a Delaware
limited liability company and a wholly-owned subsidiary of ARCC (“Acquisition Sub 2”), and, solely for the limited
purposes set forth therein, Ares Capital Management LLC, a Delaware limited liability company and ARCC’s investment adviser (“ARCC
Adviser”).
The Merger Agreement provides
that, subject to the terms and conditions set forth therein, (i) Acquisition Sub 1 will merge with and into MFIC (the “First
Merger”), with MFIC continuing as the surviving corporation and as a wholly-owned subsidiary of ARCC (the “Surviving Corporation”),
and (ii) after the First Merger, the Surviving Corporation will merge with and into Acquisition Sub 2 (the “Second Merger”
and, together with the First Merger, the “Mergers”), with Acquisition Sub 2 continuing as the surviving company and as a wholly-owned
subsidiary of ARCC (the “Surviving Company”).
The board of directors
of MFIC (the “MFIC Board”), at the recommendation of the special committee of MFIC, and the board of directors of ARCC
(the “ARCC Board”) have approved, adopted and declared advisable the Merger Agreement and the transactions contemplated
thereby (collectively, the “Transaction”). Holders of MFIC common stock, par value $0.001 per share (“MFIC Common
Stock”) will not be entitled to appraisal or objecting stockholder rights in connection with the Mergers. In addition, as
described below, concurrently with the execution of the Merger Agreement, certain stockholders of MFIC who collectively own more
than 5% of MFIC’s outstanding common stock entered into voting and support agreements with ARCC pursuant to which they agreed,
subject to the terms and conditions set forth therein, to vote their shares of MFIC Common Stock in favor of the approval and adoption of the Merger Agreement and the Mergers.
Merger Consideration
Subject to the terms and
conditions of the Merger Agreement, at the effective time of the First Merger (the “Effective Time”), each share of MFIC Common
Stock issued and outstanding immediately prior to the Effective Time (other than shares held by a subsidiary of MFIC or held, directly
or indirectly, by ARCC or Acquisition Sub 1) will be converted into the right to receive (i) $1.21 in cash, without interest, to be paid
by ARCC Adviser (the “Cash Consideration”), and (ii) a number of validly issued, fully paid and non-assessable shares of ARCC
common stock, par value $0.001 per share (“ARCC Common Stock”) equal to the Exchange Ratio (as defined below), with cash to
be paid in lieu of fractional shares, if applicable (together with the Cash Consideration, the “Merger Consideration”). Based
on the terms of the Merger Agreement, as of the date of the Merger Agreement, the Merger Consideration represents total consideration
of $10.88 per fully diluted share of MFIC Common Stock, consisting of approximately $1.21 per share in cash, to be paid by ARCC Adviser,
and approximately $9.67 per share in ARCC Common Stock, subject to reduction for the Post-Signing Tax Dividend Amount (as defined below)
and to adjustment as described below.
The “Exchange Ratio”
will be determined as of a date mutually agreed by the parties that is no earlier than 48 hours (excluding Sundays and holidays) prior
to the Effective Time, based on ARCC’s net asset value per share (“ARCC NAV”) and the closing price of ARCC Common Stock
on that date (the “ARCC Price”), as follows:
(1) if the ARCC Price is less than or equal to 100% of ARCC NAV, the Exchange
Ratio will equal $9.67 less the Post-Signing Tax Dividend Amount, divided by ARCC NAV;
(2) if the ARCC Price is greater than 100%
but less than or equal to 104.5% of ARCC NAV, the Exchange Ratio will equal the product of (A) $9.67 less the Post-Signing Tax Dividend
Amount and (B) 1.00 plus 50% of the premium of the ARCC Price to ARCC NAV, divided by the ARCC Price; and
(3) if the ARCC Price
is greater than 104.5% of ARCC NAV, the Exchange Ratio will equal the product of (A) $9.67 less the Post-Signing Tax Dividend Amount
and (B) 102.25%, divided by the ARCC Price.
Tax Distributions
For U.S. federal income tax
purposes, the Mergers, taken together, are intended to qualify as a “reorganization” within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the “Code”).
Prior to the closing of the
Mergers, MFIC will declare one or more dividends in order to distribute all of its previously undistributed investment company taxable
income, any prior year shortfall and net capital gain and to maintain its qualification as a “regulated investment company”
under the Code (any such dividend, a “Tax Dividend”). The stock portion of the Merger Consideration will be reduced by the
aggregate per share amount of any Tax Dividend declared after the date of the Merger Agreement with a record date on or prior to the closing
date, excluding regular quarterly dividends (the “Post-Signing Tax Dividend Amount”).
Representations, Warranties and Covenants
The Merger Agreement contains
customary representations and warranties of MFIC, ARCC, Acquisition Sub 1, Acquisition Sub 2 and ARCC Adviser, which will not survive
consummation of the Mergers, subject to certain limited exceptions described in the Merger Agreement.
The Merger Agreement also
contains certain pre-closing covenants by the parties, including covenants requiring (i) MFIC, ARCC, Acquisition Sub 1 and Acquisition
Sub 2 to use reasonable best efforts to cause the consummation of the transactions contemplated by the Merger Agreement, (ii) MFIC to
use reasonable best efforts to conduct its business in the ordinary course, and (iii) MFIC and ARCC to refrain from taking certain
actions prior to the consummation of the Mergers without the other party’s consent. Among other things, MFIC has also agreed not
to, and to cause its subsidiaries and representatives not to, solicit or initiate discussions or negotiations with third parties regarding
other proposals to acquire MFIC, and MFIC is restricted in its ability to respond to such proposals, subject to customary exceptions.
MFIC must call and hold a meeting of MFIC stockholders solely for the purpose of seeking the approval of the Mergers by the holders of
at least a majority of the outstanding shares of MFIC Common Stock entitled to vote thereon (such approval, the “MFIC Stockholder
Approval” and such meeting, the “MFIC Stockholders Meeting”). No vote of ARCC stockholders is required in connection
with the transactions contemplated by the Merger Agreement.
Conditions to the Mergers
The consummation of the Mergers
is subject to the satisfaction or waiver of certain customary closing conditions, including obtaining the MFIC Stockholder Approval, the
approval for listing on NASDAQ of the ARCC Common Stock to be issued in the First Merger, the effectiveness of ARCC’s registration
statement on Form N-14, the expiration or termination of the applicable waiting period under the HSR Act and the absence of any law
or order prohibiting the consummation of the First Merger. ARCC’s obligation to consummate the Mergers is further conditioned upon
the receipt of certain third party consents.
The Merger Agreement contains
certain termination rights for ARCC and MFIC. In particular, at any time prior to receipt of the MFIC Stockholder Approval, MFIC may terminate
the Merger Agreement in order to substantially concurrently enter into a definitive agreement providing for a Superior Proposal (as defined
in the Merger Agreement), subject to MFIC’s compliance with certain obligations contained in its non-solicitation covenants and
the payment by MFIC of a $31,360,000 termination fee (the “MFIC Termination Fee”). The MFIC Termination Fee is also payable
by MFIC in certain other situations, including a termination of the Merger Agreement following withdrawal or modification of the recommendation
by the MFIC Board that the stockholders of MFIC vote in favor of the approval of the Mergers (a “MFIC Recommendation Change”).
No termination fee is payable by ARCC in connection with the termination of the Merger Agreement.
Voting Agreements
Concurrently with ARCC entering
into the Merger Agreement, ARCC also entered into separate voting and support agreements (each, a “Voting Agreement”) with
Apollo Principal Holdings A, L.P. and MidCap Financial Trust, each an affiliate of Apollo Global Management, Inc. (each, an “Equityholder”),
with respect to an aggregate of 4,281,394 shares of MFIC Common Stock (together with any shares of MFIC Common Stock that an Equityholder
acquires beneficial ownership of prior to the expiration of the Voting Agreement, the “Voting Agreement Shares”). Pursuant
to the Voting Agreements, each Equityholder has agreed, among other things, (i) to vote or cause to be voted its Voting Agreement Shares
at any meeting of MFIC stockholders in favor of the approval of the Mergers and any other matters expressly contemplated by the Merger
Agreement that are submitted to MFIC stockholders and are necessary for the consummation of the Mergers, and any proposal to adjourn or
postpone such meeting if there are not sufficient votes to approve the Mergers, (ii) not to transfer any of its Voting Agreement Shares,
subject to certain permitted transfers and (iii) not to take certain actions that would violate the “no-shop” provisions of
the Merger Agreement if the Equityholder were MFIC. Each Voting Agreement will terminate upon the earliest of (a) the Effective Time,
(b) any amendment, modification or waiver of the Merger Agreement made without the applicable Equityholder’s consent that decreases
the merger consideration, changes its form or otherwise materially adversely affects the applicable Equityholder (in its capacity as a
stockholder of MFIC) or the economic interests of MFIC stockholders, (c) the valid termination of the Merger Agreement, (d) a MFIC Recommendation
Change and (e) the mutual written consent of the parties thereto.
General
The foregoing summary descriptions of the Merger
Agreement and the Voting Agreements do not purport to be complete and are qualified in their entirety by reference to the full text of
the Merger Agreement and the form of Voting Agreement, copies of which are attached to this Current Report on Form 8-K (this “Current
Report”) as Exhibits 2.1 and 10.1, respectively, and the terms of which are incorporated herein by reference.
The Merger Agreement has been attached as an exhibit
to this Current Report in order to provide investors and security holders with information regarding its terms. It is not intended to
provide any other financial information about the parties thereto or their respective subsidiaries and affiliates. The Merger Agreement
contains representations, warranties, covenants and agreements that were made only for purposes of the Merger Agreement and as of specific
dates; were solely for the benefit of the parties to the Merger Agreement (except as may be expressly set forth in the Merger Agreement);
may be subject to limitations agreed upon by the parties, including being qualified by confidential disclosures made for the purposes
of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts; and may be
subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors and
security holders should not rely on such representations, warranties, covenants or agreements, or any descriptions thereof, as characterizations
of the actual state of facts or condition of any of the parties to the Merger Agreement or any of their respective subsidiaries or affiliates.
Moreover, information concerning the subject matter of the representations, warranties, covenants and agreements may change after the
date of the Merger Agreement, which subsequent information may or may not be fully reflected in public disclosures by the parties to the
Merger Agreement.
Item 7.01.
Regulation FD Disclosure.
On October 27, 2026, ARCC
and MFIC issued a joint press release announcing the signing of the Merger Agreement. A copy of the press release is included as
Exhibit 99.1 to this Current Report.
The information furnished pursuant to this Item
7.01, including the related exhibit, shall not be deemed “filed” for purposes of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section, nor shall such information or exhibits
be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or
the Exchange Act, except as shall be expressly set forth by specific reference in such a filing by ARCC with the U.S. Securities and Exchange
Commission (the “SEC”).
Item 9.01.
Financial Statements and Exhibits.
(d) Exhibits:
Exhibit
Number
Description
2.1
Agreement
and Plan of Merger, dated as of October 26, 2026, by and among Ares Capital Corporation, Union Acquisition Sub Inc., Union Acquisition
Sub LLC, MidCap Financial Investment Corporation and, solely for the limited purposes set forth therein, Ares Capital Management LLC
10.1
Form of
Voting and Support Agreement, dated as of October 26, 2026, by and between Ares Capital Corporation and each of the Equityholders
party thereto
99.1
Joint
Press Release dated October 27, 2026
104
Cover Page Interactive Data File (embedded within Inline XBRL Document)
***********
Forward-Looking Statements
Some of the statements in this Current Report
constitute forward-looking statements because they relate to future events, future performance or financial condition, including statements
regarding the Transaction pursuant to the Merger Agreement. The forward-looking statements may include statements as to: the consummation
of the Transaction, the future operating results of ARCC, MFIC and, following the closing of the Transaction, the combined company, and
distribution projections; business prospects of ARCC, MFIC and the combined company, and the prospects of their portfolio companies; and
the impact of the investments that ARCC, MFIC and the combined company expect to make. In addition, words such as “anticipate,”
“believe,” “expect,” “seek,” “plan,” “should,” “could,” “estimate,”
“overestimate,” “underestimate,” “project,” “intend,” “may,” “will,”
“endeavor,” “potential,” “predict,” “continue,” “target” and “would”
indicate forward-looking statements, although not all forward-looking statements include these words. The forward-looking statements contained
in this communication involve risks and uncertainties.  Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking
statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will
be achieved. Certain factors could cause actual results and conditions to differ materially from those planned, projected, or estimated,
including the uncertainties associated with (i) the ability of the parties to consummate the Transaction on the expected timeline,
or at all; (ii) the failure of MFIC stockholders to approve the Transaction and the other Proposals (as defined below); (iii) the
possibility that any or all of the various conditions to the consummation of the Transaction, including the receipt of any required regulatory
approvals, may not be satisfied or waived on a timely basis or at all, and including the possibility that a governmental entity may prohibit,
delay or refuse to grant approval for the consummation of the Transaction or may require conditions, limitations or restrictions in connection
with such approvals; (iv) the occurrence of any event, change or other circumstance that could give rise to the termination
of the Merger Agreement, including circumstances requiring MFIC to pay a termination fee; (v) the possibility that competing offers
or acquisition proposals for MFIC will be made; (vi) ARCC’s ability to realize the anticipated benefits of the Transaction,
including the expected accretion to ARCC’s core earnings, including as a result of delay in completing the Transaction or integrating
the businesses of MFIC and ARCC; (vii) the amount of the special dividend from MFIC’s undistributed taxable income, the NAV
per share of ARCC and the trading price of ARCC common stock, each of which will affect the number of shares of ARCC common stock issued
in the Transaction; (viii) risks related to diverting management’s attention from ongoing business operations and the effect
of the announcement or pendency of the Transaction on the business relationships, operating results and business generally of ARCC and
MFIC; (ix) the combined company’s plans, expectations, objectives and intentions as a result of the Transaction, including
the integration of MFIC’s portfolio; (x) the future operating results and net investment income projections of ARCC, MFIC or,
following the closing of the Transaction, the combined company; (xi) the ability of Ares Management to implement its future plans
with respect to the combined company and to attract and retain highly talented professionals; (xii) the business prospects of ARCC,
MFIC or the combined company and the ability of their portfolio companies to achieve their objectives; (xiii) the expected financings
and investments and additional leverage that ARCC, MFIC or the combined company may seek to incur in the future; (xiv) the adequacy
of the cash resources and working capital of ARCC, MFIC or the combined company; (xv) the timing of cash flows, if any, from the
operations of the portfolio companies of ARCC, MFIC or the combined company; (xvi) the ability of ARCC and the combined company to
maintain their qualification as a business development company under the Investment Company Act of 1940, as amended, and as a regulated investment company under Subchapter
M of the Code; (xvii) general economic, political and market conditions, including changes in
interest rates and credit spreads; (xviii) future changes in laws or regulations (including the interpretation of these laws and
regulations by regulatory authorities); (xix) the risk that stockholder litigation in connection with the Transaction may result
in significant costs of defense and liability; (xx) unexpected costs, charges or expenses resulting from the Transaction, and (xxi) such
other factors as are described under the heading “Risk Factors” in ARCC’s and MFIC’s respective annual reports
on Form 10-K, quarterly reports on Form 10-Q and other filings with the SEC. Any forward-looking statements speak only as of
the date of this Current Report.  ARCC and MFIC have based the forward-looking statements included in this Current Report on information
available to them on the date hereof, and they assume no obligation to update any such forward-looking statements. Although ARCC and MFIC
undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise,
you are advised to consult any additional disclosures that they may make directly to you or through reports that ARCC and/or MFIC in the
future may file with the SEC, including the Proxy Statement/Prospectus and the Registration Statement (in each case, as defined below),
annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Readers are cautioned not
to place undue reliance on any of these forward-looking statements.
No Offer or Solicitation
This Current Report is not, and under no circumstances
is it to be construed as, a prospectus or an advertisement and the communication of this Current Report is not, and under no circumstances
is it to be construed as, an offer to sell or a solicitation of an offer to purchase any securities in ARCC, MFIC or in any fund or other
investment vehicle managed by Ares Management, Apollo Management or any of their respective affiliates.
Additional Information and Where to Find It
This Current Report relates to the proposed Transaction
and certain related matters (the “Proposals”). In connection with the Proposals, ARCC will file with the SEC a registration
statement on Form N-14 (the “Registration Statement”) that will include a proxy statement of MFIC and a prospectus of
ARCC (the “Proxy Statement/Prospectus”), and MFIC will mail the Proxy Statement/Prospectus to its stockholders. The Proxy
Statement/Prospectus and the Registration Statement will each contain important information about ARCC, MFIC, the Transaction and the
Proposals. This Current Report does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation
of any vote or approval. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10
of the Securities Act.
INVESTORS IN ARCC AND STOCKHOLDERS OF MFIC ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND REGISTRATION
STATEMENT, AND OTHER DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS,
CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT ARCC, MFIC, THE TRANSACTION
AND THE PROPOSALS.
Investors and security holders will be able to obtain the documents filed with the SEC free of charge at the
SEC’s website, http://www.sec.gov or, for documents filed by ARCC, from ARCC’s website at www.arescapitalcorp.com, and, for
documents filed by MFIC, from MFIC’s website at https://www.midcapfinancialic.com.
Participants in the Solicitation
ARCC, its directors, certain of its executive
officers and certain employees and officers of Ares Management and its affiliates may be deemed to be participants in the solicitation
of proxies in connection with the Proposals. Information about the directors and executive officers of ARCC is set forth in its proxy
statement for its 2026 Annual Meeting of Stockholders, which was filed with the SEC on March 5, 2026. MFIC, its directors, certain
of its executive officers and certain employees and officers of Apollo Management and its affiliates may be deemed to be participants
in the solicitation of proxies in connection with the Proposals. Information about the directors and executive officers of MFIC is set
forth in its proxy statement for its 2026 Annual Meeting of Stockholders, which was filed with the SEC on April 30, 2026. Information
regarding the persons who may, under the rules of the SEC, be considered participants in the solicitation of the MFIC stockholders
in connection with the Proposals, including a description of their direct or indirect interests, by security holdings or otherwise, will
be contained in the Proxy Statement/Prospectus when it becomes available. These documents may be obtained free of charge from the sources
indicated above.
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
ARES CAPITAL CORPORATION
Date: October 27, 2026
By:
/s/ Scott C. Lem
Name:
Scott C. Lem
Title:
Chief Financial Officer and Treasurer

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EX-10.1
3
tm2628314d1_ex10-1.htm
EXHIBIT 10.1
Exhibit 10.1
This VOTING AND SUPPORT AGREEMENT,
dated as of October 26, 2026 (this “
Agreement
”), is entered into by and between Ares Capital Corporation, a Maryland
corporation (“
Parent
”), and the stockholder of Midcap Financial Investment Corporation, a Maryland corporation (the
“
Company
”), set forth on
Schedule A
hereto (the “
Equityholder
”). Parent and the Equityholder
are each sometimes referred to herein as a “
Party
” and collectively as the “
Parties
.”
W I T N E S S
E T H
:
WHEREAS, concurrently with
the execution and delivery of this Agreement, Parent, Union Acquisition Sub Inc., a Maryland corporation and a direct wholly owned Subsidiary
of Parent (“
Acquisition Sub 1
”), Union Acquisition Sub, LLC, a Delaware limited liability company and a direct wholly
owned subsidiary of Parent (“
Acquisition Sub 2
”), the Company, and, solely for the purposes set forth therein, Ares
Capital Management LLC, are entering into an agreement and plan of merger (as it may be amended, amended and restated, supplemented or
modified, from time to time, the “
Merger Agreement
”), pursuant to which (i) Acquisition Sub 1 will merge with
and into the Company, with the Company surviving as a wholly owned subsidiary of Parent (the “
First Merge
r”), and (ii) immediately
following the First Merger, the Company, as the surviving corporation in the First Merger, will merge with and into Acquisition Sub 2,
with Acquisition Sub 2 surviving as a wholly owned Subsidiary of Parent (the “
Second Merger
” and, together with the
First Merger, the “
Mergers
”), in each case on the terms and subject to the conditions set forth therein;
WHEREAS, as a condition to
the willingness of Parent, Acquisition Sub 1 and Acquisition Sub 2 to enter into the Merger Agreement, Parent has required that the Equityholder
agree to, and the Equityholder has agreed to, enter into this Agreement with respect to its Subject Securities (defined below);
WHEREAS, the Equityholder
is the Beneficial Owner (as defined below), and has either sole or shared voting power over, such number of Subject Securities as is indicated
opposite the Equityholder’s name on
Schedule A
attached hereto; and
WHEREAS, the Equityholder
agrees not to Transfer (as defined below) any of the Equityholder’s Subject Securities, and to vote such Subject Securities in a
manner so as to facilitate consummation of the transactions contemplated by the Merger Agreement (including the Mergers), in each case,
subject to the terms and conditions hereof.
NOW, THEREFORE, in consideration
of the foregoing and the respective representations, warranties, covenants and agreements set forth below and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto, intending to be legally bound, do hereby
agree as follows:
1.
Definitions
.
Capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to such terms in the Merger Agreement.
When used in this Agreement, the following terms in all of their tenses, cases and correlative forms shall have the meanings assigned
to them in this
Section 1
or elsewhere in this Agreement.
“
Adverse Amendment
”
shall mean an amendment, modification or waiver of the Merger Agreement in the form as it exists as of the time of the execution of the
Merger Agreement in a manner that (a) decreases the amount of the Cash Consideration or the Per Share Stock Consideration or changes
the form of consideration to be paid to the Company’s stockholders in connection with the First Merger or (b) otherwise materially
adversely affects the Equityholder (in its capacity as a stockholder of the Company) or the economic interests of the stockholders of
the Company.
“
Affiliates
”
shall have the meaning set forth in Rule 12b-2 of the Exchange Act;
provided
, that (a) the Company and its Subsidiaries
shall not be deemed Affiliates of the Equityholder for purposes of this Agreement and (b) other than with respect to
Section
12.17
,
no direct or indirect portfolio companies (as such term is understood in the private equity industry) or investments of or affiliated
with any Party or any of its Affiliates shall be deemed or treated as an Affiliate of such Party, including, (x) with respect to
Parent, any Parent Portfolio Company or Vehicle (or any form of real asset or property held by any form of asset holding structure of,
or such other investment or portfolio company of, a Vehicle) advised, managed, sponsored or controlled by the Parent External Adviser
or a member of the Parent External Adviser or any Person directly or indirectly controlling, controlled by or under common control with
Parent, the Parent External Adviser or a member of the Parent External Adviser and (y) with respect to the Equityholder, Apollo Global
Management, Inc. and each of its Subsidiaries and affiliated investment funds, accounts, vehicles and portfolio companies (including
the investment adviser to the Company and any other fund, account or vehicle advised, managed, sponsored or controlled by any of the foregoing),
in each case other, than the Equityholder itself and any Permitted Transferee.
“
Beneficial Owners
”
shall mean Persons who Beneficially Own the referenced securities.
“
Beneficially
Own
” or “
Beneficial Ownership
” has the meaning assigned to such term in Rule 13d-3 under the Exchange
Act, and a Person’s beneficial ownership of securities shall be calculated in accordance with the provisions of such Rule (in
each case, irrespective of whether or not such Rule is actually applicable in such circumstance)
. For the avoidance of doubt,
Beneficially Own and Beneficial Ownership shall also include record ownership of securities.
“
Company Common Stock
”
means the common stock, par value $0.001 per share, of the Company.
“
Expiration Time
”
shall mean the earliest to occur of (i) the Effective Time, (ii) upon any Adverse Amendment being made without the prior written
consent of the Equityholder, (iii) such date and time as the Merger Agreement shall have been validly terminated pursuant to Article VIII
thereof, (iv) the making of a Company Adverse Recommendation Change and (v) the termination of this Agreement by mutual written
consent of the Parties.
“
Permitted Transfer
”
shall mean, in each case, with respect to the Equityholder, any Transfer of Subject Securities by the Equityholder (i) to another
equityholder or stockholder of the Company subject to a similar voting and support agreement with Parent, (ii) to an Affiliate of
the Equityholder (including, for this purpose, any Person described in clause (b)(y) of the definition of “Affiliates”
(provided that following such Transfer, clause (b) of the definition of “Affiliates” shall not apply to such Person))
or (iii) following the Company Stockholder Approval (as applicable, each, a “
Permitted Transferee
”);
provided
,
that (x) such Transfer is in accordance with applicable Law, and (y) in the case of Permitted Transfers contemplated by clauses
(i) and (ii), such Permitted Transferee, in connection with, and prior to, such Transfer, executes a joinder to this Agreement, in
form and substance reasonably acceptable to Parent (a “
Joinder
”), to become a party to this Agreement and be subject
to the restrictions and obligations applicable to the Equityholder with respect to the Subject Securities so Transferred;
provided
,
further
, that, notwithstanding the foregoing, no such Transfer pursuant to clause (ii) shall relieve the transferring Equityholder
from its obligations under this Agreement prior to the execution of such Joinder;
provided
,
further
, that, notwithstanding
anything to the contrary in this Agreement, the delivery by the Equityholder of shares of Company Common Stock to any holder of restricted
stock units in respect of Company Common Stock upon the vesting or settlement of such restricted stock units in accordance with their
terms as in effect on the date hereof in an amount not to exceed 11,200 shares of Company Common Stock (an “
RSU Delivery
”)
shall constitute a Permitted Transfer, no Joinder shall be required in connection therewith, the recipient of such shares shall not be
deemed a Permitted Transferee, and the shares so delivered shall cease to be Subject Securities upon such RSU Delivery.
2
“
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.
“
Subject Securities
”
shall mean, collectively, the shares of Company Common Stock set forth on
Schedule A
attached hereto and any New Subject Securities
(as defined below).
“
Transfer
”
shall mean (i) any direct or indirect offer, sale, lease, assignment, encumbrance, loan, pledge, grant of a security interest or
option, hypothecation, disposition or other transfer (by operation of law or otherwise), either voluntary or involuntary, or entry into
any contract, option or other arrangement or understanding with respect to any offer, sale, lease, assignment, encumbrance, loan, pledge,
hypothecation, disposition or other transfer (by operation of law or otherwise), of any capital stock (or any security convertible or
exchangeable into such capital stock), including in each case through the Transfer of any Person or any interest in any Person, (ii) in
respect of any capital stock or interest in any capital stock , entry into any swap or any other agreement, transaction or series of transactions
that hedges or transfers, in whole or in part, the economic consequence of ownership of such any capital stock or interest in any capital
stock, whether any such swap, agreement, transaction or series of transactions is to be settled by delivery of securities, in cash or
otherwise or (iii) the deposit of any capital stock or interest in any capital stock (or any security convertible or exchangeable
into such capital stock) in a voting trust, or granting of any proxy or power of attorney or entry into any voting agreement, arrangement,
understanding or commitment with respect thereto (other than this Agreement or as expressly contemplated by this Agreement);
provided
,
that none of the following shall constitute a Transfer: (A) any indirect transfer of, or change in, the equity or other interests
in the Equityholder as a result of Transfers of publicly listed securities or any capital stock in any Person that directly or indirectly
controls, or is an investor in, the Equityholder, or (B) any Transfer to which Parent consents in writing. For purposes of this Agreement,
“capital stock” shall include equity interests in a corporation, partnership, limited liability company or real estate investment
trust.
“
Willful
Breach
”
shall mean any material breach of this Agreement where the action or non-action constituting or giving rise to
such breach was intentionally undertaken by the Party taking such action, with actual knowledge that such action or non-action would or
would reasonably be expected to constitute or give rise to a breach of this Agreement.
“
Fraud
”
shall mean, of a Person, an intentional and knowing misrepresentation of or with respect to a representation or warranty set forth in
this Agreement, which misrepresentation constitutes actual common law fraud (and not constructive fraud or negligent misrepresentation).
3
2.
Agreement
to Retain Subject Securities
.
2.1
Transfer
of Subject Securities
. Other than a Permitted Transfer, from the date of this Agreement until the Expiration Time, no Equityholder
shall, with respect to any Subject Securities Beneficially Owned by the Equityholder, Transfer any such Subject Securities;
provided
,
in the event that any Equityholder intends to undertake a Permitted Transfer of any of the Equityholder’s Subject Securities, the
Equityholder shall (i) provide prior notice thereof to Parent and (ii) authorize the Company to, or authorize the Company to
instruct its transfer agent to, effect such Permitted Transfer only if a Joinder in respect of such Transfer has been executed and delivered
to Parent to the extent required under the definition of “Permitted Transfer”;
provided
,
further
, that the foregoing
clauses (i) and (ii) shall not apply to any RSU Delivery.
2.2
Additional
Purchases; Adjustments
. The Equityholder agrees that any shares of Company Common Stock that the Equityholder purchases or otherwise
acquires Beneficial Ownership of, and with respect to which the Equityholder has sole or shared voting power, after the execution of this
Agreement and prior to the Expiration Time (the “
New Subject Securities
”) shall be subject to the terms and conditions
of this Agreement as Subject Securities. In the event of any stock split, stock dividend, merger, reorganization, recapitalization, reclassification,
combination, exchange of shares or the like of the capital stock or equity interests of the Company affecting the Subject Securities,
the terms of this Agreement shall apply to the resulting securities as Subject Securities.
2.3
Unpermitted
Transfers; Involuntary Transfers
. Any Transfer or attempted Transfer of any Subject Securities in violation of this
Section 2
shall, to the fullest extent permitted by Law, be null and void
ab initio
. If any involuntary Transfer of any of the Equityholder’s
Subject Securities shall occur, the transferee (which term, as used herein, shall include any and all transferees and subsequent transferees
of the initial transferee) shall take and hold such Subject Securities subject to all of the restrictions, liabilities and rights under
this Agreement, which shall continue in full force and effect until the valid termination of this Agreement.
3.
Agreement
to Vote and Approve
. From the date of this Agreement until the Expiration Time, at every meeting of the stockholders of the Company
(including the Company Stockholders’ Meeting, and any annual meeting or special meeting) however called, with respect to any of
the following matters, and at every adjournment or postponement thereof, and on every action or approval by written consent of the stockholders
of the Company with respect to any of the following matters, the Equityholder shall, and shall cause each holder of record of Subject
Securities on any applicable record date to (including via proxy or written consent), solely in its capacity as a stockholder of the Company,
(a) when such meeting is held, appear at such meeting or otherwise cause the Equityholder’s Subject Securities to be counted
as present thereat for the purpose of establishing a quorum, and respond to each request by the Company for written consent, (b) vote
all such Subject Securities (solely in respect of the following matters, and not with respect to any other matters): (i) in favor
of (A) the approval of the Mergers and any other matters expressly contemplated by the Merger Agreement that are submitted to a vote
of the Company’s stockholders and are necessary for the consummation of the Mergers and the other transactions contemplated by the
Merger Agreement and (B) any proposal to adjourn or postpone such meeting of stockholders of the Company to a later date if there
are not sufficient votes to approve the Mergers; and (ii) against (A) any Competing Proposal, Alternative Acquisition Agreement
or any of the transactions contemplated thereby, (B) any action, proposal, transaction, or agreement that would reasonably be expected
to impede, interfere with, delay, discourage, adversely affect, or inhibit the consummation of the transactions contemplated by the Merger
Agreement, including the Mergers, and (C) any reorganization, dissolution, liquidation, winding up or similar extraordinary transaction
involving the Company (except as contemplated by the Merger Agreement). The Equityholder shall execute and deliver (or cause the holders
of record of the Subject Securities to execute and deliver), within five (5) Business Days of receipt, any proxy card or voting instructions
it receives that is sent by the Company to its stockholders soliciting proxies with respect to any matter described in this Section 3,
which shall be voted in the manner described in this
Section 3
. Except as expressly set forth in this Section 3, the
Equityholder shall retain at all times the right to vote the Subject Securities in its sole discretion on all matters.
4
4.
No
Inconsistent Agreements
. The Equityholder hereby represents, covenants and agrees that, except pursuant to this Agreement, the Equityholder
(i) is not subject to, has not entered into, and shall not enter into at any time prior to the Expiration Time, any voting agreement
or voting trust with respect to any of the Subject Securities Beneficially Owned by the Equityholder that is inconsistent with the Equityholder’s
obligations pursuant to this Agreement, (ii) is not subject to, has not granted, and shall not grant at any time prior to the Expiration
Time, a proxy or power of attorney with respect to any of such Subject Securities that is inconsistent with the Equityholder’s obligations
pursuant to this Agreement, and (iii) is not subject to, has not entered into, and shall not enter into, any agreement or undertaking
that is otherwise inconsistent with, or would interfere with, or prohibit or prevent him, her or it from satisfying, his, her or its obligations
pursuant to this Agreement.
5.
Representations and Warranties of the Equityholder
. The Equityholder, on behalf of
himself, herself or itself, hereby represents and warrants to Parent as follows:
5.1
Organization;
Due Authority
. The Equityholder (a) if applicable, is a legal entity duly organized, validly existing and, to the extent such
concept is applicable, in good standing under the Laws of the jurisdiction of its organization, and (b) has capacity to, or if applicable,
the full power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform his, her or
its obligations under this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Equityholder and, assuming the due and valid execution and delivery hereof by Parent, constitutes a valid
and binding agreement of the Equityholder enforceable against him, her or it in accordance with its terms, subject to the Bankruptcy and
Equity Exception.
5.2
Ownership
of the Subject Securities
. The Equityholder (a) Beneficially Owns, and has good and valid title to, the Subject Securities indicated
on
Schedule A
hereto opposite the Equityholder’s name, free and clear of any and all Liens, other than those (i) created
by or arising under this Agreement, the Company’s Articles or the Company’s Bylaws and (ii) arising under any applicable
restrictions on transfers under the Securities Act or any applicable state Securities Law, and (b) has sole or shared voting power
over all of the Subject Securities Beneficially Owned by the Equityholder (as indicated thereon). As of the date hereof, the Equityholder
does not Beneficially Own any shares of capital stock or other equity interests or securities of the Company other than the Subject Securities
set forth on
Schedule A
opposite the Equityholder’s name. The Equityholder has voting power with respect to the Subject Securities
and power to issue instructions with respect to the matters set forth herein and power to agree to all of the matters set forth in this
Agreement, in each case with respect to all of the Subject Securities.
5
5.3
No
Conflict; Consents
.
(a)
The
execution and delivery of this Agreement by the Equityholder does not, and the performance by the Equityholder of the obligations under
this Agreement and the compliance by the Equityholder with any provisions hereof do not and will not: (i) conflict with or violate
any Laws applicable to the Equityholder or (ii) result in any breach of or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation
of, or result in the creation of a Lien on any of the Subject Securities Beneficially Owned by the Equityholder pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Equityholder
is a party or by which the Equityholder is bound.
(b)
No
filings, notices, reports, consents, registrations, approvals, permits, waivers, expirations of waiting periods or authorizations are
required to be obtained by the Equityholder from, or to be given by the Equityholder to, or be made by the Equityholder with, any Governmental
Authority, in connection with the execution and delivery of this Agreement or the performance by the Equityholder of his, her or its obligations
hereunder.
5.4
Absence
of Litigation
. As of the date of this Agreement, there is no Proceeding pending against, or, to the knowledge of the Equityholder,
threatened against or affecting, the Equityholder that would reasonably be expected to prevent, impair, materially delay or materially
adversely affect the ability of the Equityholder to perform the Equityholder’s obligations hereunder or to consummate the transactions
contemplated hereby on a timely basis.
5.5
Reliance
.
The Equityholder understands and acknowledges that Parent is entering into the Merger Agreement in reliance upon the Equityholder’s
execution and delivery of this Agreement and the representations, warranties, covenants and other agreements of the Equityholder contained
herein.
6.
Representations
and Warranties of Parent
. Parent hereby represents and warrants to the Equityholder as follows:
6.1
Organization; Due Authority
. Parent (a) is a corporation duly organized, validly existing and, to the extent such concept
is applicable, in good standing under the Laws of the jurisdiction of its organization and (b) has the full power and authority and
has taken all corporate or other action necessary in order to execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Parent and, assuming
the due and valid execution and delivery hereof by the Equityholder, constitutes a valid and binding agreement of Parent enforceable against
it in accordance with its terms, subject to the Bankruptcy and Equity Exception.
6
7.
Termination
.
This Agreement shall terminate automatically and without any further action by the Parties, and shall have no further force or effect
immediately as of and following the Expiration Time without any liability on the part of any Party;
provided
, that the provisions
set forth in this
Section 7
,
Section 10
and
Section 12
(other than
Section 12.14
) shall
survive the termination of this Agreement;
provided
,
further
that, (a) nothing herein shall relieve any Party hereto
of any liability for any Willful Breach or Fraud of this Agreement prior to such termination and (b) in no event shall the Equityholder
have any liability for any damages resulting from a breach of this Agreement other than a Willful Breach or Fraud by the Equityholder
prior to the termination of this Agreement.
8.
No
Ownership Interest
. Nothing contained in this Agreement shall be deemed to vest in Parent any direct or indirect ownership or incidence
of ownership of or with respect to any Subject Securities or to create or form a “group” for purposes of the Exchange Act.
All rights, ownership and economic benefits of and relating to the Subject Securities shall remain vested in and belong to the Equityholder,
and Parent shall have no authority to direct the Equityholder in the voting or disposition of any of the Subject Securities, except as
otherwise expressly provided herein.
9.
No
Solicitation; Public Disclosure
. The Equityholder agrees that the Equityholder shall not (and shall cause its Subsidiaries and its
and their officers, directors and employees not to), and shall cause his, her or its Representatives acting at his, her or its direction
not to, directly or indirectly, take any action that would violate Section 6.6 of the Merger Agreement if the Equityholder were deemed
to be the Company for purposes of Section 6.6 of the Merger Agreement;
provided
,
however
, that (a) to the extent
that the Company is expressly permitted to take any action or not prohibited from taking any action pursuant to Section 6.6 of the
Merger Agreement, the Equityholder and its Representatives also shall be so permitted or not prohibited. The Equityholder shall not make
any public announcement regarding this Agreement and the transactions contemplated hereby without the prior written consent of Parent
(such consent not to be unreasonably withheld, conditioned or delayed), except as may be required by applicable Law (including any such
disclosure by the Equityholder or its Affiliates in their periodic or current reports);
provided
, such consent shall not be required
for communications consistent with the final form of joint press release announcing the Merger Agreement or other public disclosure made
in compliance with the Merger Agreement. In the event the Equityholder intends to file a Schedule 13D (or amendment thereto) with the
SEC to disclose this Agreement, the Equityholder shall provide a draft of such filing to Parent and consider any reasonable comments in
good faith prior to such filing. The Equityholder consents to and authorizes the Company, Parent and their respective Affiliates to publish
and disclose in the Proxy Statement, the Form N-14, any Current Report on Form 8-K and other documents required to be filed
with the SEC in connection with the Merger Agreement, the Equityholder’s identity and ownership of Subject Securities and the nature
of the Equityholder’s commitments under this Agreement as an exhibit to the extent required by Law,
provided
, that Parent
shall provide the Equityholder a reasonable opportunity to review and comment on any such disclosure regarding the Equityholder prior
to filing and shall consider such comments in good faith.
7
10.
Waiver
of Certain Actions
. The Equityholder hereby agrees not to commence or participate in, and to take all actions necessary to opt out
of any class in any class action with respect to, any Proceeding, derivative or otherwise, against Parent or any of its Affiliates, on
the one hand, or the Company or any of its Subsidiaries or their respective successors, on the other hand (a) challenging the validity
of, or seeking to enjoin or delay the operation of, any provision of this Agreement or the Merger Agreement (including any claim seeking
to enjoin or delay the Closing) or (b) to the fullest extent permitted under Law, alleging a breach of any duty or standard of conduct
of the Company Board or the Special Committee (or any member or committee thereof) or the Company in connection with the Merger Agreement,
this Agreement or the transactions contemplated thereby or hereby;
provided
, that this
Section 10
shall not be deemed
a waiver of, or restrict, (i) any rights of any Equityholder or any Permitted Transferee thereof for any breach of this Agreement,
(ii) any claim to enforce the Equityholder’s right to receive the Merger Consideration in accordance with the Merger Agreement
or (iii) any claim based on Fraud.
11.
Further
Assurances
. E
ach Party shall use commercially reasonable efforts to execute and deliver, or
cause to be executed and delivered, such additional instruments, and shall take such further actions, as the other Party may reasonably
request for the purpose of carrying out and furthering the intent of this Agreement.
12.
Miscellaneous
.
12.1
Severability
.
If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by rule of Law or public policy,
all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect. Upon such determination that
any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this
Agreement to fulfill as closely as possible the original intent and purpose of this Agreement.
12.2
Successors
and Assigns
. Neither this Agreement nor any of the rights, interests or obligations of the Parties hereunder shall be assigned by
any of the Parties (whether by operation of law or otherwise) without the prior written consent of the other Parties, and any attempt
to make any such assignment without such consent shall be null and void;
provided
, that, for the avoidance of doubt, (i) Parent’s
consent shall not be required for any Permitted Transfer and (ii) Equityholder’s consent shall not be required for Parent or
its Affiliates to engage in any merger, consolidation, reorganization or other business combination transaction. 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 successors
and permitted assigns.
12.3
Amendments
and Modifications
. No provision of this Agreement may be amended or modified unless such amendment or modification is in writing and
signed by (a) Parent and (b) the Equityholder. No failure or delay by any Party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive
of any rights or remedies provided by applicable Law.
8
12.4
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, by prepaid overnight courier (providing written proof of delivery) or by confirmed electronic mail,
addressed as follows:
(a)
if
to the Equityholder, to him, her or it at:
[
·
]
Attention:
[
·
]
Email:
[
·
]
with copies (which
shall not be considered notice) to:
[
·
]
Attention:
[
·
]
Email:
[
·
]
MidCap Financial Services, LLC
7255 Woodmont Ave., Suite 300
Bethesda, MD 20814
Attention:
Lisa Lenderman
Email:
llenderman@midcapfinancial.com
with copies (which shall not be considered
notice) to:
Sidley Austin LLP
One South Dearborn
Chicago, IL 60603
Attention:
Scott Williams
Email:
swilliams@sidley.com
(b)
if
to Parent, to:
Ares Capital Corporation
245 Park Avenue
New York, New York 10167
Attention:
Kort Schnabel, Scott Lem, Ian Fitzgerald
Email:
kschnabel@aresmgmt.com
slem@aresmgmt.com
ifitzgerald@aresmgmt.com
with a copy (which shall not be considered
notice) to:
Latham & Watkins LLP
1271 Avenue of the Americas
New York, New York 10020
Attention:
Alex Kelly, Owen Alexander, Mark Stagliano
E-mail:
alex.kelly@lw.com
owen.alexander@lw.com
mark.stagliano@lw.com
9
or to such other address as any Party may have
furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective upon receipt.
12.5
Governing
Law; Jurisdiction
.
(a)
This
Agreement, and all claims or causes of Proceedings (whether at Law, in contract or in tort) that may be based upon, arise out of or related
to this Agreement or the negotiation, execution or performance of this Agreement, shall be governed by, and construed in accordance with,
the Laws of the State of Maryland without giving effect to conflicts of laws principles (whether of the State of Maryland or any other
jurisdiction that would cause the application of the Laws of any jurisdiction other than the State of Maryland).
(b)
All
Proceedings arising out of or relating to this Agreement shall be heard and determined exclusively in the Circuit Court for Baltimore
City, Maryland, or if jurisdiction over the matter is vested exclusively in federal courts, the United States District Court for the District
of Maryland, and the appellate courts to which orders and judgments therefor may be appealed (such courts, the “
Subject Courts
”).
Each of the Parties hereby irrevocably and unconditionally (a) submits to the exclusive jurisdiction of the Subject Courts, for the
purpose of any Proceeding arising out of or relating to this Agreement and the transactions contemplated hereby brought by any Party,
(b) agrees not to commence any such action or proceeding except in such courts, (c) agrees that any claim in respect of any
such action or proceeding may be heard and determined in any Subject Court, (d) waives, to the fullest extent it may legally and
effectively do so, any objection which it may now or hereafter have to the laying of venue of any such action or proceeding, (e) agrees,
with respect to any Proceeding filed in the Circuit Court for Baltimore City, Maryland, to jointly request an assignment to the Business
and Technology Case Management Program pursuant to Maryland Rule 16-205 (or any successor thereof), and (f) waives, to the fullest
extent permitted by Law, the defense of an inconvenient forum to the maintenance of such action or proceeding. Each of the Parties agrees
that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by Law. Each Party irrevocably consents to service of process in the manner provided for notices in
Section 12.4
.
Nothing in this Agreement will affect the right of any Party to serve process in any other manner permitted by Law.
12.6
Enforcement
.
The Parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms on a timely basis or were otherwise breached. It is accordingly agreed that the Parties shall be
entitled to an injunction or other equitable relief (without the requirement of posting a bond or other security) to prevent breaches
of this Agreement and to enforce specifically the terms and provisions of this Agreement in any Subject Court, this being in addition
to any other remedy to which they are entitled at law or in equity.
10
12.7
No
Third Party Beneficiaries
. Nothing in this Agreement shall confer any rights upon any Person other than the Parties and each such
Party’s respective heirs, successors and permitted assigns, except as otherwise set forth herein.
12.8
WAIVER
OF JURY TRIAL
. EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH
OR THE MERGERS AND OTHER TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (C) IT MAKES
SUCH WAIVERS VOLUNTARILY, AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS
SECTION 12.8
.
12.9
Entire
Agreement
. This Agreement and the Merger Agreement (including the documents and the instruments referred to herein and therein) constitute
the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the Parties with respect to
the subject matter of this Agreement.
12.10
Counterparts
.
This Agreement may be executed in counterparts (including by electronic mail in “portable document format” (.pdf) form, or
by any other electronic means intended to preserve the original graphic and pictorial appearance of a document), each of which shall be
an original, with the same effect as if the signatures thereto and hereto were on the same instrument. This Agreement shall become effective
when one or more counterparts have been signed by each of the Parties and delivered (by telecopy, electronic mail or otherwise as authorized
by the prior sentence) to the other Parties.
12.12
No
Agreement Until Executed
. Irrespective of negotiations among the Parties or the exchanging of drafts of this Agreement, this Agreement
shall not constitute or be deemed to evidence a contract, agreement, arrangement or understanding between the Parties hereto unless and
until (a) the Merger Agreement is executed and delivered by all parties thereto, and (b) this Agreement is executed and delivered
by the Parties.
12.13
Expenses
.
All costs and expenses incurred in connection with this Agreement shall be paid by the Party incurring such cost or expense, whether or
not the Mergers are consummated.
12.14
Action
in Equityholder Capacity Only
. The Parties acknowledge and agree that this Agreement is entered into by the Equityholder solely in
his, her or its capacity as a Beneficial Owner of Subject Securities and, subject to the Merger Agreement, nothing in this Agreement shall
limit, restrict or otherwise affect in any respect any actions (or omissions) taken by (a) any director or officer of the Company
or any of its Subsidiaries in his or her capacity as such, including in exercising rights under the Merger Agreement or fulfilling fiduciary
or other duties required under applicable Law or (b) the Equityholder in his, her or its capacity as a director, officer or employee
of the Company or any Subsidiaries in fulfilling fiduciary or other duties required under applicable Law.
11
12.15
Obligation
to Update Schedule A
. The Equityholder agrees that in connection with any acquisitions or Transfers (to the extent permitted) of Subject
Securities by any Equityholder, the Equityholder will, as promptly as practicable following the completion of such acquisition or Transfer,
notify Parent in writing of such acquisition or Transfer and the Parties will update
Schedule A
to reflect the effect of such acquisition
or Transfer.
12.16
Non-Survival
of Representations and Warranties
. The respective representations and warranties of the Equityholder and Parent contained herein shall
not survive the Closing.
12.17
Non-Recourse
.
Notwithstanding anything herein to the contrary, this Agreement may only be enforced against, and any claim or cause of action based upon,
arising out of, or to the extent related to this Agreement may only be brought against the entities that are expressly named as Parties
hereto and their respective successors and assigns (and in the case of any Equityholder, any Permitted Transferee to whom Subject Securities
are transferred). Except as set forth in the immediately preceding sentence, no past, present or future director, officer, manager, employee,
incorporator, member, partner, shareholder, equityholder, controlling person, Affiliate, agent, attorney, advisor or representative of
any Party hereto, and no past, present or future director, officer, manager, employee, incorporator, member, partner, shareholder, equityholder,
controlling person, Affiliate, agent, attorney, advisor or representative of any of the foregoing (each, a “
Non-Recourse Party
”)
shall have any liability for any obligations or liabilities of any Party hereto under this Agreement (whether in tort, contract or otherwise).
The Parties acknowledge and agree that the Non-Recourse Parties are third party beneficiaries of this
Section 12.17
, each
of whom may enforce the provisions thereof.
[Signature pages follow]
12
IN WITNESS WHEREOF, the Parties
have duly executed this Agreement by their authorized representatives as of the date first above written.
PARENT:
ARES CAPITAL CORPORATION
By:
Name:
Title:
[
Signature Page to Voting and Support
Agreement
]
IN WITNESS WHEREOF, the Parties
have duly executed this Agreement by their authorized representatives as of the date first above written.
EQUITYHOLDER:
[EQUITYHOLDER]
By:
Name:
Title:
[
Signature Page to Voting and Support
Agreement
]
Schedule
A
[See Attached]

----- tm2628314d1_ex2-1.htm -----
EX-2.1
2
tm2628314d1_ex2-1.htm
EXHIBIT 2.1
Exhibit 2.1
Execution Version
AGREEMENT AND PLAN OF MERGER
by and among
Ares Capital Corporation,
Union Acquisition Sub
Inc.,
Union Acquisition Sub
LLC,
MidCap Financial Investment
Corporation,
and
solely for the limited
sections expressly set forth herein,
Ares Capital Management,
LLC
Dated as of October 26,
2026
TABLE OF CONTENTS
Page
Article I
THE
MERGERS
Section 1.1
The Mergers
3
Section 1.2
The Closing
3
Section 1.3
Effective Time
3
Section 1.4
Charter and Bylaws
4
Section 1.5
Board of Directors
4
Section 1.6
Officers
4
Article II
EFFECT
OF THE MERGERS ON CAPITAL STOCK
Section 2.1
Effect on Securities
5
Section 2.2
Exchange of Shares
7
Section 2.3
Lost Certificates
9
Section 2.4
Transfers; No Further Ownership Rights
9
Section 2.5
Dissenter’s Rights
10
Section 2.6
Parent NAV Certificate
10
Article III
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
Section 3.1
Organization and Qualification
10
Section 3.2
Capitalization; Subsidiaries
11
Section 3.3
Authority Relative to Agreement
12
Section 3.4
No Conflict; Required Filings and Consents
13
Section 3.5
Permits; Compliance with Laws
13
Section 3.6
Company SEC Documents; Financial Statements; Enforcement
Actions
15
Section 3.7
Information Supplied
16
Section 3.8
Disclosure Controls and Procedures
17
Section 3.9
Absence of Certain Changes or Events
17
Section 3.10
No Undisclosed Liabilities
17
Section 3.11
Litigation
17
Section 3.12
Employee Matters
17
Section 3.13
Intellectual Property; Privacy and Data Security
18
Section 3.14
Taxes
20
Section 3.15
Material Contracts
21
Section 3.16
Real Property
23
Section 3.17
Environmental
24
i
Section 3.18
Takeover Statutes
24
Section 3.19
Vote Required
25
Section 3.20
Brokers
25
Section 3.21
Opinion of Financial Advisor
25
Section 3.22
Insurance
25
Section 3.23
Investment Assets
25
Section 3.24
Related Party Agreements
26
Section 3.25
ERISA Matters
26
Section 3.26
Anti-Corruption
27
Section 3.27
Anti-Money Laundering Laws
27
Section 3.28
Sanctions; International Trade Laws
28
Section 3.29
No Other Representations or Warranties
28
Article IV
REPRESENTATIONS
AND WARRANTIES OF PARENT, ACQUISITION SUB 1 AND ACQUISITION SUB 2
Section 4.1
Organization and Qualification
29
Section 4.2
Capitalization; Subsidiaries
29
Section 4.3
Authority Relative to Agreement
31
Section 4.4
No Conflict; Required Filings and Consents
32
Section 4.5
Permits; Compliance with Laws
32
Section 4.6
Parent SEC Documents; Financial Statements; Enforcement
Actions
33
Section 4.7
Information Supplied
34
Section 4.8
Disclosure Controls and Procedures
34
Section 4.9
Absence of Certain Changes or Events
35
Section 4.10
No Undisclosed Liabilities
35
Section 4.11
Litigation
35
Section 4.12
Taxes
35
Section 4.13
Brokers
37
Section 4.14
Investment Assets
37
Section 4.15
Takeover Statutes
37
Section 4.16
Anti-Corruption
37
Section 4.17
Anti-Money Laundering Laws
37
Section 4.18
Sanctions; International Trade Laws
38
Section 4.19
Parent Investment Advisory Agreement
38
Section 4.20
Beneficial Ownership
38
Section 4.21
No Other Representations or Warranties
38
Article V
REPRESENTATIONS
AND WARRANTIES OF THE PARENT EXTERNAL ADVISER
Section 5.1
Organization and Qualification
39
Section 5.2
Authority Relative to Agreement
39
Section 5.3
No Conflict; Required Filings and Consents
40
ii
Section 5.4
Sufficient Funds
40
Section 5.5
Litigation
40
Section 5.6
Information Supplied
40
Section 5.7
No Other Representations or Warranties
41
Article VI
COVENANTS
AND AGREEMENTS
Section 6.1
Conduct of Business by the Company Pending the Mergers
41
Section 6.2
Conduct of Business by Parent Pending the Mergers
46
Section 6.3
Preparation of the Form N-14 and the Proxy Statement;
Company Stockholders’ Meeting
46
Section 6.4
Appropriate Action; Consents; Filings
48
Section 6.5
Access to Information; Confidentiality
49
Section 6.6
No Solicitation
50
Section 6.7
Directors’ and Officers’ Indemnification
and Insurance
54
Section 6.8
Notification of Certain Matters
56
Section 6.9
Public Announcements
56
Section 6.10
Acquisition Sub 1 and Acquisition Sub 2
57
Section 6.11
No Control of the Other Party’s Business
57
Section 6.12
Rule 16b-3 Matters
57
Section 6.13
Certain Tax Matters
57
Section 6.14
Credit Agreement
58
Section 6.15
Company Indenture
59
Section 6.16
Stock Exchange Listing
59
Section 6.17
Takeover Statutes and Provisions
59
Section 6.18
Stockholder Litigation
59
Section 6.19
Coordination of Dividends
60
Section 6.20
Share Repurchase Plan and Trading Plans
60
Section 6.21
Asset Coverage Requirement
60
Section 6.22
CLO Consent
60
Article VII
CONDITIONS
TO THE MERGERS
Section 7.1
Conditions to the Obligations of Each Party
60
Section 7.2
Conditions to Obligations of Parent and Acquisition
Sub 1 to Effect the First Merger
61
Section 7.3
Conditions to Obligation of the Company to Effect the
First Merger
62
Article VIII
TERMINATION,
AMENDMENT AND WAIVER
Section 8.1
Termination
63
Section 8.2
Effect of Termination
65
iii
Section 8.3
Termination Fees
66
Section 8.4
Amendment
67
Section 8.5
Extension; Waiver
67
Section 8.6
Expenses; Transfer Taxes
67
Article IX
GENERAL
PROVISIONS
Section 9.1
Non-Survival of Representations, Warranties and Agreements
68
Section 9.2
Notices
68
Section 9.3
Interpretation; Certain Definitions
69
Section 9.4
Severability
70
Section 9.5
Assignment
70
Section 9.6
Entire Agreement
70
Section 9.7
No Third-Party Beneficiaries
70
Section 9.8
Governing Law; Jurisdiction; Waiver of Jury Trial
70
Section 9.9
Specific Performance
72
Section 9.10
Counterparts
72
Appendix A
Definitions
iv
THIS
AGREEMENT AND PLAN OF MERGER, dated as of October 26, 2026 (this “
Agreement
”), is made by and among Ares Capital
Corporation, a Maryland corporation (“
Parent
”), Union Acquisition Sub Inc., a Maryland corporation and a direct wholly-owned
Subsidiary of Parent (“
Acquisition Sub 1
”), Union Acquisition Sub LLC, a Delaware limited liability company and a
direct wholly-owned Subsidiary of Parent (“
Acquisition Sub 2
” and, together with Acquisition Sub 1, the “
Acquisition
Subs
”), MidCap Financial Investment Corporation, a Maryland corporation (the “
Company
”), and, solely for
purposes of
Section 2.1(a)(ii)
,
Section 2.2
,
Article V
,
Article VII
,
Section 6.9
,
Section 8.1(a)
,
Section 8.3
,
Section 8.5, Section 8.6
and
Article IX
(and the defined
terms used therein), Ares Capital Management LLC, a Delaware limited liability company (the “
Parent External Adviser
”).
Defined terms used in this Agreement have the respective meanings ascribed to them by definition in this Agreement or in
Appendix A
.
W
I
T
N
E
S
S
E
T
H
:
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 Board of Directors
of the Company (the “
Company Board
”) established a special committee consisting only of disinterested directors (the
“
Special Committee
”) to, among other things, determine and recommend to the Company Board whether a potential transaction
is advisable and is fair to, and in the best interests of, the Company and its stockholders (or any subset of the stockholders of the
Company that the Special Committee determines to be appropriate);
WHEREAS, the Special Committee
has unanimously (a) determined that this Agreement and the transactions contemplated by this Agreement, including the Mergers (as
defined below), on the terms and subject to the conditions set forth herein, are advisable, fair to and in the best interests of the
Company and its stockholders, and (b) recommended that the Company Board (i) determine that this Agreement and the transactions
contemplated hereby, including the Mergers, are advisable, fair to and in the best interests of the Company and its stockholders, (ii) approve
and declare advisable this Agreement, the execution and delivery by the Company of this Agreement, the performance by the Company of
the covenants and agreements contained herein and the consummation of the transactions contemplated by this Agreement, including the
Mergers, and (iii) subject to approval by the Company Board, submit the Mergers to the stockholders of the Company for their approval
and recommend that the stockholders of the Company vote in favor of the approval of the Mergers (such recommendation, the “
Special
Committee Recommendation
”);
WHEREAS, the Company Board
(acting upon the Special Committee Recommendation) has (a) determined that this Agreement and the transactions contemplated by this
Agreement, including the Mergers, on the terms and subject to the conditions set forth herein, are advisable, fair to and in the best
interests of the Company and its stockholders, (b) approved and declared advisable the form, terms and provisions of this Agreement,
the execution and delivery by the Company of this Agreement, the performance by the Company of the covenants and agreements contained
herein and the consummation of the transactions contemplated by this Agreement, including the Mergers, on the terms and subject to the
conditions contained herein, (c) directed that the Mergers be submitted to the stockholders of the Company for their approval and
(d) resolved to recommend that the stockholders of the Company vote in favor of the approval of the Mergers;
1
WHEREAS, the board of directors
of Parent (the “
Parent Board
”) and the board of directors or similar governing body of Acquisition Sub 1 and Acquisition
Sub 2 have, by resolutions adopted by directors or similar governing members, unanimously (a) determined that this Agreement and
the transactions contemplated hereby are advisable and in the best interests of Parent, Acquisition Sub 1 and Acquisition Sub 2, as applicable,
and (b) approved and adopted this Agreement and the transactions contemplated hereby, including the Mergers;
WHEREAS, Parent, acting in
its capacity as the sole stockholder of Acquisition Sub 1 and sole member of Acquisition Sub 2, has approved and adopted this Agreement
and the transactions contemplated hereby (including the Mergers);
WHEREAS, the parties intend
that Parent shall cause Acquisition Sub 1 to merge with and into the Company (the “
First Merger
”), with the Company
surviving as a wholly-owned Subsidiary of Parent (the “
Surviving Corporation
”), upon the terms and subject to the
conditions and limitations set forth in this Agreement and in accordance with the Maryland General Corporation Law (the “
MGCL
”);
WHEREAS, the parties intend
that, immediately after the First Merger, the Surviving Corporation shall merge with and into Acquisition Sub 2 (the “
Second
Merger
” and, together with the First Merger, the “
Mergers
”), with Acquisition Sub 2 surviving as a wholly-owned
Subsidiary of Parent (the “
Surviving Company
”), upon the terms and subject to the conditions and limitations set forth
in this Agreement and in accordance with the MGCL and the Delaware Limited Liability Company Act (the “
DLLCA
”);
WHEREAS, concurrently with
the execution of this Agreement, and as a condition to the willingness of Parent, Acquisition Sub 1 and Acquisition Sub 2 to enter into
this Agreement, certain stockholders of the Company have entered into voting agreements (the “
Voting Agreements
”)
pursuant to which such stockholders have, among other things and subject to the terms and conditions set forth therein, agreed to vote
all of the shares of capital stock of the Company beneficially owned by such stockholders in favor of the approval and adoption of this
Agreement, the Mergers and the transactions contemplated herein;
WHEREAS, for United States
federal income Tax purposes, the Mergers taken together, are intended to qualify for the Intended Tax Treatment; and
WHEREAS, each of Parent,
Acquisition Sub 1, Acquisition Sub 2, the Company and, solely for the limited purposes expressly stated herein, Parent External Adviser,
desire to make certain representations, warranties, covenants and agreements in connection with the Mergers and also to prescribe various
conditions to the Mergers.
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:
2
Article I
THE
MERGERS
Section 1.1
The
Mergers
.
(a)
Upon
the terms and subject to the conditions of this Agreement, and in accordance with the MGCL, at the Effective Time, Acquisition Sub 1
shall be merged with and into the Company, whereupon the separate existence of Acquisition Sub 1 shall cease, and the Company shall continue
as the surviving corporation. By virtue of the transactions described in
Section 2.1(a)
hereof, upon consummation of
the First Merger, the Surviving Corporation shall be a wholly-owned Subsidiary of Parent.
(b)
Upon
the terms and subject to the conditions of this Agreement, and in accordance with the MGCL and the DLLCA, immediately after the Effective
Time and as part of a single integrated transaction with the First Merger, the Surviving Corporation shall be merged with and into Acquisition
Sub 2, whereupon the separate existence of the Surviving Corporation shall cease, and Acquisition Sub 2 shall continue as the surviving
limited liability company. By virtue of the transactions described in
Section 2.1(b)
hereof, upon consummation of the
Second Merger the Surviving Company shall be a wholly-owned Subsidiary of Parent.
Section 1.2
The
Closing
. Subject to the provisions of
Article VII
, the closing of the First Merger (the “
Closing
”)
shall take place at 10:00 a.m. (local time) on the first day of a calendar month (or, if such date is not a Business Day, the next
Business Day) that is at least three Business Days after the date on which the conditions set forth in
Article VII
are satisfied
or waived (other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver
of such conditions), unless another time, date or place is agreed to in writing by the parties hereto (the date on which the Closing
occurs being the “
Closing Date
”). The Closing shall take place virtually via the exchange of executed documents and
other deliverables.
Section 1.3
Effective
Time
.
(a)
Concurrently
with the Closing, the Company and Acquisition Sub 1 shall cause articles of merger with respect to the First Merger (the “
First
Merger Filing
”) to be executed and filed with, and accepted for record by, the Department of Assessments and Taxation of the
State of Maryland (“
SDAT
”) as provided under the MGCL. The First Merger shall become effective on the date and time
at which the First Merger Filing has been duly filed with, and accepted for record by, SDAT or at such other date and time as is permitted
by the MGCL, agreed in writing between Parent and the Company and specified in the First Merger Filing (such date and time being hereinafter
referred to as the “
Effective Time
”).
(b)
Immediately
after the Effective Time and as part of a single integrated transaction with the First Merger, Acquisition Sub 2 and the Surviving Corporation
shall cause (i) articles of merger with respect to the Second Merger (the “
Articles of Second Merger
”) to be
executed and filed with SDAT and (ii) a certificate of merger with respect to the Second Merger (together with the Articles of Second
Merger, the “
Second Merger Filings
”) to be filed with the SDAT and the Delaware Secretary, in each case, as provided
under the MGCL and the DLLCA. The Second Merger shall become effective on the date and time at which the Second Merger Filings have been
duly filed with, and accepted for record by, SDAT and the Delaware Secretary or at such other date and time (which shall be on the Closing
Date and following the Effective Time) as determined by Parent and specified in the Second Merger Filings (such date and time being hereinafter
referred to as the “
Second Effective Time
”).
3
(c)
The
Mergers shall have the effects set forth in this Agreement and the applicable provisions of the MGCL and the DLLCA, as the case may be.
Without limiting the generality of the foregoing, (i) from and after the Effective Time, the Surviving Corporation shall possess
all property, rights, privileges, powers and franchises of the Company and Acquisition Sub 1, and all of the obligations, liabilities,
and duties of the Company and Acquisition Sub 1 shall become the obligations, liabilities and duties of the Surviving Corporation, and
(ii) from and after the Second Effective Time, the Surviving Company shall possess all property, rights, privileges, powers and
franchises of the Surviving Corporation and Acquisition Sub 2, and all of the obligations, liabilities, and duties of the Surviving Corporation
and Acquisition Sub 2 shall become the obligations, liabilities and duties of the Surviving Company.
Section 1.4
Charter
and Bylaws
.
(a)
The
Surviving Corporation’s charter shall be amended and restated as of the Effective Time such that the articles of incorporation
of Acquisition Sub 1, as in effect immediately prior to the Effective Time, shall be the Surviving Corporation’s charter after
the Effective Time (except the references to Acquisition Sub 1’s name shall be replaced by references to “MidCap Financial
Investment Corporation”), until later amended as provided by Law and such charter. The bylaws of Acquisition Sub 1, as in effect
immediately prior to the Effective Time, shall be the Surviving Corporation’s bylaws after the Effective Time, until later amended
as provided by Law, the charter of the Surviving Corporation and such bylaws (except the references to Acquisition Sub 1’s name
shall be replaced by references to “MidCap Financial Investment Corporation”).
(b)
The
certificate of formation of Acquisition Sub 2, as in effect immediately prior to the Second Effective Time, shall continue to be the
Surviving Company’s certificate of formation after the Second Effective Time, until later amended as provided by Law and such certificate
of formation. The limited liability company agreement of Acquisition Sub 2, as in effect immediately prior to the Second Effective Time,
shall continue to be the Surviving Company’s limited liability company agreement after the Second Effective Time, until later amended
as provided by Law, the certificate of formation of Acquisition Sub 2 and such limited liability company agreement.
Section 1.5
Board
of Directors
. The board of directors of the Surviving Corporation effective as of, and immediately following, the Effective Time
shall consist of the members of the board of directors of Acquisition Sub 1 immediately prior to the Effective Time, each to hold office
in accordance with the charter and bylaws of the Surviving Corporation until the earlier of their death, resignation or removal or until
their respective successors are duly elected, designated or qualified, as the case may be.
Section 1.6
Officers
.
The officers of Acquisition Sub 1 as of the Effective Time shall be the officers of the Surviving Corporation effective as of, and immediately
following, the Effective Time, until the earlier of their death, resignation or removal or until their respective successors are duly
elected or appointed and qualified, as the case may be. The officers of the Surviving Corporation as of the Second Effective Time shall
be the officers of the Surviving Company effective as of, and immediately following, the Second Effective Time, until the earlier of
their death, resignation or removal or until their respective successors are duly elected or appointed and qualified, as the case may
be.
4
Article II
EFFECT
OF THE MERGERS ON CAPITAL STOCK
Section 2.1
Effect
on Securities
.
(a)
First
Merger
. At the Effective Time, by virtue of the First Merger and without any action on the part of the Company, Parent, Acquisition
Sub 1 or the holders of any securities of the Company or Acquisition Sub 1:
(i)
Cancellation
of Company Securities
. Each share of common stock, par value $0.001 per share, of the Company (the “
Company Common Stock
”)
issued and held by a Subsidiary of the Company or held, directly or indirectly, by Parent or Acquisition Sub 1 immediately prior to the
Effective Time (collectively, “
Canceled Shares
”), shall automatically be canceled and retired and shall cease to exist,
and no consideration or payment shall be delivered in exchange therefor or in respect thereof.
(ii)
Conversion
of Company Securities
. Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (excluding
any Canceled Shares) shall be converted into the right to receive (A) $
1.21
in cash, without interest, from the Parent External Adviser (such amount of cash, as may be adjusted pursuant to
Section 2.1(a)(iv)
,
the “
Cash Consideration
”), and (B) a number of validly issued, fully paid and non-assessable shares of common
stock of Parent, par value $0.001 per share (the “
Parent Common Stock
”) determined pursuant to the Exchange Ratio
(the “
Share Consideration
”) (and, if applicable, cash in lieu of fractional shares of Parent Common Stock payable
in accordance with
Section 2.1(a)(v)
) (the consideration payable in accordance with
Section 2.1(a)(ii)(A)
and
Section 2.1(a)(ii)(B)
, collectively, the “
Merger Consideration”
). Each share of Company Common Stock converted
into the right to receive the Merger Consideration as provided in this
Section 2.1(a)(ii)
shall no longer be outstanding
and shall be automatically canceled and shall cease to exist, and the holders of certificates (the “
Certificates
”)
or book-entry shares (“
Book-Entry Shares
”) that immediately prior to the Effective Time represented such Company Common
Stock shall cease to have any rights with respect to such Company Common Stock other than the right to receive, upon surrender of such
Certificates or Book-Entry Shares in accordance with
Section 2.2
, the Merger Consideration.
(iii)
Conversion
of Acquisition Sub 1 Capital Stock
. Each share of common stock, par value $0.01 per share, of Acquisition Sub 1 issued and outstanding
immediately prior to the Effective Time shall be converted into and become one (1) fully paid share of common stock, par value $0.01
per share, of the Surviving Corporation and shall constitute the only outstanding shares of capital stock of the Surviving Corporation.
5
(iv)
Adjustments
.
Without limiting the other provisions of this Agreement, if at any time during the period between the date of this Agreement and the
Effective Time, any change in the number of outstanding shares of Parent Common Stock or Company Common Stock shall occur as a result
of a reclassification, recapitalization, stock split (including a reverse stock split) or combination, exchange or readjustment of shares,
or any stock dividend or stock distribution with a record date during such period (but specifically excluding sales of Parent Common
Stock and issuances of Parent Common Stock pursuant to Parent’s dividend reinvestment plan or otherwise in lieu of a portion of
any cash dividend declared by Parent in accordance with this Agreement), the Cash Consideration, the Share Consideration and any other
similarly dependent items, as the case may be, shall be appropriately adjusted to provide the same economic effect as contemplated by
this Agreement prior to such event, provided that any such adjustment shall not prevent the Mergers from qualifying for the Intended
Tax Treatment. Nothing in this
Section 2.1(a)(iv)
shall be construed to permit any party to take any action that is
otherwise prohibited or restricted by any other provision of this Agreement.
(v)
Fractional
Shares
. No certificates or scrip representing fractional shares of Parent Common Stock shall be issued upon the conversion of Company
Common Stock pursuant to
Section 2.1(a)(ii)
, and such fractional share interests shall not entitle the owner thereof to any
Parent Common Stock or to vote or to any other rights of a holder of Parent Common Stock. All fractional shares to which a single record
holder of Company Common Stock would be otherwise entitled to receive shall be aggregated and calculations shall be rounded to three
(3) decimal places. In lieu of any such fractional shares, each holder of Company Common Stock who would otherwise be entitled to
such fractional shares shall be entitled to an amount in cash, without interest, rounded up to the nearest cent, equal to the product
of (A) the amount of the fractional share interest in a share of Parent Common Stock to which such holder would, but for this
Section 2.1(a)(v)
,
be entitled under
Section 2.1(a)(ii)
and (B) an amount equal to the average of the volume weighted average price
per share of Parent Common Stock on NASDAQ (as reported by Bloomberg L.P. or, if not reported therein, in another authoritative source
mutually selected by Parent and the Company) on each of the five (5) consecutive Trading Days ending with the third (3rd) complete
Trading Day immediately prior to the Closing Date, provided that any such payment of cash shall not prevent the Mergers from qualifying
for the Intended Tax Treatment. As soon as practicable after the determination of the amount of cash, if any, to be paid to holders of
Company Common Stock in lieu of any fractional share interests in Parent Common Stock, the Exchange Agent shall make available such amount,
without interest, to the holders of Company Common Stock entitled to receive such cash. The payment of cash in lieu of fractional share
interests pursuant to this
Section 2.1(a)(v)
is not separately bargained-for consideration.
(b)
Second
Merger
. At the Second Effective Time, by virtue of the Second Merger and without any action on the part of the Surviving Corporation
or Acquisition Sub 2 or the holders of any securities of the Surviving Corporation or Acquisition Sub 2, each share of common stock,
par value $0.01 per share, of the Surviving Corporation issued and outstanding immediately prior to the Second Effective Time shall no
longer be outstanding and shall automatically be canceled and shall cease to exist without any consideration being payable therefor.
The limited liability company interests of Acquisition Sub 2 issued and outstanding immediately prior to the Second Effective Time shall
remain outstanding as the limited liability company interests of the Surviving Company immediately following the Second Effective Time.
6
Section 2.2
Exchange
of Shares
.
(a)
Designation
of Exchange Agent; Deposit of Exchange Fund
. Prior to the Closing, Parent shall enter into a customary exchange agreement with a
nationally recognized financial institution designated by Parent and reasonably acceptable to the Company (the “
Exchange Agent
”)
for the payment of the Merger Consideration as provided in
Section 2.1(a)(ii)
. At or prior to the Effective Time, (i) Parent
shall deposit, or cause to be deposited, with the Exchange Agent, for exchange in accordance with this
Article II
, through
the Exchange Agent book-entry shares representing the full number of whole shares of Parent Common Stock issuable pursuant to
Section 2.1(a)(ii)
in
exchange for outstanding shares of Company Common Stock, and (ii) the Parent External Adviser shall deposit, or cause to be deposited,
with the Exchange Agent, cash in an amount equal to the aggregate Cash Consideration into which the shares of Company Common Stock are
to be converted (such shares of Parent Common Stock and Cash Consideration provided to the Exchange Agent, together with any dividends
or other distributions payable with respect thereto pursuant to
Section 2.2(d)
, are hereinafter referred to as the “
Exchange
Fund
”). For purposes of the deposit referred to in the previous sentence, Parent shall assume that there will not be any fractional
shares of Parent Common Stock. Parent shall make available to the Exchange Agent, for addition to the Exchange Fund, from time to time
as needed, cash sufficient to pay cash in lieu of fractional shares in accordance with
Section 2.1(a)(v)
. In the event the
Exchange Fund shall at any time be insufficient to make the payments contemplated by
Section 2.1(a)
and
Section 6.19
,
Parent (with respect to the Deposited Dividend and cash in lieu of fractional shares) and the Parent External Adviser (with respect to
the Cash Consideration) shall promptly deposit, or cause to be deposited, additional funds with the Exchange Agent in an amount equal
to the applicable deficiency. The Exchange Fund shall be held for the benefit of the holders of Company Common Stock and applied promptly
to making the payments pursuant to
Section 2.1(a)
. The Exchange Fund shall not be used for any purpose other than to fund
payments pursuant to
Section 2.1(a)
, except as expressly provided for in
Section 2.2(e)
or
Section 6.19
.
(b)
As
promptly as practicable following the Effective Time and in any event not later than the third (3rd) Business Day thereafter, Parent
shall cause the Exchange Agent to mail to each holder of record of a Certificate or Book-Entry Share that immediately prior to the Effective
Time represented outstanding shares of Company Common Stock (i) a letter of transmittal, which shall specify that delivery shall
be effected, and risk of loss and title to the Certificates (or Book-Entry Shares, as applicable) shall pass, only upon proper delivery
of the Certificates (or affidavits of loss in lieu thereof) to, or in the case of Book-Entry Shares, upon receipt of an “agent’s
message” by, the Exchange Agent and which shall be in the form and have such other provisions as Parent and the Company may reasonably
specify in accordance with Applicable Law and (ii) instructions (which instructions shall be in the form and have such other provisions
as Parent and the Company may reasonably specify) for use in effecting the surrender of the Certificates or Book-Entry Shares. For Book-Entry
Shares, Parent shall cooperate with the Exchange Agent to establish procedures so that the Exchange Agent transmits the applicable Merger
Consideration to the Depository Trust Company (“
DTC
”) or its nominees promptly following the Effective Time upon surrender
in accordance with DTC’s customary procedures.
7
(c)
Upon
surrender of a Certificate (or affidavit of loss in lieu thereof) or Book-Entry Share for cancellation to the Exchange Agent, together
with (in the case of a Certificate) a letter of transmittal duly completed and validly executed in accordance with the instructions thereto,
and such other documents as may be required pursuant to such instructions, the holder of such Certificate or Book-Entry Share shall be
entitled to receive in exchange therefor, (A) cash in an amount equal to the Cash Consideration multiplied by the number of shares
of Company Common Stock previously represented by such Certificate or Book-Entry Shares, (B) the number of shares of Parent Common
Stock representing, in the aggregate, the whole number of shares that such holder has the right to receive in respect of such Certificate
or Book-Entry Shares pursuant to
Section 2.1(a)(ii)
, (C) any unpaid dividends or other distributions payable pursuant
to
Section 2.2(d)
or
Section 6.19
, and (D) cash in lieu of fractional shares of Parent Common Stock
payable pursuant to
Section 2.1(a)(v)
, and the Certificate (or affidavit of loss in lieu thereof) or Book-Entry Share so
surrendered shall be forthwith canceled. The Exchange Agent shall accept such Certificates (or affidavits of loss in lieu thereof) or
Book-Entry Shares upon compliance with such reasonable terms and conditions as the Exchange Agent may impose to effect an orderly exchange
thereof in accordance with normal exchange practices. No interest shall be paid or accrued for the benefit of holders of the Certificates
or Book-Entry Shares on any cash payable upon the surrender of the Certificates or Book-Entry Shares.
(d)
Distributions
with Respect to Unexchanged Shares
. Subject to Applicable Law, in connection with the exchange described in
Section 2.2(c)
,
there shall be paid to each holder of the Parent Common Stock issued in exchange for Certificates or Book-Entry Shares, without interest,
(i) at the time of delivery of such Parent Common Stock by the Exchange Agent pursuant to
Section 2.2(c)
, the amount
of dividends or other distributions with a record date after the Effective Time and a payment date prior to the delivery of such Parent
Common Stock by the Exchange Agent pursuant to
Section 2.2(c)
with respect to such shares of Parent Common Stock and
(ii) at the appropriate payment date, the amount of dividends or other distributions with a record date after the Effective Time
but prior to the delivery of such Parent Common Stock by the Exchange Agent pursuant to
Section 2.2(c)
and a payment
date subsequent to the delivery of such Parent Common Stock by the Exchange Agent pursuant to
Section 2.2(c)
payable
with respect to such shares of Parent Common Stock.
(e)
In
the event of a transfer of ownership of Company Common Stock that is not registered in the transfer records of the Company, payment of
the appropriate amount of Merger Consideration (and any dividends or other distributions with respect to Parent Common Stock as contemplated
by
Section 2.2(d)
) may be made to a Person other than the Person in whose name the Certificates or Book-Entry Shares are
registered, but only if such Certificates or Book-Entry Shares shall be properly transferred, and the Person requesting such payment
shall pay any transfer or other Taxes required by reason of the payment to a Person other than the registered holder of such Certificates
or Book-Entry Shares or establish to the satisfaction of Parent that such Taxes have been paid or are not applicable.
(f)
Termination
of Exchange Fund
. Any portion of the Exchange Fund which remains unclaimed by the former stockholders of the Company one (1) year
after the Effective Time shall be delivered to Parent (in the case of Share Consideration and any dividends or distributions with respect
to Parent Common Stock as contemplated by
Section 2.2(d)
) and Parent External Adviser (in the case of Cash Consideration)
or its designee, upon demand, and any such holders prior to the First Merger who have not theretofore complied with this
Article II
shall thereafter look only to (i) Parent and the Surviving Company as general creditor thereof for payment of their claims for Share
Consideration and any dividends or other distributions with respect to Parent Common Stock as contemplated by
Section 2.2(d)
and
(ii) the Parent External Adviser as general creditor thereof for payment of their claims for the Cash Consideration.
8
(g)
No
Liability
. None of Parent, the Parent External Adviser, the Acquisition Subs, the Company, the Surviving Corporation, the Surviving
Company or the Exchange Agent shall be liable to any Person in respect of any shares of Parent Common Stock (or dividends or other distributions
with respect thereto) or cash held in the Exchange Fund delivered to a Governmental Authority pursuant to any applicable abandoned property,
escheat or similar Law. If any Certificate or Book-Entry Share shall not have been surrendered and exchanged pursuant to
Section 2.2(c)
immediately
prior to the date on which the Merger Consideration in respect of such Certificate or Book-Entry Share would otherwise escheat to or
become the property of any Governmental Authority, any such Merger Consideration in respect of such Certificate or Book-Entry Share shall,
to the extent permitted by Applicable Law, become the property of the Surviving Company (in the case of Share Consideration and any dividends
or other distributions with respect to Parent Common Stock as contemplated by
Section 2.2(d)
) and the Parent External Adviser
(in the case of Cash Consideration), in each case free and clear of all claims or interest of any Person previously entitled thereto.
(h)
Withholding
.
Parent, the Parent External Adviser, the Surviving Corporation, the Surviving Company, the Company, and the Exchange Agent shall be entitled
to deduct and withhold from the Merger Consideration and any amounts otherwise payable pursuant to this Agreement such amounts as Parent,
the Parent External Adviser, the Surviving Corporation, the Surviving Company, the Company, or the Exchange Agent are required to deduct
and withhold with respect to the making of such payment under the Code or any provision of applicable state, local or foreign Tax Law.
To the extent that amounts are so withheld and paid over to the appropriate Taxing Authority, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made.
Section 2.3
Lost
Certificates
. If any Certificate shall have been lost, stolen or destroyed, then upon the making of an affidavit of that fact by
the Person claiming such Certificate to be lost, stolen or destroyed and, if required by the Surviving Company, Parent or the Exchange
Agent, the posting by such Person of a bond, in such reasonable amount as the Surviving Company, Parent or the Exchange Agent may direct,
as indemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agent will issue in exchange
for such lost, stolen or destroyed Certificate the Merger Consideration to which the holder thereof is entitled pursuant to this
Article II
.
Section 2.4
Transfers;
No Further Ownership Rights
. After the Effective Time, there shall be no registration of transfers on the stock transfer books of
the Company of shares of Company Common Stock that were outstanding immediately prior to the Effective Time. If Certificates or Book-Entry
Shares are presented to the Surviving Corporation or the Surviving Company for transfer following the Effective Time, they shall be canceled
against delivery of the applicable Merger Consideration, as provided for in
Section 2.1(a)(ii)
, for each share of Company
Common Stock formerly represented by such Certificates or Book-Entry Shares.
9
Section 2.5
Dissenter’s
Rights
. No rights of an objecting stockholder provided for under Title 3, Subtitle 2 of the MGCL shall be available to holders of
Company Common Stock with respect to the First Merger or the other transactions contemplated by this Agreement. The Company Board has
not exercised, and shall not exercise, any discretion under
Section 4.7
of the Company’s Articles (as defined below)
to make rights of an objecting stockholder or any similar appraisal rights available to stockholders in connection with the First Merger
and the transactions contemplated by this Agreement.
Section 2.6
Parent
NAV Certificate
. Parent shall deliver to the Company, no later than the close of business on the date such calculation is made, a
certificate executed by the chief financial officer of Parent setting forth in reasonable detail the calculation of the Parent Net Asset
Value and the Parent Per Share NAV and certifying that such calculation was prepared in accordance with the definition of Parent Per
Share NAV. Parent shall, and shall cause the Parent External Adviser and the administrator of Parent to, upon the Company’s reasonable
request, provide the Company and its Representatives with reasonable access to the supporting documentation used in the preparation of
such calculation, and shall consider in good faith any comments of the Company thereon.
Article III
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
Except as disclosed in the
Company SEC Documents filed by the Company prior to the date of this Agreement (but excluding any risk factor disclosures contained under
the heading “Risk Factors,” any disclosure of risks included in any “forward-looking statements” disclaimer or
any other statements that are similarly predictive or forward-looking in nature, in each case, other than any specific factual information
contained therein) or as disclosed in the Company Disclosure Letter, the Company hereby represents and warrants to Parent as follows:
Section 3.1
Organization
and Qualification
. Each of the Company and its Subsidiaries (a) is a corporation or other entity duly organized, validly existing
and (to the extent applicable) in good standing under the laws of the jurisdiction of its incorporation or organization and (b) has
the requisite entity power and authority to conduct its business as it is now being conducted, to own and use its assets in the manner
in which its assets are currently used, and to perform its obligations under all Contracts to which it is a party or by which its assets
or properties are bound, except, in the case of this clause (b), as has not had and would not reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect. Each of the Company and its Subsidiaries is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of the business conducted by it makes such qualification or
licensing necessary, except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. The Company’s Articles of Restatement (as amended, the “
Company’s Articles
”)
and its Bylaws (as amended, the “
Company’s Bylaws
”), as currently in effect, are included in the Company SEC
Documents filed prior to the date hereof and are in full force and effect and the Company is not in violation of such documents. The
Company has duly elected to be regulated as a BDC pursuant to the Investment Company Act and such election has not been revoked or withdrawn
and is in full force and effect.
10
Section 3.2
Capitalization;
Subsidiaries
.
(a)
The
authorized capital stock of the Company consists of 130,000,000 shares of Company Common Stock, of which 82,372,628 shares were outstanding
as of the close of business on October 23, 2026 (the “
Company Capitalization Date
”).
(b)
All
of the issued and outstanding shares of Company Common Stock have been duly authorized and validly issued and are fully paid, nonassessable
and free of preemptive rights. All of the outstanding shares of Company Common Stock have been issued in compliance with applicable Law
in all material respects. All of the Company Common Stock has been sold pursuant to an effective registration statement filed under the
federal securities Laws or an appropriate exemption therefrom and in accordance with the Investment Company Act.
(c)
All
of the issued and outstanding shares of capital stock or other equity or voting securities or interests of each Subsidiary of the Company
are owned by the Company, directly or indirectly, free and clear of any Liens, and all of such shares, securities or interests are duly
authorized and validly issued and are fully paid, nonassessable (in respect of corporate entities) and free of preemptive rights. No
Subsidiary of the Company has or is bound by any outstanding rights calling for the purchase or issuance of, or the payment of any amount
based on, any shares of capital stock or any other equity or voting securities or interests of such Subsidiary or any securities representing
the right to purchase or otherwise receive any shares of capital stock or other equity or voting securities or interests of such Subsidiary.
(d)
As
of the date of this Agreement, there are no outstanding, authorized, promised or committed (i) options, warrants, calls, subscriptions
or other rights, convertible securities, agreements or commitments of any character to which the Company or any of its Subsidiaries is
a party obligating the Company or any of its Subsidiaries to issue, transfer or sell any shares of capital stock or other equity or voting
securities or interest in the Company or any of its Subsidiaries or securities or interests convertible into or exchangeable for such
shares, securities or interests, (ii) contractual obligations of the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any capital stock or other equity or voting securities or interests of the Company or any of its Subsidiaries or any
securities representing the right to purchase or otherwise receive any capital stock or other equity or voting securities or interests
of the Company or any of its Subsidiaries, (iii) appreciation rights, phantom equity or similar rights with respect to, or valued
in whole or in part in reference to, the Company or any of its Subsidiaries or (iv) voting trusts, stockholder agreements or other
similar agreements or understandings to which the Company or any of its Subsidiaries is a party with respect to the ownership, voting
or transfer of the capital stock or other equity or voting securities or interests of the Company or any of its Subsidiaries. Neither
the Company External Adviser, the Company Administrator nor any of their respective Affiliates has any right to receive, and no amounts
are payable by the Company or any of its Subsidiaries to any such Person that are determined in whole or in part by reference to the
value, appreciation or other performance of, any capital stock or other equity or voting securities or interests of the Company or any
of its Subsidiaries, other than the fees payable under the Company Investment Advisory Agreement and the Company Administration Agreement,
each as in effect on the date of this Agreement.
(e)
Each
Subsidiary of the Company on the date hereof is listed on Section 3.2(e) of the Company Disclosure Letter. Except as set forth
on Section 3.2(e) of the Company Disclosure Letter, the Company owns, directly or indirectly, all of the issued and outstanding
company, partnership or corporate (as applicable) ownership interests in each such Subsidiary, free and clear of all Liens except for
Permitted Liens, and all of such company, partnership or corporate (if applicable) ownership interests are duly authorized and validly
issued and are fully paid, nonassessable and free of preemptive rights. The Company has made available to Parent the currently effective
corporate or other organizational documents for each of its Subsidiaries.
11
Section 3.3
Authority
Relative to Agreement
.
(a)
The
Company has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and,
subject to obtaining the Company Stockholder Approval, to consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement by the Company, and the consummation by the Company of the transactions contemplated hereby, have been
duly and validly authorized by all necessary corporate action by the Company, and except for the Company Stockholder Approval and the
filing of the First Merger Filing and the Second Merger Filings with the SDAT and the Delaware Secretary, as applicable, no other corporate
action or proceeding on the part of the Company or any of its Affiliates is necessary to authorize the execution, delivery and performance
of this Agreement by the Company or any of its Affiliates and the consummation by the Company of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by the Company and, assuming due authorization, execution and delivery of this Agreement
by the other parties hereto, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance
with its terms, except that (i) such enforcement may be subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other similar Laws, now or hereafter in effect, affecting creditors’ rights and remedies generally and (ii) the remedies
of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion
of the court before which any Proceeding therefor may be brought (collectively, the “
Bankruptcy and Equity Exception
”).
(b)
The
Special Committee has unanimously (i) determined that this Agreement and the transactions contemplated by this Agreement, including
the Mergers, on the terms and subject to the conditions set forth herein, are advisable, fair to and in the best interests of the Company
and its stockholders and (ii) resolved to make the Special Committee Recommendation, and, subject to
Section 6.6(d)
,
such Special Committee Recommendation has not been subsequently rescinded, modified or withdrawn in any way.
(c)
The
Company Board, acting upon the Special Committee Recommendation, has unanimously (i) determined that this Agreement and the transactions
contemplated by this Agreement, including the Mergers, on the terms and subject to the conditions set forth herein, are advisable, fair
to and in the best interests of the Company and its stockholders, (ii) approved and declared advisable this Agreement, the execution
and delivery by the Company of this Agreement, the performance by the Company of the covenants and agreements contained herein and the
consummation of the transactions contemplated by this Agreement, including the Mergers, on the terms and subject to the conditions contained
herein, (iii) directed that the Mergers be submitted to the stockholders of the Company for their approval and (iv) resolved
to make the Company Recommendation, and, subject to
Section 6.6(d)
, such Company Recommendation has not been subsequently
rescinded, modified or withdrawn in any way.
12
(d)
Neither
the execution and delivery of this Agreement by the Company nor the consummation by the Company of the transactions contemplated hereby
will (i) violate any provision of the Company’s Articles or the Company’s Bylaws or the charter or bylaws (or equivalent
organizational documents) of any Subsidiary of the Company, (ii) assuming that the Consents, registrations, declarations, filings
and notices referred to in
Section 3.4
have been obtained or made, any applicable waiting periods referred to therein have
expired and any condition precedent to any such Consent has been satisfied, conflict with or violate any Law applicable to the Company
or any of its Subsidiaries or by which any property or asset (including any Intellectual Property Right) of the Company or any of its
Subsidiaries is bound or affected, or (iii) require notice to or the consent of the counterparty under, result in any breach of,
or constitute a default (with or without notice or lapse of time) under, or give rise to any right of termination, acceleration or cancellation
of any Contract to which the Company or any of its Subsidiaries is a party or by which any of their properties or assets (including any
Intellectual Property Right) are bound, or any Company Lease, or result in the creation of a Lien, upon any of the property or assets
(including any Intellectual Property Right) of the Company or any of its Subsidiaries, other than, in the case of this
clause (iii)
,
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
Section 3.4
No
Conflict; Required Filings and Consents
. No consent, approval, license, permit, order or authorization (a “
Consent
”)
of, or registration, declaration or filing with, or notice to, any Governmental Authority is required to be obtained or made by or with
respect to the Company or any of its Subsidiaries in connection with the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby, other than (a) applicable requirements of and filings with the SEC under the
Securities Act, the Exchange Act and the Investment Company Act, (b) the filing of the First Merger Filing and the Second Merger
Filings with the SDAT and the Delaware Secretary, as applicable, (c) filings in respect of Taxes, (d) compliance with applicable
rules and regulations of NASDAQ, (e) such other items required solely by reason of the participation of Parent, Acquisition
Sub 1, Acquisition Sub 2 or the Parent External Adviser in the transactions contemplated hereby, (f) compliance with and filings
or notifications under applicable Antitrust Laws and (g) such other Consents, registrations, declarations, filings or notices the
failure of which to be obtained or made has not had and would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect.
Section 3.5
Permits;
Compliance with Laws
.
(a)
Each
of the Company and each of its Subsidiaries is in compliance, and has been operated in compliance, with all Applicable Laws, including,
if and to the extent applicable, the Investment Company Act, the Investment Advisers Act, the Securities Act, the Exchange Act and applicable
rules and regulations of NASDAQ, other than as has not had and would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. Neither the Company nor any of its Subsidiaries has received any written or, to the Knowledge
of the Company or its Subsidiaries, oral notification from a Governmental Authority of any non-compliance with any Applicable Laws, which
non-compliance has had or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
Neither the Company nor the Company External Adviser has received any inquiry, deficiency letter, examination report or comparable communication
from the staff of the SEC, other than routine comments that are publicly available via EDGAR as of the date hereof, whether or not such
communication relates to non-compliance with any Applicable Laws.
13
(b)
Each
of the Company and each of its Subsidiaries is in compliance, and since it commenced operations, has complied with its investment policies
and restrictions and portfolio valuation methods, if any, as such policies and restrictions have been set forth in its registration statement
(as amended from time to time) or reports that it has filed with the SEC under the Exchange Act, the Securities Act, the Investment Company
Act, the Investment Advisers Act, and other Applicable Laws, if any, other than as has not had and would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect. The Company has adopted written valuation policies and procedures
meeting the requirements of Rule 2a-5 under the Investment Company Act and complied in all material respects with such written valuation
policies and procedures, and the Company Portfolio Companies have been valued in accordance with such written valuation policies and
procedures.
(c)
Neither
the Company nor any of its Subsidiaries is in default or violation of any Law applicable to the Company or any of its Subsidiaries except
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
(d)
The
Company has written policies and procedures adopted pursuant to Rule 38a-1 under the Investment Company Act that are reasonably
designed to prevent material violations of the “Federal Securities Laws,” as such term is defined in Rule 38a-1(e)(1) under
the Investment Company Act. There have been no “Material Compliance Matters” for the Company, as such term is defined in
Rule 38a-1(e)(2) under the Investment Company Act, other than those that have been reported to the Company Board and satisfactorily
remedied or are in the process of being remedied, all of which are set forth in
Section 3.5(d)
of the Company Disclosure
Letter.
(e)
The
Company and each of its Subsidiaries holds and is in compliance with all Permits required in order to permit the Company and each of
its Subsidiaries to own or lease their properties and assets and to conduct their businesses under and pursuant to all Applicable Laws
as presently conducted, other than as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. All such Permits are valid and in full force and effect, except as has not had and would not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect. Neither the Company nor any of its Subsidiaries has received
any written or, to the Knowledge of the Company, oral notification from a Governmental Authority of any non-compliance with any such
Permits, and no Proceeding is pending or threatened in writing to suspend, cancel, modify, revoke or materially limit any such Permits,
that has had or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
(f)
To
the Knowledge of the Company, no “affiliated person” (as defined under the Investment Company Act) of the Company or the
Company External Adviser has been subject to disqualification to serve in any capacity contemplated by the Investment Company Act for
any investment company (including a BDC) under Sections 9(a) and 9(b) of the Investment Company Act, unless, in each case,
such Person has received exemptive relief from the SEC with respect to any such disqualification. All such instances of exemptive relief
are set forth in
Section 3.5(f)
of the Company Disclosure Letter. There is no Proceeding pending or, to the Knowledge
of the Company, threatened in writing or orally, that would be reasonably likely to result in any such disqualification. Neither the
Company External Adviser nor, to the Knowledge of the Company, any “person associated with” (as defined in the Investment
Advisers Act) the Company External Adviser is disqualified or ineligible pursuant to Sections 203(e) or 203(f) of the Investment
Advisers Act to serve as an investment adviser or as a “person associated with” an investment adviser, and no Proceeding
is pending or, to the Knowledge of the Company, threatened in writing that would result in any such disqualification or ineligibility.
The Company External Adviser is, and at all times required by the Investment Advisers Act has been, duly registered as an investment
adviser under the Investment Advisers Act, and is duly registered, licensed or qualified as an investment adviser in each other jurisdiction
where the conduct of its business requires such registration, licensing or qualification.
14
(g)
The
Company Investment Advisory Agreement has been duly approved, continued and at all times has been in compliance in all material respects
with Section 15 of the Investment Company Act (to the extent applicable) and any exemptive, no-action or interpretive guidance issued
by the SEC or its staff. Neither the Company nor the Company External Adviser is in default under the Company Investment Advisory Agreement.
The Company Investment Advisory Agreement is a valid and binding obligation of the Company and the Company External Adviser, except that
such enforcement may be subject to the Bankruptcy and Equity Exception.
(h)
The
Company has made available to Parent a complete and correct copy of each material no-action letter and exemptive order issued by the
SEC to the Company on which it, or the Company External Adviser, relies in the conduct of its business as conducted on the date of this
Agreement, or in the case of the Company External Adviser, relies in the conduct of its business as it relates to the Company as conducted
on the date of this Agreement. The Company and the Company External Adviser are in compliance in all material respects with any such
material no-action letters and exemptive orders.
(i)
The
minute books and other similar records of the Company contain a true and complete record in all material respects of all actions taken
at all meetings and by all written consents in lieu of meetings of the shareholders of the Company, the Company Board and any committee
of the Company Board.
Section 3.6
Company
SEC Documents; Financial Statements; Enforcement Actions
.
(a)
Since
January 1, 2023, the Company has filed with the SEC all forms, documents and reports required to be filed or furnished prior to
the date hereof by it with the SEC (such forms, documents and reports so filed with the SEC by the Company since such date, including
any amendments or supplements thereto, the “
Company SEC Documents
”). As of their respective dates, or, if amended
or supplemented, as of the date of the last such amendment or supplement, the Company SEC Documents complied in all material respects
with the applicable requirements of the Securities Act, the Exchange Act, the Investment Company Act or the Investment Advisers Act,
as the case may be, and the applicable rules and regulations promulgated thereunder, and none of the Company SEC Documents at the
time it was filed (or, if amended or supplemented, as of the date of such amendment or supplement) contained any untrue statement of
a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, or are to be made, not misleading (or, in the case of a Company SEC Document that is
a registration statement, as amended or supplemented, if applicable, filed pursuant to the Securities Act, as of the date such registration
statement or amendment or supplement became effective, contained any untrue statement of a material fact or omitted to state any material
fact required to be stated therein or necessary to make the statements, in light of the circumstances under which they were made, therein
not misleading).
15
(b)
The
consolidated financial statements (including all related notes) of the Company included in the Company SEC Documents (i) fairly
present in all material respects the consolidated financial position of the Company and its Subsidiaries as at the respective dates thereof,
and their consolidated statements of operations and consolidated statements of cash flows for the respective periods then ended (subject,
in the case of unaudited interim statements, to normal year-end audit adjustments, to the absence of notes and to any other adjustments
described therein, including in any notes thereto), (ii) were prepared in conformity with GAAP applied on a consistent basis throughout
the periods involved (except as may be indicated therein or in the notes thereto), (iii) were prepared from, and are in accordance
with, the books and records of the Company and its Subsidiaries and (iv) comply as to form, as of their respective dates of filing
with the SEC, in all material respects with applicable accounting requirements and with the published rules and regulations of the
SEC with respect thereto.
(c)
None
of the Company or any of its Subsidiaries is subject to any cease-and-desist or other enforcement action by, or is a party to any Contract,
consent agreement or memorandum of understanding with, or is a party to any commitment letter or similar undertaking to, or is subject
to any Order by, or has adopted any policies, procedures or board resolutions at the request of, any Governmental Authority that currently
restrict the conduct of its business (or that would upon consummation of the First Merger restrict in any respect the conduct of the
business of Parent or any of its Subsidiaries), or that relate to its capital adequacy, its ability to pay dividends, its credit, risk
management or compliance policies, its internal controls, its management or its business, other than those of general application that
apply to similarly situated BDCs or their Subsidiaries, except as has not had and would not reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect, nor has the Company or any of its Subsidiaries been advised in writing or, to
the Knowledge of the Company, verbally by any Governmental Authority that it is considering issuing, initiating, ordering or requesting
any of the foregoing.
Section 3.7
Information
Supplied
. None of the information supplied or to be supplied by or on behalf of the Company, any of its Subsidiaries or the Company
External Adviser expressly for inclusion or incorporation by reference in (a) the registration statement on Form N-14 to be
filed with the SEC by Parent in connection with the registration under the Securities Act of the shares of Parent Common Stock to be
issued in the First Merger (as amended or supplemented from time to time, the “
Form N-14
”) will, at the time
the Form N-14 is filed with the SEC or at any time it is amended or supplemented or at the time it becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they are made, not misleading, and (b) the proxy statement
to be sent to the stockholders of the Company relating to the Company Stockholders’ Meeting (the “
Proxy Statement
”)
will, at the date it or any amendment or supplement is mailed to stockholders of the Company and at the time of the Company Stockholders’
Meeting, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances in which they are made, not misleading (except that no representation or
warranty is made by the Company regarding such portions thereof that relate expressly to Parent or any of its Subsidiaries, including
the Acquisition Subs, or to statements made therein based on information supplied by or on behalf of Parent, Acquisition Sub 1, Acquisition
Sub 2 or the Parent External Adviser for inclusion or incorporation by reference therein).
16
Section 3.8
Disclosure
Controls and Procedures
. The Company and its Subsidiaries maintain “disclosure controls and procedures” and “internal
control over financial reporting” (as such terms are defined in paragraphs (e) and (f), respectively, of Rule 13a-15
under the Exchange Act) as required by Rule 13a-15 under the Exchange Act.
Section 3.9
Absence
of Certain Changes or Events
. Since December 31, 2025 through the date of this Agreement, (a) except as expressly contemplated
by this Agreement, the respective businesses of the Company and its Subsidiaries have been conducted in the ordinary course of business
consistent with past practice, (b) except as set forth on
Section 3.9
of the Company Disclosure Letter, neither the
Company nor any of its Subsidiaries has taken any action which would be prohibited by
Section 6.1
if taken after the date
hereof and (c) there have not occurred any facts, circumstances, events, changes, occurrences or effects that would have had or
would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
Section 3.10
No
Undisclosed Liabilities
. Except (a) as reserved against on the Company Balance Sheet included in the Company SEC Documents,
(b) for liabilities or obligations incurred in the ordinary course of business since the Company Balance Sheet Date, (c) as
expressly contemplated by this Agreement, (d) for liabilities and obligations to the extent discharged or paid prior to the date
of this Agreement and (e) for liabilities or obligations that have not had and would not reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect, the Company and its Subsidiaries have no liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise.
Section 3.11
Litigation
.
There is no Proceeding pending or, to the Knowledge of the Company, threatened against the Company or any of its Subsidiaries that has
had or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, nor is there any judgment
or order of any Governmental Authority outstanding against, or, to the Knowledge of the Company, investigation by any Governmental Authority
involving, the Company or any of its Subsidiaries that has had or would reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect.
Section 3.12
Employee
Matters
.
(a)
The
Company and each of its Subsidiaries (i) does not have, and has never had, any employees or individual independent contractors (other
than the members of the Company Board) and (ii) does not sponsor, contribute to, or have any liability with respect to, and has
never sponsored, contributed to, or had any liability with respect to, any “employee benefit plan” as defined in Section 3(3) of
ERISA (whether or not subject to ERISA), or any employment, bonus, incentive, vacation, stock option or other equity-based, severance,
termination, retention, change of control, fringe benefit, retirement, health, medical or other similar employee benefit plan, program
or agreement.
17
(b)
Neither
the Company nor any of its Subsidiaries has, or could reasonably be expected to have, any liability arising from or relating to (i) the
classification or treatment of any individual as an independent contractor, consultant, temporary worker, leased employee or other non-employee
service provider (including any individual who provides services to or on behalf of the Company or its Subsidiaries pursuant to the Company
Investment Advisory Agreement, the Company Administration Agreement or any similar arrangement), (ii) any professional employer
organization, staffing, leasing, secondment or similar arrangement, other than the Company Investment Advisory Agreement and the Company
Administration Agreement, or (iii) any wages, salary, bonuses, commissions, benefits, payroll Taxes, workers’ compensation,
severance, accrued leave or other compensation or benefit obligation with respect to any individual providing services to or on behalf
of the Company or its Subsidiaries, other than fees, expense reimbursements and other amounts payable under the Company Investment Advisory
Agreement and the Company Administration Agreement in accordance with their terms as in effect on the date of this Agreement.
(c)
Neither
the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby (whether alone or in conjunction
with any other event) will result in any payment or benefit becoming due to, or the acceleration, vesting, funding or increase of any
payment or benefit for, any Person in respect of services performed for or on behalf of the Company or any of its Subsidiaries, other
than fees and other amounts payable under the Company Investment Advisory Agreement and the Company Administration Agreement in accordance
with their terms as in effect on the date of this Agreement.
Section 3.13
Intellectual
Property; Privacy and Data Security
.
(a)
Section 3.13(a)
of
the Company Disclosure Letter sets forth a complete and accurate list of all: (i) patents and patent applications; (ii) Trademark
registrations and applications (including internet domain name registrations); and (iii) copyright registrations and applications,
in each case that are included in the Company Owned Intellectual Property (“
Company Registered Intellectual Property
”).
Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect:
(x) each item of Company Registered Intellectual Property is subsisting, and to the Knowledge of the Company, valid and enforceable;
and (y) no Proceeding is pending, or to the Knowledge of the Company, has been threatened since January 1, 2023, challenging
the validity, enforceability, registration, ownership or scope of any Company Registered Intellectual Property.
(b)
Except
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect: (i) the
Company and its Subsidiaries own or have the right to use all Intellectual Property Rights used or held for use by them in the conduct
of their respective businesses as currently conducted; and (ii) the Company or its applicable Subsidiary is the sole and exclusive
owner of each item of Company Owned Intellectual Property.
(c)
The
conduct of the respective businesses of the Company and its Subsidiaries as currently conducted does not infringe, misappropriate, dilute,
or otherwise violate, and since January 1, 2023, has not infringed, misappropriated, diluted, or otherwise violated, any Intellectual
Property Rights of any other Person, except as has not had and would not reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect. No Proceeding is pending or, to the Knowledge of the Company, has been threatened in writing since
January 1, 2023, alleging that the Company or any of its Subsidiaries has infringed, misappropriated, diluted, or otherwise violated
any Intellectual Property Rights of any Third Party, except as has not had and would not reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect. To the Knowledge of the Company, except as has not had and would not reasonably
be expected to have, individually or in the aggregate, a Company Material Adverse Effect, no other Person is infringing, misappropriating,
diluting, or otherwise violating any Company Owned Intellectual Property. No Proceeding is pending, or has been threatened in writing
by the Company or any of its Subsidiaries since January 1, 2023, alleging that any Third Party has infringed, misappropriated, diluted,
or otherwise violated any Company Owned Intellectual Property, except as has not had and would not reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect.
18
(d)
Except
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect: (i) the
Company and its Subsidiaries use commercially reasonable efforts to protect the confidentiality of all trade secrets and other material
confidential information owned by the Company and its Subsidiaries; and (ii) no trade secrets or other material confidential information
owned by the Company or any of its Subsidiaries has been disclosed by the Company or any of its Subsidiaries to any Person, except for
Persons who are subject to contractual, legal or legally enforceable ethical or professional obligations to maintain the confidentiality
of such information.
(e)
Except
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, all
Persons who have contributed to or participated in the creation or development of any Intellectual Property Rights for or on behalf of
the Company or any of its Subsidiaries have assigned all of their right, title and interest in or to such Intellectual Property Rights
to the Company or one of its Subsidiaries (except to the extent ownership of such Intellectual Property Rights vests in the Company or
its Subsidiary by operation of Law).
(f)
Except
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect: (i) the
Company IT Systems are in good working condition, operate and perform in all respects as required for the operation of the businesses
of the Company and its Subsidiaries, and have not malfunctioned or failed since January 1, 2023; (ii) the Company and its Subsidiaries
maintain commercially reasonable data backup, data storage, system redundancy, and disaster avoidance and recovery plans, policies and
procedures, consistent with industry practice; (iii) the Company and its Subsidiaries have in place commercially reasonable measures
to protect the integrity and security of their owned Company IT Systems (and all Personal Information and confidential information stored
or contained therein or transmitted thereby); and (iv) there has been no security breach or other unauthorized access to such Company
IT Systems since January 1, 2023 which has resulted in the unauthorized access, use, disclosure, deletion, modification, encryption
or corruption of any Personal Information or confidential information stored or contained therein or processed thereby (each, a “
Company
Security Incident
”).
(g)
Except
as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect: (i) the
Company and its Subsidiaries are in compliance, and, since January 1, 2023, have been in compliance, with all Company Privacy/Data
Security Laws and Company Privacy Requirements, including in the course of the operations of the Company and its Subsidiaries, and (ii) since
January 1, 2023, no Proceedings have been pending or, to the Knowledge of the Company, threatened in writing against the Company
or any of its Subsidiaries by any Person alleging a violation of such Person’s privacy, personal or confidentiality rights under
any Company Privacy/Data Security Laws or Company Privacy Requirements. Except as has not had and would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect, neither the Company nor any of its Subsidiaries have, since
January 1, 2023: (A) received any written notice of any Proceeding from any Person or (B) been required to send to any
Person any written notice, in each case of (A) and (B), concerning any Company Security Incident or any actual or alleged violation
of any Company Privacy Requirements.
19
Section 3.14
Taxes
.
Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect:
(a)
The Company
and each of its Subsidiaries have (i) timely filed (taking into account any extension of time within which to file) all Tax Returns
required to be filed by any of them and all such filed Tax Returns (taking into account all amendments thereto) are complete and accurate
and (ii) paid all Taxes due and payable (whether or not shown as due on such Tax Returns), except for Taxes contested in good faith
or for which adequate reserves have been established on the financial statements in accordance with GAAP.
(b)
There
are no pending or ongoing audits, examinations, investigations or other Proceedings by any Taxing Authority in respect of Taxes of or
with respect to the Company or any of its Subsidiaries.
(c)
All
Taxes that the Company or any of its Subsidiaries are or were required by Law to withhold or collect have been duly and timely withheld
or collected in all material respects on behalf of its respective employees, independent contractors or other Third Parties, and have
been timely paid to the proper Governmental Authority or other Person or properly set aside in accounts for this purpose.
(d)
Neither
the Company nor any of its Subsidiaries has (i) ever been a member of a consolidated, combined or unitary income Tax group (other
than such a group the common parent of which is the Company or any of its Subsidiaries) or (ii) any liability for the Taxes of another
Person (other than the Company and its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar provision of state,
local or foreign Law), as a transferee, successor or otherwise as a matter of Law.
(e)
Neither
the Company nor any of its Subsidiaries is a party to or is bound by any Tax sharing, Tax allocation or Tax indemnification agreement
or arrangement (other than such an agreement or arrangement exclusively between or among the Company and its Subsidiaries or customary
commercial Contracts, the principal subject matter of which is not Taxes) that will not be terminated on or before the Closing Date without
any future liability to the Company or its Subsidiaries.
(f)
There
are no Liens for Taxes on any of the assets of the Company or any of its Subsidiaries other than Permitted Liens.
20
(g)
Neither
the Company nor any of its Subsidiaries has participated in or been a party to a transaction that, as of the date of this Agreement,
constitutes a “listed transaction” that is required to be reported to the IRS pursuant to Section 6011 of the Code and
applicable Treasury Regulations thereunder.
(h)
The
Company has made a valid election under Part I of Subchapter M of Subtitle A, Chapter 1, of the Code to be taxed as a “regulated
investment company” (a “
RIC
”). The Company has qualified as a RIC with respect to its first taxable year ending
March 31, 2005, and with respect to each taxable year thereafter and expects to continue to qualify through the Effective Time.
No challenge to the Company’s status as a RIC is pending or has been threatened in writing. For each taxable year of the Company
ending on or before the Effective Time, the Company has satisfied the distribution requirements imposed on a RIC under Section 852
of the Code (assuming for these purposes that any dividend declared by the Company after the date of this Agreement has been timely paid).
All dividends (as defined in Section 316 of the Code) paid by the Company in any taxable year for which the applicable statute of
limitations remains open (including its taxable year ending on the Effective Time) shall have been deductible pursuant to the dividends
paid deduction under Section 562 of the Code. Since the taxable year ending March 31, 2005, the Company has no earnings or
profits accumulated with respect to any taxable year in which the provisions of Subchapter M of Subtitle A, Chapter 1, of the Code did
not apply.
(i)
The
Company does not directly or indirectly hold any asset the disposition of which would be subject to (or to rules similar to) Section 1374
of the Code (or otherwise result in any “built-in gains” Tax under Section 337(d) of the Code and the applicable
Treasury Regulations thereunder).
(j)
Within
the past two years, neither the Company nor any of its Subsidiaries has been a “distributing corporation” or a “controlled
corporation” in a distribution of stock which qualified or was intended to qualify under Section 355(a) of the Code.
(k)
The
Company is not aware of any fact or circumstance that could reasonably be expected to prevent the Mergers, taken together, from qualifying
for the Intended Tax Treatment.
Section 3.15
Material
Contracts
.
(a)
Section 3.15(a)
of
the Company Disclosure Letter sets forth a complete and correct list, as of the date hereof, of each Company Material Contract, a complete
and correct copy of each of which has been made available to Parent. For purposes of this Agreement, “
Company Material Contract
”
means any Contract to which the Company or any of its Subsidiaries is a party, except for this Agreement, that:
(i)
constitutes
a “material contract” (as such term is defined in item 601(b)(10) of Regulation S-K under the Securities Act) of the
Company or any of its Subsidiaries;
(ii)
is
a material partnership, limited liability company, joint venture or other similar Contract;
(iii)
is
a loan, guarantee of Indebtedness or credit agreement, note, mortgage, indenture, or other Contract or commitment (other than those solely
between or among the Company and any of its Subsidiaries (excluding, for the avoidance of doubt, any CLO among the Company or any of
its Subsidiaries)) relating to Indebtedness for borrowed money of the Company or its Subsidiaries (whether outstanding or as may be incurred)
in an amount in excess of $5,000,000 individually;
21
(iv)
contemplates
future payments to or from the Company or any of its Subsidiaries in excess of $2,000,000 in any one year (other than any payment to
or from the Company or any of its Subsidiaries, on the one hand, to or from any Company Portfolio Company, on the other hand, that is
made in the ordinary course of business);
(v)
is
a Contract (A) that licenses or otherwise grants to the Company or any of its Subsidiaries a right to use or exploit any material
Intellectual Property Rights owned by a Third Party, but excluding any licenses of shrink-wrap, click-wrap and off-the-shelf software
or technology, or any other non-exclusive licenses of software or technology that is generally commercially available with one-time or
annual license, maintenance, support and other fees; or (B) that licenses or otherwise grants to a Third Party a right to use or
exploit any material Company Owned Intellectual Property, other than non-exclusive licenses granted by the Company or its Subsidiaries
in the ordinary course of business;
(vi)
is
solely between or among the Company or any of its Subsidiaries, on the one hand, and one or more of (A) the Company External Adviser
or any of its Subsidiaries or Affiliates (in each case, other than the Company and its Subsidiaries) or (B) any “associate”
or member of the “immediate family” (as such terms are respectively defined in Rule 12b-2 and Rule 16a-1 of the
Exchange Act) of a Person identified in clause (A), on the other hand, and to which no other Person is a party;
(vii)
contains
any non-competition or other restrictive covenant or is a Contract that, upon consummation of the Mergers, will obligate Parent, the
Surviving Company, the Parent External Adviser or any of their respective Subsidiaries to conduct business with any Third Party on an
exclusive, most-favored-nations or preferential basis;
(viii)
is
a Contract between or among the Company or any of its Subsidiaries, on the one hand, and any director, officer, stockholder holding five
percent (5%) or more of any class of outstanding capital stock or other equity or voting securities or interests of the Company or any
Affiliate of such Person, on the other hand;
(ix)
is
with a Governmental Authority or relates to an Order or Consent of any Governmental Authority to which the Company, any of its Subsidiaries
or, if it pertains to the Company and its Subsidiaries, the Company External Adviser is subject;
(x)
is
a Contract (including a Contract relating to acquisitions or dispositions of investments of controlling interests in Company Portfolio
Companies but excluding any Contract relating to acquisitions or dispositions of debt investments in any Company Portfolio Company) relating
to the acquisition or disposition of any business, assets, equity or operations (whether by merger, sale of stock, sale of assets or
otherwise) (A) that has not yet been consummated, (B) pursuant to which the Company or any of its Subsidiaries has any non-de
minimis ongoing obligations, (C) pursuant to which the Company or any of its Subsidiaries would reasonably be expected to be required
to pay consideration in excess of $5,000,000 or (D) pursuant to which any other Person has the right to acquire any business, assets,
equity or operations of the Company or any of its Subsidiaries with a purchase price (or total consideration realizable by or payable
to the Company or any of its Subsidiaries) of more than $5,000,000; or
22
(xi)
is
a Contract for the purpose of another Person providing investment advisory or investment management services to the Company or any of
its Subsidiaries (including the Company Investment Advisory Agreement).
(b)
Neither
the Company nor any of its Subsidiaries is in breach of or default (or, with the giving of notice or lapse of time or both, would be
in breach of or in default) under the terms of, or has taken any action or received any written communication that would reasonably be
expected to result in the termination, acceleration of performance required by, or a right of termination or acceleration under, any
Company Material Contract to which it is a party, except as has not had and would not reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect. Neither the Company nor any of its Subsidiaries is in breach of or default under
any existing CLO or any agreements related thereto to which it is a party, and no event or condition exists that, with the giving of
notice or lapse of time or both, would constitute such a breach or default. As of the date of this Agreement, to the Knowledge of the
Company, no other party to any Company Material Contract is in breach of or default under the terms of any Company Material Contract,
except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
Each Company Material Contract is a valid and binding obligation of the Company or its Subsidiary that is a party thereto and the other
parties thereto, except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material
Adverse Effect and except that such enforcement may be subject to the Bankruptcy and Equity Exception.
Section 3.16
Real
Property
.
(a)
Neither
the Company nor any of its Subsidiaries owns any real property in fee (or the equivalent interest in the applicable jurisdiction).
(b)
Section 3.16(b)
of
the Company Disclosure Letter sets forth a complete and correct list, as of the date hereof, of all leases, subleases, licenses and other
agreements pursuant to which the Company or any Subsidiary occupies or uses real property (together with any amendments or modifications
or supplements thereto and guarantees thereof, collectively, the “
Company Leases
” and all real property subject thereto,
including all improvements, structures or fixtures located thereon or thereunder, collectively, the “
Company Leased Real Property
”),
a complete and correct copy of each of which has been made available to Parent. Except as has not had and would not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect, the Company and each of its Subsidiaries have a valid leasehold,
subleasehold or license interest in the Company Leased Real Property pursuant to the Company Leases, in each case, free and clear of
all Liens other than Permitted Liens. Each Company Lease is a valid and binding obligation of the Company or its Subsidiary that is a
party thereto, as applicable, and, the other parties thereto, except as has not had and would not reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect and except that such enforcement may be subject to the Bankruptcy and Equity Exception.
23
(c)
As
of the date of this Agreement, neither the Company nor any of its Subsidiaries has received any written communication from, or given
any written communication to, any other party to a Company Lease or any lender alleging that the Company or any of its Subsidiaries or
such other party, as the case may be, is in default or breach under such Company Lease and no event has occurred that, with notice or
lapse of time or both, would constitute a breach or default under any Company Lease, in each case, that has had or would reasonably be
expected to have, individually or in the aggregate a Company Material Adverse Effect.
(d)
Neither
the Company nor any of its Subsidiaries has received any written notice of any pending or threatened condemnation or eminent domain proceeding
affecting any Company Leased Real Property.
(e)
Neither
the Company nor any of its Subsidiaries has received any written communication from, or given any written communication to, any other
party to a lease for Company Leased Real Property or any lender alleging that the Company or any of its Subsidiaries or such other party,
as the case may be, is in default under such lease.
Section 3.17
Environmental
.
Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect:
(a)
the
Company and its Subsidiaries are in compliance with all applicable Environmental Laws, including possessing all Permits required for
their respective operations under applicable Environmental Laws;
(b)
there
is no pending or, to the Knowledge of the Company, threatened Proceeding pursuant to any Environmental Law against the Company or any
of its Subsidiaries;
(c)
neither
the Company nor any of its Subsidiaries has received written notice from any Person, including any Governmental Authority, alleging that
the Company or any of its Subsidiaries has been or is in violation or is potentially in violation of any applicable Environmental Law
or otherwise may be liable under any applicable Environmental Law, which violation or liability is unresolved; and
(d)
neither
the Company nor any of its Subsidiaries is a party or subject to any Order pursuant to Environmental Law.
Section 3.18
Takeover
Statutes
. The Company Board has taken all action necessary to render inapplicable to the Mergers the restrictions on business combinations
contained in Subtitle 6 of Title 3 of the MGCL. The Company has opted out of the restrictions on control share acquisitions contained
in Subtitle 7 of Title 3 of the MGCL in the Company’s Bylaws, and no other “business combination,” “control share
acquisition,” “fair price,” “moratorium” or other similar antitakeover statutes or regulations enacted
under state or federal Laws in the United States (any such Laws, “
Takeover Statutes
”) are applicable to this Agreement,
the Voting Agreements, the Mergers or the other transactions contemplated by this Agreement.
24
Section 3.19
Vote
Required
. The approval of the Mergers by the holders of at least a majority of the outstanding shares of Company Common Stock entitled
to vote thereon at the Company Stockholders’ Meeting (the “
Company Stockholder Approval
”) is the only vote or
consent of the holders of any class or series of capital stock or other equity or voting securities or interests of the Company that
is required in connection with the consummation of the Mergers. Each holder of shares of Company Common Stock entitled to vote at the
Company Stockholders’ Meeting is entitled to one vote per share. No supermajority vote, including any two-thirds or 80% stockholder
approval threshold, is required under the Company’s Articles, the Company’s Bylaws or the MGCL in connection with the transactions
contemplated hereby.
Section 3.20
Brokers
.
No investment banker, broker or finder other than Moelis & Company LLC, the fees and expenses of which will be paid by the Company,
is entitled to any investment banking, brokerage, finder’s or similar fee or commission in connection with this Agreement or the
transactions contemplated hereby based upon arrangements made by or on behalf of the Company or any of its Subsidiaries or the Company
Board or the Special Committee.
Section 3.21
Opinion
of Financial Advisor
. The Special Committee has received the opinion of Moelis & Company LLC, which, if provided orally
will be subsequently confirmed in writing, to the effect that, as of the date of such opinion, and based upon and subject to the various
assumptions made, procedures followed, matters considered and qualifications and limitations set forth in such opinion, the Merger Consideration
to be received by the holders of shares of Company Common Stock pursuant to this Agreement is fair, from a financial point of view, to
such holders.
Section 3.22
Insurance
.
The Company or its Affiliates have paid, or caused to be paid, all premiums due under all material insurance policies covering the Company
or its Subsidiaries and have not received written notice that the Company or its Subsidiaries are in default with respect to any obligations
under such policies. All such insurance policies are in full force and effect, other than as has not had and would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse Effect. Neither the Company nor any of its Subsidiaries
has received any written notice of cancellation or termination with respect to any existing insurance policy, or refusal or denial of
any material coverage, reservation of rights or rejection of any claim under any existing insurance policy, in each case that is held
by, or for the benefit of, the Company or any of its Subsidiaries, other than as has not had and would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect.
Section 3.23
Investment
Assets
.
(a)
As
of the date of this Agreement, each of the Company and each of its Subsidiaries owns all securities, Indebtedness and other financial
instruments held by it, free and clear of any material Liens, except to the extent such securities, Indebtedness or other financial
instruments, as applicable, are pledged in the ordinary course of business consistent with past practice to secure obligations of the
Company or any of its Subsidiaries and except for Liens consisting of restrictions on transfer agreed to in respect of investments entered
into in the ordinary course of business. As of the date of this Agreement, there have been no material changes to the amount of securities, Indebtedness
and other financial instruments (including CLOs) listed on the Company’s most recent schedule of investments included in the Company
SEC Documents, including any increase in the amount of securities, Indebtedness and other financial instruments owned by the Company
or its Subsidiaries that are not treated as “qualifying assets” under Section 55(a) of the Investment Company Act.
25
(b)
The
Company and its Subsidiaries have been duly appointed as collateral manager (or similar) in relation to each Existing CLO and have provided
to Parent, as of the date hereof, true and correct copies of all collateral manager (or similar) agreements, trust deeds, retention letters
(or documents materially similar thereto), and/or final offering circulars (whether from the original issuance of an Existing CLO, or
the latest offering circular from each refinancing or reset of the Existing CLO) for each Existing CLO together with all amendments,
supplements and modifications thereto. No event has occurred and remains ongoing which is likely to give rise to the dismissal of the
Company or any of its Subsidiaries as collateral manager of any Existing CLO.
(c)
The
“Collateral Manager Information” (or similar term as defined in the final offering memorandum or final offering circular
with respect to each Existing CLO (whether from the original issuance of the Existing CLO or the final offering circular from each refinancing
or reset of the Existing CLO)), as of its date of publication, did not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(d)
The
Company and its Subsidiaries have no outstanding liability resulting from a “collateral manager breach” (or similar) under
any indemnification provision of any applicable transaction documents in relation to any Existing CLO. No payments of any costs, fees
or expenses to the Company or any of its Subsidiaries currently due and payable are outstanding pursuant to any applicable transaction
documents in relation to any Existing CLO other than in the ordinary course of trading.
(e)
No
“Cause” (or similar term as defined in the final offering memorandum or final offering circular with respect to any Existing
CLO) has occurred and is outstanding in respect of the Company or any of its Subsidiaries.
(f)
There
has been no invalidity, unenforceability, expiration or termination, or grounds for termination, avoidance, rescission, determination
of material change or repudiation of, any transaction documents to which the Company or any of its Subsidiaries are party in its capacity
as collateral manager of a CLO.
Section 3.24
Related
Party Agreements
.
Section 3.24
of the Company Disclosure Letter sets forth a complete and accurate list of all material
agreements between the Company or any of its Subsidiaries, on the one hand, and any “affiliated person” (as defined under
the Investment Company Act) of the Company, any of its Subsidiaries or the Company External Adviser, on the other hand, including the
Company Investment Advisory Agreement and the Company Administration Agreement. Each such agreement complies in all material respects
with the requirements of Sections 17 and 57 of the Investment Company Act, to the extent applicable. The Company and its Subsidiaries
have received any required exemptive relief from the SEC necessary to conduct co-investment transactions with affiliated funds managed
by affiliates of the Company External Adviser.
Section 3.25
ERISA
Matters
. The Company and each of its Subsidiaries (i) does not hold and is not deemed to hold, and has never held or been deemed
to hold, “plan assets” (within the meaning of the U.S. Department of Labor regulation located at 29 C.F.R. Section 2510.3-101,
as modified by Section 3(42) of ERISA (“
Plan Assets
”)) of any “benefit plan investor” (within the
meaning of Section 3(42) of ERISA), or the assets of any other governmental plan, non-U.S. plan, church plan or any other employee
benefit plan, account or arrangement that is subject to any U.S. federal, state, local, non-U.S. or other law that is similar to Title
I of ERISA or Section 4975 of the Code (“
Similar Law
”)), and (ii) is not, and has not at any time been,
a “fiduciary” (within the meaning of Section 3(21) of ERISA or under other Similar Law) with respect to any “benefit
plan investor” or other plan, account or arrangement.
26
Section 3.26
Anti-Corruption
.
In the past five years, neither the Company, nor any Subsidiary, nor any director, officer, employee, or, to the Knowledge of the Company,
agent, representative, consultant or any other Person acting on behalf of the Company or any of its Subsidiaries (each a “
Company
Representative
”), has, in each case in their roles as such or otherwise in connection with the business of the Company, (a) directly
or knowingly indirectly violated any applicable Anti-Corruption Laws or (b) corruptly offered, paid, promised to pay, authorized,
solicited, or received the payment of money or anything of value, directly or indirectly, to or from any Person, including any Government
Official: (i) to influence any official act or decision of a Government Official; (ii) to induce a Government Official to do
or omit to do any act in violation of a lawful duty; (iii) to induce a Government Official to influence the act or decision of a
Governmental Authority; (iv) to secure any improper business advantage; (v) to obtain or retain business in any way related
to the Company or any of its Subsidiaries; or (vi) that would otherwise constitute a bribe, kickback, or other improper or illegal
payment or benefit. The Company, its Subsidiaries, and their respective Company Representatives have not in the last five years received
written notice of or, to the Knowledge of the Company, otherwise been the subject of any allegations or investigations by any Governmental
Authority, litigation, or voluntary or directed disclosures to any Governmental Authority (including but not limited to the U.S. Department
of Justice, U.S. Securities Exchange Commission, or U.K. Securities Fraud Office), received any whistleblower reports or other allegations,
or conducted any internal investigation, in each case regarding any actual, potential, or alleged violation of any Anti-Corruption Law
by the Company or any of its Subsidiaries or, to the Knowledge of the Company, a Company Representative in their roles as such or otherwise
in connection with the business of the Company. At all times during the past five years, the Company has maintained and enforced or been
subject to policies and procedures reasonably designed to ensure compliance by the Company, its Subsidiaries, and Company Representatives
with applicable Anti-Corruption Laws.
Section 3.27
Anti-Money
Laundering Laws
. The operations of the Company and its Subsidiaries are, and have been for the past five years, conducted at all
times in compliance with applicable Anti-Money Laundering Laws, and no action, suit or proceeding by or before any court or Governmental
Authority or any arbitrator involving the Company or any of its Subsidiaries with respect to the Anti-Money Laundering Laws is pending
or, to the Knowledge of the Company, threatened. At all times during the past five years, the Company and its Subsidiaries have maintained
and enforced or been subject to policies and procedures reasonably designed to ensure compliance by the Company, its Subsidiaries, and
the Company Representatives with applicable Anti-Money Laundering Laws.
27
Section 3.28
Sanctions;
International Trade Laws
.
Section 3.28
of the Company Disclosure Letter sets forth all active Permits that the Company has obtained, or to which it is a party, under International
Trade Laws or Sanctions, and identifies any pending applications for such Permits. The Company, its directors, officers, employees, and,
to the Knowledge of the Company, agents acting on its behalf have, in each case in their roles as such or otherwise in connection with
the business of the Company, (a) since April 24, 2019 with respect to Sanctions and in the last five years with respect to
International Trade Laws, (i) complied with applicable International Trade Laws, Sanctions and with the terms and conditions of
all Permits identified in Section 3.28 of the Company Disclosure Letter; (ii) maintained in place, implemented, and enforced
or been subject to controls and systems, including policies and procedures, reasonably designed to comply with applicable International
Trade Laws and Sanctions; (iii) not received in writing any notice, inquiry, indictment, or allegation from any Governmental Authority
regarding any actual, potential, or alleged violation of Sanctions or International Trade Laws; (iv) not made any voluntary or involuntary
disclosure to any Governmental Authority regarding any actual or potential violation of Sanctions or International Trade Laws; and (v) not,
to the Knowledge of the Company, been the subject of or otherwise involved in an investigation or enforcement action by any Governmental
Authority or other legal proceeding with respect to any actual or alleged violations of International Trade Laws or Sanctions, or been
notified in writing of any such pending or threatened actions; and (b) since April 24, 2019, not engaged in any dealings or
transactions, directly or knowingly indirectly, in a Sanctioned Country or with or involving a Sanctioned Person, except as disclosed
in
Section 3.28
of the Company Disclosure Letter. None of the Company nor any director, officer, employee, or agent of the
Company is or has been since April 24, 2019, a Sanctioned Person.
Section 3.29
No
Other Representations or Warranties
. The Company acknowledges that, as of the date hereof, it and its Representatives: (i) have
received access to books and records, facilities, properties, premises, equipment, contracts and other assets of Parent and its Subsidiaries
and the Parent Portfolio Companies which Parent and its Representatives have made available to them, and to the electronic data room
in connection with the transactions contemplated hereby; (ii) have received and may continue to receive from Parent and its Subsidiaries
and their respective Representatives certain estimates, forecasts, projections and other forward-looking information, as well as certain
business plan information, regarding Parent and its Subsidiaries and the Parent Portfolio Companies and their respective businesses and
operations (collectively, “
Parent Forecasts
”); and (iii) have had opportunities to meet with the management of
Parent and to discuss the business and assets of Parent and its Subsidiaries and the Parent Portfolio Companies. The Company acknowledges
and agrees that there are uncertainties inherent in attempting to make Parent Forecasts, and it shall have no claim against Parent, its
Subsidiaries, the Parent External Adviser, the Parent Portfolio Companies or any of their respective Representatives with respect to
any such Parent Forecasts, except to the extent any such Parent Forecast is expressly included in a representation or warranty contained
in
Article IV
or in any certificate delivered pursuant hereto. Except for the representations and warranties contained in
this
Article III
or in any certificate delivered hereunder, neither the Company nor any other Person on behalf of the Company
makes any express or implied representation or warranty with respect to the Company, any of its Subsidiaries, or any Company Portfolio
Company, or with respect to any other information provided to Parent, Acquisition Sub 1 or Acquisition Sub 2 or any of their respective
Representatives in connection with the transactions contemplated hereby, including the accuracy, completeness or timeliness thereof.
Neither the Company nor any other Person will have or be subject to any claim, liability or indemnification obligation to Parent, Acquisition
Sub 1, Acquisition Sub 2 or any other Person resulting from the distribution or failure to distribute to Parent, Acquisition Sub 1, Acquisition
Sub 2, or Parent’s, Acquisition Sub 1’s or Acquisition Sub 2’s use of, any such information, including any information,
documents, projections, estimates, forecasts or other material made available to Parent, Acquisition Sub 1 or Acquisition Sub 2 in the
electronic data room maintained by the Company for purposes of the transactions contemplated hereby or management presentations in expectation
of the transactions contemplated hereby, unless and to the extent any such information is expressly included in a representation or warranty
contained in this
Article III
or in any certificate delivered pursuant hereto. Nothing in this
Section 3.29
shall
limit any claim for Fraud.
28
Article IV
REPRESENTATIONS
AND WARRANTIES OF PARENT, ACQUISITION SUB 1 AND ACQUISITION SUB 2
Except as disclosed in the
Parent SEC Documents filed by Parent prior to the date of this Agreement (but excluding any risk factor disclosures contained under the
heading “Risk Factors
,
” any disclosure of risks included in any “forward-looking statements” disclaimer
or any other statements that are similarly predictive or forward-looking in nature, in each case, other than any specific factual information
contained therein) or as disclosed in the Parent Disclosure Letter, Parent, Acquisition Sub 1 and Acquisition Sub 2 hereby jointly and
severally represent and warrant to the Company as follows:
Section 4.1
Organization
and Qualification
. Each of Parent and its Subsidiaries (including Acquisition Sub 1 and Acquisition Sub 2) (a) is a corporation
or other entity duly organized, validly existing and (to the extent applicable) in good standing under the laws of the jurisdiction of
its incorporation or organization and (b) has the requisite entity power and authority to conduct its business as it is now being
conducted, to own and use its assets in the manner in which its assets are currently used, and to perform its obligations under all Contracts
to which it is a party or by which its assets or properties are bound, except, in the case of this clause (b), where the failure to have
such power and authority has not had and would not reasonably be expected to have, individually or in the aggregate, a Parent Material
Adverse Effect. Each of Parent and its Subsidiaries (including Acquisition Sub 1 and Acquisition Sub 2) is duly qualified or licensed
to do business and is in good standing in each jurisdiction in which the nature of the business conducted by it makes such qualification
or licensing necessary, except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect. Parent has made available to the Company a copy of the Parent Organizational Documents (except to the extent
filed with the Parent SEC Documents filed prior to the date hereof), as currently in effect, and neither Parent, Acquisition Sub 1 nor
Acquisition Sub 2 is in violation of such documents. Parent has duly elected to be regulated as a BDC pursuant to the Investment Company
Act and such election has not been revoked or withdrawn and is in full force and effect.
Section 4.2
Capitalization;
Subsidiaries
.
(a)
The
authorized capital stock of Parent consists of (i) 1,000,000,000 shares of Parent Common Stock, of which 722,194,973 were outstanding
as of the close of business on October 22, 2026 (the “
Parent Capitalization Date
”), and (ii) zero shares
of preferred stock of Parent, par value $0.001 per share, of which zero shares were outstanding as of the Parent Capitalization Date.
Neither Acquisition Sub 1 nor Acquisition Sub 2 has any Subsidiaries or any shares of preferred stock authorized, issued or outstanding.
29
(b)
All
of the issued and outstanding shares of Parent Common Stock have been duly authorized and validly issued and are fully paid, nonassessable
and free of preemptive rights. All of the outstanding shares of Parent Common Stock have been issued in compliance with applicable Law
in all material respects. All of the Parent Common Stock has been sold pursuant to an effective registration statement filed under the
federal securities Laws or an appropriate exemption therefrom and in accordance with the Investment Company Act.
(c)
All
of the issued and outstanding shares of capital stock or other equity or voting securities or interests of each of Acquisition Sub 1
or Acquisition Sub 2 are owned by Parent, directly or indirectly, free and clear of any Liens, and all of such shares, securities or
interests are duly authorized and validly issued and are fully paid, nonassessable (in respect of corporate entities) and free of preemptive
rights. Neither Acquisition Sub 1 nor Acquisition Sub 2 has or is bound by any outstanding rights calling for the purchase or issuance
of, or the payment of any amount based on, any shares of capital stock or any other equity or voting securities or interests of such
Subsidiary or any securities representing the right to purchase or otherwise receive any shares of capital stock or other equity or voting
securities or interests of such Subsidiary.
(d)
As
of the date of this Agreement, there are no outstanding, authorized, promised or committed (i) options, warrants, calls, subscriptions
or other rights, convertible securities, agreements or commitments of any character to which Parent, Acquisition Sub 1 or Acquisition
Sub 2 is a party obligating Parent, Acquisition Sub 1 or Acquisition Sub 2 to issue, transfer or sell any shares of capital stock or
other equity or voting securities or interest in Parent, Acquisition Sub 1 or Acquisition Sub 2 or securities convertible into or exchangeable
for such shares or equity or voting securities or interests, (ii) contractual obligations of Parent, Acquisition Sub 1 or Acquisition
Sub 2 to repurchase, redeem or otherwise acquire any capital stock or other equity or voting securities or interests of Parent,
Acquisition Sub 1 or Acquisition Sub 2 or any securities representing the right to purchase or otherwise receive any capital stock
or other equity or voting securities or interests of Parent, Acquisition Sub 1 or Acquisition Sub 2, (iii) appreciation rights,
phantom equity or similar rights with respect to, or valued in whole or in part in reference to, Parent, Acquisition Sub 1 or Acquisition
Sub 2 or (iv) voting trusts, stockholder agreements or other similar agreements or understandings to which Parent, Acquisition
Sub 1 or Acquisition Sub 2 is a party with respect to the ownership, voting or transfer of the capital stock or other equity or
voting securities or interests of Parent, Acquisition Sub 1 or Acquisition Sub 2. Neither the Parent External Adviser, the administrator
of Parent nor any of their respective Affiliates has any right to receive, and no amounts are payable by Parent or any of its Subsidiaries
to any such Person that are determined in whole or in part by reference to the value, appreciation or other performance of, any capital
stock or other equity or voting securities or interests of Parent, Acquisition Sub 1 or Acquisition Sub 2, other than the fees payable
under the Parent Investment Advisory Agreement and the Parent Administration Agreement, each as in effect on the date of this Agreement.
30
Section 4.3
Authority
Relative to Agreement
.
(a)
Each
of Parent, Acquisition Sub 1 and Acquisition Sub 2 has all necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance
of this Agreement by Parent, Acquisition Sub 1 and Acquisition Sub 2, and the consummation by Parent, Acquisition Sub 1 and Acquisition
Sub 2 of the transactions contemplated hereby, have been duly and validly authorized by all necessary corporate or limited liability
company action by Parent, Acquisition Sub 1 and Acquisition Sub 2, and except for the filing of the First Merger Filing and the Second
Merger Filings with the SDAT and the Delaware Secretary, as applicable, no other corporate or limited liability company action or proceeding
on the part of Parent, Acquisition Sub 1 or Acquisition Sub 2 is necessary to authorize the execution, delivery and performance of this
Agreement by Parent, Acquisition Sub 1 and Acquisition Sub 2 and the consummation by Parent, Acquisition Sub 1 and Acquisition Sub 2
of the transactions contemplated hereby. This Agreement has been duly executed and delivered by Parent, Acquisition Sub 1 and Acquisition
Sub 2 and, assuming due authorization, execution and delivery of this Agreement by the other parties hereto, constitutes a legal, valid
and binding obligation of each of Parent, Acquisition Sub 1 and Acquisition Sub 2, enforceable against each of Parent, Acquisition Sub
1 and Acquisition Sub 2 in accordance with its terms, except that such enforcement may be subject to the Bankruptcy and Equity Exception.
(b)
The
Parent Board and the board of directors or similar governing body of Acquisition Sub 1 and Acquisition Sub 2 have, by resolutions adopted
by directors or similar governing members at a meeting duly called and held or by written consent, unanimously (i) determined that
this Agreement and the transactions contemplated hereby are advisable and in the best interests of Parent, Acquisition Sub 1 and Acquisition
Sub 2, as applicable, and (ii) approved and adopted this Agreement and the transactions contemplated hereby (including the
Mergers). Parent, acting in its capacity as the sole stockholder of Acquisition Sub 1 and sole member of Acquisition Sub 2, has approved
and adopted this Agreement and the transactions contemplated hereby (including the Mergers).
(c)
Neither
the execution and delivery of this Agreement by Parent, Acquisition Sub 1 and Acquisition Sub 2 nor the consummation by Parent, Acquisition
Sub 1 and Acquisition Sub 2 of the transactions contemplated hereby will (i) violate any provision of the Parent Organizational
Documents or the certificate of incorporation or bylaws (or equivalent organizational documents) of Acquisition Sub 1 or Acquisition
Sub 2, (ii) assuming that the Consents, registrations, declarations, filings and notices referred to in
Section 4.4
have been obtained or made, any applicable waiting periods referred to therein have expired and any condition precedent to any such Consent
has been satisfied, conflict with or violate any Law applicable to Parent or any of its Subsidiaries or by which any property or asset
of Parent or any of its Subsidiaries is bound or affected, or (iii) require notice to or the consent of the counterparty under,
result in any breach of, or constitute a default (with or without notice or lapse of time) under, or give rise to any right of termination,
acceleration or cancellation of any Contract to which Parent or any of its Subsidiaries is a party or by which any of their properties
or assets are bound, or result in the creation of a Lien, upon any of the property or assets of Parent or any of its Subsidiaries, other
than, in the case of this
clause (iii)
, as has not had and would not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect.
31
Section 4.4
No
Conflict; Required Filings and Consents
. No Consent of, or registration, declaration or filing with, or notice to, any
Governmental Authority is required to be obtained or made by or with respect to Parent or any of its Subsidiaries in connection with
the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby, other than
(a) applicable requirements of and filings with the SEC under the Securities Act, the Exchange Act and the Investment Company
Act, (b) the filing of the First Merger Filing and the Second Merger Filings with the SDAT and the Delaware Secretary, as
applicable, (c) filings in respect of Taxes, (d) compliance with applicable rules and regulations of NASDAQ,
(e) such other items required solely by reason of the participation of the Company in the transactions contemplated hereby,
(f) compliance with and filings or notifications under applicable Antitrust Laws and (g) such other Consents,
registrations, declarations, filings or notices the failure of which to be obtained or made has not had and would not reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse Effect.
Section 4.5
Permits;
Compliance with Laws
.
(a)
Each
of Parent and each of its Subsidiaries is in compliance, and has been operated in compliance, in all material respects, with all Applicable
Laws, including, if and to the extent applicable, the Investment Company Act, the Investment Advisers Act, the Securities Act, the Exchange
Act and applicable rules and regulations of NASDAQ, other than as has not had and would not reasonably be expected to have, individually
or in the aggregate, a Parent Material Adverse Effect. Neither Parent nor any of its Subsidiaries has received any written or, to the
Knowledge of Parent, oral notification from a Governmental Authority of any non-compliance with any Applicable Laws, which non-compliance
has had and would reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. Parent has not
received any inquiry, deficiency letter, examination report or comparable communication from the staff of the SEC, other than routine
comments that are publicly available via EDGAR as of the date hereof, whether or not such communication relates to non-compliance with
any Applicable Laws.
(b)
Each
of Parent and each of its Subsidiaries is in compliance, and since it commenced operations, has complied with its investment policies
and restrictions and portfolio valuation methods, if any, as such policies and restrictions have been set forth in reports that it or
its Affiliates have filed with the SEC under the Exchange Act, the Securities Act, the Investment Company Act, the Investment Advisers
Act and other Applicable Laws, if any, other than as has not had and would not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect. Parent has adopted written valuation policies and procedures meeting the requirements of
Rule 2a-5 under the Investment Company Act and complied in all material respects with such written valuation policies and procedures
and Parent’s Portfolio Companies have been valued in accordance with, such written valuation policies and procedures.
(c)
Neither
Parent nor any of its Subsidiaries is in default or violation of any Law applicable to Parent or any of its Subsidiaries except
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.
(d)
Parent
has written policies and procedures adopted pursuant to Rule 38a-1 under the Investment Company Act that are reasonably designed
to prevent material violations of the “Federal Securities Laws,” as such term is defined in Rule 38a-1(e)(1) under
the Investment Company Act. There have been no “Material Compliance Matters” for Parent, as such term is defined in Rule 38a-1(e)(2) under
the Investment Company Act, other than those that have been reported to the Parent Board and satisfactorily remedied or are in the process
of being remedied.
32
(e)
Parent
and each of its Subsidiaries holds and is in compliance with all Permits required in order to permit Parent and each of its Subsidiaries
to own or lease their properties and assets and to conduct their businesses under and pursuant to all Applicable Laws as presently conducted,
other than as has not had and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.
All such Permits are valid and in full force and effect, except as has not had and would not reasonably be expected to have, individually
or in the aggregate, a Parent Material Adverse Effect. Neither Parent nor any of its Subsidiaries has received any written or, to the
Knowledge of Parent, oral notification from a Governmental Authority of any non-compliance with any such Permits, and no Proceeding is
pending or threatened in writing to suspend, cancel, modify, revoke or materially limit any such Permits, that has had or would reasonably
be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.
(f)
To
the Knowledge of Parent, no “affiliated person” (as defined under the Investment Company Act) of Parent or the Parent External
Adviser has been subject to disqualification to serve in any capacity contemplated by the Investment Company Act for any investment company
(including a BDC) under Sections 9(a) and 9(b) of the Investment Company Act, unless, in each case, such Person has received
exemptive relief from the SEC with respect to any such disqualification. There is no Proceeding pending or, to the Knowledge of Parent,
threatened in writing or orally, that would be reasonably likely to result in any such disqualification. Neither the Parent External
Adviser nor, to the Knowledge of Parent, any “person associated with” (as defined in the Investment Advisers Act) the Parent
External Adviser is disqualified or ineligible pursuant to Sections 203(e) or 203(f) of the Investment Advisers Act to serve
as an investment adviser or as a “person associated with” an investment adviser, and no Proceeding is pending or, to the
Knowledge of Parent, threatened in writing that would result in any such disqualification or ineligibility. The Parent External Adviser
is, and at all times required by the Investment Advisers Act has been, duly registered as an investment adviser under the Investment
Advisers Act, and is duly registered, licensed or qualified as an investment adviser in each other jurisdiction where the conduct of
its business requires such registration, licensing or qualification.
Section 4.6
Parent
SEC Documents; Financial Statements; Enforcement Actions
.
(a)
Since
January 1, 2023, Parent has filed with the SEC all forms, documents and reports required to be filed or furnished prior to the date
hereof by it with the SEC (such forms, documents and reports so filed with the SEC by Parent since such date, including any amendments
or supplements thereto, the “
Parent SEC Documents
”). As of their respective dates, or, if amended or supplemented,
as of the date of the last such amendment or supplement, the Parent SEC Documents complied in all material respects with the applicable
requirements of the Securities Act, the Exchange Act or the Investment Company Act, the Investment Advisers Act, as the case may be,
and the applicable rules and regulations promulgated thereunder, and none of the Parent SEC Documents at the time it was filed (or,
if amended or supplemented, as of the date of such amendment or supplement) contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under
which they were made, or are to be made, not misleading (or, in the case of a Parent SEC Document that is a registration statement, as
amended or supplemented, if applicable, filed pursuant to the Securities Act, as of the date such registration statement or amendment
or supplement became effective, contained any untrue statement of a material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements, in light of the circumstances under which they were made, therein not misleading).
33
(b)
The
consolidated financial statements (including all related notes) of Parent included in the Parent SEC Documents (i) fairly present
in all material respects the consolidated financial position of Parent and its Subsidiaries as at the respective dates thereof, and their
consolidated statements of operations and consolidated statements of cash flows for the respective periods then ended (subject, in the
case of unaudited interim statements, to normal year-end audit adjustments, to the absence of notes and to any other adjustments described
therein, including in any notes thereto), (ii) were prepared in conformity with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated therein or in the notes thereto), (iii) were prepared from, and are in accordance with,
the books and records of Parent and its Subsidiaries and (iv) comply as to form, as of their respective dates of filing with the
SEC, in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with
respect thereto.
(c)
None
of Parent or any of its Subsidiaries is subject to any cease-and-desist or other enforcement action by, or is a party to any Contract,
consent agreement or memorandum of understanding with, or is a party to any commitment letter or similar undertaking to, or is subject
to any Order by, or has adopted any policies, procedures or board resolutions at the request of, any Governmental Authority that currently
restrict the conduct of its business, or that relate to its capital adequacy, its ability to pay dividends, its credit, risk management
or compliance policies, its internal controls, its management or its business, other than those of general application that apply to
similarly situated BDCs or their Subsidiaries, except as has not had and would not reasonably be expected to have, individually or in
the aggregate, a Parent Material Adverse Effect, nor has Parent or any of its Subsidiaries been advised in writing or, to the Knowledge
of Parent, verbally by any Governmental Authority that it is considering issuing, initiating, ordering or requesting any of the foregoing.
Section 4.7
Information
Supplied
. None of the information supplied or to be supplied by or on behalf of Parent or any of its Subsidiaries expressly for inclusion
or incorporation by reference in (a) the Form N-14 will, at the time the Form N-14 is filed with the SEC or at any time
it is amended or supplemented or at the time it becomes effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances
under which they are made, not misleading, and (b) the Proxy Statement will, at the date it or any amendment or supplement is mailed
to stockholders of the Company and at the time of the Company Stockholders’ Meeting, contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances
in which they are made, not misleading (except that no representation or warranty is made by Parent, Acquisition Sub 1 or Acquisition
Sub 2 regarding such portions thereof that relate expressly to the Company or any of its Subsidiaries, or to statements made therein
based on information supplied by or on behalf of the Company for inclusion or incorporation by reference therein).
Section 4.8
Disclosure
Controls and Procedures
.
Parent and its Subsidiaries
maintain “disclosure controls and procedures” and “internal control over financial reporting” (as such terms
are defined in paragraphs (e) and (f), respectively, of Rule 13a-15 under the Exchange Act) as required by Rule 13a-15
under the Exchange Act.
34
Section 4.9
Absence
of Certain Changes or Events
. Since December 31, 2025 through the date of this Agreement, there have not occurred any facts,
circumstances, events, changes, occurrences or effects that would have had, or would reasonably be expected to have, individually or
in the aggregate, a Parent Material Adverse Effect.
Section 4.10
No
Undisclosed Liabilities
. Except (a) as reserved against on the Parent Balance Sheet included in the Parent SEC Documents, (b) for
liabilities or obligations incurred in the ordinary course of business since the Parent Balance Sheet Date, (c) as expressly contemplated
by this Agreement, (d) for liabilities and obligations to the extent discharged or paid prior to the date of this Agreement and
(e) for liabilities or obligations that have not had and would not reasonably be expected to have, individually or in the aggregate,
a Parent Material Adverse Effect, Parent and its Subsidiaries have no liabilities or obligations of any nature, whether or not accrued,
contingent or otherwise.
Section 4.11
Litigation
.
There is no Proceeding pending or, to the Knowledge of Parent, threatened against Parent or any of its Subsidiaries that has had or would
reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect, nor is there any judgment or order
of any Governmental Authority outstanding against, or, to the Knowledge of Parent, investigation by any Governmental Authority involving
Parent or any of its Subsidiaries that has had or would reasonably be expected to have, individually or in the aggregate, a Parent Material
Adverse Effect.
Section 4.12
Taxes
.
Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect:
(a)
Parent
and each of its Subsidiaries have (i) timely filed (taking into account any extension of time within which to file) all Tax Returns
required to be filed by any of them and all such filed Tax Returns (taking into account all amendments thereto) are complete and accurate
and (ii) paid all Taxes due and payable (whether or not shown as due on such Tax Returns), except for Taxes contested in good faith
or for which adequate reserves have been established on the financial statements in accordance with GAAP.
(b)
There
are no pending or ongoing audits, examinations, investigations or other Proceedings by any Taxing Authority in respect of Taxes of or
with respect to Parent or any of its Subsidiaries.
(c)
All
Taxes that Parent or any of its Subsidiaries are or were required by Law to withhold or collect have been duly and timely withheld or
collected in all material respects on behalf of its respective employees, independent contractors or other Third Parties, and have been
timely paid to the proper Governmental Authority or other Person or properly set aside in accounts for this purpose.
35
(d)
Neither
Parent nor any of its Subsidiaries has (i) ever been a member of a consolidated, combined or unitary income Tax group (other than
such a group the common parent of which is Parent or any of its Subsidiaries) or (ii) any liability for the Taxes of another Person
(other than Parent and its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or
foreign Law), as a transferee, successor or otherwise as a matter of Law.
(e)
Neither
Parent nor any of its Subsidiaries is a party to or is bound by any Tax sharing, Tax allocation or Tax indemnification agreement or arrangement
(other than such an agreement or arrangement exclusively between or among Parent and its Subsidiaries or customary commercial Contracts,
the principal subject matter of which is not Taxes) that will not be terminated on or before the Closing Date without any future liability
to Parent or its Subsidiaries.
(f)
There
are no Liens for Taxes on any of the assets of Parent or any of its Subsidiaries other than Permitted Liens.
(g)
Neither
Parent nor any of its Subsidiaries has participated in or been a party to a transaction that, as of the date of this Agreement, constitutes
a “listed transaction” that is required to be reported to the IRS pursuant to Section 6011 of the Code and applicable
Treasury Regulations thereunder.
(h)
Acquisition
Sub 1 is a newly formed corporation created for the purpose of undertaking the First Merger and is wholly owned directly by Parent. Acquisition
Sub 2 is a newly formed limited liability company created for the purpose of undertaking the Second Merger and is treated as a disregarded
entity (i.e., as disregarded from Parent) for United States federal income Tax purposes. Prior to the Effective Time, each of Acquisition
Sub 1 and Acquisition Sub 2 will not have acquired any assets or engaged in any other business activities and will have incurred no liabilities
or obligations other than as contemplated by this Agreement.
(i)
Parent
has made a valid election under Part I of Subchapter M of Subtitle A, Chapter 1, of the Code to be taxed as a RIC. Parent has qualified
as a RIC with respect to its first taxable year ending on December 31,
2004
, and with respect
to each taxable year thereafter and expects to continue to qualify for the taxable year that includes the Second Effective Time. No challenge
to Parent’s status as a RIC is pending or has been threatened in writing. For each taxable year of Parent ending on or before the
Effective Time, Parent has satisfied or will satisfy the distribution requirements imposed on a RIC under Section 852 of the Code
and all dividends (as defined in Section 316 of the Code) paid by Parent in any taxable year for which the applicable statute of
limitations remains open shall have been deductible pursuant to the dividends paid deduction under Section 562 of the Code. Since
the taxable year ending on December 31, 2015, Parent has no earnings or profits accumulated with respect to any taxable year in
which the provisions of Subchapter M of Subtitle A, Chapter 1, of the Code did not apply.
(j)
Within
the past two years, neither Parent nor any of its Subsidiaries has been a “distributing corporation” or a “controlled
corporation” in a distribution of stock which qualified or was intended to qualify under Section 355(a) of the Code.
36
(k)
Parent
does not directly or indirectly hold any asset the disposition of which would be subject to (or to rules similar to) Section 1374
of the Code (or otherwise result in any “built-in gains” Tax under Section 337(d) of the Code and the applicable
Treasury Regulations thereunder).
(l)
Parent
is not aware of any fact or circumstance that could reasonably be expected to prevent the Mergers, taken together, from qualifying for
the Intended Tax Treatment.
Section 4.13
Brokers
.
No investment banker, broker or finder other than Wells Fargo Securities, LLC, the fees and expenses of which will be paid by Parent,
is entitled to any investment banking, brokerage, finder’s or similar fee or commission in connection with this Agreement or the
transactions contemplated hereby based upon arrangements made by or on behalf of Parent or any of its Subsidiaries (including Acquisition
Sub 1 and Acquisition Sub 2) or the Parent Board.
Section 4.14
Investment
Assets
.
(a)
Each of Parent and each of
its Subsidiaries owns all securities, Indebtedness and other financial instruments held by it, free and clear of any material Liens,
except to the extent such securities, Indebtedness or other financial instruments, as applicable, are pledged in the ordinary course
of business consistent with past practice to secure obligations of Parent or any of its Subsidiaries and except for Liens consisting
of restrictions on transfer agreed to in respect of investments entered into in the ordinary course of business.
(b)
Parent
has made available to the Company, prior to the date hereof, a draft of Parent's quarterly report on Form 10-Q for the quarterly
period ended September 30, 2026 (the “Parent Draft 10-Q”). The Parent Draft 10-Q has been prepared in good faith from,
and in accordance with, the books and records of Parent and its Subsidiaries. As of the date hereof, Parent expects that its quarterly
report on Form 10-Q for such period will not differ in any material respect from the Parent Draft 10-Q (except with respect to the
disclosure of the transactions contemplated by this Agreement).
Section 4.15
Takeover
Statutes
. No Takeover Statutes are applicable to this Agreement, the Voting Agreements, the Mergers or the other transactions contemplated
by this Agreement by reason of any action taken or omitted to be taken by Parent, Acquisition Sub 1 or Acquisition Sub 2.
Section 4.16
Anti-Corruption
.
In the past five years, neither Parent, nor any Subsidiary, nor any director, officer, employee, or, to the Knowledge of Parent, agent,
representative, consultant or other Person acting on behalf of Parent or any of its Subsidiaries has, in each case in connection with
the business of Parent, violated any applicable Anti-Corruption Laws in any material respect. Parent, its Subsidiaries and, to the Knowledge
of Parent, their respective Representatives have not in the last five years been the subject of any material allegations or investigations
by a Governmental Authority, litigation or voluntary or directed disclosure regarding any actual, potential or alleged violation of any
Anti-Corruption Law by Parent or any of its Subsidiaries.
Section 4.17
Anti-Money
Laundering Laws
. The operations of Parent and its Subsidiaries are, and have been for the past five years, conducted at all times
in compliance with applicable Anti-Money Laundering Laws in all material respects, and no action, suit or proceeding by or before any
court or Governmental Authority or any arbitrator involving Parent or any of its Subsidiaries with respect to the Anti-Money Laundering
Laws is pending or, to the Knowledge of Parent, threatened. At all times during the past five years, Parent and its Subsidiaries have
maintained and enforced or been subject to policies and procedures reasonably designed to ensure compliance with applicable Anti-Money
Laundering Laws.
37
Section 4.18
Sanctions;
International Trade Laws
. Parent, its directors, officers, employees and, to the Knowledge of Parent, agents acting on its behalf
have, in each case in connection with the business of Parent, since April 24, 2019 with respect to Sanctions and in the last five
years with respect to International Trade Laws, complied with applicable International Trade Laws in all material respects and Sanctions
in all respects; maintained controls and systems reasonably designed to comply with applicable International Trade Laws and Sanctions;
and not received written notice of, disclosed to a Governmental Authority, or, to the Knowledge of Parent, been the subject of any investigation
or enforcement action regarding an actual or alleged violation of International Trade Laws or Sanctions. Neither Parent nor any director,
officer, employee or agent of Parent is or has been since April 24, 2019 a Sanctioned Person.
Section 4.19
Parent
Investment Advisory Agreement
. The Parent Investment Advisory Agreement has been duly approved, continued and at all times has been
in compliance in all material respects with Section 15 of the Investment Company Act (to the extent applicable) and any exemptive,
no-action or interpretive guidance issued by the SEC or its staff. Neither Parent nor the Parent External Adviser is in default under
the Parent Investment Advisory Agreement. The Parent Investment Advisory Agreement is a valid and binding obligation of Parent and the
Parent External Adviser, except that such enforcement may be subject to the Bankruptcy and Equity Exception.
Section 4.20
Beneficial
Ownership
.
Except as set forth on
Section 4.20
of the Parent Disclosure Letter, none of Parent, Acquisition Sub 1, Acquisition Sub 2 or any of their respective Subsidiaries beneficially
owns any shares of Company Common Stock or any securities convertible into or exchangeable for Company Common Stock.
Section 4.21
No
Other Representations or Warranties
.
Each
of Parent, Acquisition Sub 1 and Acquisition Sub 2 acknowledges that, as of the date hereof, they and their Representatives: (i) have
received access to books and records, facilities, properties, premises, equipment, contracts and other assets of the Company and its
Subsidiaries and the Company Portfolio Companies which the Company and its Representatives have made available to them, and to the electronic
data room in connection with the transactions contemplated hereby; (ii) have received and may continue to receive from the Company
and its Subsidiaries and their respective Representatives certain estimates, forecasts, projections and other forward-looking information,
as well as certain business plan information, regarding the Company and its Subsidiaries and the Company Portfolio Companies and their
respective businesses and operations (collectively, “
Forecasts
”); and (iii) have had opportunities to meet with
the management of the Company and to discuss the business and assets of the Company and its Subsidiaries and the Company Portfolio Companies.
Parent, Acquisition Sub 1 and Acquisition Sub 2 acknowledge and agree that there are uncertainties inherent in attempting to make Forecasts,
and they shall have no claim against the Company, its Subsidiaries, the Company External Adviser, the Company Portfolio Companies or
any of their respective Representatives with respect to any such Forecasts, except to the extent any such Forecast is expressly included
in a representation or warranty contained in
Article III
or in any certificate delivered pursuant hereto. Except for the
representations and warranties contained in this
Article IV
or in any certificate delivered hereunder, none of Parent, Acquisition
Sub 1 or Acquisition Sub 2, nor any other Person on behalf of Parent, Acquisition Sub 1 or Acquisition Sub 2, makes any express or implied
representation or warranty with respect to Parent, Acquisition Sub 1 or Acquisition Sub 2, any of their respective Subsidiaries, or any
Parent Portfolio Company, or with respect to any other information provided to the Company or its Representatives in connection with
the transactions contemplated hereby, including the accuracy, completeness or timeliness thereof. None of Parent, Acquisition Sub 1 or
Acquisition Sub 2, nor any other Person, will have or be subject to any claim, liability or indemnification obligation to the Company
or any other Person resulting from the distribution or failure to distribute to the Company, or the Company’s use of, any such
information, including any information, documents, projections, estimates, forecasts or other material made available to the Company
in the electronic data room maintained by Parent for purposes of the transactions contemplated hereby or management presentations in
expectation of the transactions contemplated hereby, unless and to the extent any such information is expressly included in a representation
or warranty contained in this
Article IV
or in any certificate delivered pursuant hereto. Nothing in this
Section 4.21
shall limit any claim for Fraud.
38
Article V
REPRESENTATIONS
AND WARRANTIES OF THE PARENT EXTERNAL ADVISER
Except as disclosed in the
Parent External Adviser Disclosure Letter, the Parent External Adviser hereby represents and warrants to the Company as follows:
Section 5.1
Organization
and Qualification
. The Parent External Adviser (a) is a limited liability company, duly formed, validly existing and (to the
extent applicable) in good standing under the laws of the jurisdiction of its formation and (b) has the requisite limited liability
company power and authority to conduct its business as it is now being conducted, except, in the case of this clause (b), as has
not had and would not reasonably be expected to have, individually or in the aggregate, an Adviser Material Adverse Effect. The Parent
External Adviser is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of the
business conducted by it makes such qualification or licensing necessary, except as has not had and would not reasonably be expected
to have, individually or in the aggregate, an Adviser Material Adverse Effect.
Section 5.2
Authority
Relative to Agreement
.
(a)
The
Parent External Adviser has all necessary limited liability company power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement
by the Parent External Adviser, and the consummation by the Parent External Adviser of the transactions contemplated hereby, have been
duly and validly authorized by all necessary limited liability company action by the Parent External Adviser, and no other limited liability
company action or proceeding on the part of the Parent External Adviser is necessary to authorize the execution, delivery and performance
of this Agreement by the Parent External Adviser and the consummation by the Parent External Adviser of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by the Parent External Adviser and, assuming due authorization, execution
and delivery of this Agreement by the other parties hereto, constitutes a legal, valid and binding obligation of the Parent External
Adviser, enforceable against the Parent External Adviser in accordance with its terms, except that such enforcement may be subject to
the Bankruptcy and Equity Exception.
39
(b)
Neither
the execution and delivery of this Agreement by the Parent External Adviser nor the consummation by the Parent External Adviser of the
transactions contemplated hereby will (i) violate any provision of the limited liability company agreement of Ares Capital Management
LLC, dated as of April 20, 2004, (ii) assuming that the Consents, registrations, declarations, filings and notices referred
to in
Section 5.3
have been obtained or made, any applicable waiting periods referred to therein have expired and any condition
precedent to any such Consent has been satisfied, conflict with or violate any Law applicable to the Parent External Adviser or by which
any property or asset of the Parent External Adviser is bound or affected or (iii) result in any breach of, or constitute a default
(with or without notice or lapse of time, or both) under, or give rise to any right of termination, acceleration or cancellation of any
Contract to which the Parent External Adviser is a party or by which its properties or assets are bound, or result in the creation of
a Lien, other than any Permitted Lien, upon any of the material property or assets of the Parent External Adviser other than, in the
case of
clauses (ii)
and
(iii)
, any such conflict, violation, breach, default, termination, acceleration, cancellation
or Lien that would not have an Adviser Material Adverse Effect.
Section 5.3
No
Conflict; Required Filings and Consents
. No Consent of, or registration, declaration or filing with, or notice to, any Governmental
Authority is required to be obtained or made by or with respect to the Parent External Adviser in connection with the execution, delivery
and performance of this Agreement or the consummation of the transactions contemplated hereby, other than (a) applicable requirements
of and filings with the SEC under the Securities Act, Exchange Act and the Investment Company Act, (b) filings in respect to Taxes,
(c) compliance with applicable rules and regulations of NASDAQ, (d) such other items required solely by reason of the
participation of the Company, Parent and their respective Subsidiaries in the transactions contemplated hereby, (e) compliance and
filings or notifications under Antitrust Laws and (f) such other Consents, registrations, declarations, filings or notices the failure
of which to be obtained or made would not reasonably be expected to have an Adviser Material Adverse Effect. The Parent External Adviser
has not received any inquiry, deficiency letter, examination report or comparable communication from the staff of the SEC applicable
to Parent, other than routine comments that are publicly available via EDGAR as of the date hereof, whether or not such communication
relates to non-compliance with any Applicable Laws.
Section 5.4
Sufficient
Funds
. The Parent External Adviser will have on the Closing Date sufficient funds to make the payment of the Cash Consideration contemplated
by
Article II
.
Section 5.5
Litigation
.
There is no Proceeding pending or, to the Knowledge of Parent External Adviser, threatened against the Parent External Adviser that would
reasonably be expected to have an Adviser Material Adverse Effect, nor is there any judgment of any Governmental Authority outstanding
against, or, to the Knowledge of Parent External Adviser, investigation by any Governmental Authority involving, the Parent External
Adviser that would reasonably be expected to have an Adviser Material Adverse Effect.
Section 5.6
Information
Supplied
. None of the information supplied or to be supplied by or on behalf of the Parent External Adviser expressly for inclusion
or incorporation by reference in (a) the Form N-14 will, at the time the Form N-14 is filed with the SEC or at any time
it is amended or supplemented or at the time it becomes effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances
under which they are made, not misleading, and (b) the Proxy Statement will, at the date it or any amendment or supplement is mailed
to stockholders of the Company and at the time of the Company Stockholders’ Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances
under which they are made, not misleading, except for portions relating expressly to the Company or its Subsidiaries or based on information
supplied by or on behalf of the Company.
40
Section 5.7
No
Other Representations or Warranties
. Except for the representations and warranties contained in this
Article V
or in
any certificate delivered hereunder, neither the Parent External Adviser nor any other Person on its behalf makes any express or implied
representation or warranty with respect to the Parent External Adviser, any of its Subsidiaries or (except for the representations and
warranties expressly set forth in
Article IV
or in any certificate delivered thereunder) any investment fund advised by it
or them, or with respect to any other information provided to the Company or its Representatives in connection with the transactions
contemplated hereby, including the accuracy, completeness or timeliness thereof. Neither the Parent External Adviser nor any other Person
will have or be subject to any claim, liability or indemnification obligation to the Company or any other Person resulting from the distribution
or failure to distribute to the Company, or the Company’s use of, any such information, including any information, documents, projections,
estimates, forecasts or other material made available to the Company in the electronic data room maintained by Parent for purposes of
the transactions contemplated hereby or management presentations in expectation of the transactions contemplated hereby, unless and to
the extent any such information is expressly included in a representation or warranty contained in this
Article V
or in any
certificate delivered pursuant hereto. Nothing in this
Section 5.7
shall limit any claim for Fraud.
Article VI
COVENANTS
AND AGREEMENTS
Section 6.1
Conduct
of Business by the Company Pending the Mergers
. The Company covenants and agrees that, between the date of this Agreement and the
earlier of the Effective Time and the date, if any, on which this Agreement is terminated pursuant to
Section 8.1
(the “
Interim
Period
”), except (a) as may be required by Law, (b) with the prior written consent of Parent (which consent shall
not be unreasonably withheld, delayed or conditioned, and which consent may be delivered by electronic mail), (c) as may be expressly
contemplated pursuant to this Agreement or (d) as set forth in
Section 6.1
of the Company Disclosure Letter: (x) the
Company shall, and shall cause its Subsidiaries to, use reasonable best efforts to conduct the business of the Company and its Subsidiaries,
as applicable, in the ordinary course of business and in a manner consistent with past practice in all material respects and use reasonable
best efforts to preserve intact its business organization, maintain in effect all material licenses and permits required to carry on
its business, maintain in effect any exemptive orders or exemptive relief which it has received from the SEC and which are currently
in effect and preserve its material business relationships (provided that (1) no action by the Company or its Subsidiaries with
respect to any of the matters specifically addressed by any other provision of this
Section 6.1
will be deemed a breach of
this clause (x) unless such action would constitute a breach of one or more of such other provisions and (2) the failure by
the Company or any of its Subsidiaries to take any action prohibited by clauses (a) through (t) below will not be deemed to
be a breach of this clause (x)), and (y) the Company shall not, and shall cause its Subsidiaries to not:
(a)
amend
or otherwise change the Company’s Articles or the Company’s Bylaws (or, other than ministerial changes, such equivalent organizational
or governing documents of any of its Subsidiaries);
41
(b)
except
for transactions solely among the Company’s wholly-owned Subsidiaries, split, combine, reclassify, redeem, repurchase or otherwise
acquire or amend the terms of any capital stock or other equity interests or rights of the Company or any of its Subsidiaries;
(c)
except
for transactions solely among the Company’s wholly-owned Subsidiaries, issue, sell, pledge, dispose, encumber, subject to any Lien
or grant any (i) shares of the Company’s or its Subsidiaries’ capital stock or other equity or voting interests or securities
(other than issuances of shares of Company Common Stock pursuant to the Company’s dividend reinvestment plan as in effect on the
date hereof), (ii) options, warrants, convertible securities or other rights of any kind to acquire any shares of the Company’s
or its Subsidiaries’ capital stock or other equity or voting interests or securities or (iii) appreciation rights, phantom
equity or similar rights with respect to, or valued in whole or in part in reference to, the Company, any of its Subsidiaries or any
of their respective capital stock or other equity or voting interests or securities;
(d)
(i) declare,
set aside, authorize, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to
the Company’s or any of its Subsidiaries’ capital stock or other equity interests, other than (A) dividends and other
distributions paid by any wholly-owned Subsidiary of the Company to the Company or any of its wholly-owned Subsidiaries, (B) regular
quarterly cash distributions payable by the Company on a quarterly basis consistent with past practices (including as to timing) and
the Company’s investment objectives and policies as publicly disclosed as of the date hereof (
provided
that such dividend
shall (i) be determined by the Company Board in good faith such that it does not exceed an amount equal to the sum of (a) the
Company’s net investment income generated in the applicable quarter
plus
(b) for any quarter commencing with the Company’s
first quarter of 2027, any other of the Company’s net investment income generated in the immediately preceding quarter that had
not previously been distributed by the Company and (ii) not exceed a maximum amount of $0.31 per share of Company Common Stock)
(the dividends contemplated by this clause (B), subject to the foregoing proviso, “
Quarterly Dividends
”), or (C) the
authorization and payment of any Tax Dividend or distribution necessary for the Company to maintain its qualification as a RIC or avoid
any entity-level Tax, in each case as reasonably determined by the Company after prior consultation in good faith with Parent, or (ii) purchase,
redeem or otherwise acquire shares of capital stock or other equity or voting interests or securities of the Company or its Subsidiaries
(other than any wholly-owned Subsidiaries) or any options, warrants, or rights to acquire any such shares or other equity or voting interests
or securities;
(e)
directly
or indirectly acquire or dispose of (including by merger, consolidation or acquisition or disposition of equity or assets (excluding
Intellectual Property Rights)), or make any loans, advances, capital contributions or other equity investments in or to, any Person,
including any corporation, partnership, limited liability company, other business organization or any division or assets (excluding Intellectual
Property Rights), securities or interests thereof, except for any such acquisitions, dispositions, loans, advances, capital contributions
or other equity investments:
(i)
made
in respect of any merger, consolidation or business combination among the Company’s wholly owned Subsidiaries otherwise permitted
hereunder;
42
(ii)
resulting
from the conversion of debt in any existing Company Portfolio Company (as of the date hereof) to any equity-like instrument;
(iii)
dispositions
(A) of investments, securities or interests of, or in, Company Portfolio Companies in excess of 98% of the value ascribed to such
investment, security or interest in the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 2026,
and not in excess of $5,000,000 in the aggregate or (B) made pursuant to a Pending Sale Agreement, on the terms and conditions set
forth therein as of the date of this Agreement;
(iv)
acquisitions
made pursuant to a Pending Acquisition Agreement, on the terms and conditions set forth therein as of the date of this Agreement;
(v)
for
compliance with unfunded commitment obligations with respect to any Company Portfolio Company investments (whether in the form of equity
investments, loans, or similar obligations that would be reflected in the schedule of investments included in the Company’s quarterly
or annual reports) listed in
Section 6.1(e)(v)
of the Company Disclosure Letter;
(vi)
investments
in an existing Company Portfolio Company (as of the date hereof) at fair market value in the ordinary course of business consistent with
past practice (including such actions taken in coordination with or at the direction of any agent, lender group or other creditors) that
do not exceed $5,000,000 in the aggregate; or
(vii)
in
any case where the Company or the Company Portfolio Company investment, loan or similar obligation is subject to a compulsory drag-along,
call option, prepayment option or redemption, or similar compulsory contractual obligation exercised by a Third Party (and not the Company
or any of its Affiliates) to sell, have redeemed or paid off, or otherwise dispose of, any Company Portfolio Company investment pursuant
to the contractual terms pertaining to such Company Portfolio Company investment, loan or similar obligation;
(f)
revoke,
withdraw or take any action, or knowingly fail to take any action, that would reasonably be expected to result in the revocation or withdrawal
of the Company’s election to be regulated as a BDC under the Investment Company Act;
(g)
amend,
modify, terminate, waive or grant consent under, or enter into any investment advisory agreement, administration agreement or similar
arrangements to which the Company or any of its Subsidiaries is a party, other than the renewal or continuance of any such agreement
or arrangement on substantially the same terms as in effect on the date of this Agreement and which are terminable at any time without
penalty;
(h)
(i) make
or change any income or other material Tax election other than in the ordinary course of business, (ii) make any change to any material
method of Tax accounting other than in the ordinary course of business, (iii) amend any income or other material Tax Return other
than in the ordinary course of business consistent with past practice and the Company’s investment objectives and policies, or
(iv) agree to any extension or waiver of the statute of limitations with respect to a material amount of Tax;
43
(i)
amend,
enter into, terminate or waive any material rights under, any Company Material Contract, any Company Lease, any Pending Sale Agreement
or any material agreement underlying any Company Portfolio Company investment held by the Company, in each case, other than any Company
Material Contract or Company Lease (A) in the ordinary course of business consistent with past practice, (B) which would not
be materially adverse to the Company or its Subsidiaries and (C) which does not relate to an action otherwise restricted by this
Section 6.1
);
(j)
(i) incur,
assume, guarantee or otherwise become liable for any Indebtedness (other than (A) any draw-downs with respect to the Company Credit
Agreement undertaken in the ordinary course of business consistent with past practice and that do not cause the asset coverage ratio
(as calculated pursuant to the Investment Company Act) to fall below 150% immediately after such borrowing, and (B) obligations
to fund commitments to existing Company Portfolio Companies (as of the date hereof) entered into in the ordinary course of business consistent
with past practice), (ii) pay, discharge or satisfy any Indebtedness that has a prepayment cost, “make whole” amount,
prepayment penalty or similar obligation (other than (A) any payment, discharge or satisfaction required pursuant to the terms of
the Company Credit Agreement or the Company Indenture, in each case as in effect as of the date of this Agreement, (B) Indebtedness
incurred by the Company or its wholly owned Subsidiaries and owed solely to the Company or any of its wholly owned Subsidiaries), (iii) cancel
any Indebtedness that is material (individually or in the aggregate) (other than (A) in connection with restructuring of investments
in Company Portfolio Companies in the ordinary course of business consistent with past practice and (B) Indebtedness incurred by
the Company or its wholly owned Subsidiaries and owed solely to the Company or its wholly owned Subsidiaries) or (iv) waive or amend
any claims or rights of substantial value;
(k)
waive
material benefits of, or agree to modify in any material manner, any confidentiality, standstill or similar agreement to which the Company
or any of its Subsidiaries is a party (other than in the ordinary course of business consistent with past practice);
(l)
make
any pledge of any of its material assets or permit any of its material assets to become subject to any Liens (except for Permitted Liens);
(m)
commence
any Proceedings except with respect to de minimis routine matters in the ordinary course of business and consistent with past practice,
or settle any Proceedings other than settlements that result solely in monetary obligations involving payment by the Company or any of
its Subsidiaries of (i) the amounts specifically reserved in accordance with GAAP with respect to such Proceeding or claim on the
Company’s consolidated financial statements as of the Company Balance Sheet Date, (ii) amounts to be paid from insurance proceeds
for the purpose of paying such settlements, (iii) amounts not greater than $1,000,000 in the aggregate or (iv) amounts held
as collateral as agent for any Company Portfolio Companies or on behalf of Third Party lenders;
(n)
make
any material change to its methods of accounting, except as required by GAAP (or any interpretation thereof), Regulation S-X of the Exchange
Act or a Governmental Authority or quasi-Governmental Authority (including the Financial Accounting Standards Board or any similar organization),
or as otherwise required by Applicable Law;
44
(o)
enter
into a new line of business outside of the Company’s investment objective as described in the Company SEC Documents as of the date
hereof (provided, that the foregoing shall not apply in any way to any Company Portfolio Company);
(p)
(i) increase
the compensation or benefits payable or to become payable to any of its directors, officers or individual independent contractors; (ii) establish,
adopt, enter into, amend, terminate or fund any collective bargaining agreement or employee benefit plan, program or agreement for the
benefit of any of its officers, directors or individual independent contractors (including any equity or equity-based plan, program or
agreement); (iii) enter into any severance, change of control, retention or transaction bonus agreement with any of its officers,
directors or individual independent contractors, or otherwise become obligated to make any severance, change of control, retention, transaction
bonus or similar payment to any Person in connection with the transactions contemplated hereby; (iv) hire any employee or individual
independent contractor; (v) consent to, approve or authorize any increase in the allocable portion of compensation, overhead or
other expenses reimbursable to the Company External Adviser, the Company Administrator or any of their respective Affiliates under the
Company Investment Advisory Agreement, the Company Administration Agreement or any other arrangement between the Company or any of its
Subsidiaries, on the one hand, and the Company External Adviser, the Company Administrator or any of their respective Affiliates, on
the other hand, other than in the ordinary course of business consistent with past practice and the allocation methodology in effect
as of the date of this Agreement; or (vi) reimburse, agree to reimburse or authorize the reimbursement of, any transaction bonus,
deal bonus, retention payment, change of control payment or other compensation or payment that is contingent on, or related to, the execution
of this Agreement or the consummation of the transactions contemplated hereby;
(q)
adopt
a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company or any
of its Subsidiaries;
(r)
cancel
any material insurance policies, fail to renew any material insurance policies upon expiration on substantially the same terms as those
in place on the date of this Agreement, to the extent insurance policies on such terms are available on commercially reasonable terms,
or maintain insurance at less than current levels or otherwise in a manner inconsistent with past practice;
(s)
sell,
transfer, license, assign, cancel, permit to lapse, fail to maintain or otherwise dispose of any Intellectual Property Rights material
to the businesses of the Company or any of its Subsidiaries, except for (i) non-exclusive licenses granted in the ordinary course
of business and (ii) expirations of Company Registered Intellectual Property at the end of its non-renewable statutory term; or
(t)
enter
into any agreement or otherwise commit to do or approve or authorize any of the foregoing.
45
Section 6.2
Conduct
of Business by Parent Pending the Mergers
.
Parent covenants
and agrees that during the Interim Period, except (I) as may be required by Law, (II) with the prior written consent of the
Company (which consent shall not be unreasonably withheld, delayed or conditioned, and which consent may be delivered by electronic mail),
(III) as may be expressly contemplated pursuant to this Agreement or (IV) as set forth in
Section 6.2
of the Parent
Disclosure Letter, Parent shall not, and shall cause its Subsidiaries to not:
(a)
amend
or otherwise change the organizational documents of Parent in a manner that is materially adverse to the holders of Company Common Stock;
(b)
revoke,
withdraw or take any action, or knowingly fail to take any action, that would reasonably be expected to result in the revocation or withdrawal
of Parent’s election to be regulated as a BDC under the Investment Company Act; or
(c)
enter
into any agreement or otherwise commit to do or approve or authorize any of the foregoing.
Section 6.3
Preparation
of the Form N-14 and the Proxy Statement; Company Stockholders’ Meeting
.
(a)
As
promptly as practicable after the execution of this Agreement (and in any event, unless agreed otherwise, within thirty (30) days after
the date hereof) (i) the Company shall prepare (with Parent’s reasonable cooperation) the Proxy Statement and, in consultation
with Parent, shall set potential record dates for the Company Stockholders’ Meeting and commence a broker search pursuant to Section 14a-13
of the Exchange Act in connection therewith and (ii) Parent shall prepare (with the Company’s reasonable cooperation) and
file with the SEC the Form N-14, in which the Proxy Statement will be included, in connection with the registration under the Securities
Act of the Parent Common Stock to be issued in the First Merger. Each of Parent and the Company shall use its reasonable best efforts
to have the Form N-14 declared effective under the Securities Act, and the Proxy Statement cleared of all comments from the SEC,
as promptly as practicable after such filing (including by responding to comments from the SEC). Each of Parent and the Company shall
furnish all information as may be reasonably requested by the other in connection with any such action and the preparation, filing and
distribution of the Form N-14 and the Proxy Statement. As promptly as practicable after the Form N-14 shall have become effective
(and in no event later than five (5) days thereafter), the Company shall use its reasonable best efforts to cause the Proxy Statement
to be mailed to its stockholders. No filing of, or amendment or supplement to, the Form N-14 will be made by Parent, and no filing
of, or amendment or supplement to, the Proxy Statement will be made by the Company, in each case without providing the other party with
a reasonable opportunity to review and comment thereon. If, at any time prior to the Effective Time, any information relating to Parent
(including, in the case of Parent, the Parent External Adviser), the Company or any of their respective Affiliates, directors or officers,
should be discovered by Parent or the Company that should be set forth in an amendment or supplement to either the Form N-14 or
the Proxy Statement so that either such document would not include any misstatement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the circumstances under which they are made, not misleading, the party that
discovers such information shall promptly notify the other parties hereto and an appropriate amendment or supplement describing such
information shall be promptly filed with the SEC and, to the extent required by Applicable Law, disseminated to the stockholders of the
Company. Each party shall notify the other promptly of the time when the Form N-14 has become effective, of the issuance of any
stop order or suspension of the qualification of the Parent Common Stock issuable in connection with the First Merger for offering or
sale in any jurisdiction, or of the receipt of any comments from the SEC or the staff of the SEC and of any request by the SEC or the
staff of the SEC for amendments or supplements to the Proxy Statement or the Form N-14 or for additional information, and shall
supply each other with copies of all correspondence between it or any of its Representatives, on the one hand, and the SEC or its staff,
on the other hand, with respect to the Proxy Statement, the Form N-14 or the First Merger.
46
(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 (and in any event within forty (40) calendar days after such declaration of effectiveness), duly
call, give notice of, convene and hold a meeting of its stockholders (the “
Company Stockholders’ Meeting
”) solely
for the purpose of seeking the Company Stockholder Approval. The record date for the Company Stockholders’ Meeting shall be determined
by the Company with the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned or delayed). The
Company may postpone or adjourn the Company Stockholders’ Meeting to a later date solely (i) for the absence of a quorum,
(ii) 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 obtain the Company Stockholder Approval, whether or not a quorum is present or (iii) if
required by Applicable Law; provided, that in no event shall the Company adjourn or postpone the Company Stockholders’ Meeting
to a date that is later than five (5) Business Days prior to the Termination Date. Notwithstanding the foregoing, the Company shall,
at the request of Parent, adjourn or postpone the Company Stockholders’ Meeting to a date specified by Parent for the absence of
a quorum or if the Company has not received proxies representing a sufficient number of shares of Company Common Stock to obtain the
Company Stockholder Approval; provided, that (A) the Company shall not be required to adjourn or postpone the Company Stockholders’
Meeting pursuant to this sentence on more than two (2) occasions, (B) no such adjournment or postponement shall be to a date
that is more than ten (10) Business Days after the date for which the Company Stockholders’ Meeting was previously scheduled,
and (C) in no event shall the Company be required to adjourn or postpone the Company Stockholders’ Meeting to a date that
is later than five (5) Business Days prior to the Termination Date.
(c)
Subject
to
Section 6.6(c)
, the Company shall, through the Company Board (acting upon the recommendation of the Special Committee),
make the Company Recommendation, and shall include such Company Recommendation in the Proxy Statement. The Company shall use its reasonable
best efforts to lawfully solicit from its stockholders proxies in favor of the approval of the Mergers. The Company shall, upon the request
of Parent, request its proxy solicitor to advise Parent one (1) time each Business Day as to the aggregate tally of proxies received
by the Company with respect to the Company Stockholder Approval. Except as expressly permitted in
Section 6.6
, neither the
Company Board nor any committee thereof shall (i) withhold or withdraw, or modify or qualify in a manner adverse to Parent, Acquisition
Sub 1 or Acquisition Sub 2, or propose publicly to withhold or withdraw, or modify or qualify in a manner adverse to Parent, Acquisition
Sub 1 or Acquisition Sub 2, the Company Recommendation, (ii) fail to include the Company Recommendation in the Proxy Statement,
(iii) approve, authorize, recommend or determine to be advisable, or propose publicly to approve, authorize, recommend or determine
to be advisable, any Competing Proposal or (iv) resolve, agree or propose to take any such actions (each such action in clauses
(i)
,
(ii)
,
(iii)
and
(iv)
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).
47
Section 6.4
Appropriate
Action; Consents; Filings
.
(a)
Subject
to the terms and conditions of this Agreement, 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 Merger set forth in
Article VII
to be satisfied, including using reasonable best efforts to obtain 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 Merger, and the making of all necessary registrations and filings (including filings with Governmental Authorities, if any)
and the taking of all reasonable steps as may be 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. Without limiting the
generality of the foregoing, each of the parties hereto shall promptly make within 10 Business Days under the HSR Act, and thereafter
make any other applications and filings as reasonably determined by Parent are required under other applicable United States or foreign
competition, antitrust, merger control or investment Laws (“
Antitrust Laws
”) with respect to the transactions contemplated
hereby as promptly as practicable, but in no event later than as required by Law. The Company and Parent shall each bear and pay fifty
percent (50%) of all filing fees and other charges for the filings required under any Antitrust Law by the parties to this Agreement.
After consulting with the Company in good faith, Parent will make final decisions with regard to antitrust strategy including with regard
to a so-called “pull and refile” and/or in connection with any Second Request for Information, or similar investigation,
subject to the efforts and remedy obligations in this
Section 6.4
.
(b)
Notwithstanding
anything to the contrary in this Agreement, Parent and its Affiliates shall not be required to effect or undertake (or be required to
agree or consent to), and, without the prior written consent of Parent, the Company, its Subsidiaries and their respective Affiliates
shall not (but, if directed by Parent, the Company shall, and shall cause its Subsidiaries to, subject to and conditioned upon the consummation
of the Closing) effect or undertake (or agree or consent to) any of the following actions: (i) selling, divesting, licensing or
otherwise disposing of, or holding separate, or agreeing to sell, divest, license or otherwise dispose of, any businesses, assets, properties,
investments or rights of the Company, Parent, Acquisition Sub 1, Acquisition Sub 2 or any of their respective Affiliates, (ii) terminating,
amending or assigning any existing relationships or contractual rights or obligations, (iii) granting any right or commercial or
other accommodation to, or entering into any commercial contractual or other commercial relationship with, any Third Party, (iv) imposing,
accepting, undertaking or agreeing to limitations on Parent, Acquisition Sub 1 and Acquisition Sub 2, the Company or any of their respective
Affiliates that would limit how they, or their freedom to, own, retain, conduct or operate all or any portion of their respective businesses,
assets, properties, investments or rights or (v) otherwise offering, proposing, negotiating, agreeing to, committing to or effecting
any other remedy, condition, commitment or undertaking of any kind.
48
(c)
In
connection with this
Section 6.4
, Parent shall lead all communications and strategy for dealing with any Governmental Authority
in connection with any review, challenge or Proceeding under Antitrust Laws. Each of the parties 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,
including (i) promptly informing the other party of such inquiry or Proceeding, (ii) consulting in advance before making any
substantive presentations or submissions to a Governmental Authority, (iii) giving the other party reasonable notice of and the
opportunity to attend and participate in any substantive meetings or discussions with any Governmental Authority, to the extent not prohibited
by such Governmental Authority, and (iv) supplying each other with copies of all substantive correspondence, filings or communications
between either party and any Governmental Authority with respect to this Agreement or the transactions contemplated hereby. The Company
and Parent, in their reasonable determination in consultation with outside counsel, may designate any competitively sensitive material
as “Outside Counsel Only Material” such that such materials and the information contained therein shall be given only to
the outside counsel of the recipient and will not be disclosed to employees, officers or directors of the recipient unless express permission
is obtained in advance from the source of the materials or its legal counsel.
Section 6.5
Access
to Information; Confidentiality
. 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 unreasonably 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 officers, advisors, personnel, agents, properties, books and records of the Company
and its Subsidiaries and, during such period, shall (and shall cause each of its Subsidiaries to) furnish promptly to such Representatives
all information concerning the business, properties, personnel and books and records of the Company and its Subsidiaries as may reasonably
be requested;
provided
,
however
, that nothing herein shall require the Company or any of its Subsidiaries to disclose any
information to Parent if such disclosure would (i)  violate Applicable Law, or violate publicly posted privacy policies applicable
to the Processing of Personal Information or the provisions of any Contract to which the Company or any of its Subsidiaries is a party,
or (ii) jeopardize any attorney-client, attorney work product or any other legal privilege;
provided
, that the Company shall
(and shall cause its Subsidiaries to) use reasonable best efforts to provide as much information as possible without violating such Applicable
Law, Contract, publicly posted privacy policies or privilege. No investigation or access permitted pursuant to this
Section 6.5
shall affect or be deemed to modify any representation or warranty made by the Company hereunder. The Confidentiality Agreement shall
apply
mutatis mutandis
with respect to information furnished by the Company, the Company External Adviser, the Company’s
Subsidiaries and their respective officers, employees and other Representatives hereunder. Without limiting the foregoing, (i) no
later than ten (10) days before the end of each calendar month, the Company shall provide Parent a good faith calculation of the
Tax Dividends that would be required to be distributed by it to maintain its qualification as a RIC or avoid any entity-level Tax as
reasonably determined by the Company if the Closing were to occur at the end of such month, (ii) the Company shall use commercially
reasonable efforts to provide Parent with all information reasonably requested by Parent with respect thereto, subject to any applicable
confidentiality restrictions, and reasonably cooperate with Parent in connection with its diligence of the amount of such Tax Dividends
and (iii) the Company shall use reasonable best efforts to provide any information reasonably requested by Parent to determine whether
there are any Consents required, or any registrations, declarations, filings or notices required to be made, pursuant to any Antitrust
Law in connection with the transactions contemplated by this Agreement.
49
Section 6.6
No
Solicitation
.
(a)
Except
as expressly provided in
Section 6.6(c)
, the Company shall, and shall cause its Subsidiaries and its and their Representatives
to, promptly (and in any event within 24 hours of the execution of this Agreement) (i) cease and cause to be terminated 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
”) and (ii) terminate
all physical and electronic data room access previously granted to any such Third Party and request that each Third Party that has previously
executed a confidentiality agreement with respect to or that relates to any potential Competing Proposal promptly return to the Company
or destroy all non-public information previously furnished or made available to such Third Party or any of its Representatives by or
on behalf of the Company or its Representatives in accordance with the terms of such confidentiality agreement.
(b)
Except
as expressly provided in
Section 6.6(c)
and
Section 6.6(d)
, from the date of this Agreement until the earlier
of the Effective Time or the termination of this Agreement in accordance with its terms, the Company shall not, and shall cause its Subsidiaries
and its and their respective Representatives not to, directly or indirectly, (i) initiate, solicit, facilitate or knowingly encourage
the making of any Competing Proposal or Inquiry, (ii) enter into, continue or otherwise participate in negotiations or discussions
with (other than to state that the provisions contained in this
Section 6.6
prohibit such discussions), or furnish any non-public
information to, or enter into any agreement, arrangement or understanding with, any Third Party relating to a Competing Proposal or any
Inquiry (other than an Acceptable Confidentiality Agreement entered into in accordance with
Section 6.6(c)
), (iii) grant
a waiver of or terminate any “standstill” or similar obligation of any Third Party with respect to the Company or any of
its Subsidiaries to allow such Third Party to submit a Competing Proposal or Inquiry or (iv) resolve, agree or propose to do any
of the foregoing.
(c)
Notwithstanding
anything to the contrary in
Section 6.6(a)
or
Section 6.6(b)
, at any time prior to the date that the Company
Stockholder Approval is obtained, in the event that the Company receives a written Inquiry or a written Competing Proposal from any Third
Party that (i) the Company Board (acting upon the recommendation of the Special Committee) determines in good faith to be
bona
fide
, (ii) was unsolicited and (iii) did not otherwise result from a non de-minimis breach of this
Section 6.6
,
the Company and the Company Board and their Representatives may (1) respond to any Person making such Inquiry or Competing Proposal
solely to clarify the terms and conditions thereof or (2) engage or participate in negotiations or discussions with, or furnish
any information and other access to, the Third Party making such Inquiry or Competing Proposal and its Representatives and Affiliates
and prospective debt and equity financing sources that have been specifically engaged for the purpose of financing such Competing Proposal
if, with respect to this clause (2), the Company Board (acting upon the recommendation of the Special Committee) determines in good faith
(after consultation with its financial advisor and outside legal counsel) that such Inquiry or Competing Proposal either constitutes
a Superior Proposal or would reasonably be expected to lead to a Superior Proposal;
provided
, that (x) prior to furnishing
any non-public information concerning the Company and its Subsidiaries, the Company receives from such Third Party, to the extent such
Third Party is not already subject to a confidentiality agreement with the Company, a confidentiality agreement containing confidentiality
terms that are not less favorable in the aggregate to the Company than those contained in the Confidentiality Agreement (an “
Acceptable
Confidentiality Agreement
”), and (y) the Company shall promptly (and in any event within 48 hours) provide or make available
to Parent (I) all notices, descriptions, information, copies and summaries contemplated by
Section 6.6(f)
and (II) all
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.
50
(d)
Except
as expressly provided in this
Section 6.6(d)
, neither the Company nor the Company Board nor any committee (including the
Special Committee) thereof shall effect a Company Adverse Recommendation Change or approve or recommend, and the Company shall not (and
shall cause each of its Subsidiaries not to) execute or enter into, any letter of intent, memorandum of understanding, agreement in principle,
acquisition agreement, merger agreement, option agreement, joint venture agreement, partnership agreement or other Contract or agreement,
in each case constituting or with respect to, any Competing Proposal or Inquiry (each, an “
Alternative Acquisition Agreement
”)
(other than an Acceptable Confidentiality Agreement in accordance with
Section 6.6(c)
), and neither the Company Board nor
any committee thereof (including the Special Committee) shall resolve, agree or publicly propose to take any such actions. Notwithstanding
the first sentence of this
Section 6.6(d)
, at any time prior to the receipt of the Company Stockholder Approval, the Company
Board (acting upon the recommendation of the Special Committee) may effect a Company Adverse Recommendation Change if (x) an Intervening
Event has occurred and is continuing and the Company Board determines in good faith, after consultation with its financial advisor and
outside legal counsel, that failure to do so would reasonably be expected to be inconsistent with the Company directors’ duties
under Applicable Law or (y) the Company has received a Competing Proposal after the date of this Agreement that (A) was unsolicited,
(B) did not otherwise result from a non de-minimis breach of this
Section 6.6
and (C) the Company Board (acting
upon the recommendation of the Special Committee) has determined in good faith, after consultation with its financial advisor and outside
legal counsel, constitutes a Superior Proposal, in which case the Company Board (acting upon the recommendation of the Special Committee)
may also cause the Company to terminate this Agreement pursuant to
Section 8.1(c)(ii)
in order to substantially concurrently
enter into an Alternative Acquisition Agreement and all other definitive documentation, including financing commitments, relating to
such Superior Proposal,
provided,
in each case, that:
(i)
the
Company shall have provided prior written notice to Parent, at least four (4) Business Days (the “
Company Notice Period
”)
in advance, that it intends to effect a Company Adverse Recommendation Change and, if applicable, cause the Company to terminate this
Agreement pursuant to
Section 8.1(c)(ii)
(a “
Notice of Adverse Recommendation
”), which notice shall
specify in reasonable detail the basis therefor, including if the basis of the proposed action by the Company Board is an Intervening
Event, the material facts and circumstances related to such Intervening Event, or, if the basis of the proposed action by the Company
Board is a Superior Proposal, the identity of the Person or group of Persons making such Superior Proposal and the material terms and
conditions thereof, including a copy of the then-current draft of the definitive agreement providing for such Superior Proposal, any
related financing commitments and any related material ancillary agreements (which, in either case, need not include signatures and may
contain brackets solely of the type that are completed in or removed from a definitive agreement of that nature prior to the execution
thereof);
51
(ii)
during
the Company Notice Period, after Parent’s receipt of the Notice of Adverse Recommendation and prior to effecting such Company Adverse
Recommendation Change or terminating this Agreement pursuant to
Section 8.1(c)(ii)
, the Company shall have negotiated, and
shall have caused its Representatives to negotiate, with Parent, Acquisition Sub 1 and Acquisition Sub 2 and their respective Representatives
in good faith (to the extent Parent, Acquisition Sub 1 and Acquisition Sub 2 desire to negotiate) regarding any adjustment or amendment
to this Agreement or any other agreement proposed by Parent to make such irrevocable adjustments to the terms and conditions of this
Agreement that the Company Board determines (acting upon the recommendation of the Special Committee) in good faith, after consultation
with its financial advisor and outside counsel, would obviate the need for the Company to effect the Company Adverse Recommendation Change
or terminate this Agreement pursuant to
Section 8.1(c)(ii)
and, if applicable, cause such Competing Proposal to no longer
constitute a Superior Proposal;
(iii)
any
material changes in facts or circumstances relating to such Intervening Event, or material changes in facts or circumstances relating
to, or material amendment to terms or conditions of, such Superior Proposal, as applicable, shall, in each case, require a new Notice
of Adverse Recommendation and the Company shall be required to comply again with the requirements of this
Section 6.6(d)
with
respect to such new written notice, and a new Company Notice Period shall commence, except that the four (4) Business Day Company
Notice Period referenced above shall be reduced to two (2) Business Days; and
(iv)
following
the end of the final four (4) or two (2) Business Day Company Notice Period (as applicable), the Company Board (acting upon
the recommendation of the Special Committee) shall have determined in good faith, after consultation with its financial advisor and outside
legal counsel, taking into account any irrevocable changes to this Agreement or additional agreements proposed in writing by Parent in
response to the Notice of Adverse Recommendation, in the case of an Intervening Event, the failure of the Company Board to effect a Company
Adverse Recommendation Change would continue to be reasonably expected to be inconsistent with the Company’s directors’ duties
under Applicable Law, or, in the case of a Superior Proposal, the Superior Proposal continues to constitute a Superior Proposal.
(e)
Nothing
contained in this
Section 6.6
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 NASDAQ 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 (ii) making
any “stop-look-and-listen” communication to stockholders of the Company pursuant to Rule-14d-9(f) under the Exchange
Act, which disclosure or communication shall not be deemed to constitute a Company Adverse Recommendation Change if, and only if, it
does not have the substantive effect of withdrawing, qualifying or modifying the Company Recommendation and the Company expressly reaffirms
the Company Recommendation in such disclosure or communication.
52
(f)
The
Company shall promptly (and in any event within 36 hours of receipt) notify Parent in writing in the event that it (including its officers,
directors or employees) or any of its Subsidiaries or, to the Knowledge of the Company, any of its or their Representatives receives
any Inquiry or Competing Proposal from any Third Party, in each case together with a description of the material terms and conditions
of any such Inquiry or Competing Proposal, the identity of the Third Party making such Inquiry or Competing Proposal and copies of any
written proposal, offer, draft agreement, term sheet or other analogous agreement provided by such Third Party and written summaries
of any material oral communications relating thereto. The Company shall keep Parent reasonably informed on a timely basis of the status
and details (including within 36 hours after the occurrence of any material amendment, modification, development, discussion or negotiation)
of any such Inquiry or Competing Proposal, including furnishing copies of any written inquiries, material correspondence and draft documentation,
and written summaries of any material oral inquiries or discussions. Without limiting any of the foregoing, the Company shall promptly
(and in any event within 36 hours) notify Parent in writing if it determines to begin providing information or to engage in discussions
or negotiations concerning an Inquiry or Competing Proposal.
(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, reorganization, consolidation, tender offer, self-tender, exchange offer, stock acquisition, asset acquisition, share exchange,
business combination, recapitalization, liquidation, dissolution, joint venture or other 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 (I) assets
or businesses (including any mortgage, pledge or similar disposition thereof but excluding any mortgage or pledge in connection with
a
bona fide
debt financing transaction entered into in the ordinary course of business consistent with past practice) that constitute
or represent, or would constitute or represent if such transaction is consummated, twenty percent (20%) or more of the total assets (based
on fair market value) of the Company and its Subsidiaries, taken as a whole, as of the date of such inquiry or proposal, or that generated
twenty percent (20%) or more of net revenue or net income of the Company and 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 (II) twenty percent (20%) or more
of the outstanding shares of any class of capital stock of, or other equity or voting interests in, the Company or any of its Subsidiaries
or any resulting parent company of the Company or any of its Subsidiaries, in each case other than the Mergers.
53
(ii)
“
Superior
Proposal
” shall mean a
bona fide
, unsolicited, and written Competing Proposal that is not subject to a financing contingency
(with all percentages in the definition of Competing Proposal increased from twenty percent (20%) to fifty percent (50%)) made by a Third
Party, on terms that the Company Board (acting upon the recommendation of the Special Committee) determines in good faith, after consultation
with its financial advisor and outside legal counsel, and considering all such factors as the Company Board considers in good faith to
be appropriate, (A) is more favorable to stockholders of the Company from a financial point of view than the transactions contemplated
by this Agreement (including any revisions to the terms and conditions of this Agreement proposed by Parent to the Company in writing
in response to such Competing Proposal under
Section 6.6(d)
) and (B) is reasonably likely to be completed on the terms
proposed on a timely basis.
(h)
The
Company agrees that any violation of the restrictions set forth in this
Section 6.6
by any of the Company’s Subsidiaries
or any of its or their respective officers, directors, managers, partners or employees, or any of its or their agents, accountants, counsel,
financial advisors, consultants and other advisors or representatives acting at their direction or on their behalf, shall be deemed to
be a breach of this Agreement by the Company.
Section 6.7
Directors’
and Officers’ Indemnification and Insurance
.
(a)
Parent,
Acquisition Sub 1 and Acquisition Sub 2 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 or its Subsidiaries (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 indemnification Contract made available
to Parent prior to the date hereof shall survive the Mergers and shall continue in full force and effect in accordance with their terms.
Parent shall cause the Surviving Company to indemnify, defend and hold harmless, and advance expenses (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 by a final and non-appealable
judgment of a court of competent jurisdiction that such D&O Indemnified Party is not entitled to be indemnified under Applicable
Law) 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 the Effective Time (including any matters arising in connection with this Agreement or the transactions contemplated hereby), to the
fullest extent permitted by Applicable Law as required by the organizational documents of the Company or its Subsidiaries as in effect
on the date of this Agreement or in any indemnification Contract made available to Parent prior to the date hereof and 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. For a period of six years following the Effective Time, Parent shall cause the Surviving
Company’s and any of its successors’ organizational documents to contain provisions with respect to indemnification, advancement
of expenses and limitation of director, officer and employee liability with respect to the D&O Indemnified Parties for the period
prior to the Effective Time that are no less favorable to the D&O Indemnified Parties than those set forth in the organizational
documents of the Company and its Subsidiaries 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, in each case
for a period of six years following the Effective Time.
54
(b)
Notwithstanding
anything to the contrary contained in this
Section 6.7
or elsewhere in this Agreement, following the Effective Time, 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 in which any D&O Indemnified Party is a named defendant unless such settlement, compromise, consent or termination
includes an unconditional release of all of the D&O Indemnified Parties named as defendants in such claim, Proceeding or investigation
from all liability arising out of such claim, Proceeding or investigation; provided, that such release may contain customary confidentiality
or similar obligations.
(c)
Prior
to the Effective Time, the Company may, at its option (in consultation with Parent), purchase or bind a six (6) year prepaid “tail”
policy on terms and conditions no less advantageous to the D&O Indemnified Parties 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 at or prior to the Effective Time (including any matters arising in connection with this Agreement or
the transactions contemplated hereby); provided, that such “tail” policy shall not have a total premium in excess of three
hundred percent (300%) of the annual premium currently paid by the Company for such insurance, and in such case the Company shall instead
be entitled to purchase as much of such coverage as possible for such amount. If the Company purchases or binds such a policy, Parent
shall cause such policy to be maintained in full force and effect for its full term and shall not cancel or modify such policy, and such
purchase or binding shall satisfy Parent’s obligation under this
Section 6.7(b)
to purchase a “tail”
policy. If the Company does not purchase or bind such a policy prior to the Effective Time, Parent shall purchase and maintain in full
force and effect as of the Closing a six (6) year “tail” policy, on terms and conditions no less advantageous to the
D&O Indemnified Parties 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 any matters arising in connection with this Agreement or the transactions contemplated hereby); provided,
that Parent shall not be required to pay a total premium for such “tail” policy in excess of three hundred percent (300%)
of the annual premium currently paid by the Company for such insurance, but in such case shall purchase as much of such coverage as possible
for such amount.
(d)
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, and the D&O Indemnified Parties to whom this
Section 6.7
applies shall be third-party beneficiaries
of this
Section 6.7
. 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
, provided that such D&O
Indemnified Party provides an undertaking agreeing to reimburse such expenses if it determined by a court of competent jurisdiction that
the D&O Indemnified Party is not entitled to indemnification pursuant to this
Section 6.7
. Notwithstanding any other
provision of this Agreement, this
Section 6.7
shall survive the consummation of the Mergers as provided herein and shall
be binding on Parent and the Surviving Company and any of their respective successors and assigns, and this
Section 6.7
shall
be enforceable by the D&O Indemnified Parties and their successors, heirs or representatives.
55
(e)
If
the Surviving Company or any of its successors or assigns (i) consolidates with or merges into any other Person and is not the continuing
or surviving entity of such consolidation or merger or (ii) transfers or conveys all or a material portion of its properties and
assets to any Person (including Parent or any of its Affiliates), whether in a single transaction or a series of related transactions,
then, and in each such case, Parent shall cause proper provision to be made so that the successors and assigns of the Surviving Company
expressly assume and are bound by the obligations set forth in this
Section 6.7
, and such assumption shall not relieve the
Surviving Company of any such obligations, unless such assumption occurs by operation of law.
Section 6.8
Notification
of Certain Matters
. Subject to Applicable Law, the Company shall give prompt written notice to Parent, and Parent shall give prompt
written 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 Mergers 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 Mergers or the transactions contemplated hereby, if the subject matter of such
communication or the failure of such party to obtain such consent would be reasonably likely to be material to the Company, the Surviving
Corporation, the Surviving Company or Parent, (b) any claims, investigations or Proceedings commenced or, to such party’s
Knowledge, threatened in writing against, relating to or involving or otherwise affecting such party or any of its Subsidiaries that
relate to this Agreement, the Mergers or the transactions contemplated hereby and (c) any fact, circumstance or development of which
the Company or Parent (as applicable) becomes aware that will or is reasonably likely to result in any of the conditions set forth in
Article VII
becoming incapable of being satisfied by the Termination Date; provided, however, that the delivery of any notice
pursuant to this
Section 6.8
shall not cure any breach of any representation or warranty requiring disclosure of such matter
prior to the date of this Agreement or otherwise limit or affect the remedies available hereunder to any Party, and the failure to deliver
any such notice shall not affect any of the conditions set forth in
Article VII
or give rise to any right to terminate under
Article VIII
.
Section 6.9
Public
Announcements
. Except as otherwise permitted by
Section 6.6
(and, for the avoidance of doubt, nothing herein shall limit
or expand the rights or obligations of the Company or the Company Board under
Section 6.6
), prior to any Company Adverse
Recommendation Change, the Company, Parent, Parent External Adviser, Acquisition Sub 1 and Acquisition Sub 2 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 Company, Parent, Acquisition Sub 1 or Acquisition Sub 2 or their respective Affiliates shall issue any such press release
or public announcement prior to obtaining the other parties’ written consent (which consent may be delivered by electronic mail
and shall not be unreasonably withheld, conditioned or delayed), except that no such consent shall be necessary to the extent (a) disclosure
is required by Law, Order or applicable stock exchange rule or any listing agreement of any party hereto, so long as the disclosing
party gives notice to and consults with the other parties prior to making such disclosure to the extent practicable, or (b) the
statements included therein with respect to this Agreement or the transactions contemplated hereby are limited to statements consistent
with prior communications previously issued in compliance with this
Section 6.9
. Notwithstanding the foregoing, the Company
may, without Parent’s or the Acquisition Subs’ consent, communicate with its employees, Company Portfolio Companies and consultants
in a manner consistent with prior communications of the Company previously issued in compliance with this
Section 6.9
or
a communications plan previously agreed to by Parent and the Company.
56
Section 6.10
Acquisition
Sub 1 and Acquisition Sub 2
.
Parent will take all actions
necessary to (a) cause each of Acquisition Sub 1 and Acquisition Sub 2 to perform its obligations under this Agreement and to consummate
the First Merger and Second Merger, as applicable, on the terms and conditions set forth in this Agreement and (b) ensure that,
prior to the Effective Time, neither Acquisition Sub 1 nor Acquisition Sub 2 shall 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
Certain
Tax Matters
.
(a)
For
United States federal income Tax purposes, (i) the parties intend that the Mergers, taken together, constitute an integrated plan
of the type contemplated in IRS Revenue Ruling 2001-46 and will qualify as a “reorganization” within the meaning of Section 368(a) of
the Code (the “
Intended Tax Treatment
”), (ii) this Agreement is intended to be, and is hereby adopted as, a “plan
of reorganization” for purposes of Sections 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 1 are parties under Section 368(b) of the Code, and (iii) the
parties intend that the Cash Consideration shall be treated as the receipt of cash consideration in connection with the Mergers and in
exchange for Company Common Stock.
(b)
Unless
otherwise required by Applicable Law, (i) each of the Company, Parent, Acquisition Sub 1 and Acquisition Sub 2 shall use its reasonable
best efforts to cause the Mergers, taken together, to qualify as a reorganization within the meaning of Section 368(a) of the
Code, including by not taking any action that such party knows is reasonably likely to prevent such qualification; provided, however,
that the foregoing shall not preclude the Company from declaring or paying any Tax Dividend on or before the Closing Date, and (ii) each
of the Company, Parent, Acquisition Sub 1 and Acquisition Sub 2 shall report the Mergers and the other transactions contemplated hereby
in a manner consistent with the Intended Tax Treatment.
57
(c)
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 the 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.
(d)
Each
of the Company and Parent shall use its reasonable best efforts to obtain the Tax opinion described in
Section 7.3(d)
, including
making representations and covenants reasonably requested by Tax counsel in order to render such Tax opinion. Prior to the Effective
Time (or at such other times as reasonably requested by counsel), each of Parent and the Company shall execute and deliver to Tax counsel,
tax representation letters reasonably requested by Tax counsel to enable the issuance of the Tax opinion described in
Section 7.3(d)
.
Section 6.14
Credit
Agreement
. The Company shall, and shall cause its Subsidiaries to, use reasonable best efforts to deliver, or cause to be delivered,
to Parent, (a) at least two Business Days prior to the Closing Date, a substantially final draft of a payoff letter and (b) at
or prior to the Closing Date, an executed payoff letter, in each case, in customary form with respect to the Company Credit Agreement
(the “
Payoff Letter
”) from the applicable agent and other applicable parties thereto on behalf of the Persons to whom
such indebtedness is owed, which Payoff Letter shall set forth the amount required to effectuate the repayment in full on the Closing
Date of all obligations thereunder (including any breakage costs, accrued interest and fees and amounts required under the Company Credit
Agreement to cash collateralize or backstop outstanding letters of credit) (the “
Payoff Amount
”), the instructions
for payment of the same to discharge such obligations and authorize all Lien terminations and instruments of discharge releasing and
terminating such Lien or security interest, as applicable, upon the receipt of the Payoff Amount. At or prior to the Effective Time,
Parent will repay on behalf of the Company and its Subsidiaries the Payoff Amount in the manner set forth in the Payoff Letter. The Company
shall, and shall cause its Subsidiaries to, take such other actions as it determines to be necessary or advisable (or that Parent reasonably
requests) to effect the lien terminations contemplated by the Payoff Letter upon payoff, including the delivery, taking or making of
all required documents or actions under the Company Credit Agreement to effect such lien terminations. Notwithstanding the foregoing,
neither the Company nor any of its Subsidiaries shall be required to deliver any notice of prepayment or termination that is not expressly
conditioned on the occurrence of the Closing Date, execute any document or instrument that is not effective only upon the Closing Date,
or pay any fee or incur any liability prior to the Closing Date.
58
Section 6.15
Company
Indenture
. Prior to the Closing Date, the Company and its Subsidiaries shall, upon Parent’s request, (i) issue or cause
to be issued one or more notices of optional redemption or similar notices (each of which shall provide that the redemption of the notes
shall be contingent upon the Closing) in respect of the then-outstanding notes under the Company Indenture pursuant to the requisite
provisions of the Company Indenture and (ii) take such other actions as it determines to be necessary or advisable (or that Parent
reasonably requests) to facilitate redemption of such notes at the Closing, including the delivery, taking or making of all required
documents, actions or payments (other than the deposit of funds in accordance with this paragraph) under the Company Indenture to effect
the redemption of the notes under the Company Indenture and/or the satisfaction and discharge or defeasance of the Company Indenture
pursuant to the requisite provisions of the Company Indenture, provided, that in no event shall this
Section 6.15
require
the Company or any of its Subsidiaries to cause any redemption or termination of the notes or the Company Indenture prior to the occurrence
of the Closing (or, if the redemption cannot be effected on the Closing Date in compliance with the Company Indenture, then the earliest
date possible after the Closing Date in compliance with the Company Indenture (such notice and redemption documents, the “
Note
Redemption Documents
”)). Parent shall deliver any request pursuant to clause (i) of this
Section 6.15
in writing
no later than forty-five (45) Business Days prior to the anticipated Closing Date (or (a) such later date as agreed to by the Company
and Parent or (b) such earlier date as is necessary to permit the timely delivery of any notice required under the Company Indenture).
At the Closing, Parent shall, and shall cause the Surviving Company or Surviving Corporation, as applicable, to take all such steps as
may be necessary to redeem the notes under the Company Indenture in accordance with its terms, including depositing (or causing to be
deposited) with the trustee under the Company Indenture funds sufficient to pay the full amount of principal and accrued interest, and
any and all premiums (including any make-whole amount), fees, costs, expenses, penalties and other amounts payable under the notes and
the Company Indenture. The Company shall further deliver to Parent such trustee’s acknowledgement of satisfaction and discharge
or defeasance and release of any Liens securing the Company Indenture, in each case in a form and substance reasonably satisfactory to
Parent, and each executed by or on behalf of the holders of the then outstanding notes under the Company Indenture by such trustee or
agent therefor. Any Note Redemption Documents delivered pursuant to this
Section 6.15
and other related documents prepared
by or on behalf of the Company in connection therewith shall be subject to the prior review of, and opportunity for comment by, Parent
and its counsel, and the Company shall consider in good faith any comments provided by Parent or its counsel. Notwithstanding the foregoing,
neither the Company nor any of its Subsidiaries shall be required pursuant to this
Section 6.15
to execute and deliver any
document or instrument (or cause any document or instrument to be executed or delivered) not conditioned on or delivered substantially
concurrently with the occurrence of the Closing.
Section 6.16
Stock
Exchange Listing
. Parent shall use its reasonable best efforts to cause the shares of Parent Common Stock to be issued in connection
with the First Merger to be listed on NASDAQ, subject to official notice of issuance, at or prior to the Effective Time.
Section 6.17
Takeover
Statutes and Provisions
. None of the Company, Parent, Acquisition Sub 1 or Acquisition Sub 2 will take any action that would cause
the First Merger and related transactions to be subject to requirements or limitations 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 First Merger
from, or if necessary to challenge the validity or applicability thereto of, any applicable Takeover Statute, as now or hereafter in
effect.
Section 6.18
Stockholder
Litigation
. The Company shall (a) give Parent the opportunity to participate in the defense or settlement of any stockholder
litigation against the Company and/or its Representatives relating to this Agreement or any of the transactions contemplated hereby and
(b) not settle any such litigation without the prior written consent of Parent (such consent not to be unreasonably withheld, conditioned
or delayed).
59
Section 6.19
Coordination
of Dividends
. Parent and the Company shall coordinate with each other in designating the record and payment dates for any
dividends or other distributions to their respective stockholders (including a Tax Dividend), declared in accordance with this
Agreement in any calendar quarter in which the Closing Date might reasonably be expected to occur. In the event that a dividend or
other distribution with respect to the shares of Company Common Stock permitted under the terms of this Agreement has (a) a
record date prior to the Effective Time and (b) 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 after the Effective Time on the appropriate payment date and, in
connection therewith, the Company shall deposit such dividend or other distribution (the “
Deposited Dividend
”)
with the Exchange Agent to be paid to such holders in accordance with
Section 2.2
in the same manner as the Cash
Consideration. Prior to the Closing Date, if the aggregate amount of (i) all dividends paid by the Company on or prior to
the date of this Agreement plus (ii) all dividends declared after the date of this Agreement is less than the amount that
should be paid as a dividend to distribute to the Company’s stockholders the amounts set forth in clauses (i) through
(iv) of the definition of “Tax Dividend” or otherwise necessary for the Company to maintain its qualification as a
RIC as reasonably determined by the Company, the Company shall declare a Tax Dividend. For all federal income tax purposes, to the
fullest extent permitted by Applicable Law, Parent and the Company shall treat the payments of any Deposited Dividend and Tax
Dividend by the Exchange Agent, as agent on behalf of the Company, pursuant to
Section 2.2
as a payment of a dividend
considered to have been paid by the Company in the Company’s last federal income tax year pursuant to Section 855 of the
Code.
Section 6.20
Share
Repurchase Plan and Trading Plans
. As soon as reasonably practicable following the execution of this Agreement, the Company will
take all necessary corporate action to suspend (i) its share repurchase and any other trading plan adopted in accordance with Rule 10b5-1
under the Exchange Act, subject to applicable notice provisions under such plans and (ii) its dividend reinvestment plan.
Section 6.21
Asset
Coverage Requirement
. The Company agrees to use its commercially reasonable efforts to maintain “asset coverage” within
the meaning of Section 18(h) of the Investment Company Act of at least 150% throughout the Interim Period.
Section 6.22
CLO
Consent
. Each of the Company and Parent shall, and shall cause their respective Subsidiaries to, use commercially reasonable efforts
to cooperate with each other in (a) providing any necessary or advisable notices to, and seeking any consents in connection with
the transactions contemplated hereby from, each of the parties set forth on
Section 6.22
of the Company Disclosure Letter
and (b) otherwise taking such actions as may be reasonably requested by the other party in connection therewith. The Company and
Parent shall, and shall cause their respective Subsidiaries to, take the actions set forth on
Section 6.22
of the Company
Disclosure Letter.
Article VII
CONDITIONS
TO THE MERGERS
Section 7.1
Conditions
to the Obligations of Each Party
. The respective obligations of each party to consummate the First 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;
60
(b)
the
issuance of Parent Common Stock in connection with the First Merger shall have been approved for listing on NASDAQ, 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)
(i) any
applicable waiting period (and any extension or related voluntary commitments thereof) under the HSR Act relating to the consummation
of the First Merger shall have expired or early termination thereof shall have been granted or (ii) any Consents required, or any
registrations, declarations, filings or notice required to be made, pursuant to any Antitrust Law in connection with the consummation
of the transactions contemplated by this Agreement in any non-U.S. jurisdiction, as reasonably determined by Parent (after providing
the Company a reasonable opportunity to review and comment on such determination and considering in good faith any comments reasonably
proposed by the Company), shall have been filed, occurred or obtained, as applicable (or any applicable waiting period thereunder shall
have expired or been terminated or shall have been deemed to have occurred or been obtained); 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 First Merger.
Section 7.2
Conditions
to Obligations of Parent and Acquisition Sub 1 to Effect the First Merger
. The obligations of Parent, Acquisition Sub 1 and Acquisition
Sub 2 to effect the First Merger (and for the Parent External Adviser to fund the Cash Consideration) are further 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 3.1
,
Section 3.2(a)
,
Section 3.2(b)
,
Section 3.2(c)
,
Section 3.2(d)
,
Section 3.3(a)
,
Section 3.3(b)
,
Section 3.3(c)
,
Section 3.3(d)
(but only clause (i) thereof),
Section 3.19
and
Section 3.20
(collectively,
the “
Company Fundamental Representations
”), without giving effect to any materiality or “Company Material Adverse
Effect” or similar qualifications therein, shall be true and correct in all 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), except, in the case
of this clause (i), for such failures to be true and correct that are de minimis, (ii) clause (c) of
Section 3.9
(the “
Company No MAE Rep
”) shall be true and correct in all respects as of the date hereof as though made on and as
of such date, and (iii)
Article III
(other than the Company Fundamental Representations and the Company No MAE Rep),
without giving effect to any materiality or “Company Material Adverse Effect” or similar qualifications therein, shall be
true and correct in all 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), except, in the case of this clause (iii), for such failures to be true and
correct as have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect;
61
(b)
the
Company shall have performed or complied in all material respects with all of its covenants and agreements required under this Agreement
to be performed or complied with on or prior to the Closing Date;
(c)
since
the date of this Agreement, there shall not have occurred any facts, circumstances, events, changes, occurrences or effects that have
had, or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect;
(d)
the
Company shall have provided, or caused to be provided, any necessary or advisable notices to, and shall have received the consents with
respect to the transactions contemplated hereby of, each of the parties set forth on Section 7.2(d) of the Company Disclosure
Letter; and
(e)
Parent
shall have received a certificate signed by an executive officer of the Company, dated as of the Closing Date, certifying as to the matters
set forth in
Section 7.2(a)
,
Section 7.2(b)
,
Section 7.2(c)
and
Section 7.2(d)
.
Section 7.3
Conditions
to Obligation of the Company to Effect the First Merger
. The obligation of the Company to effect the First 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 1, Acquisition Sub 2 and the Parent External Adviser, as applicable, contained in (i)
Section 4.1
,
Section 4.2
,
Section 4.3(a)
,
Section 4.3(b)
,
Section 4.3(c)
(but only clause (i) thereof),
Section 4.13
,
Section 5.1
,
Section 5.2
and
Section 5.4
(collectively, the “
Parent
Fundamental Representations
”), without giving effect to any materiality, or “Parent Material Adverse Effect” or
similar qualifications therein, shall be true and correct in all 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), except, in the case of this clause
(i), for such failures to be true and correct that are de minimis, (ii)
Section 4.9
(the “
Parent No MAE Rep
”)
shall be true and correct in all respects as of the date hereof as though made on and as of such date, and (iii)
Article IV
and
Article V
, as applicable (other than the Parent Fundamental Representations and the Parent No MAE Rep), without giving
effect to any materiality, “Parent Material Adverse Effect,” “Adviser Material Adverse Effect” or similar qualifications
therein, shall be true and correct in all 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), except, in the case of this clause
(iii)
, for such
failures to be true and correct as have not had and would not reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect (in the case of representations and warranties contained in
Article IV
) or Adviser Material Adverse
Effect (in the case of representations and warranties contained in
Article V
);
62
(b)
each
of Parent, Acquisition Sub 1, Acquisition Sub 2 and the Parent External Adviser shall have performed or complied in all material respects
with all of its covenants and agreements required under this Agreement to be performed or complied with on or prior to the Closing Date;
(c)
since
the date of this Agreement, there shall not have occurred any facts, circumstances, events, changes, occurrences or effects that have
had, or would reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect;
(d)
the
Company shall have received the written opinion of Simpson Thacher & Bartlett LLP (or, if Simpson Thacher & Bartlett
LLP is unable or unwilling to render such an opinion, the written opinion of another nationally recognized counsel as may be reasonably
acceptable to the Company), as of the Closing Date, to the effect that the Mergers will qualify for the Intended Tax Treatment. In rendering
the opinion described in this
Section 7.3(d)
, the Tax counsel rendering such opinion may require and rely upon (and may incorporate
by reference) reasonable and customary representations and covenants, including those contained in certificates of officers of the Company
and Parent; and
(e)
the
Company shall have received a certificate signed by an executive officer of Parent, dated as of the Closing Date, certifying as to the
matters set forth in
Section 7.3(a)
,
Section 7.3(b)
and
Section 7.3(c)
.
Article VIII
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 is obtained (except as otherwise expressly noted), as follows:
(a)
by
mutual written consent of each of Parent, the Parent External Adviser and the Company; or
(b)
by
either Parent or the Company, if:
(i)
the
First Merger shall not have been consummated on or before 5:00 p.m. (New York time) on the date that is nine (9) months after
the date of this Agreement (the “
Termination Date
”);
provided
that, if on such date all conditions to Closing
set forth in
Article VII
(other than
Section 7.1(d)
or
Section 7.1(e)
to the extent relating
to any Antitrust Law) either have been satisfied (other than the conditions that by their nature can only be satisfied on the Closing
Date, provided such conditions would be satisfied if the Closing were then to occur) or waived, as applicable, the Termination Date shall
be automatically extended for three (3) months;
provided
,
further
that the right to terminate this Agreement pursuant
to this
Section 8.1(b)(i)
shall not be available to any party if a material breach by such party of its representations,
warranties, covenants or agreements 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;
63
(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 right
to terminate this Agreement under this
Section 8.1(b)(ii
) shall not be available to any party if a material breach by
such party (or, in the case of Parent, Acquisition Sub 1 or Acquisition Sub 2) of its representations, warranties, covenants or agreements
under this Agreement has been the principal cause of or resulted in the issuance of such Law or Order or taking of such action; or
(iii)
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 approval of the Mergers was taken; or
(c)
by
the Company if:
(i)
Parent,
Acquisition Sub 1, Acquisition Sub 2 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 7.3(a)
or
Section 7.3(b)
and (B) is
not capable of being cured by Parent, Acquisition Sub 1, Acquisition Sub 2 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 1, Acquisition Sub 2 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) 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 7.2(a)
or
Section 7.2(b)
not to be satisfied; or
(ii)
at
any time prior to receipt of the Company Stockholder Approval, in order to substantially concurrently enter into a definitive agreement
providing for a Superior Proposal to the extent permitted by, and subject to the applicable terms and conditions of,
Section 6.6
;
provided
, that the Company shall not have the right to terminate this Agreement pursuant to this
Section 8.1(c)(ii)
(A) if
the Company has breached any provision of
Section 6.6
in any material respect or (B) unless the Company shall concurrently
pay the Company Termination Fee pursuant to
Section 8.3(a)
.
64
(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 7.2(a)
or
Section 7.2(b)
and (B) is not capable of being cured by the Company prior to 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) 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 1, Acquisition Sub 2 or the Parent External Adviser is then in material breach of any of its respective representations, warranties,
covenants or obligations under this Agreement so as to cause any of the conditions set forth in
Section 7.3(a)
or
Section 7.3(b)
not
to be satisfied; or
(ii)
at
any time prior to the receipt of the Company Stockholder Approval, (A) the Company or the Company Board (or any committee thereof)
shall have made a Company Adverse Recommendation Change, (B) the Company breaches or otherwise violates
Section 6.6
in any material respect, (C) the Company fails to recommend against any Competing Proposal that is a tender offer or exchange offer
subject to Regulation 14D promulgated under the Exchange Act within ten (10) Business Days after the commencement thereof or
(D) the Company or any of its Subsidiaries enters into an Alternative Acquisition Agreement (other than an Acceptable Confidentiality
Agreement) or the Company fails to include the Company Recommendation in the Proxy Statement.
Section 8.2
Effect
of Termination
. In the event that this Agreement is terminated and the Mergers abandoned pursuant to
Section 8.1
, written
notice thereof shall be given by the terminating party to the other parties, 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
or in any other provision of this Agreement, no such termination shall relieve any party hereto of any liability
or damages, which shall not be limited to reimbursement of expenses or out-of-pocket costs and, in the case of liabilities or damages
payable by the Company, Parent, an Acquisition Sub or the Parent External Adviser, shall include the benefits of the contemplated transactions
lost by the Company’s or Parent’s stockholders, as applicable, taking into consideration all relevant matters, including
lost stockholder premium, other combination opportunities and the time value of money, resulting from (i) any Intentional Breach
of this Agreement by such party prior to such termination where the action or nonaction constituting or giving rise to such breach was
intentionally undertaken by the party taking such action, with actual knowledge that such action or nonaction would constitute or give
rise to a material breach of this Agreement, or (ii) Fraud by a party, in which case the aggrieved party shall be entitled to all
remedies available at law or in equity (subject, other than in the case of Fraud, to
Section 8.3
); and
provided
,
further
,
that the Confidentiality Agreement, this
Section 8.2
,
Section 8.3
,
Section 8.6
and
Article IX
(and the definitions of the defined terms used therein) shall survive any termination of this Agreement pursuant to
Section 8.1
.
The parties acknowledge and agree that nothing in
Section 8.1
or this
Section 8.2
shall be deemed to affect their
right to specific performance in accordance with the terms and conditions set forth in
Section 9.9
.
65
Section 8.3
Termination
Fees
.
(a)
If,
but only if, this Agreement is terminated by:
(i)
either
Parent or the Company pursuant to
Section 8.1(b)(iii)
, and (A) after the date of this Agreement and prior to the time
of the Company Stockholders’ Meeting, a Competing Proposal was publicly disclosed and was not publicly withdrawn prior to the time
of the Company Stockholders’ Meeting and (B) within twelve (12) months after such termination, the Company enters into an
Alternative Acquisition Agreement with respect to a Competing Proposal that is later consummated (regardless of whether such consummation
happens prior to or following such twelve (12) month period) (
provided
, that for this purpose, 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)
; or
(iii)
Parent
pursuant to
Section 8.1(d)(i)
or
Section 8.1(d)(ii)
;
then, in any such case, the Company shall pay,
or cause to be paid, to Parent the Company Termination Fee, by wire transfer of same day funds to the account or accounts designated
by Parent (A) in the case of
clause (i)
above, prior to or substantially concurrently with the consummation
of a Competing Proposal, should one occur (regardless of whether such consummation happens prior to or following the expiration of such
twelve (12) month period) (
provided
, that for this purpose, the references to “twenty percent (20%)” in the definition
of Competing Proposal shall be deemed to be references to “fifty percent (50%)”), (B) in the case of
clause (ii)
above,
prior to or substantially concurrently with such termination, or (C) in the case of
clause (iii)
above, no later than
two (2) Business Days following the date of such termination.
(b)
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.
(c)
Notwithstanding
anything to the contrary set forth in this Agreement, but subject to
Section 9.9
, except in cases involving (i) any
Intentional Breach of this Agreement prior to such termination, or (ii) Fraud, the Company Termination Fee, to the extent paid
in full when due and on the terms provided in
Section 8.3(a)
, shall constitute the sole and exclusive monetary remedy of
Parent, Acquisition Sub 1, Acquisition Sub 2 and the Parent External Adviser against the Company and its Subsidiaries and any of their
respective former, current or future general or limited partners, stockholders, members, managers, directors, officers and employees
(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 by or failure to perform of the Company hereunder, and upon payment
of such amount, 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
, except in cases involving (i) any Intentional Breach of this Agreement prior
to such termination, or (ii) Fraud, the Company and its Subsidiaries shall have no claims against Parent, Acquisition Sub 1, Acquisition
Sub 2 and the Parent External Adviser and any of their respective former, current or future general or limited partners, stockholders,
members, managers, directors, officers and employees(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 by or failure to
perform of the Parent, Acquisition Sub 1, Acquisition Sub 2 and the Parent External Adviser hereunder and 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 the Parent and the Parent External Adviser shall each remain obligated to comply with the provisions of this Agreement
applicable to it that survive termination pursuant to Section 8.2).
66
(d)
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) the Company Termination Fee is not a penalty, but is liquidated damages, in a reasonable
amount that will compensate Parent in the circumstances in which such fees 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 fails to timely pay any amount due pursuant to this
Section 8.3
,
and, in order to obtain such payment, Parent or any of its Representatives commences a suit that results in a judgment against the Company
for any amount due pursuant to this
Section 8.3
, the Company shall pay Parent its 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 after receipt of the Company Stockholder Approval,
if any such amendment shall by Applicable Law require further approval of the stockholders of the Company, the effectiveness of such
amendment shall be subject to the approval of the stockholders of the Company.
Section 8.5
Extension;
Waiver
. The conditions to each of the parties’ obligations to consummate the Mergers are for the sole benefit of such party
and may be waived by such party (without the approval of the stockholders of the Company) 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 1, Acquisition Sub 2 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 1, Acquisition Sub 2
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
), all expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expenses (it being acknowledged and
agreed that Taxes imposed upon holders of Company Common Stock shall be borne by such holders).
67
Article IX
GENERAL
PROVISIONS
Section 9.1
Non-Survival
of Representations, Warranties and Agreements
. The representations and warranties and covenants and agreements (to the extent such
covenants and agreements contemplate or require 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
, upon the termination of
this Agreement pursuant to
Section 8.1
, as the case may be, except that this
Section 9.1
shall not limit any
covenant or agreement in this Agreement to the extent that, by its terms, it contemplates performance after the Effective Time or after
termination of this Agreement, including those contained in
Section 6.7
.
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, by prepaid overnight courier (providing written proof of delivery) or by confirmed electronic mail,
addressed as follows:
if to Parent, Acquisition Sub 1, Acquisition Sub
2 or the Parent External Adviser:
Ares Capital Corporation
245 Park Avenue
New York, New York 10167
Email: [***]; [***]; [***]
Attention: Kort Schnabel, Scott Lem, Ian Fitzgerald
with a copy (which shall not constitute notice)
to:
Latham & Watkins LLP
1271 Avenue of the Americas
New York, NY 10020
Email: [***]; [***]; [***]
Attention: Alex Kelly, Owen Alexander, Mark Stagliano
if to the Company:
MidCap Financial Investment Corporation
9 West 57th Street
New York, NY 10019
Email: [***]
Attention: Kristin Hester
68
with a copy (which shall not constitute notice) to:
Simpson Thacher & Bartlett LLP
900 G Street NW
Washington, DC 20001
Email: [***]; [***]
Attention: Jonathan Corsico, Steven Grigoriou
or to such other address or 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 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 hereto 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 hereto, 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, to the extent that 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 acknowledgment that the information is required to be disclosed, admission or evidence of materiality, nor shall it be
an admission of any violation or breach of any Contract, Permit or Law.
(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. 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, regulations or official
guidance 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, regulations or official guidance promulgated thereunder, in each case, as of such date). Any Law defined or referred to herein
or in any agreement or instrument that is referred to herein means such 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, regulations or official guidance 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. All references to “dollars” or “$” refer to currency of the United States.
The term “or” is not exclusive. The word “extent” in the phrase “to the extent” shall mean the degree
to which a subject or other thing extends and such phrase shall not mean simply “if.” References to “days” are
to calendar days unless otherwise noted. Unless otherwise specified, the words “made available to” or “delivered to”
(i) Parent or Acquisition Subs (or words of similar import) shall mean the documents posted to the applicable VDR at least two
(2) calendar days prior to the date hereof or (ii) the Company or its Subsidiaries shall mean the documents posted to the
applicable VDR at least two (2) calendar days prior to the date hereof or provided to the Company’s or its Subsidiaries’
outside counsel.
69
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 Merger 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), together with the Confidentiality Agreement, the
Company Disclosure Letter, the Parent Disclosure Letter and the Voting Agreements, constitutes 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
and this
Section 9.7
, in each case from and after the Effective Time) are intended third-party
beneficiaries hereof.
Section 9.8
Governing
Law; Jurisdiction; Waiver of Jury Trial
.
70
This
Agreement shall be governed and construed in accordance with the Laws of the State of Maryland 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 Circuit Court for Baltimore City, Maryland, or if
jurisdiction over the matter is vested exclusively in federal courts, the United States District Court for the District of Maryland,
and the appellate courts to which orders and judgments therefor may be appealed (collectively, the “
Acceptable Courts
”).
In any such judicial proceeding brought in the Circuit Court for Baltimore City, Maryland, each of the parties further consents
to the assignment of such proceeding to the Business and Technology Case Management Program pursuant to Maryland Rule 16-205 (or
any successor thereof). 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
.
71
Section 9.9
Specific
Performance
. 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 the transactions contemplated by 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. Without limiting
the foregoing, the parties expressly acknowledge and agree that the Company shall be entitled to specific performance to cause (i) Parent,
Acquisition Sub 1 and Acquisition Sub 2 to consummate the Mergers and the Closing and (ii) the Parent External Adviser to fund
and deposit with the Exchange Agent the aggregate Cash Consideration and otherwise to perform its obligations under
Section 2.1(a)(ii)
and
Section 2.2, in each case on the terms and subject to the conditions set forth in this Agreement. In no event shall any party be
entitled to receive both monetary damages to which it is entitled pursuant to this Agreement and a grant of specific performance of the
consummation of the transactions contemplated hereby;
provided
, that the pursuit of specific performance or other equitable relief
shall not constitute an election of remedies or a waiver of any right to pursue monetary damages to which it is entitled under this Agreement,
and if specific performance is denied or not granted, the party seeking such relief shall be entitled to pursue any monetary damages
to which it is entitled under this Agreement. 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 and not to assert that a remedy
of monetary damages would provide an adequate remedy for such breach. 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.
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
.]
72
IN WITNESS WHEREOF, Parent,
Acquisition Sub 1, Acquisition Sub 2, 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.
ARES CAPITAL CORPORATION
By:
/s/ Kort Schnabel
Name:
Kort Schnabel
Title:
Chief Executive Officer
UNION ACQUISITION SUB, INC.
By:
/s/ Kort Schnabel
Name:
Kort Schnabel
Title:
President
UNION ACQUISITION SUB LLC
By:
/s/ Kort Schnabel
Name:
Kort Schnabel
Title:
President
MIDCAP FINANCIAL INVESTMENT CORPORATION
By:
/s/ Kristin Hester
Name:
Kristin Hester
Title:
Chief Legal Officer, Vice President and Secretary
ARES CAPITAL MANAGEMENT LLC (solely
for the purposes of
Section 2.1(a)(ii)
,
Section 2.2
,
Article V
,
Article VII
,
Section 6.9
,
Section 8.1(a)
,
Section 8.3
,
Section 8.5
,
Section 8.6
and
Article IX
(and the defined terms used therein))
By:
/s/ Ian Fitzgerald
Name:
Ian Fitzgerald
Title:
Authorized Signatory
[
Signature Page to Agreement
and Plan of Merger
]
Appendix A
As used in this Agreement, the following terms
shall have the following meanings:
“
Adviser Material
Adverse Effect
” shall mean any fact, circumstance, event, change, occurrence or effect that has a material adverse effect on
the ability of the Parent External Adviser to timely perform its obligations under this Agreement or consummate the transactions contemplated
hereby.
“
Affiliate
”
means, with respect to any Person as of any relevant time of determination, any other Person that, directly or indirectly through one
(1) or more intermediaries, controls, or is controlled by, or is under common control with, such Person, and the term “control”
(including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities,
by Contract or otherwise;
provided
that (i) no Parent Portfolio Company or Vehicle (or any form of real asset or property
held by any form of asset holding structure of, or such other investment or portfolio company of, a Vehicle) advised, managed, sponsored
or controlled by the Parent External Adviser or a member of the Parent External Adviser or any Person directly or indirectly controlled,
controlled by or under common control with Parent, the Parent External Adviser or a member of the Parent External Adviser will be deemed
to be an “Affiliate” of Parent, Acquisition Subs, the Parent External Adviser or their respective Affiliates (except that
each of Parent, Acquisition Sub 1 and Acquisition Sub 2 shall be an Affiliate of the other) and (ii) no Company Portfolio Company
or Vehicle (or any form of real asset or property held by any form of asset holding structure of, or such other investment or portfolio
company of, a Vehicle) advised, managed, sponsored or controlled by the Company External Adviser or a member of the Company External
Adviser or any Person directly or indirectly controlled, controlled by or under common control with the Company, the Company External
Adviser or a member of the Company External Adviser will be deemed to be an “Affiliate” of Company, the Company External
Adviser or their respective Affiliates (except that each of Company, its Affiliates and the Company External Adviser shall be an Affiliate
of the other).
“
Anti-Corruption
Laws
” means all laws, rules and regulations relating to bribery or corruption, including: (a) the U.S. Foreign
Corrupt Practices Act of 1977, as amended; (b) the UK Bribery Act 2010; (c) any laws implementing the principles described
in the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions; and (d) any other applicable
anti-corruption or anti-bribery laws.
“
Anti-Money Laundering
Laws
” means all laws, rules and regulations of any Governmental Authority concerning or relating to terrorism financing
or money laundering, including the Bank Secrecy Act of 1970, as amended by the USA PATRIOT Act.
“
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, Parent, Acquisition Sub 1, Acquisition Sub 2, the Company or any of their respective
Affiliates, directors, officers, employees or agents, as the case may be.
A-
1
“
Blue Sky Laws
”
shall mean state securities or “blue sky” laws.
“
Business Day
”
shall mean any day other than a Saturday, Sunday or a day on which banking institutions in New York, New York are authorized or obligated
by Law or executive order to close.
“
CLO
”
means a collateralized loan obligation transaction in respect of which the Company or the Successor Manager acts as the collateral
manager.
“
Code
”
shall mean the Internal Revenue Code of 1986, as amended.
“
Company Administration
Agreement
” shall mean the Second Amended and Restated Administration Agreement, dated as of May 17, 2018, by and between
Apollo Investment Corporation, a Maryland corporation and the Company Administrator.
“
Company Administrator
”
shall mean Apollo Investment Administration, LLC, a Delaware limited liability company.
“
Company Balance
Sheet
” means the unaudited consolidated balance sheet of the Company as of the Company Balance Sheet Date and the footnotes
thereto set forth in the Company’s quarterly report on Form 10-Q for the quarterly period ended on the Company Balance Sheet
Date.
“
Company Balance
Sheet Date
” means June 30, 2026.
“
Company
Credit Agreement
”
means the Third Amended and Restated Senior Secured Revolving Credit Agreement, dated as of October 1,
2025 (as amended, restated, supplemented or otherwise modified from time to time prior to the date hereof or as permitted under this
Agreement), by and between the Company, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent.
“
Company Disclosure
Letter
” shall mean the disclosure letter delivered by the Company to Parent simultaneously with the execution of this Agreement.
“
Company External
Adviser
” shall mean Apollo Investment Management, L.P.
“
Company Indenture
”
means the Indenture, dated as of October 9, 2012, as amended, supplemented or modified from time to time, by and between the Company
and U.S. Bank National Association, as Trustee and the supplemental indentures thereto.
“
Company Investment
Advisory Agreement
” shall mean the agreement entered into by the Company External Adviser with the Company for the purpose
of providing investment advisory or investment management services.
A-
2
“
Company IT Systems
”
means the computers, software, code, hardware, platforms, servers, routers, hubs, switches, data communications lines, networks, and
all other information technology equipment and assets owned, leased or licensed by the Company and its Subsidiaries.
“
Company Material
Adverse Effect
” shall mean any fact, circumstance, event, change, occurrence or effect that has had, or would reasonably be
expected to have, individually or in the aggregate, 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, for purposes of the foregoing clause (1) only, 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:
(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 Company Portfolio Companies operate
(or applicable portions or segments of such industries or markets); (iii) changes in any Applicable Law or applicable accounting
regulations or authoritative interpretations thereof; (iv) any change in the price or trading volume of the Company’s or
any of the Company 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 a Company Material Adverse Effect shall have occurred or exists or would reasonably
be expected to occur or exist); (v) any failure by the Company or any of the Company Portfolio Companies to meet published analyst
estimates or expectations of the Company’s or such Company 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 a Company Material Adverse Effect shall have occurred or exists or would reasonably be expected to occur
or exist); (vi) any failure by the Company, any of its Subsidiaries or any Company Portfolio Company to meet its internal or published
projections, budgets, plans or Forecasts, 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 a Company Material Adverse Effect shall have occurred
or exists or would reasonably be expected to occur or exist); (vii) any outbreak or escalation of hostilities or war or any act
of terrorism, including cyberterrorism, or any acts of God or natural disasters, epidemic, pandemic, disease outbreak, or the related
responses of Governmental Authorities with respect thereto; (viii) the announcement of this Agreement, including (A) the
initiation of litigation by any stockholders of the Company or any Stockholders of Parent, in each case, with respect to this Agreement
or the transactions contemplated hereby, or (B) any termination of, reduction in or similar negative impact on relationships, contractual
or otherwise, with Company Portfolio Companies, due to the announcement of this Agreement (
provided
, that when “Company
Material Adverse Effect” is used in relation to the representations and warranties of the Company in
Sections 3.3(d)
and
3.4
, this clause (viii) shall be disregarded); (ix) any action taken by the Company or any of its Subsidiaries that
is required to be taken pursuant to this Agreement; or (x) any actions taken or omitted to be taken at the express written request
of Parent, to the extent taken in accordance with such request;
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 or would reasonably be expected to occur to the 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.
A-
3
“
Company Owned Intellectual
Property
” shall mean all Intellectual Property Rights owned by the Company or its Subsidiaries.
“
Company Portfolio
Company
” shall mean any entity in which the Company or any of its Subsidiaries has made, makes or proposes to make a debt or
equity investment that is or would be reflected in the schedule of investments included in the Company’s quarterly or annual
reports.
“
Company Privacy/Data
Security Laws
” means, to the extent relating to Processing of Personal Information or otherwise relating to data privacy, data
security, or security breach notification requirements and to the extent applicable to the Company or its Subsidiaries, all Applicable
Laws to the extent governing the receipt, collection, use, storage, handling, sharing, security, use, disclosure, transfer, or other
Processing of Personal Information or the security (or breaches of security) of Company IT Systems.
“
Company Privacy
Requirement
” means any of the following to the extent relating to Processing of Personal Information: (i) the Company’s
or any of its Subsidiaries’ own public or posted policies and procedures (whether physical or technical in nature, or otherwise)
and (ii) binding industry standards applicable to the Company or any of its Subsidiaries, including, to the extent applicable,
the Payment Card Industry Data Security Standard (PCI-DSS).
“
Company Recommendation
”
shall mean the recommendation of the Company Board (acting upon the recommendation of the Special Committee) that the stockholders of
the Company approve the Mergers.
“
Company Termination
Fee
” shall mean $31,360,000.00.
“
Confidentiality
Agreement
” shall mean the confidentiality agreement, dated as of April 27, 2026, by and between the Company and Ares
Management LLC.
“
Contract
”
shall mean any 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.
“
Delaware Secretary
”
shall mean the Secretary of State of the State of Delaware.
A-
4
“
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.
“
ERISA
”
shall mean the Employee Retirement Income Security Act of 1974, as amended.
“
Exchange Act
”
shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“
Exchange Ratio
”
shall be calculated as follows:
(i)
if
the quotient of the Parent Common Stock Price and the Parent Per Share NAV is less than or equal to 100%, then the Exchange Ratio shall
be the quotient (rounded to the fourth nearest decimal) of (A) (I) the Per Share Stock Consideration minus (II) the
Post-Signing Tax Dividend Amount divided by (B) the Parent Per Share NAV;
(ii)
if
the quotient of the Parent Common Stock Price and the Parent Per Share NAV is greater than 100% but less than or equal to 104.5%, then
the Exchange Ratio shall be equal to the quotient (rounded to the fourth nearest decimal) of (A) the product of (I)(x) the
Per Share Stock Consideration minus (y) the Post-Signing Tax Dividend Amount and (II) the sum of (x) 1.00 and (y) 50%
of the difference between (a) the quotient of the Parent Common Stock Price and the Parent Per Share NAV and (b) 1.00 divided
by (B) the Parent Common Stock Price; or
(iii)
if
the quotient of the Parent Common Stock Price and the Parent Per Share NAV is greater than 104.5%, then the Exchange Ratio shall be equal
to the quotient (rounded to the fourth nearest decimal) of (A) the product of (I)(x) the Per Share Stock Consideration minus
(y) the Post-Signing Tax Dividend Amount and (II) 102.25% divided by (B) the Parent Common Stock Price.
“
Existing
CLO
”
means each of the CLOs listed in
Section 6.22
of the Company Disclosure Letter.
“
Fraud
”
means, of a Person, an intentional and knowing misrepresentation of or with respect to a representation or warranty set forth in this
Agreement, or in any certificate delivered hereunder, by such Person, which misrepresentation constitutes actual common law fraud (and
not constructive fraud or negligent misrepresentation).
“
GAAP
”
shall mean the United States generally accepted accounting principles, consistently applied in accordance with past practice.
A-
5
“
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.
“
Government
Official
” means: (i) any full- or part-time officer or employee of any Governmental Authority, whether elected or appointed;
(ii) any person acting in an official capacity or exercising a public function for or on behalf of any Governmental Authority;
or (iii) any political parties, political party officials, or candidates for political office.
“
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.
“
Intentional Breach
”
shall mean any material breach of this Agreement where the action or non-action constituting or giving rise to such breach was intentionally
undertaken by the party taking such action, with actual knowledge that such action or non-action would or would reasonably be expected
to constitute or give rise to a breach of this Agreement.
“
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 direct or contingent obligations
under letters of credit, bankers’ acceptances, bank guarantees, surety bonds and similar instruments, each to the extent drawn
upon and unpaid, (v) any obligation to pay the deferred purchase price of property or services (other than trade accounts payable
in the ordinary course of business), (vi) any capitalized lease obligations, (vii) all liabilities, prepayment penalties
or premiums, expenses or other amounts that are payable in connection with retirement, prepayment or termination of any of the foregoing
clauses (i)
through
(vi)
and (viii) guarantees, endorsements and assumptions in respect of any
of the foregoing
clauses (i)
through
(vi)
.
“
Intellectual Property
Rights
” means all intellectual property rights worldwide, including (i) patents and utility models, (ii) Trademarks,
(iii) copyrights, mask works and copyrightable designs, (iv) trade secrets, and other intellectual property rights in know-how
and confidential or proprietary information, and (v) all registrations and applications for the registration or issuance of any
of the foregoing.
“
International Trade
Laws
” shall mean (a) all applicable trade, export control, import, and antiboycott laws and regulations imposed, administered,
or enforced by the U.S. government, including the Arms Export Control Act (22 U.S.C. § 1778), the International Emergency Economic
Powers Act (50 U.S.C. §§ 1701–1706), Section 999 of the Internal Revenue Code, the U.S. customs laws at Title 19
of the U.S. Code, the Export Control Reform Act of 2018 (50 U.S.C. §§ 4801-4861), the International Traffic in Arms Regulations
(22 C.F.R. Parts 120–130), the Export Administration Regulations (15 C.F.R. Parts 730-774), the U.S. customs regulations at 19
C.F.R. Chapter 1, and the Foreign Trade Regulations (15 C.F.R. Part 30); and (b) all applicable trade, export control, import,
and antiboycott laws and regulations imposed, administered or enforced by any other country, except to the extent inconsistent with U.S.
Law.
A-
6
“
Intervening Event
”
shall mean an event, occurrence, development or change in circumstances with respect to or impacting the Company and its Subsidiaries
or the businesses of the Company and its Subsidiaries (other than any event, occurrence, development or change resulting from a breach
of this Agreement by the Company), in each case taken as a whole, that was unknown to, and not 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 (whether alone or in combination): (i) the receipt, existence of or terms of an Inquiry or Competing
Proposal or any matter relating thereto or consequence thereof; (ii) any change in the market price or trading volume of the Company
Common Stock or Parent Common Stock, changes in the credit or analyst ratings of the Company or its Subsidiaries or Parent or its Subsidiaries,
or the performance of the Company or Parent relative to any estimates or expectations of revenue, earnings or other financial performance
or results of operations for any period, in and of itself (it being understood that the underlying causes of any such change may, to
the extent not otherwise excluded from this definition of Intervening Event, be taken into account in determining whether an Intervening
Event has occurred); (iii) any action taken by the parties to this Agreement pursuant to any affirmative regulatory covenants set
forth herein, or the consequences of any such action; or (iv) any event, occurrence, development or change in circumstances with
respect to or impacting the Parent, the Parent External Adviser or their respective Subsidiaries.
“
Investment Advisers
Act
” shall mean the Investment Advisers Act of 1940, as amended, and the rules and regulations promulgated thereunder.
“
Investment Company
Act
” shall mean the Investment Company Act of 1940, as amended, and the rules and regulations promulgated thereunder.
“
IRS
”
shall mean the United States Internal Revenue Service.
“
Knowledge
”
shall mean (i) with respect to the Company, the actual knowledge, after due inquiry of their respective direct reports, of those
persons set forth in
Section A-2
of the Company Disclosure Letter, (ii) with respect to Parent, the actual knowledge,
after due inquiry of their respective direct reports, of those persons set forth in
Section A-1
of the Parent Disclosure
Letter and (iii) with respect to the Parent External Adviser, the actual knowledge, after due inquiry of their respective direct
reports, of those persons set forth in
Section A-1
of the Parent Disclosure Letter.
“
Law
”
shall mean any domestic (federal, state or local) or foreign law, rule, regulation, statute, ordinance, order, judgment or decree promulgated
by any Governmental Authority.
A-
7
“
Lien
”
shall mean any lien, claim, mortgage, encumbrance, pledge, security interest or charge of any kind
, encroachment, easement, covenant,
restriction, real property title defect (or similar irregularity), option, right of first refusal or offer or other adverse claim.
“
NASDAQ
”
shall mean The Nasdaq Global Select Market.
“
Order
”
shall mean any decree, order, judgment, injunction, writ, declaration, temporary restraining order or other order in any Proceeding or
issued by any Governmental Authority.
“
Parent Administration
Agreement
” shall mean the Amended and Restated Administration Agreement, dated as of June 1, 2007, between Ares Capital
Corporation and Ares Operations LLC.
“
Parent Balance
Sheet
” means the unaudited consolidated balance sheet of Parent as of the Parent Balance Sheet Date and the footnotes thereto
set forth in Parent’s quarterly report on Form 10-Q for the quarterly period ended on the Parent Balance Sheet Date.
“
Parent Balance
Sheet Date
” means June 30, 2026.
“
Parent Common Stock
Price
” means the closing price per share of Parent Common Stock on the date the Parent Per Share NAV is determined, or if the
NASDAQ is closed on such date, on the most recent Trading Day as of such date.
“
Parent Disclosure
Letter
” shall mean the disclosure letter delivered by Parent to the Company simultaneously with the execution of this Agreement.
“
Parent External
Adviser Disclosure Letter
” shall mean the disclosure letter delivered by Parent External Adviser to the Company simultaneously
with the execution of this Agreement.
“
Parent Investment
Advisory Agreement
” shall mean the Second Amended and Restated Investment Advisory and Management Agreement entered into by
the Parent External Adviser with Parent for the purpose of providing investment advisory or investment management services.
A-
8
“
Parent Material
Adverse Effect
” shall mean any fact, circumstance, event, change, occurrence or effect that has had, or would reasonably be
expected to have, individually or in the aggregate, 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, for purposes of the foregoing clause (1) only, 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: (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, any of its Subsidiaries, or any of the Parent Portfolio Companies operate (or applicable portions
or segments of such industries or markets); (iii) changes in any Applicable Laws or applicable accounting regulations or authoritative
interpretations thereof; (iv) any change in the price or trading volume of Parent’s or any of the Parent 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 “Parent Material Adverse Effect” shall 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); (v) any failure
by Parent or any of the Parent Portfolio Companies to meet published analyst estimates or expectations of Parent’s or such Parent
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 “Parent Material Adverse Effect” shall 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); (vi) any failure by Parent, any of its
Subsidiaries or any Parent Portfolio Company to meet its internal or published projections, budgets, plans or Parent Forecasts, 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 a Parent Material Adverse Effect shall have occurred or exists or would reasonably
be expected to occur or exist); (vii) any outbreak or escalation of hostilities or war or any act of terrorism, including cyberterrorism,
or any acts of God or natural disasters, epidemic, pandemic, disease outbreak, or the related responses of Governmental Authorities with
respect thereto; (viii) the announcement of this Agreement, including (A) the initiation of litigation by any stockholders
of the Company or any Stockholders of Parent, in each case, with respect to this Agreement or the transactions contemplated hereby, or
(B) any termination of, reduction in or similar negative impact on relationships, contractual or otherwise, with Parent Portfolio
Companies due to the announcement of this Agreement (provided, that when “Parent Material Adverse Effect” is used in relation
to the representations and warranties of the Parent in
Sections 4.3(c)
and
4.4
, this clause (viii) shall be
disregarded); (ix) any action taken by Parent or any of its Subsidiaries that is required to be taken pursuant to this Agreement
or (x) any actions taken or omitted to be taken at the express written request of the Company, to the extent taken in accordance
with such request;
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
or would reasonably be expected to occur to the 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 Net Asset
Value
” shall mean the net asset value of Parent as of a date mutually agreed by Parent and the Company that is no earlier than
48 hours (excluding Sundays and holidays) prior to the Effective Time, as calculated by Parent in good faith and based upon the same
assumptions and methodologies, and applying the same categories of adjustments to net asset value (except as may be mutually agreed by
Parent and the Company), historically used by Parent in preparing the calculation of the net asset value per share of Parent Common Stock
(with an accrual for any dividend declared by Parent and not yet paid).
“
Parent Organizational
Documents
” shall mean the charter, bylaws, certificate of formation and/or limited liability company agreement, as applicable,
each as amended to date, of each of Parent, Acquisition Sub 1 and Acquisition Sub 2.
A-
9
“
Parent Per Share
NAV
” shall mean the quotient of (i) the Parent Net Asset Value
divided by
(ii) the number of shares of Parent
Common Stock issued and outstanding as of the close of business on the date the Parent Net Asset Value is calculated.
“
Parent Portfolio
Company
” shall mean any entity in which Parent or any of its Subsidiaries has made, makes or proposes to make a debt or equity
investment that is or would be reflected in the schedule of investments included in Parent’s quarterly or annual reports.
“
Pending Acquisition
Agreement
” shall mean any definitive agreement, duly executed and delivered as of the date of this Agreement, relating to the
acquisition, lease or license (whether by merger, sale of stock, sale of assets or otherwise) of (i) any Company Portfolio Company
investment or (ii) any corporation, partnership, limited liability company, other business organization or any division or all
or any portion of the assets, business or properties of any other Person, in each case set forth on
Section 6.1(e)(iv)
of
the Company Disclosure Letter.
“
Pending Sale Agreement
”
shall mean any definitive agreement, duly executed and delivered as of the date of this Agreement, relating to the disposition, lease
or license (whether by merger, sale of stock, sale of assets or otherwise) of (i) any Company Portfolio Company investment or (ii) any
corporation, partnership, limited liability company, other business organization or any division or all or any portion of the assets,
business or properties of any other Person, in each case set forth on
Section 6.1(e)(iii)
of the Company Disclosure
Letter.
“
Permit
”
shall mean any license, permit, variance, exemption, approval, qualification, authorization, consent or Order of any Governmental Authority.
“
Permitted
Lien
” shall mean (i) any Lien for Taxes not yet due and payable or being contested in good faith 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, in each case in the ordinary course of business, (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 applicable
party or 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 which do not materially impair the current use or operation by the applicable party or its
Subsidiaries of such leased real property, (vi) Liens securing indebtedness or liabilities that are reflected in the Company SEC
Documents or the Parent 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 or Parent, as applicable, and Liens securing indebtedness or liabilities that have
otherwise been disclosed to Parent or the Company, as applicable, in writing, (vii) such Liens or other imperfections of title,
if any, that
would not, individually or in the aggregate, be material to a party and its Subsidiaries, taken as a whole, including
Liens for any supplemental Taxes or assessments not shown by the public records, (viii) with respect to real property, Liens
disclosed on existing title reports or existing surveys, in each case, that do not materially impair the current use or operation by
the applicable party or its Subsidiaries of such real property, (ix) Liens securing acquisition financing with respect to the applicable
asset, including refinancings thereof, (x) Liens described in Section A-2 to the Company Disclosure Letter or Section A-2
of the Parent Disclosure Letter, as applicable, (xi) licenses or grants of rights with respect to Intellectual Property Rights
on a non-exclusive basis in the ordinary course of business, (xii) liens securing indebtedness that will be repaid under payoff
letters or that the Company is otherwise obligated to discharge at Closing and (xiii) Liens securing any refinancing, renewal,
extension or replacement of indebtedness secured by Liens described in clauses (vi), (ix) or (x), provided that the amount secured
is not increased (other than by accrued interest, fees, premiums and expenses) and such Liens do not extend to any additional assets.
A-
10
“
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.
“
Per Share Stock
Consideration
” means an amount equal to $9.67.
“
Personal Information
”
means any data or information that (i) directly or indirectly identifies or is reasonably capable of identifying a natural Person,
or (ii) is considered “personally identifiable information”, “personal information”, or “personal
data” under Applicable Law.
“
Post-Signing Tax
Dividend Amount
” means the aggregate amount per share of Company Common Stock of any Tax Dividends (excluding, for clarity,
Quarterly Dividends) declared by the Company after the date of this Agreement pursuant to
Section 6.19
or otherwise and
with a record date on or prior to the Closing Date, and with no dividend counted more than once.
“
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.
“
Process
”,
“
Processed
” or “
Processing
” means the collection, use, storage, processing, recording, transmission,
modification, destruction, retrieval, disposal, sharing, or disclosure or other activity regarding Personal Information (whether electronically
or in any other form or medium).
“
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, across, over or in the air, soil, surface
water, groundwater or real property.
“
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.
“
Sanctioned Country
”
shall mean, at any time, a country or territory that is the target of comprehensive Sanctions (as of the date of this Agreement, Cuba, Iran,
North Korea, and the Crimea, the so-called Donetsk People’s Republic, and the so-called Luhansk People’s Republic regions
of Ukraine, and prior to July 1, 2025, Syria).
A-
11
“
Sanctioned Person
”
shall mean any Person that is the target of Sanctions, including (a) any Person listed in any Sanctions-related list of designated
Persons maintained by Office of Foreign Assets Control (“
OFAC
”) or the U.S. Department of State, the United Nations
Security Council, the European Union, any Member State of the European Union, or the United Kingdom; (b) any Person located, organized,
or resident in a Sanctioned Country; or (c) any Person fifty percent (50%) or more owned or controlled by any such Person or Persons
or acting for or on behalf of such Person or Persons.
“
Sanctions
”
shall mean economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by the United States
(including OFAC and the U.S. Department of State), the United Nations Security Council, the European Union, any European Union Member
State, or the United Kingdom.
“
SEC
”
shall mean the United States Securities and Exchange Commission.
“
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.
“
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;
provided
, that in the case of (i) the Company, no Company
Portfolio Company shall be deemed to be a Subsidiary of the Company, and (ii) Parent, no Parent Portfolio Company shall be deemed
a Subsidiary of the Parent, in each case, for the purposes of this Agreement.
“
Successor Manager
”
means Parent or the Affiliate of Parent that (i) replaces the Company as the collateral manager for any CLO and/or (ii) is
appointed as the collateral manager for any new CLO.
“
Tax
”
or “
Taxes
” shall mean any and all taxes, fees, levies, duties, tariffs, imposts, and other similar charges in the
nature of a tax (together with any and all interest, penalties and additions to tax) imposed by any Governmental Authority including
taxes or other charges on or with respect to income, franchises, windfall or other profits, gross receipts, 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, 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) “investment company taxable income” within the meaning of Section 852(b) of the Code
(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, (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, and (iv) net capital gain (within
the meaning of Section 1222(11) of the Code), if any, in each case recognized either in the applicable tax year or any prior tax
year.
A-
12
“
Tax Returns
”
shall mean returns, reports, forms or information statements, including any schedule or attachment thereto or any amendment thereof,
with respect to Taxes filed or required to be filed with the IRS or any other Taxing Authority.
“
Taxing Authority
”
shall mean any Governmental Authority having jurisdiction over the assessment, determination, collection or other imposition of any Tax.
“
Third Party
”
shall mean any Person or group of Persons other than, for purposes of (i)
Section 6.6
, Parent, Acquisition Sub 1,
Acquisition Sub 2, the Parent External Adviser and their respective Affiliates, or (ii) all other provisions of this Agreement,
(a) Parent, Acquisition Sub 1, Acquisition Sub 2, the Parent External Adviser and their respective Affiliates, when used with reference
to Parent, Acquisition Sub 1, Acquisition Sub 2 or the Parent External Adviser, or (b) the Company and its Affiliates, when used
with reference to the Company.
“
Trading Day
”
means any day on which NASDAQ is open for trading.
“
Trademarks
”
shall mean trademarks, service marks, trade dress, trade names, internet domain names, and other indicia of source or origin.
“
VDR
”
shall mean any electronic data room for “Project Union” and maintained by the Company for purposes of the Mergers and the
other transactions contemplated by this Agreement, including the electronic data room hosted by Box under the title “MFIC - Ares
(Project Union) - Diligence”.
“
Vehicle
”
means any investment fund vehicle or any other similar investment arrangement (including any master or feeder fund or parallel
fund, alternative investment vehicle, co-investment vehicle, joint venture, continuation vehicle, general or limited partnership, limited
liability company, trust, business development corporation, registered investment company or real estate investment trust, in each case
that serves as an investment fund vehicle or similar investment arrangement) or separately managed account, in each case, regardless
of whether dedicated to a single investor or multiple investors, closed or open-ended or private or publicly traded.
A-
13
Table of Definitions
Term
Section
Acceptable
Confidentiality Agreement
Section 6.6(c)
Acceptable
Courts
Section 9.8
Acquisition
Sub 1
Preamble
Acquisition
Subs
Preamble
Acquisition
Sub 2
Preamble
Agreement
Preamble
Alternative
Acquisition Agreement
Section 6.6(d)
Antitrust
Laws
Section 6.4(a)
Articles
of Second Merger
Section 1.3(b)
Bankruptcy
and Equity Exception
Section 3.3(a)
BDC
Recitals
Book-Entry
Shares
Section 2.1(a)(ii)
Cash
Consideration
Section 2.1(a)(ii)
Canceled
Shares
Section 2.1(a)(i)
Certificates
Section 2.1(a)(ii)
Closing
Section 1.2
Closing
Date
Section 1.2
Company
Preamble
Company
Adverse Recommendation Change
Section 6.3(c)
Company
Board
Recitals
Company
Capitalization Date
Section 3.2(a)
Company
Common Stock
Section 2.1(a)(i)
Company
Fundamental Representations
Section 7.2(a)
Company
Leases
Section 3.16(b)
Company
Leased Real Property
Section 3.16(b)
Company
Material Contract
Section 3.15(a)
Company
Notice Period
Section 6.6(d)(i)
Company
No MAE Rep
Section 7.2(a)
Company
Related Parties
Section 8.3(c)
Company
Registered Intellectual Property
Section 3.13(a)
Company
SEC Documents
Section 3.6(a)
Company
Representative
Section 3.26
Company
Stockholder Approval
Section 3.19
Company
Stockholders’ Meeting
Section 6.3(b)
Company’s
Articles
Section 3.1
Company’s
Bylaws
Section 3.1
Competing
Proposal
Section 6.6(g)(i)
Company
Security Incident
Section 3.13(f)
Consent
Section 3.4
Delaware
Secretary
Section 1.3(a)
Deposited
Dividend
Section 6.19
D&O
Indemnified Parties
Section 6.7(a)
A-
14
DLLCA
Recitals
DTC
Section 2.2(b)
Effective
Time
Section 1.3(a)
Exchange
Agent
Section 2.2(a)
Exchange
Fund
Section 2.2(a)
First
Merger
Recitals
First
Merger Filing
Section 1.3(a)
Forecasts
Section 4.21(a)
Form N-14
Section 3.7
Inquiry
Section 6.6(a)
Intellectual
Property Rights
Section 3.13(c)
Intended
Tax Treatment
Section 6.13(a)
Interim
Period
Section 6.1
Mergers
Recitals
Merger
Consideration
Section 2.1(a)(ii)
MGCL
Recitals
Notice
of Adverse Recommendation
Section 6.6(e)(i)
Note
Redemption Documents
Section 6.15
Parent
Preamble
Parent
Board
Recitals
Parent
Capitalization Date
Section 4.2(a)
Parent
Common Stock
Section 2.1(a)(ii)(A)
Parent
Draft 10-Q
Section 4.14(b)
Parent
External Adviser
Preamble
Parent
Forecasts
Section 3.29
Parent
Fundamental Representations
Section 7.3(a)
Parent
No MAE Rep
Section 7.3(a)
Parent
Related Parties
Section 8.3(c)
Parent
SEC Documents
Section 4.6(a)
Payoff
Amount
Section 6.14
Payoff
Letter
Section 6.14
Plan
Assets
Section 3.25
Proxy
Statement
Section 3.7
Quarterly
Dividends
Section 6.1(d)
RIC
Section 3.14(h)
SDAT
Section 1.3(a)
Second
Effective Time
Section 1.3(b)
Second
Merger
Recitals
Second
Merger Filings
Section 1.3(b)
Share
Consideration
Section 2.1(a)(ii)
Similar
Law
Section 3.25
Special
Committee
Recitals
Special
Committee Recommendation
Recitals
Superior
Proposal
Section 6.6(g)(ii)
Surviving
Corporation
Recitals
Surviving
Company
Recitals
Takeover
Statutes
Section 3.18
Termination
Date
Section 8.1(b)(i)
Voting
Agreements
Recitals
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15

----- tm2628314d1_ex99-1.htm -----
EX-99.1
4
tm2628314d1_ex99-1.htm
EXHIBIT 99.1
Exhibit 99.1
Ares Capital Corporation Agrees to Acquire MidCap
Financial Investment Corporation
Transaction Expected to Be Accretive to Ares
Capital’s Core Earnings and
Support Future Dividends
Enhances Scale, Diversification and Market Presence
to Further Strengthen Ares Capital’s Position as the Largest Publicly Traded BDC and Ares Management’s Leading U.S. Direct
Lending Platform
Purchase Price Represents a 30.1% Premium to
MFIC’s Last Closing Price and a 25.8% Premium to MFIC’s 30-Day VWAP
NEW YORK – October 27, 2026
–
Ares Capital Corporation (NASDAQ: ARCC) (“Ares Capital”) and MidCap Financial Investment Corporation (NASDAQ: MFIC) (“MFIC”)
announced today that they have entered into a definitive merger agreement under which Ares Capital will acquire MFIC in a stock-and-cash
transaction for a total enterprise value of approximately $2.6 billion (the “Transaction”). The Transaction is expected to
further strengthen Ares Capital’s position as the largest publicly traded business development company (“BDC”) and Ares
Management Corporation’s (NYSE: ARES) (“Ares Management”) broader position as a leading direct lending platform to U.S.
middle-market companies. The Transaction has been unanimously approved by the Board of Directors of Ares Capital and the Board of Directors
of MFIC, which did so on the unanimous recommendation of the Special Committee of MFIC independent directors.
Under the terms of the Transaction, MFIC stockholders
are expected to receive total consideration of $10.88 per fully diluted share of MFIC common stock, consisting of approximately $1.21
per share in cash, provided by a subsidiary of Ares Management, and approximately $9.67 per share in Ares Capital common stock, as adjusted
for the cash received from MFIC’s special dividend described below. Prior to closing, MFIC expects to declare and pay a special
dividend to distribute to its stockholders all of its undistributed taxable income estimated to remain as of the closing of the Transaction,
which is expected to be meaningful. The Ares Capital stock consideration will be reduced dollar-for-dollar to account for the special
dividend, and the number of shares will be calculated based on an exchange ratio using a value for the Ares Capital common stock equal
to the greater of (i) Ares Capital’s NAV per share prior to closing and (ii) Ares Capital’s share price. In addition, MFIC
stockholders will share in 50% of any premium of Ares Capital’s share price in excess of NAV, up to 104.5% of NAV, which represents
a maximum of 102.25% of NAV.
The consideration of $10.88 per MFIC share represents
a premium of approximately 30.1% to MFIC’s closing share price on October 26, 2026, the last trading day prior to the announcement
of the Transaction, and a premium of approximately 25.8% to MFIC’s 30-day volume-weighted average share price for the period ending
October 26, 2026. MFIC’s preliminary estimate of net asset value per share as of September 30, 2026, is approximately $12.86.
1
1
MFIC’s final net asset value per share as of September
30, 2026, will be reported in MFIC’s third quarter 2026 results, which MFIC expects to release on Thursday, November 5, 2026, and
may differ from this preliminary estimate. The preliminary estimate provided herein has been prepared by, and is the responsibility of,
MFIC's management. This estimate is based solely on MFIC management's preliminary determinations and has not been approved by the Board
of Directors of MFIC. Consequently, the data set forth in MFIC's Quarterly Report on Form 10-Q for the quarter ended September 30, 2026,
may differ from this estimate, and any such differences may be material. Deloitte & Touche LLP, MFIC's independent registered public
accounting firm, has not audited, reviewed, compiled or performed any procedures with respect to this preliminary estimate.
Financially Attractive Combination with Significant
Strategic Benefits
Ares Capital believes the Transaction will create
compelling benefits for stockholders:
·
Accretive to earnings and supports future dividends.
The Transaction is expected to be modestly
accretive to Ares Capital’s core earnings per share, further supporting future dividends. The combined company and its affiliates
expect to benefit from MFIC’s portfolio of senior secured investments with compelling current yields.
·
Greater scale and diversification.
The addition of MFIC’s healthy and broad-based assets
will further diversify Ares Capital’s portfolio across borrowers, industries and sponsors. At closing, the Transaction is expected
to increase Ares Capital’s pro forma portfolio to more than 800 portfolio companies and over $31 billion of investments at fair
value as of September 30, 2026.
·
Broader sponsor and market connectivity.
MFIC’s portfolio is expected to add more than 200
incumbent positions and further expand the number of sponsors Ares Capital has transacted with to more than 600. These relationships are
expected to enhance Ares Capital’s long-standing core middle-market presence and to support future investment opportunities, resulting
in greater financial resilience and strengthening its ability to grow through dynamic market environments.
·
Continued industry leadership.
The Transaction builds on Ares Capital’s nearly two-decade
track record of successful strategic activity, including its prior acquisitions of Allied Capital Corporation and American Capital, Ltd.,
which has been an important contributor to its long-term growth and value creation.
“We’re excited to announce our acquisition
of MFIC, which we believe reinforces our leading competitive position, advances our strategic goals and enhances the earnings power of
our company,” said Kort Schnabel, Chief Executive Officer of Ares Capital. “The MFIC transaction brings a diversified portfolio
and valuable borrower and sponsor relationships, which, when combined with our differentiated private credit investment capabilities,
we expect will bolster the long-term growth profile of Ares Capital. In addition, we believe this transaction will further build on our
successful track record of acquiring publicly traded BDCs and supporting attractive risk-adjusted returns over time.”
“We believe the financial merits of this
transaction are compelling,” said Scott Lem, Chief Financial Officer and Treasurer of Ares Capital. “We expect the transaction
to be accretive to core earnings and supportive of our future dividends, while preserving the balance sheet strength and financial flexibility
that have been central to Ares Capital’s long-term performance. Importantly, the financial support from Ares Management will provide
MFIC stockholders with additional cash value alongside attractive equity in Ares Capital’s industry-leading business.”
“This agreement with Ares Capital represents
a value-maximizing transaction that we are pleased to deliver for MFIC stockholders,” said Tanner Powell, Executive Chairman and
Chief Executive Officer of MFIC. “It provides value meaningfully above MFIC’s current stock price and gives our stockholders
an investment in the largest publicly traded BDC, which has a history of creating stockholder value through successful acquisitions. MFIC’s
investment adviser and Board, upon recommendation of its Special Committee, have concluded that this transaction represents the best path
forward for MFIC’s stockholders.”
“Apollo has long been committed to delivering
positive outcomes wherever we manage investor capital,” said John Zito, Co-President of Apollo Asset Management. “Throughout
this year we have taken active steps to support stockholder value across our public vehicles, including through this transaction. Importantly,
Apollo will continue to invest in and grow our middle-market direct lending franchise, including through the MidCap Financial platform.”
Additional Transaction Details
Prior to the closing of the Transaction, MFIC
will operate its business in the ordinary course, subject to certain interim operating covenants set forth in the Agreement and Plan of
Merger among Ares Capital, MFIC and certain other parties thereto (the “Merger Agreement”).
In connection with the Transaction, Apollo Principal
Holdings A, L.P. and MidCap Financial Trust, each an affiliate of Apollo Management and which together beneficially own 5.2% of MFIC’s
outstanding common stock, have entered into voting and support agreements with Ares Capital.
As part of the Transaction, Ares Capital may issue
up to approximately 41 million shares of common stock to MFIC stockholders; however, it is expected that the total number of shares will
be lower due to an adjustment in the exchange ratio for the MFIC special dividend. Following completion of the Transaction, and without
taking into account the impact of the MFIC special dividend, existing Ares Capital stockholders are expected to own approximately 95%
and existing MFIC stockholders are expected to own approximately 5% of the combined company.
Wells Fargo has also agreed, subject to customary
conditions, to provide $750 million of additional secured financing that can be used to support the Transaction.
The Transaction is expected to close in the first
half of 2027, subject to approval of MFIC’s stockholders, applicable regulatory approvals and the satisfaction of other customary
closing conditions. Upon completion of the Transaction, Ares Capital will continue to be externally managed by Ares Capital Management
LLC, and the existing Ares Capital Board and management team are expected to remain in place.
Wells Fargo is serving as exclusive financial
advisor and Kirkland & Ellis LLP and Latham & Watkins LLP are serving as legal counsel to Ares Capital. Eversheds Sutherland (US)
LLP is serving as legal counsel to the independent directors of Ares Capital. Simpson Thacher & Bartlett LLP is serving as legal counsel
to MFIC. Moelis & Company LLC is serving as financial advisor and Willkie Farr & Gallagher LLP and Stradley Ronon Stevens &
Young, LLP are serving as legal counsel to MFIC’s Special Committee.
About Ares Capital Corporation
Founded in 2004, Ares Capital is a leading specialty
finance company focused on providing direct loans and other investments in private middle-market companies in the United States. Ares
Capital's objective is to source and invest in high-quality borrowers that need capital to achieve their business goals, which oftentimes
can lead to economic growth and employment. Ares Capital believes its loans and other investments in these companies can help generate
attractive levels of current income and potential capital appreciation for investors. Ares Capital, through its investment manager, utilizes
its extensive, direct origination capabilities and incumbent borrower relationships to source and underwrite predominantly senior secured
loans but also subordinated debt and equity investments. Ares Capital has elected to be regulated as a BDC and was the largest publicly
traded BDC by market capitalization as of September 30, 2026. Ares Capital is externally managed by a subsidiary of Ares Management Corporation
(NYSE: ARES), a publicly traded, leading global alternative investment manager. For more information about Ares Capital, visit
www.arescapitalcorp.com
.
About MidCap Financial Investment Corporation
MidCap Financial Investment Corporation (NASDAQ:
MFIC) is a closed-end, externally managed, diversified management investment company that has elected to be treated as a business development
company under the Investment Company Act of 1940, as amended (the “1940 Act”). For tax purposes, MFIC has elected to be treated
as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended. MFIC is externally managed by
Apollo Investment Management, L.P., an affiliate of Apollo Global Management, Inc. and its consolidated subsidiaries, a high-growth global
alternative asset manager. MFIC’s investment objective is to generate current income and, to a lesser extent, long-term capital
appreciation. MFIC primarily invests in directly originated and privately negotiated first lien senior secured loans to privately held
U.S. middle-market companies, which MFIC generally defines as companies with less than $75 million in earnings before interest, taxes,
depreciation and amortization, as may be adjusted for market disruptions, mergers and acquisitions-related charges and synergies, and
other items. To a lesser extent, MFIC may invest in other types of securities including first lien unitranche, second lien senior secured,
unsecured, subordinated, and mezzanine loans, and equities in both private and public middle-market companies. For more information,
please visit
www.midcapfinancialic.com
.
Forward-Looking Statements
Some of the statements in this press release
constitute forward-looking statements because they relate to future events, future performance or financial condition, including
statements regarding the Transaction pursuant to the Merger Agreement. The forward-looking statements may include statements as to:
the consummation of the Transaction, the future operating results of Ares Capital, MFIC and, following the closing of the
Transaction, the combined company, and distribution projections; business prospects of Ares Capital, MFIC and the combined company,
and the prospects of their portfolio companies; and the impact of the investments that Ares Capital, MFIC and the combined company
expect to make. In addition, words such as “anticipate,” “believe,” “expect,”
“seek,” “plan,” “should,” “could,” “estimate,”
“overestimate,” “underestimate,” “project,” “intend,” “may,”
“will,” “endeavor,” “potential,” “predict,” “continue,”
“target” and “would” indicate forward-looking statements, although not all forward-looking statements
include these words. The forward-looking statements contained in this press release involve risks and uncertainties. Should one or
more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary
materially from those indicated or anticipated by such forward-looking statements. The inclusion of such statements should not be
regarded as a representation that such plans, estimates or expectations will be achieved. Certain factors could cause actual results
and conditions to differ materially from those planned, projected, or estimated, including the uncertainties associated with (i) the
ability of the parties to consummate the Transaction on the expected timeline, or at all; (ii) the failure of MFIC stockholders to
approve the Transaction and the other Proposals (as defined below); (iii) the possibility that any or all of the various conditions
to the consummation of the Transaction, including the receipt of any required regulatory approvals, may not be satisfied or waived
on a timely basis or at all, and including the possibility that a governmental entity may prohibit, delay or refuse to grant
approval for the consummation of the Transaction or may require conditions, limitations or restrictions in connection with such
approvals ; (iv) the occurrence of any event, change or other circumstance that could give rise to the termination of the
Merger Agreement, including circumstances requiring MFIC to pay a termination fee; (v) the possibility that competing offers or
acquisition proposals for MFIC will be made; (vi) Ares Capital’s ability to realize the anticipated benefits of the
Transaction, including the expected accretion to Ares Capital’s core earnings and the expected elimination of certain expenses
and costs, including as a result of delay in completing the Transaction or integrating the businesses of MFIC and Ares Capital;
(vii) the amount of the special dividend from MFIC’s undistributed taxable income, the NAV per share of Ares Capital and the
trading price of Ares Capital common stock, each of which will affect the number of shares of Ares Capital common stock issued in
the Transaction; (viii) risks related to diverting management’s attention from ongoing business operations and the effect of
the announcement or pendency of the Transaction on the business relationships, operating results and business generally of Ares
Capital and MFIC; (ix) the combined company’s plans, expectations, objectives and intentions as a result of the Transaction,
including the integration of MFIC’s portfolio; (x) the future operating results and net investment income projections of Ares
Capital, MFIC or, following the closing of the Transaction, the combined company; (xi) the ability of Ares Management to implement
its future plans with respect to the combined company and to attract and retain highly talented professionals; (xii) the business
prospects of Ares Capital, MFIC or the combined company and the ability of their portfolio companies to achieve their objectives;
(xiii) the expected financings and investments and additional leverage that Ares Capital, MFIC or the combined company may seek to
incur in the future; (xiv) the adequacy of the cash resources and working capital of Ares Capital, MFIC or the combined company;
(xv) the timing of cash flows, if any, from the operations of the portfolio companies of Ares Capital, MFIC or the combined company;
(xvi) the ability of Ares Capital and the combined company to maintain their qualification as a business development company under
the 1940 Act, and as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended; (xvii)
general economic, political and market conditions, including changes in interest rates and credit spreads; (xviii) future changes in
laws or regulations (including the interpretation of these laws and regulations by regulatory authorities); (xix) the risk that
stockholder litigation in connection with the Transaction may result in significant costs of defense and liability; (xx) unexpected
costs, charges or expenses resulting from the Transaction, and (xxi) such other factors as are described under the heading
“Risk Factors” in Ares Capital’s and MFIC’s respective annual reports on Form 10-K, quarterly reports on
Form 10-Q and other filings with the Securities and Exchange Commission (“SEC”). Any forward-looking statements speak
only as of the date of this press release. Ares Capital and MFIC have based the forward-looking statements included in this press
release on information available to them on the date hereof, and they assume no obligation to update any such forward-looking
statements. Although Ares Capital and MFIC undertake no obligation to revise or update any forward-looking statements, whether as a
result of new information, future events or otherwise, you are advised to consult any additional disclosures that they may make
directly to you or through reports that Ares Capital and/or MFIC in the future may file with the SEC, including the Proxy
Statement/Prospectus and the Registration Statement (in each case, as defined below), annual reports on Form 10-K, quarterly reports
on Form 10-Q and current reports on Form 8-K. Readers are cautioned not to place undue reliance on any of these forward-looking
statements.
No Offer or Solicitation
This press release is not, and under no circumstances
is it to be construed as, a prospectus or an advertisement and the communication of this press release is not, and under no circumstances
is it to be construed as, an offer to sell or a solicitation of an offer to purchase any securities in Ares Capital, MFIC or in any fund
or other investment vehicle managed by Ares Management, Apollo Management or any of their respective affiliates.
Additional Information and Where to Find It
This press release relates to the proposed Transaction
and certain related matters (the “Proposals”). In connection with the Proposals, Ares Capital will file with the SEC a registration
statement on Form N-14 (the “Registration Statement”) that will include a proxy statement of MFIC and a prospectus of Ares
Capital (the “Proxy Statement/Prospectus”), and MFIC will mail the Proxy Statement/Prospectus to its stockholders. The Proxy
Statement/Prospectus and the Registration Statement will each contain important information about Ares Capital, MFIC, the Transaction
and the Proposals. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a
solicitation of any vote or approval. No offer of securities shall be made except by means of a prospectus meeting the requirements of
Section 10 of the Securities Act of 1933, as amended.
INVESTORS IN ARES CAPITAL AND STOCKHOLDERS OF MFIC ARE URGED TO READ THE
PROXY STATEMENT/PROSPECTUS AND REGISTRATION STATEMENT, AND OTHER DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY
AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT ARES CAPITAL, MFIC, THE TRANSACTION AND THE PROPOSALS.
Investors and security holders will be able to obtain
the documents filed with the SEC free of charge at the SEC’s website, http://www.sec.gov or, for documents filed by Ares Capital,
from Ares Capital’s website at www.arescapitalcorp.com, and, for documents filed by MFIC, from MFIC’s website at https://www.midcapfinancialic.com.
Participants in the Solicitation
Ares Capital, its directors, certain of its executive
officers and certain employees and officers of Ares Management and its affiliates may be deemed to be participants in the solicitation
of proxies in connection with the Proposals. Information about the directors and executive officers of Ares Capital is set forth in its
proxy statement for its 2026 Annual Meeting of Stockholders, which was filed with the SEC on March 5, 2026. MFIC, its directors, certain
of its executive officers and certain employees and officers of Apollo Management and its affiliates may be deemed to be participants
in the solicitation of proxies in connection with the Proposals. Information about the directors and executive officers of MFIC is set
forth in its proxy statement for its 2026 Annual Meeting of Stockholders, which was filed with the SEC on April 30, 2026. Information
regarding the persons who may, under the rules of the SEC, be considered participants in the solicitation of the MFIC stockholders in
connection with the Proposals, including a description of their direct or indirect interests, by security holdings or otherwise, will
be contained in the Proxy Statement/Prospectus when it becomes available. These documents may be obtained free of charge from the sources
indicated above.
Contacts
Ares
Investor Relations
John Stilmar | Carl Drake
+1.888.818.5298
irarcc@ares.com
Media
Priscila Roney | Jacob Silber
media@ares.com
MFIC
Investor Relations
Elizabeth Besen
+1.212.822.0625
ebesen@apollo.com
Apollo Global Management, Inc.
Media
Joanna Rose
Global Head of Corporate Communications
+1.212.822.0491
Communications@apollo.com