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

 

SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

 

Filed by the Registrant ☒

 

Filed by a Party other than the Registrant

 

Check the appropriate box:

 

  Preliminary Proxy Statement
  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material Pursuant to §240.14a-12

 

Princeton Capital Corporation

(Name of Registrant as Specified in Its Charter)

 

(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)

 

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PRINCETON CAPITAL CORPORATION
800 Turnpike Street

 Suite 300

North Andover, Massachusetts 01845
(978) 794-3366

 

April 25, 2018

 

Dear Stockholder:

 

You are cordially invited to attend the 2018 Annual Meeting of Stockholders (the “Annual Meeting”) of Princeton Capital Corporation to be held on Wednesday, May 30, 2018 at 1:00pm, Eastern Time, at 250 West Pratt Street, Suite 2000, Baltimore, Maryland 21201. Only stockholders of record at the close of business on April 16, 2018 are entitled to the notice of, and to vote at, the Annual Meeting, including any postponement or adjournment thereof.

 

Details regarding the business to be conducted are more fully described in the accompanying Notice of Annual Meeting and Proxy Statement.

 

It is important that you be represented at the Annual Meeting, and you are encouraged to vote your shares as soon as possible. If you are unable to attend the meeting in person, I urge you to complete, date and sign the enclosed proxy card and promptly return it in the envelope provided. If you prefer, you can save time by voting through the Internet or by telephone as described in the proxy statement and on the enclosed proxy card. Your vote is important.

 

Sincerely yours,

 

/s/ Mark DiSalvo  
Mark DiSalvo  
Interim Chief Executive Officer  

 

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be Held on May 30, 2018.

 

Our proxy statement and our annual report on Form 10-K for the year ended December 31, 2016 are available at the following cookies-free website that can be accessed anonymously: www.voteproxy.com.

 

 

 

 

PRINCETON CAPITAL CORPORATION
800 Turnpike Street

Suite 300

 North Andover, Massachusetts 01845
(978) 794-3366

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 30, 2018

 

To the Stockholders of Princeton Capital Corporation:

 

The 2018 Annual Meeting of Stockholders (the “Annual Meeting”) of Princeton Capital Corporation, a Maryland corporation (the “Company”), will be held at 250 West Pratt Street, Suite 2000, Baltimore, Maryland 21201 on Wednesday, May 30, 2018, at 1:00pm Eastern Time, to consider and vote on the following proposals:

 

1.The election of four (4) directors of the Company;

 

2.To ratify the selection of WithumSmith&Brown, PC as the Company’s independent registered public accounting firm for the year ending December 31, 2018;

 

3.To approve the new investment advisory agreement between the Company and House Hanover, LLC, a Delaware limited liability company, pursuant to which House Hanover, LLC will be appointed as the Company’s investment advisor;

 

4.To approve the adjournment of the Annual Meeting, if necessary or appropriate, to solicit additional proxies; and

 

5.To transact such other business as may properly come before the meeting, or any postponement or adjournment thereof.

 

THE BOARD, INCLUDING THE INDEPENDENT DIRECTORS, RECOMMENDS THAT YOU VOTE “FOR” EACH OF THESE PROPOSALS.

 

The enclosed proxy statement is also available at www.princetoncapitalcorp.com (under the “Investor Relations” section). This website also includes copies of the form of proxy and the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 (the “Annual Report”). Stockholders may request a copy of the proxy statement and the Company’s Annual Report by contacting our main office at (978) 794-3366. As of the date of this proxy statement, the Company has failed to timely file its quarterly reports on Form 10-Q for the quarters ended on March 31, 2017, June 30, 2017, and September 30, 2017, and its Annual Report on Form 10-K for the year ended December 31, 2017. The Company is working diligently to complete the past due Form 10-K and the past due Form 10-Qs.

 

You have the right to receive notice of and to vote at the Annual Meeting if you were a stockholder of record at the close of business on April 16, 2018. Whether or not you expect to be present in person at the Annual Meeting, please sign the enclosed proxy and return it promptly in the self-addressed envelope provided. As a registered stockholder, you may also authorize your proxy by telephone or over the Internet by following the instructions included with your proxy card. Instructions are shown on the proxy card. In the event there are not sufficient votes for a quorum or to approve any of the foregoing proposals at the time of the Annual Meeting, the Annual Meeting may be postponed or adjourned in order to permit further solicitation of the proxies by the Company.

 

By Order of the Board,

 

/s/ Gregory J. Cannella  
Gregory J. Cannella  
Chief Financial Officer, Secretary and Treasurer


April 25, 2018

 

This is an important meeting. To ensure proper representation at the Annual Meeting, please complete, sign, date and return the proxy card in the enclosed, self-addressed envelope. You may also authorize your proxy by telephone or over the Internet by following the instructions included with your proxy card. Even if you vote your shares prior to the Annual Meeting, you still may attend the Annual Meeting and vote your shares in person.

 

 

 

 

TABLE OF CONTENTS

 

   

Page

GENERAL   1
ANNUAL MEETING INFORMATION   3
VOTING INFORMATION   3
INFORMATION REGARDING THIS SOLICITATION   5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT   6
PROPOSAL 1: ELECTION OF DIRECTORS   7
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE   15
PROPOSAL 2: RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR DECEMBER 31, 2018   16
PRINCIPAL ACCOUNTANT FEES AND SERVICES   16
AUDIT COMMITTEE REPORT   18
PROPOSAL 3: APPROVAL OF NEW INVESTMENT ADVISORY AGREEMENT   19
PROPOSAL 4: ADJOURNMENT OF THE ANNUAL MEETING   24
OTHER BUSINESS   25
SUBMISSION OF STOCKHOLDER PROPOSALS   25
PRIVACY PRINCIPLES   25
EXHIBIT A: NEW INVESTMENT ADVISORY AGREEMENT   A-1
EXHIBIT B: PROXY CARD   B-1

 

i

 

 

PRINCETON CAPITAL CORPORATION
800 Turnpike Street
Suite 300
North Andover, Massachusetts 01845
(978) 794-3366

 

PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS

 

GENERAL

 

This proxy statement is furnished in connection with the solicitation of proxies by the board of directors (the “Board”) of Princeton Capital Corporation, a Maryland corporation (the “Company,” “we,” “us” or “our”), for use at the Company’s 2018 Annual Meeting of Stockholders (the “Annual Meeting”) to be held at 250 West Pratt Street, Suite 2000, Baltimore, Maryland 21201 on Wednesday, May 30, 2018, at 1:00 p.m., Eastern Time and at any postponements or adjournments thereof. This proxy statement, the accompanying proxy card and the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 (the “Annual Report”) are first being sent to stockholders on or about April 25, 2018. 

 

On or about March 15, 2016, the Company engaged WithumSmith&Brown, PC (“WithumSmith”) as its independent registered public accounting firm to audit the Company’s financial statements for the fiscal year ending December 31, 2015 and to perform procedures related to the financial statements included in the Company’s quarterly reports on Form 10-Q, beginning with the quarter ended March 31, 2015. The Company’s stockholders, at the 2017 Annual Meeting, ratified the selection of WithumSmith for the years ending December 31, 2016 and December 31, 2017.

 

The engagement of WithumSmith and the delay in the filings of our Form 10-Q’s and Form 10-K’s arose following litigation involving the Company and other events in 2015, 2016 and 2017. The litigation, captioned Capital Link Fund I, LLC, et al. v. Capital Point Management, LP, et al., C.A. No. 11483-VCN (the “Litigation”) has been disclosed in numerous of the Company’s filings with the Securities and Exchange Commission. As previously disclosed, on June 17, 2016, following our 2016 Annual Meeting (at which certain matters relating to the settlement of the Litigation were approved by our stockholders), a Stipulation and Order of Dismissal of Claims (the “Dismissal Order”) against the Company, Princeton Advisory Group, Inc. (the Company’s former investment advisor, “PAG”), Gregory J. Cannella, Munish Sood, Thomas Jones, Jr. and Trennis L. Jones (together the “Settling Defendants”) and Martin Tuchman (collectively, the “Dismissed Defendants”) was entered in the Delaware Court of Chancery. The Dismissal Order, which was dated June 10, 2016, dismissed with prejudice the claims brought against the Dismissed Defendants.

 

As previously reported by the Company, on February 24, 2017, a Stipulation and Order of Dismissal of Claims (the “Dismissal Order II”) against Alfred Jackson (“Jackson”), Capital Point Management, LP (“CPM”), Capital Point Advisors, LP (“CPA”), and Princeton Investment Advisors, LLC (“PIA”) was entered in the Delaware Court of Chancery. The Dismissal Order II dismissed with prejudice the claims brought against Jackson, CPM, CPA and PIA. Terms of any settlement were not disclosed, all claims with respect to the Litigation have now been dismissed, and the status quo order that had included the Company has been lifted.

 

On September 25, 2017, as previously disclosed by the Company, the United States of America filed Complaints against Munish Sood and others captioned U.S. v. Lamont Evans, et al. and U.S. v. James Gatto, et al., in the Southern District of New York. At the time of the allegations, Mr. Sood was a member of the Board, the Chief Executive Officer of the Company, and the President of the Company. As previously disclosed, as a result of the allegations, Mr. Sood resigned from his positions as a director, Chief Executive Officer, and President, effective September 27, 2017.

 

As a result of the allegations contained in the Complaints, also on September 27, 2017 and as previously disclosed, the Board authorized and directed its Audit Committee (which consists of the Board’s three independent board members) to conduct an independent investigation into whether such events impacted the Company, and the extent to which any officer or employee of the Company may have been involved, and whether any corporate funds may have been utilized in the conduct alleged.

 

 1 

 

 

Also as a result of these developments and as previously disclosed, the Board determined that it would be in the best interests of the Company to terminate the Investment Advisory Agreement between the Company and PAG dated as of June 9, 2016 (the “PAG Investment Advisory Agreement”). On December 27, 2017 and as previously disclosed, the Board sent a formal Notice of Termination to PAG notifying PAG of its termination as the Company’s investment advisor, effective as of December 31, 2017 at 11:59 p.m. Eastern Time. Also on December 27, 2017, the Board approved (specifically in accordance with Rule 15a-4(b)(1)(ii) of the Investment Company Act of 1940, as amended (the “Investment Company Act)) and authorized the Company to enter into an Interim Investment Advisory Agreement between the Company and House Hanover, LLC, a Delaware limited liability company (“House Hanover”) (the “Interim Investment Advisory Agreement”), in accordance with Rule 15a-4 of the Investment Company Act. The effective date of the Interim Investment Company Agreement was January 1, 2018. In accordance with Rule 15a-4(a)(2) of the Investment Company Act, the Interim Investment Advisory Agreement did not need to be approved by the Company’s stockholders and the duration of the interim contract is not greater than 150 days following the date on which the PAG Investment Advisory Agreement terminated.

 

The Audit Committee conducted its independent investigation with the assistance of outside advisors. As previously disclosed, the investigation concluded on January 24, 2018. The investigation uncovered (i) no evidence that the allegations contained in the Complaints impacted the Company (other than the resignation of Mr. Sood), (ii) no evidence that any officer or employee of the Company, other than (as has been alleged) Mr. Sood, had any involvement in the allegations contained in the Complaints, and (iii) no evidence that any corporate or portfolio company funds were utilized in the conduct alleged in the Complaints. In respect to Mr. Sood, the Audit Committee did not make any judgment regarding the criminal allegations made by the U.S. Attorney in its Complaints. As a result of the investigation, the Company, its Audit Committee, and its advisors concluded that the Company’s internal controls over financial reporting are effective and no recommendations were made to implement any additional procedures or controls. To the Company’s knowledge, as of the date of this filing, the allegations against Mr. Sood are still pending.

 

At the request of WithumSmith, the Company put its financial filings on hold until the Audit Committee concluded its investigation.

 

The Company and WithumSmith are working diligently to complete the remaining past due Form 10-Q’s and the past due Form 10-K. The Company plans to file the past due Form 10-Q for the quarter ended March 31, 2017 by mid-May, the past due Form 10-Q for the quarter ended June 30, 2017 by mid-June, the past due Form 10-Q for the quarter ended September 30, 2017 by mid-July, and the past due Form 10-K for the fiscal year ended December 31, 2017 by the end of September.

 

We encourage you to vote your shares, either by voting in person at the Annual Meeting or by granting a proxy (i.e., authorizing someone to vote your shares). If you properly sign and date the accompanying proxy card and the Company receives it in time for the Annual Meeting, the persons named as proxies will vote the shares registered directly in your name in the manner that you specified. This proxy statement is also available via the Internet at www.princetoncapitalcorp.com (under the “Investor Relations” section). The website also includes electronic copies of the form of proxy and the Annual Report.

 

 2 

 

 

ANNUAL MEETING INFORMATION

 

Date and Location

 

We will hold the 2018 Annual Meeting on Wednesday, May 30, 2018, at 1:00pm Eastern Time at 250 West Pratt Street, Suite 2000, Baltimore, Maryland 21201.

 

Admission

 

Only record or beneficial owners of the Company’s common stock as of the close of business on April 16, 2018 or their proxies may attend the Annual Meeting. Beneficial owners must also provide evidence of stock holdings, such as a recent brokerage account statement.

 

Purpose of the Annual Meeting

 

At the Annual Meeting, you will be asked to vote on the following proposals:

 

1.The election of four (4) directors of the Company;

 

2.The ratification of the selection of WithumSmith&Brown, PC as the Company’s independent registered public accounting firm for the year ending December 31, 2018;

 

3.To approve the new investment advisory agreement between the Company and House Hanover, LLC, a Delaware limited liability company, pursuant to which House Hanover LLC will be appointed as the Company’s investment advisor;

 

4.To approve the adjournment of the Annual Meeting, if necessary or appropriate, to solicit additional proxies; and

 

5.To transact such other business as may properly come before the meeting, or any postponement or adjournment thereof.

 

VOTING INFORMATION

 

Record Date and Quorum Required

 

The record date of the Annual Meeting is the close of business on April 16, 2018 (the “Record Date”). You may cast one vote for each share of our common stock that you own of record as of the Record Date.

 

A quorum of stockholders must be present at the Annual Meeting for any business to be conducted. The presence at the Annual Meeting, in person or by proxy, of stockholders entitled to cast a majority of the votes entitled to be cast as of the Record Date will constitute a quorum. Abstentions will be treated as shares present for quorum purposes. Shares held in “street name” by a bank, broker, or other nominee, and for which the nominee is present (in person or by proxy) and has not received voting instructions from the beneficial owner and does not have discretionary authority to vote the shares on certain proposals (“Broker Non-Votes”) will be treated as shares present for quorum purposes. On the Record Date, there were 120,486,061 shares of our common stock outstanding and entitled to vote. Thus, 60,243,031 shares of our common stock must be present at the Annual Meeting in person or by proxy to have a quorum.

 

If a quorum is not present at the Annual Meeting, the stockholders who are represented may adjourn the Annual Meeting until a quorum is present. The persons named as proxies may vote those proxies for such adjournment if Proposal 4 on the attached Proxy Card is marked for such adjournment.

 

Submitting Voting Instructions for Shares Held Through a Broker

 

If you hold shares of common stock in “street name” through a broker, bank, or other nominee, you must follow the instructions you receive from your broker, bank, or nominee in order to provide voting instructions to your broker, bank, or nominee. If you hold shares of our common stock through a broker, bank or other nominee and you want to vote in person at the Annual Meeting, you must obtain a legal proxy from the record holder of your shares and present it at the meeting. If you do not submit voting instructions to your broker, bank, or other nominee, your broker, bank, or other nominee will be permitted to vote in its discretion on Proposal 2, to ratify the selection of WithumSmith&Brown, PC as the Company’s independent registered public accounting firm for the year ending December 31, 2018, but will not be permitted to vote your shares on any other proposal considered at the Annual Meeting.

 

 3 

 

 

Authorizing a Proxy for Shares Held in Your Name

 

If you are a record holder of shares of our common stock, you may authorize a proxy to vote on your behalf by mail, as described on the enclosed proxy card. If you are a stockholder of record, you may also authorize a proxy and provide voting instructions via telephone or Internet by following the instructions on the proxy card. Authorizing a proxy will not limit your right to vote in person at the Annual Meeting. A properly completed, executed and submitted proxy will be voted in accordance with your instructions, unless you subsequently revoke the proxy. If you authorize a proxy without indicating your voting instructions, the proxy holder will vote your shares according to the Board’s recommendations.

 

Revoking Your Proxy

 

If you are a stockholder of record, you can revoke your proxy by (1) delivering a written revocation notice prior to the Annual Meeting to our Secretary, Gregory J. Cannella, at 800 Turnpike Street, Suite 300, North Andover, Massachusetts 01845; (2) delivering a later-dated proxy that we receive no later than the opening of the polls at the Annual Meeting; or (3) voting in person at the Annual Meeting. If you hold shares of common stock through a broker, bank or other nominee, you must follow the instructions you receive from your nominee in order to revoke your voting instructions. Attending the Annual Meeting does not revoke your proxy unless you also vote in person at the Annual Meeting.

 

Vote Required

 

Proposal

 

Vote Required

 

Broker Discretionary Voting Allowed

 

Effect of Abstentions and Broker Non-Votes

Proposal 1 — The election of four (4) directors.   Affirmative vote of the holders of a plurality1 of the votes cast in the election of directors at the Annual Meeting.   No   Abstentions and broker non-votes, if any, are not votes cast and, as a result, will have no effect on the outcome of the election of directors.
             
Proposal 2 — To ratify the selection of WithumSmith&Brown, PC as the Company’s independent registered public accounting firm for the year ending December 31, 2018.   Affirmative vote of a majority of the votes cast at the Annual Meeting.   Yes   Abstentions and broker non-votes, if any, are not votes cast and, as a result, will have no effect on this proposal.
             

Proposal 3 — The approval of the new investment advisory agreement between the Company and House Hanover, LLC, a Delaware limited liability company, pursuant to which House Hanover, LLC will be appointed as the Company’s investment advisor

  Affirmative vote of a majority of the outstanding shares of the Company’s common stock entitled to vote at the Annual Meeting   No   Abstentions and broker non-votes, if any, will have the same effect of a vote against this proposal.
             
Proposal 4 — To approve the adjournment of the Annual Meeting, if necessary or appropriate, to solicit additional proxies.   Affirmative vote of a majority of the votes cast on the proposal at the Annual Meeting.   No  

Abstentions and broker non-votes, if any, are not votes cast and, as a result, will have no effect on this proposal.

 

Ownership by Capital Point Partners, LP and Capital Point Partners II, LP

 

Capital Point Partners, LP and Capital Point Partners II, LP (the “Partnerships”) beneficially own 104,562,000 and 10,922,327 shares of the Company’s common stock, respectively, representing approximately 96% of the Company’s outstanding common stock and voting power. We entered into an agreement with the Partnerships concerning their obligations pursuant to Section 12(d)(1)(e) of the Investment Company Act of 1940, as amended (the “1940 Act”). Under this agreement, the Partnerships will either (i) seek instructions from those holding interests in the Partnerships with regards to voting proxies issued by the Company or (ii) vote the shares of the Company’s common stock they own in the same proportion “for” and “against” each proposal as all of our other stockholders vote their shares of the Company’s common stock on each of the matters to be voted on by stockholders at the Annual Meeting.


 

 

1 Plurality means the individual who gets the most votes, regardless of whether or not such individual obtains a majority of the votes.

 

 4 

 

 

INFORMATION REGARDING THIS SOLICITATION

 

Our Board is making this solicitation and the Company will bear the expense of the solicitation of proxies for the Annual Meeting, including the cost of preparing, printing, and mailing this proxy statement, the accompanying Notice of Annual Meeting of Stockholders, and the proxy card. The Company will pay market rates for such services, which the Company has estimated to be approximately $20,000. If brokers, trustees, or fiduciaries and other institutions or nominees holding shares in their names, or in the name of their nominees, which are beneficially owned by others, forward the proxy materials to, and obtain proxies form, such beneficial owners, we will reimburse such persons for their reasonable expenses in so doing.

 

In addition to the solicitation of proxies by the use of the mail, proxies may be solicited in person and/or by telephone or facsimile transmission by directors, officers or employees of the Company. No additional compensation will be paid to directors, officers or employees of the Company for such services.

 

Stockholders may also authorize a proxy and provide their voting instructions by telephone and through the Internet. This option requires stockholders to input the Control Number which is located on each proxy card. After inputting this number, stockholders will be prompted to provide their voting instructions. Stockholders authorizing a proxy via the Internet will have an opportunity to review their voting instructions and make any necessary changes before submitting their voting instructions and terminating their Internet link. Stockholders who authorize a proxy via the Internet, in addition to confirming their voting instructions prior to submission, will also receive an e-mail confirming their instructions upon request.

 

If a stockholder wishes to participate in the Annual Meeting, but does not wish to give a proxy electronically, the stockholder may still submit the proxy card originally sent with this Proxy Statement or attend the Annual Meeting in person.

 

The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement and annual report addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.

 

A number of brokerages and other institutional holders of record have implemented householding. A single proxy statement will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. If you have received notice from your broker that it will be householding communications to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement, please notify your broker. Stockholders who currently receive multiple copies of the proxy statement at their addresses and would like to request information about householding of their communications should contact their brokers or other intermediary holder of record. You can notify us by sending a written request to: Gregory J. Cannella, Secretary, Princeton Capital Corporation, 800 Turnpike Street, Suite 300, North Andover, Massachusetts 01845, or by calling (978) 794-3366.

 

 5 

 

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following table sets forth, as of April 16, 2018, the beneficial ownership of each current director (and each nominee for director), the Company’s executive officers, each person known to us to beneficially own 5% or more of the outstanding shares of the Company’s common stock, and the executive officers and directors as a group.

 

Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. Common stock subject to options or warrants that are currently exercisable or exercisable within 60 days of April 16, 2018 are deemed to be outstanding and beneficially owned by the person holding such options or warrants. Such shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Percentage of ownership is based on 120,486,061 shares of the Company’s common stock outstanding as of April 16, 2018.

 

Unless otherwise indicated, to our knowledge, each stockholder listed below has sole voting and investment power with respect to the shares beneficially owned by the stockholder, except to the extent authority is shared by their spouses under applicable law. Unless otherwise indicated, the address of all executive officers and directors is c/o Princeton Capital Corporation, 800 Turnpike Street, Suite 300, North Andover, Massachusetts 01845.

 

The Company’s directors are divided into two groups - interested directors and independent directors. Interested directors are “interested persons” as defined in Section 2(a)(19) of the 1940 Act and the NASDAQ (“NASDAQ”) Stock Market Rules, as the Over the Counter Pink (“OTCPK”) exchange where the Company trades, does not establish director independence standards.

 

Name and Address of Beneficial Owner 

Number of Shares Owned Beneficially(1)

   Percentage
of Class
 
Interested Directors (Interested Director Nominees)          
Mark S. DiSalvo(2)   115,484,327    95.9%
           
Independent Directors (Independent Director Nominees)          
Greg Bennett   0    * 
Martin Laidlaw   0    * 
Darren Stainrod   0    * 
           
Executive Officers          
Mark S. DiSalvo(2)   115,484,327    95.9%
Gregory J. Cannella   0    * 
Florina Klingbaum   0    * 
           
Executive officers and directors as a group   115,484,327    95.9%
           
Greater than 5% Holders          
Capital Point Partners, LP (3)   104,562,000    86.8%
Capital Point Partners II, LP(3)   10,922,327    9.07%

 

 

*  Less than 1%

 

(1)Beneficial ownership has been determined in accordance with Rule 13d-3 of the Securities Exchange Act of 1934, as amended.

 

(2)Mr. DiSalvo, by virtue of his ownership of all of the outstanding stock of Sema4, Inc., the general partner of Capital Point Partners, LP (“CPP”) and Capital Point Partners II, LP (“CPP II”), may be deemed to be the beneficial owner of the 104,562,000 shares of the Company’s common stock owned by CPP and the 10,922,327 shares of the Company’s common stock owned by CPP II. Mr. DiSalvo and Sema4, Inc. each disclaims beneficial ownership of any shares held by CPP and CPP II, except to the extent of their pecuniary interest therein. The address of Sema4, Inc., CPP and CPP II is 800 Turnpike Street, Suite 300, North Andover, MA 01854.

 

(3)This information is based on information included in the Schedule 13D filed with the SEC.

 

 6 

 

 

PROPOSAL 1: ELECTION OF DIRECTORS

 

Proposal 1 is that we are proposing to elect the following directors to the Board: Greg Bennett, Mark DiSalvo, Darren Stainrod, and Martin Laidlaw, as further described herein.

 

Our business and affairs are managed under the direction of the Board. Pursuant to the Company’s Charter and bylaws, the number of directors on our Board is currently fixed at five directors, and all directors, beginning with the 2017 Annual Meeting of Stockholders that was held on July 14, 2017, will stand for election to a term expiring at the next annual meeting of stockholders or until their respective successors are duly elected and qualified. Messrs. Laidlaw, Bennett, DiSalvo, and Stainrod were each elected at the 2017 Annual Meeting of Stockholders and their terms will expire at the 2018 Annual Meeting. Mr. Sood was also elected as a director at the 2017 Annual Meeting of Stockholders, but as previously disclosed, Mr. Sood resigned as a director, effective September 27, 2017. The Company’s Nominating and Corporate Governance Committee, in accordance with the Nominating and Corporate Governance Committee Charter dated as of December 6, 2016, has recommended that one vacancy remain on the Board until the Company has caught up on its past due SEC filings.

 

In this regard, four directors are to be elected at the Annual Meeting. All of the directors elected at the Annual Meeting will serve until the 2019 Annual Meeting of Stockholders, and until their successors are duly elected and qualified, or until their earlier death, resignation or removal.

 

The Board, upon the recommendation of the Nominating and Corporate Governance Committee, has recommended as nominees for election as directors, to serve until the 2019 Annual Meeting or until their respective successors are duly elected and qualified, the persons named below. All of the nominees are currently directors of the Company and each of the nominees terms are expiring at the Annual Meeting. Upon the past due Form 10-Q’s and the past due Form 10-K being filed, the Board and the Nominating and Corporate Governance Committee intend to review the number of directors serving upon the Board and consider the experiences and strengths desirable for directors serving on the Board. The proxies cannot be voted for more than four directors at the Annual Meeting. Since fewer nominees are named for director than the number fixed by the Charter of the Company, the proxies cannot be voted for a greater number of persons than the number of nominees named. The Company’s stockholders are not being asked to vote separately on an amendment to the Company’s Charter to reduce the size of the Board because the Company’s Charter and Bylaws delegate the power to reduce the size of the Board solely to the Board and not to the Company’s stockholders.

 

Each of the nominees has indicated his willingness to serve as a director if elected and has consented to be named as a nominee. None of the nominees are being nominated to serve as a director pursuant to any agreement or understanding between them and the Company.

 

A stockholder can vote for or withhold his or her vote for each of the nominees. In the absence of instructions to the contrary, the persons named as proxies will vote such proxy FOR the election of the nominees named in this proxy statement. If any of the nominees should decline or be unable to serve as a director, it is intended that the proxy will be voted for the election of such person as is nominated by the Board as a replacement. The Board has no reason to believe that any of the nominees will be unable or unwilling to serve.

 

Information about Director Nominees

 

As described below under “Committees of the board of directors — Nominating and Corporate Governance Committee,” the Board has identified certain desired attributes for director nominees, which criteria was evaluated by the Nominating and Corporate Governance Committee as a part of the nomination process for the upcoming Annual Meeting. Each of the director nominees has demonstrated high character and integrity, superior credentials and recognition in his respective field and the relevant expertise and experience upon which to be able to offer advice and guidance to our management. Each of our director nominees also has sufficient time available to devote to the affairs of the Company, is able to work with the other members of the Board and contribute to the success of the Company and can represent the long-term interests of the Company’s stockholders as a whole. Our director nominees have been selected such that the Board represents a range of backgrounds and experience.

 

Certain information, as of the Record Date, with respect to the director nominees, is set forth below, including their names, ages, a brief description of their business experience during the past five years, including present occupations and employment, directorships that each person holds and has held in the past five years, the year in which each person became a director of the Company, and a discussion of their particular experience, qualifications, attributes or skills that lead us to conclude, as of the Record Date, that such individual should serve as a director of the Company, in light of the Company’s business and structure.

 

 7 

 

 

The business address of the nominees for directors listed below is 800 Turnpike Street, Suite 300, North Andover, Massachusetts 01845.

 

Nominees for Directors

 

Mr. DiSalvo is an “interested person” of the Company as defined in the 1940 Act and NASDAQ Rules due to his controlling interest in Sema4, Inc., which is the general partner of Capital Point Partners, LP and Capital Point Partners II, LP. Each of Messrs. Stainrod, Laidlaw and Bennett is not an “interested person” of the Company as defined in the 1940 Act and the NASDAQ Rules.

 

Interested Directors

 

Mark DiSalvo, 63, serves as our Interim Chief Executive Officer and Interim President. He was originally elected to the Company’s Board on June 9, 2016 and re-elected to the Board by the Company’s stockholders at the 2017 Annual Meeting on July 14, 2017. He is the President and CEO of Sema4, Inc., a leading global professional services provider of private equity funds-under-management. He has been a senior executive and entrepreneur at international companies such as Euromoney Institutional Investor and Fairfield Whitney, and was founder of Hall, Berwick and DiSalvo where he provided funding and management advisory services to zero and first stage entities prior to founding Sema4. He has extensive experience in private equity, entrepreneurial management, and emerging market strategy, particularly as to underserved markets and economic development. A frequent speaker at worldwide industry conferences, he is a charter member of the Inner City Economic Forum. Mr. DiSalvo was educated at the University of Massachusetts with degrees in Political Studies and Economics and has earned the professional designations CPC and CTA. He is a long-time lecturer at the Johnson School of Business at Cornell University and the Kellogg School of Business at Northwestern University in their full-time MBA programs where he contributes case studies in private equity, emerging market economics and cross-border M&A. We believe Mr. DiSalvo’s broad experience with private equity funds and early stage growth companies makes him a well-qualified nominee for re-election to our Board.

 

Independent Directors

 

Darren Stainrod, 53, serves as the Chairman of the Company’s Board and was originally appointed to the Company’s Board on January 18, 2016 and re-elected to the Board by the Company’s stockholders at the 2017 Annual Meeting on July 14, 2017. Mr. Stainrod is a Principal of Marbury Fund Services (Cayman) Limited (“Marbury”), a fiduciary services company focused on the alternative investment industry and licensed by the Cayman Islands Monetary Authority. He is registered as a director with the Authority pursuant to the Directors Licensing and Registration Law, 2014. Prior to joining Marbury, Mr. Stainrod was a Principal at HighWater Limited in Cayman for almost 3 years where he provided professional director services to hedge funds, fund of funds and private equity vehicles. Before becoming a professional director in May 2013, Mr. Stainrod spent 17 years at UBS where he was a Managing Director and the Global Head of UBS Alternative Fund Services. At UBS he had responsibility for the overall management and development of the global hedge fund administration business in seven countries with more than 300 staff servicing alternative investment funds with over $200 billion in assets under administration. Mr. Stainrod has over 27 years of experience in the investment fund industry, including 23 years offshore. Before joining UBS, he worked for three years with Coopers & Lybrand in Cayman and four years with Deloitte in the UK. Mr. Stainrod holds a BA (Hons) in Politics from the University of Reading in the UK. He is a member of the Institute of Chartered Accountants in England and Wales and the Cayman Islands Society of Professional Accountants. He is a past Chairman of the Cayman Islands Fund Administrators Association and is the current Treasurer of AIMA Cayman Chapter. Mr. Stainrod brings to the Board extensive experience as a director of hedge funds, fund of funds and private equity funds as well as considerable experience in the investment fund industry, all of which provide our Board with valuable insight and supports Mr. Stainrod’s re-election to our Board. Mr. Stainrod serves as chairman of the Company’s Nominating and Corporate Governance Committee and he is a member of the Company’s Audit Committee and the Company’s Valuation Committee.

 

 8 

 

 

Martin Laidlaw, 61, who was originally elected by the Board (to fill a vacancy) on January 18, 2016 and re-elected to the Board by the Company’s stockholders at the 2017 Annual Meeting on July 14, 2017, is a Director of Premier Fiduciary Services (Cayman) Ltd. and a former Managing Director of JP Fund Administration (Cayman) Ltd. (“JPFA”) and has over 25 years of experience in the offshore financial industry. Mr. Laidlaw has an extensive range of experience with all forms of investment fund products and has held numerous directorship positions for a wide variety of offshore fund vehicles. From 1989 to 2009 Mr. Laidlaw was employed with CIBC Bank and Trust Company (Cayman) Limited. He was appointed Director and Head of Fund Services and was responsible for leading the fund services team and developing new business and client relationships. Prior to his years at CIBC, he was employed with KPMG, Cayman Islands where he led various financial services audits. He was a founding member, Director and Treasurer of the Cayman Islands Fund Administrators Association. Martin graduated from Edinburgh University in Scotland with a Bachelor of Commerce Degree. He was admitted as a Member of the Institute of Chartered Accountants of Scotland in February, 1984 and continues to maintain his qualification. He is a Cayman Islands Monetary Authority Registered Director and is a member of The Alternative Investment Management Association (AIMA). Mr. Laidlaw’s extensive experience in the financial industry, including his financial and accounting background, and his experience as a director of various offshore fund vehicles makes him well qualified to serve on our Board. Mr. Laidlaw serves as chairman of the Company’s Audit Committee and he is a member of the Company’s Nominating and Corporate Governance Committee and the Company’s Valuation Committee.

 

Greg Bennett, 45, who was originally elected to the Company’s Board on June 9, 2016 and re-elected to the Board by the Company’s stockholders at the 2017 Annual Meeting on July 14, 2017, is the co-founder of Danesmead Partners. Mr. Bennett has more than eighteen years of experience in financial services having started his professional career with Coopers & Lybrand in Canada in 1996. From 2011 through 2014, prior to co-founding Danesmead Partners, Mr. Bennett was a Director of The Harbour Trust Co. Ltd., where he provided fiduciary services to their clients, including serving as an independent hedge fund director. In 2004 Mr. Bennett joined Butterfield Fund Services (Cayman) Limited as head of client relationship management and he became a Director of that firm in 2005. In 2008 he was promoted to Managing Director where he had responsibility for all aspects of the business, including managing over 75 staff responsible for providing full fund administration services to a wide range of hedge fund clients with in excess of $30 billion in assets under management. In 2010 Mr. Bennett established the Cayman office of HedgeServ and held the position of Managing Director. Mr. Bennett graduated with a Bachelor of Commerce from the University of Alberta in Canada in 1995. He is a Chartered Accountant (Canada), a Certified Public Accountant (US), and a CFA Charterholder. Mr. Bennett is also a Director of Hedge Funds Care Cayman, past Deputy Chairman of the Cayman Islands Fund Administrators Association, past Treasurer of AIMA Cayman and a past President of the CFA Society of the Cayman Islands. Mr. Bennett’s considerable experience in the financial services industry and as a director of various hedge funds and his accounting background make him well qualified to serve on our Board. Mr. Bennett serves as chairman of the Company’s Valuation Committee and he is a member of the Company’s Nominating and Corporate Governance Committee and the Company’s Audit Committee.

 

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE ELECTION OF EACH OF THE NOMINEES NAMED IN THIS PROXY STATEMENT.

 

Information about Director Nominees and Executive Officers

 

Board of Directors

 

The terms of each of the directors are expiring at the 2018 Annual Meeting. Each director will hold office to a term expiring at the next annual meeting of stockholders or until their respective successors are duly elected and qualified.

 

The Board considered whether each of the director nominees is qualified to serve as a director, based on a review of the experience, qualifications, attributes and skills of each nominee, including those described above. The Board will also consider whether each director nominee has significant experience in the investment or financial services industries and has held management, board or oversight positions in other companies and organizations. For the purposes of this presentation, our directors and director nominees have been divided into two groups — independent directors and director nominees and interested directors and director nominees. Interested directors and director nominees are “interested persons” as defined in the 1940 Act and NASDAQ Rules. The Company is not part of a fund complex.

 

Name, Address(1) and Age

  Position  Principal Occupation (s) During Past 5 years  Director Since  Term Expires 

Other
Directorships(2)

Interested Directors Director Nominees               
Mark S. DiSalvo (63)  Interim Chief Executive Officer, Interim President, Current Director and Director Nominee  Mr. DiSalvo serves as the Interim CEO and President of the Company. Mr. DiSalvo is the President and CEO of Sema4, Inc., a global professional services provider of private equity funds-under-management.  2016  2018  None
                
Independent Director Nominees               
Martin Laidlaw (61)  Current Director and Director Nominee  Mr. Laidlaw is a Director of Premier Fiduciary Services (Cayman) Ltd. and a former Managing Director of JP Fund Administration (Cayman) Ltd.  2016  2018  None
Greg Bennett (45)  Current Director and Director Nominee  Mr. Bennett is the co-founder of Danesmead Partners. From 2011 through 2014, prior to co-founding Danesmead Partners, Mr. Bennett was a Director of The Harbour Trust Co. Ltd., where he provided fiduciary services to their clients, including serving as an independent hedge fund director.  2016  2018  None
Darren Stainrod (53)  Current Director and Director Nominee  Mr. Stainrod is a Principal of Marbury Fund Services (Cayman) Limited.  2016  2018  None

 

 

(1)The address for each of our directors is c/o Princeton Capital Corporation, 800 Turnpike Street, Suite 300, North Andover, Massachusetts 01845.
(2)Other Directorships are limited to: (i) companies with a class of equity securities registered under Section 12 of the Exchange Act, (ii) companies subject to the requirements of Section 15(d) of the Exchange Act, or (iii) companies registered as an investment company under the Investment Company Act.

  

 9 

 

 

Executive Officers Who Are Not Directors

 

Information regarding our executive officers who are not directors is as follows (such information includes each officer’s business experience during the past five years):

 

Name

 

Age

 

Position

Gregory J. Cannella   43   Chief Financial Officer, Secretary, and Treasurer
Florina Klingbaum   42   Chief Compliance Officer

 

The address for each of our executive officers is c/o Princeton Capital Corporation, 800 Turnpike Street, Suite 300, North Andover, Massachusetts 01845.

 

Gregory J. Cannella, 43, has served as our Chief Financial Officer, Treasurer and Secretary since March 13, 2015. Mr. Cannella resigned as Chief Financial Officer, Treasurer and Secretary of the Company at the 2016 Annual Meeting and was subsequently re-elected the following day. Mr. Cannella is responsible for financial reporting, investor communications, financial modeling and due diligence and analysis of acquisitions and dispositions. Prior to this, Mr. Cannella was the Chief Financial Officer of Capital Point Partners, a private equity group that focused on mezzanine lending to small and middle market private companies, where he was responsible for financial reporting, investor communications, financial modeling and due diligence and analysis of acquisitions and dispositions. Prior to working at Capital Point Partners, Mr. Cannella was an Asset Manager at First Commonwealth Holdings Corp., a wealth management firm in Houston, Texas where he was responsible for managing various commercial and multi-family residential real estate investment funds as well as oversight of accounting functions and reporting for the funds. Mr. Cannella received a B.B.A. in Management from Stephen F. Austin State University and an M.B.A. with honors in Accounting and Finance from the University of Houston. He is a Certified Public Accountant in the State of Texas.

 

Florina Klingbaum, 42, has served as our Chief Compliance Officer since January 1, 2018, following Joy Sheehan’s resignation as our Chief Compliance Officer, effective December 31, 2017. Ms. Klingbaum is a Managing Member of Altemis Capital Management LLC an investment management provider specializing in compliance and regulatory services. From 2015-2016, she served as a Consultant for Nuveen Investments in New York City. During her career, Ms. Klingbaum has held senior roles at both Citigroup Global Markets as well as Credit Suisse. She has extensive experience in alternative investments, structured products and overall fund operations including fund administration, accounting, regulatory, compliance and fund liquidation services. Ms. Klingbaum started her career at KPMG LLP where she was a Senior Auditor in the Financial Services division. She holds two Masters degrees, in Accounting and Business Administration respectively, from Pace University, a BA in Sociology from the University of Toronto, and is a CPA.

 

The following table sets forth as of April 16, 2018, the dollar range of our securities owned by our directors and executive officers. The Company is not part of a “family of investment companies,” as that term is defined in Schedule 14A.

 

Name 

Dollar Range of Equity Securities Beneficially Owned(1)(2)

  Aggregate Dollar Range of Equity Securities in All Funds Overseen or to be Overseen by Director or Nominee in Family of Investment Companies
Interested Director:      
Mark S. DiSalvo  Over $100,000  n/a
       
Independent Directors:      
Greg Bennett  None  n/a
Martin Laidlaw  None  n/a
Darren Stainrod  None  n/a
       
Executive Officers:      
Mark S. DiSalvo  Over $100,000  n/a
Gregory J. Cannella  None  n/a
Florina Klingbaum  None  n/a

 

 

(1)  The dollar range of the equity securities beneficially owned is based on the closing price per share of the Company’s common stock of $0.105 on April 16, 2018 on the OTCPK.
(2)  The dollar ranges of equity securities beneficially owned are: none; $1–$10,000; $10,001–$50,000; $50,001–$100,000; and over $100,000.

 

 10 

 

 

Board of Directors and Its Leadership Structure

 

Our business and affairs are managed under the direction of our Board. The Board consists of four directors, three of whom are not “interested persons” of the Company, or its affiliates as defined in Section 2(a)(19) of the 1940 Act and NASDAQ Rules. We refer to these individuals as our “independent directors.” The Board currently has one vacancy following the resignation of Mr. Sood on September 27, 2017. As disclosed elsewhere in this proxy statement, the Nominating and Corporate Governance Committee plans to review the number of directors serving upon the Board and consider the experiences and strengths desirable for directors serving on the Board, after the Company has caught up on its past due financial filings. The Board elects our officers, who serve at the discretion of the Board. The responsibilities of the Board include quarterly valuation of our assets, corporate governance activities, oversight of our financing arrangements and oversight of our investment activities.

 

Oversight of our investment activities extends to oversight of the risk management processes employed by House Hanover, LLC (“House Hanover”) as part of its day-to-day management of our investment activities under the Interim Investment Advisory Agreement. The Board anticipates reviewing risk management processes at both regular and special board meetings throughout the year, consulting with appropriate representatives of House Hanover, as necessary and periodically requesting the production of risk management reports or presentations. The goal of the Board’s risk oversight function is to ensure that the risks associated with our investment activities are accurately identified, thoroughly investigated and responsibly addressed. Stockholders should note, however, that the Board’s oversight function cannot eliminate all risks or ensure that particular events do not adversely affect the value of investments.

 

The Board has established an audit committee, a nominating and corporate governance committee, and a valuation committee and may establish additional committees from time to time as necessary. The scope of the responsibilities assigned to each of these committees is discussed in greater detail below. Mr. DiSalvo is the sole owner and an affiliate of House Hanover, the interim investment advisor of the Company (and as set forth in Proposal 3 herein, the proposed investment advisor of the Company moving forward). Mr. DiSalvo is an “interested person” of the Company as defined in Section 2(a)(19) of the 1940 Act and NASDAQ Rules due to his ownership of Sema4, Inc., the general partner of Capital Point Partners, LP and Capital Point Partners II, LP, which own approximately 87% and 9% of the outstanding common stock of the Company respectively.

 

Mr. Stainrod serves as the Company’s Chairman of the Board. In addition to having an independent director serve as the Company’s Chairman of the Board, our corporate governance practices are intended to provide additional risk management for our Company. These governance practices include regular meetings of the independent directors in executive session without the presence of interested directors and management, the establishment of an audit committee, a nominating and corporate governance committee, and a valuation committee, each of which is comprised solely of independent directors, and the appointment of a Chief Compliance Officer, with whom the independent directors meet without the presence of interested directors and other members of management, for administering our compliance policies and procedures. The Chairman or his designee will preside over the executive sessions of our independent directors.

 

The Board believes that its leadership structure is appropriate in light of our characteristics and circumstances because the structure allocates areas of responsibility among the individual directors and the committees in a manner that affords effective oversight. Specifically, the Board believes that the relationship of Mr. DiSalvo provides an effective bridge between the Board, the Company’s interim investment advisor and management, and encourages an open dialogue between management and our Board, ensuring that these groups act with a common purpose. The Board also believes that its small size creates a highly efficient governance structure that provides ample opportunity for direct communication and interaction between our management, the Company’s interim investment advisor and the Board.

 

Board Meetings

 

Our Board met 12 times during 2017. Each director attended at least 73% of the total number of meetings of the Board and committees on which the director served that were held while the director was a member. The Board’s standing committees are set forth below. We require each director to make a diligent effort to attend all Board and committee meetings, as well as each Annual Meeting of Stockholders. All of the board members attended, in person or via teleconference, the Company’s 2017 Annual Meeting of Stockholders.

 

Audit Committee

 

The members of the audit committee are Messrs. Laidlaw, Stainrod, and Bennett each of whom meets the independence standards established by the SEC and the NASDAQ (the “NASDAQ”) for audit committees and is independent for purposes of the 1940 Act. Mr. Laidlaw serves as chairman of the audit committee. Our Board has determined that Mr. Laidlaw is an “audit committee financial expert” as that term is defined under Item 407 of Regulation S-K of the Securities Exchange Act of 1934, as amended. The Board has adopted a charter of the audit committee, which is available in print to any stockholder who requests it and it is also available on the Company’s website at www.princetoncapitalcorp.com. The audit committee met 4 times during 2017. Each member attended at least 75% of the audit committee meetings that were held while the director was a member of the audit committee.

 

The audit committee is responsible for approving our independent accountants, reviewing with our independent accountants the plans and results of the audit engagement, approving professional services provided by our independent accountants, reviewing the independence of our independent accountants and reviewing the adequacy of our internal accounting controls. The audit committee is also responsible for aiding our Board in fair value pricing debt and equity securities that are not publicly traded or for which current market values are not readily available. The Board and audit committee utilizes the services of an independent valuation firm to help them determine the fair value of these securities. The audit committee may also be tasked with special investigations into director and/or officer conduct, as was the case in 2017 when the audit committee conducted a formal investigation into allegations against Mr. Sood, as disclosed in the Company’s Form 8-K filed with the SEC on January 24, 2018.

 

 11 

 

 

Nominating and Corporate Governance Committee

 

The members of the nominating and corporate governance committee are Messrs. Stainrod, Laidlaw, and Bennett, each of whom is independent for purposes of the 1940 Act and the NASDAQ corporate governance regulations. Mr. Stainrod serves as chairman of the nominating and corporate governance committee. The nominating and corporate governance committee is responsible for selecting, researching and nominating directors for election by our stockholders, selecting nominees to fill vacancies on the Board or a committee of the Board, developing and recommending to the Board a set of corporate governance principles and overseeing the evaluation of the Board and our management. The Board has adopted a charter of the nominating and corporate governance committee, which is available in print to any stockholder who requests it and it is also available on the Company’s website at www.princetoncapitalcorp.com. The nominating and corporate governance committee met 1 time during 2017. Each member attended 100% of the nominating and corporate governance committee meetings that were held while the director was a member of the nominating and corporate governance committee.

 

The nominating and corporate governance committee will consider nominees to the Board recommended by a stockholder if such stockholder complies with the advance notice provisions of our bylaws. Our bylaws provide that a stockholder who wishes to nominate a person for election as a director at a meeting of stockholders must deliver written notice to our corporate secretary. This notice must contain, as to each nominee, all of the information relating to such person as would be required to be disclosed in a proxy statement meeting the requirements of Regulation 14A under the Securities Exchange Act of 1934, as amended, and certain other information set forth in the bylaws. In order to be eligible to be a nominee for election as a director by a stockholder, such potential nominee must deliver to our corporate secretary a written questionnaire providing the requested information about the background and qualifications of such person, and would be in compliance with all of our publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines.

 

The nominating and corporate governance committee has not adopted a formal policy with regard to the consideration of diversity in identifying individuals for election as members of the Board, but the committee will consider such factors as it may deem are in our best interests and those of our stockholders. Those factors may include a person’s differences of viewpoint, professional experience, education and skills, as well as his or her race, gender and national origin. In addition, as part of the board’s annual self-assessment, the members of the nominating and corporate governance committee will evaluate the membership of the Board and whether the board maintains satisfactory policies regarding membership selection.

 

Valuation Committee

 

The members of the valuation committee are Messrs. Laidlaw, Bennett and Stainrod. Mr. Bennett serves as chairman of the valuation committee. The valuation committee is responsible for establishing guidelines and making recommendations to the Board on matters relating to the valuation of our investments. The valuation committee met two times during 2017. Mr. Laidlaw attended 50% of the valuation committee meetings that were held during 2017 and Messrs. Bennett and Stainrod attended 100% of the valuation committee meetings that were held during 2017.

 

Compensation Committee

 

We do not have a compensation committee or a committee performing similar functions because our executive officers do not receive any direct compensation from the Company. All decisions concerning compensation of House Hanover are made by the Board (with Mr. DiSalvo recusing himself from deliberations and voting). Executive officers of the Company are employees or independent contractors of, and are compensated by, House Hanover. Compensation payable by the Company to the Advisor is required to be approved by a majority of the Company’s independent directors pursuant to Section 15(c) of the 1940 Act. Since the Audit Committee consists of a majority of the independent directors of the Company, the Company has allocated responsibility to consider the compensation paid to the Advisor to the Audit Committee.

 

The Nominating and Corporate Governance Committee will review the form and amount of independent director compensation at least annually and make any changes, as it deems appropriate.

 

Compensation of Directors

 

For the year ended December 31, 2016, $184,871 in director’s fees for the independent directors were accrued, of which $184,871 has been paid, with $0 paid in 2016 and $184,871 paid in 2017.

 

For the year ended December 31, 2017, $145,288 in director’s fees for the independent directors were accrued, of which $141,457 has been paid, with $141,457 paid in 2017 and $3,831 to be paid in 2018. No amount remains unpaid to the independent directors of the Company, for service as directors during 2017.

 

 12 

 

 

For the year ending December 31, 2018, the independent directors will receive an annual fee of $30,000. They will also receive $1,500 plus reimbursement of reasonable out-of-pocket expenses incurred in connection with attending in person or telephonically each regular board of directors meeting and each special telephonic meeting. They will also receive $1,500 plus reimbursement of reasonable out-of-pocket expenses incurred in connection with each committee meeting attended in person and each telephonic committee meeting. The chairmen of the audit committee, the valuation committee and the nominating and corporate governance committee will receive an annual fee of $3,500, respectively. On March 13 2017, the independent directors agreed to cap director’s fees at $50,000 per independent director annually, and to have an amount of $12,500 advanced to them each quarter, subject to true up at the end of each quarter. We have obtained directors’ and officers’ liability insurance on behalf of our directors and officers. No compensation is paid to directors who are “interested persons.”

 

The following table shows information regarding the compensation earned by our directors for the fiscal year ended December 31, 2017. No compensation is paid by us to any interested director or executive officer of the Company.

 

Name  Aggregate Compensation from Princeton Capital Corporation  

Pension or Retirement Benefits Accrued as Part of Company Expenses(1)

   Total Compensation from Princeton Capital Corporation 
Interested Directors:            
Mark S. DiSalvo   None    None    None 
Munish Sood(2)   None    None    None 
                
Independent Directors:               
Greg Bennett  $45,288    None   $45,288 
Martin Laidlaw  $50,000    None   $50,000 
Darren Stainrod  $50,000    None   $50,000 

 

 

(1)  We do not have a profit-sharing or retirement plan, and directors do not receive any pension or retirement benefits.
(2) Mr. Sood served as a director until his resignation on September 27, 2017. He did not earn any compensation as a director of the Company.

 

Corporate Governance

 

Corporate Governance Documents

 

Our Corporate Governance Guidelines, Code of Business Conduct, Ethics and Statement on Prohibition of Insider Trading and the charters of the Audit Committee, Nominating and Corporate Governance Committee and Valuation Committee are available at www.princetoncapitalcorp.com at the and are also available to any stockholder who requests them by writing to our Secretary, Gregory J. Cannella, at Princeton Capital Corporation, 800 Turnpike Street, Suite 300, North Andover, Massachusetts 01845.

 

Director Independence

 

In accordance with rules of the NASDAQ, the Board annually determines the independence of each director. No director is considered independent unless the Board has determined that he or she has no material relationship with the Company. The Company monitors the status of its directors and officers through the activities of the Company’s nominating and corporate governance committee and through a questionnaire to be completed by each director no less frequently than annually (and most recently in December of 2017), with updates periodically if information provided in the most recent questionnaire has changed.

 

In order to evaluate the materiality of any such relationship, the Board uses the definition of director independence set forth in the rules promulgated by the NASDAQ Stock Market. Rule 5605(a)(2) provides that a director of a business development company (“BDC”) shall be considered to be independent if he or she is not an “interested person” of the Company, as defined in Section 2(a)(19) of the 1940 Act. Section 2(a)(19) of the 1940 Act defines an “interested person” to include, among other things, any person who has, or within the last two years had, a material business or professional relationship with the Company.

 

The Board has determined that each of the directors is independent and has no relationship with the Company, except as a director and stockholder of the Company, with the exception of Mr. DiSalvo. Mr. DiSalvo is an interested person of the Company due to his interests in House Hanover, our interim investment advisor (and proposed investment advisor pursuant to Proposal 3), his position as Interim Chief Executive Officer and Interim President of the Company, and his interests in Sema4, Inc., the general partner of Capital Point Partners, LP and Capital Point Partners II, LP, which own approximately 87% and 9% of our common stock, respectively.

 

 13 

 

 

Communication with the Board

 

We believe that communications between our Board, our stockholders and other interested parties are an important part of our corporate governance process. Stockholders with questions about the Company are encouraged to contact our Secretary, Gregory J. Cannella, at (978) 794-3366. However, if stockholders believe that their questions have not been addressed, they may communicate with the Company’s Board by sending their communications to Princeton Capital Corporation, 800 Turnpike Street, Suite 300, North Andover, Massachusetts 01845, Attn.: Board of Directors. All stockholder communications received in this manner will be delivered to one or more members of the Board.

 

All communications involving accounting, internal accounting controls and auditing matters, possible violations of, or non-compliance with, applicable legal and regulatory requirements or policies, or retaliatory acts against anyone who makes such a complaint or assists in the investigation of such a complaint, will be referred to our audit committee.

 

The acceptance and forwarding of a communication to any director does not imply that the director owes or assumes any fiduciary duty to the person submitting the communication, all such duties being only as prescribed by applicable law.

 

Code of Business Conduct and Ethics and Statement on the Prohibition of Insider Trading

 

Our Code of Business Conduct and Ethics and Statement on the Prohibition of Insider Trading (the “Code of Ethics”), which is signed by directors and executive officers of the Company, requires that directors and executive officers avoid any conflict, or the appearance of a conflict, between an individual’s personal interests and the interests of the Company. Pursuant to the Code of Ethics which is available on our website under the “Corporate Governance” link under the “Princeton Capital Corporation” link at www.princetoncapitalcorp.com, each director and executive officer must disclose any conflicts of interest, or actions or relationships that might give rise to a conflict, to the audit committee. Certain actions or relationships that might give rise to a conflict of interest are reviewed and approved by the Board. The Code of Ethics also contains our policies and procedures relating to insider trading and material non-public information.

 

Compensation of Executive Officers

  

None of our officers receive direct compensation from the Company. Mr. DiSalvo, through his financial interest in House Hanover is entitled to receive and has received a portion of investment advisory fees paid by the Company to House Hanover under the interim investment advisory agreement with the Company. Our other executive officers will be paid by House Hanover, subject to reimbursement by us of our allocable portion of such compensation for services rendered by such persons to the Company under the Interim Investment Advisory Agreement. To the extent that House Hanover outsources any of its functions, we will reimburse House Hanover for the fees associated with such functions without profit or benefit to House Hanover.

 

Indemnification Agreements

 

We have entered into indemnification agreements with our directors. The indemnification agreements are intended to provide our directors the maximum indemnification permitted under Maryland law and the 1940 Act. Each indemnification agreement provides that the Company shall indemnify the director who is a party of the agreement (an “Indemnitee”), including the advancement of legal expenses, if, by reason of his or her corporate status, the Indemnitee is, or is threatened to be, made a party to or a witness in any threatened, pending, or completed proceeding, to the maximum extent permitted by Maryland law and the 1940 Act.

 

Certain Relationships and Transactions

 

We have procedures in place for the review, approval and monitoring of transactions involving us and certain persons related to us. As a business development company, the 1940 Act restricts us from participating in transactions with any persons affiliated with us, including our officers, directors, and employees and any person controlling or under common control with us or our affiliates, subject to certain exceptions. In the ordinary course of business, we may enter into transactions with portfolio companies that may be considered related party transactions. We have implemented certain procedures, both written and unwritten, to ensure that we do not engage in any prohibited transactions with any persons affiliated with us. If such affiliations are found to exist, we will seek Board and/or committee review and approval or exemptive relief for such transactions, as appropriate. In accordance with NASDAQ Rule 5630, an independent body of the Board shall be responsible for conducting an appropriate review and oversight of all related party transactions. The Board has delegated this responsibility to the Audit Committee.

 

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We have entered into our Interim Investment Advisory Agreement with House Hanover, LLC (the “Interim Investment Advisory Agreement”). The Interim Investment Advisory Agreement also provides for, subject to approval by the Board of Directors, reimbursement for the portion of any compensation expense and the costs of any salaries of any such employees to the extent attributable to services performed by such employees for the Company (“Administration Expenses”). At a Special Meeting of the Board held on December 27, 2017, the independent directors of the Board, voted to approve (specifically in accordance with Rule 15a-4(b)(1)(ii) of the 1940 Act) the Interim Investment Advisory Agreement in accordance with Rule 15a-4 of the 1940 Act. The value of the current Interim Investment Advisory Agreement is determined based on a management fee. The amount payable to House Hanover, LLC through April 1, 2018 under the Interim Investment Advisory Agreement is approximately $120,000. In accordance with Rule 15a-4(a)(2) of the 1940 Act, the Interim Investment Advisory Agreement was not required to be approved by the Company’s stockholders and the duration of the interim contract may not be greater than 150 days following the date on which the previous investment advisory agreement terminates (i.e., the Interim Investment Advisory Agreement will terminate on May 30, 2018, the date of the 2018 Annual Meeting). As set forth in Proposal 3, the Company’s stockholders are being asked to approve an investment advisory agreement with House Hanover, LLC, whereby House Hanover, LLC would continue as the Company’s investment advisor upon termination of the Interim Investment Advisory Agreement.

 

As disclosed in previous filings and elsewhere in this proxy statement, the investment advisory agreement between the Company and Princeton Advisory Group, Inc. (“PAG”) dated as of June 9, 2016 (the “PAG Investment Advisory Agreement”) was terminated by the Board, effective as of December 31, 2017 at 11:59 p.m. Easter Time. The amount of management fees accrued for PAG under the PAG Investment Advisory Agreement for the fiscal year ended December 31, 2017 was $453,133. The amount of administration expenses accrued for PAG for the fiscal year ended December 31, 2017 under the PAG Investment Advisory Agreement was $139,354. Mr. Sood, our former Chief Executive Officer and President, and a former member of our Board and owned all of the interests in PAG.

 

Mr. DiSalvo owns all of the interests in Sema4, Inc., the general partner of Capital Point Partners, LP and Capital Point Partners II, LP, which own approximately 87% and 9% of our common stock, respectively.

 

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

 

Section 16(a) of the Securities Exchange Act of 1934, as amended, and the disclosure requirements of Item 405 of SEC Regulation S-K require that our directors and executive officers, and any persons holding more than 10% of any class of our equity securities report their ownership of such equity securities and any subsequent changes in that ownership to the SEC and to us. Based solely on a review of the written statements and copies of such reports furnished to us by our executive officers, directors and greater than 10% beneficial owners, we believe that during the fiscal year ended December 31, 2015 all Section 16(a) filing requirements applicable to the executive officers, directors and greater than 10% beneficial owners were timely satisfied, except for Messrs. Alfred Jackson, Thomas Jones, Jr., Trennis L. Jones, Munish Sood, Gregory J. Cannella and Ms. Joy Sheehan, each of which failed to file a Form 3 on a timely basis and each of which have since filed a Form 3.

 

Based solely on a review of copies of such reports as filed with the SEC, we believe that during the fiscal year ended December 31, 2016 all Section 16(a) filing requirement applicable to the executive officers, directors and greater than 10% beneficial owners were timely satisfied.

 

Based solely on a review of copies of such reports as filed with the SEC, we believe that during fiscal year ended December 31, 2017 all Section 16(a) filing requirements applicable to the executive officers, directors and greater than 10% beneficial owners were timely satisfied.

 

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PROPOSAL 2: RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2018

 

The Audit Committee and the independent directors of the board of directors have selected WithumSmith&Brown, PC (“WithumSmith”) to serve as the independent registered public accounting firm for the Company for the fiscal year ending December 31, 2018. This selection is subject to ratification by the stockholders of the Company.

 

WithumSmith has advised us that neither the firm nor any present member or associate of it has any material financial interest, direct or indirect, in the Company or its affiliates. It is expected that a representative of WithumSmith will be present at the Annual Meeting and will have an opportunity to make a statement if he or she chooses and will be available to answer questions.

 

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE RATIFICATION OF THE SELECTION OF WITHUMSMITH AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2018.

 

PRINCIPAL ACCOUNTANT FEES AND SERVICES

(fiscal year ended December 31, 2016)

 

The following aggregate fees by WithumSmith, the Company’s independent registered public accounting firm for the fiscal year ended December 31, 2016, were billed to the Company for work attributable to audit, tax and other services.

 

  

WithumSmith

Fiscal Year Ended December 31, 2016

 
Audit Fees  $245,813 
Audit-Related Fees  $0 
Tax Fees  $0 
All Other Fees  $0 
Total Fees:  $245,813 

 

Services rendered by WithumSmith in connection with fees presented above were as follows:

 

Audit Fees. Audit fees include fees for services that normally would be provided by the accountant in connection with statutory and regulatory filings or engagements and that generally only the independent accountant can provide. In addition to fees for the audit of our annual financial statements, the audit of the effectiveness of our internal control over financial reporting and the review of our quarterly financial statements in accordance with generally accepted auditing standards, this category contains fees for comfort letters, statutory audits, consents, and assistance with and review of documents filed with the SEC.

 

Audit-Related Fees. Audit related fees are assurance related services that traditionally are performed by the independent accountant, such as attest services that are not required by statute or regulation.

 

Tax Fees. Tax fees include professional fees for tax compliance and tax advice.

 

All Other Fees. Fees for other services would include fees for products and services other than the services reported above.

 

In the fiscal year 2016, the percentage of services designated for Audit Fees, Audit-Related Fees, Tax Fees, and All Other Fees that were approved by the audit committee were 100%, 0%, 0%, and 0%, respectively.

 

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PRINCIPAL ACCOUNTANT FEES AND SERVICES

(fiscal year ended December 31, 2017)

 

The following aggregate fees by WithumSmith, the Company’s independent registered public accounting firm for the fiscal year ended December 31, 2017, were billed to the Company for work attributable to audit, tax and other services.

 

  

WithumSmith

Fiscal Year Ended December 31, 2017

 
Audit Fees  $191,500 
Audit-Related Fees  $ 0 
Tax Fees  0 
All Other Fees  $0 
Total Fees:  $191,500 

 

Services rendered by WithumSmith in connection with fees presented above were as follows:

 

Audit Fees. Audit fees include fees for services that normally would be provided by the accountant in connection with statutory and regulatory filings or engagements and that generally only the independent accountant can provide. In addition to fees for the audit of our annual financial statements, the audit of the effectiveness of our internal control over financial reporting and the review of our quarterly financial statements in accordance with generally accepted auditing standards, this category contains fees for comfort letters, statutory audits, consents, and assistance with and review of documents filed with the SEC.

 

Audit-Related Fees. Audit related fees are assurance related services that traditionally are performed by the independent accountant, such as attest services that are not required by statute or regulation.

 

Tax Fees. Tax fees include professional fees for tax compliance and tax advice.

 

All Other Fees. Fees for other services would include fees for products and services other than the services reported above.

 

In the fiscal year 2017, the percentage of services designated for Audit Fees, Audit-Related Fees, Tax Fees, and All Other Fees that were approved by the audit committee were 100%, 0%, 0%, and 0%, respectively.

 

Change in Auditor in 2016

 

On March 15, 2016, and effective the same date, the Audit Committee authorized and approved the engagement of WithumSmith, as its independent registered public accounting firm to audit the Company’s financial statements for the fiscal year ending December 31, 2015 and to perform procedures related to the financial statements included in the Company’s quarterly reports on Form 10-Q, beginning with the quarter ended March 31, 2015. During the Company’s fiscal year ended December 31, 2015 and through the interim period preceding WithumSmith’s engagement, the Company has not consulted WithumSmith regarding either (i) the application of accounting principles to a specific transaction, either completed or proposed, or the type of audit opinion that might be rendered with respect to the Company’s financial statements; or (ii) any matter that was the subject of a “disagreement” or “reportable event” as those terms are defined in Item 304(a)(1) of Regulation S-K; and there was neither a written report nor oral advice provided to the Company by WithumSmith that WithumSmith concluded was an important factor considered by the Company in reaching a decision as to any auditing or financial reporting issue.

 

Pre-Approval Policy

 

The Audit Committee has established a pre-approval policy that describes the permitted audit, audit-related, tax and other services to be provided by the Company’s independent registered public accounting firm. The policy requires that the Audit Committee pre-approve all audit and non-audit services performed by the independent auditor in order to assure that the provision of such service does not impair the auditor’s independence. In accordance with the pre-approval policy, the Audit Committee includes every year a discussion and pre-approval of such services and the expected costs of such services for the year.

 

Any requests for audit, audit-related, tax and other services that have not received general pre-approval at the first Audit Committee meeting of the year must be submitted to the Audit Committee for specific pre-approval, irrespective of the amount, and cannot commence until such approval has been granted. Normally, pre-approval is provided at regularly scheduled meetings of the Audit Committee. However, the Audit Committee may delegate pre-approval authority to one or more of its members. The member or members to whom such authority is delegated shall report any pre-approval decisions to the Audit Committee at its next scheduled meeting. The Audit Committee does not delegate its responsibilities to pre-approve services performed by the independent registered public accounting firm to management.

 

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AUDIT COMMITTEE REPORT

 

Management is responsible for the Company’s internal controls and the financial reporting process. The independent auditors are responsible for performing an independent audit of the Company’s financial statements in accordance with auditing standards generally accepted in the United States and expressing an opinion on the conformity of those audited financial statements in accordance with accounting principles generally accepted in the United States. The Audit Committee’s responsibility is to monitor and oversee these processes. The Audit Committee is also directly responsible for the appointment, compensation and oversight of the Company’s independent registered public accounting firm.

 

Review with Management

 

The Audit Committee has reviewed the audited financial statements and met and held discussions with management regarding the audited financial statements. Management has represented to the Audit Committee that the Company’s financial statements were prepared in accordance with accounting principles generally accepted in the United States.

 

Review and Discussion with Independent Registered Public Accounting Firm

 

The Audit Committee has discussed with WithumSmith the matters required to be discussed by Statement of Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1, AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T. SAS No. 61, as amended, requires our independent registered public accounting firm to discuss with our Audit Committee, among other things, the following:

 

methods used to account for significant unusual transactions;

 

the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus;

 

the process used by management in formulating particularly sensitive accounting estimates and the basis for the auditors’ conclusions regarding the reasonableness of those estimates; and

 

disagreements with management over the application of accounting principles, the basis for management’s accounting estimates and the disclosures in the consolidated financial statements.

 

The Audit Committee received and reviewed the written disclosures and the letter from the independent registered public accounting firm required by the applicable Public Company Accounting Oversight Board rule regarding the independent accountant’s communications with audit committees concerning independence and has discussed with the auditors the auditors’ independence. The Audit Committee has also considered the compatibility of non-audit services with the auditors’ independence.

 

Conclusion

 

Based on the Audit Committee’s discussion with management and the independent registered public accounting firm, the Audit Committee’s review of the audited financial statements, the representations of management and the report of the independent registered public accounting firm to the Audit Committee, the Audit Committee recommended that the Board include the audited financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 for filing with the SEC and will make that determination for the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 upon completion.

 

The Audit Committee

 

Martin Laidlaw, Chairman

Greg Bennett
Darren Stainrod

 

The material contained in the foregoing Audit Committee Report is not “soliciting material,” is not deemed “filed” with the SEC, and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

 

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PROPOSAL 3: THE APPROVAL OF THE NEW INVESTMENT ADVISORY AGREEMENT BETWEEN THE COMPANY AND HOUSE HANOVER, LLC, PURSUANT TO WHICH HOUSE HANOVER, LLC WILL BE APPOINTED AS THE COMPANY’S INVESTMENT ADVISOR.

 

Background and Reasons for Change

 

Since March 13, 2015, the Company has operated as a business development company (“BDC”) that is externally managed by an external investment advisor. Princeton Advisory Group, Inc. (“PAG”), an entity owned by Mr. Munish Sood (the Company’s former chief executive officer, former president, and a former director), previously served as the Company’s external investment advisor pursuant to an investment advisory agreement, dated as of June 9, 2016, entered into by and between Company and PAG (the “PAG Investment Advisory Agreement”). As reported in the Company’s Form 8-K filed on September 28, 2017, on September 25, 2017, the United States of America filed Complaints against Mr. Sood and others captioned U.S. v. Lamont Evans, et al. and U.S. v. James Gatto, et al., in the Southern District of New York and Mr. Sood notified the Company of his resignation from his role as a director, as the Company’s Chief Executive Officer, and as the Company’s President, effective immediately. As reported in the Company’s Form 8-K filed on September 28, 2017, on September 27, 2017, the Board determined that it would be in the best interests of the Company and its stockholders to terminate the PAG Investment Advisory Agreement. As reported in the Company’s Form 8-K filed on January 2, 2018, on December 27, 2017, the Board sent a formal Notice of Termination to PAG notifying PAG of its termination as the Company’s investment advisor, effective as of December 31, 2017 at 11:59 p.m. Eastern Time.

 

The PAG Investment Advisory Agreement was last submitted to a vote of stockholders of the Company at the 2016 Annual Meeting of Stockholders held on June 9, 2016 for the purpose of entering into the PAG Investment Advisory Agreement. At a Special Meeting of the Board held on June 27, 2017, the Board, including a majority of the independent directors of the Board, voted to renew the PAG Investment Advisory Agreement for another one year term, pursuant to the requirements of Section 9(c) of the PAG Investment Advisory Agreement and Section 15(c) of the 1940 Act. During the fiscal year ended December 31, 2017, the Company paid $507,552 to PAG under the PAG Investment Advisory Agreement, $453,133 of which was earned during the fiscal year ended December 31, 2017 and $54,419 of which was earned during the fiscal year ended December 31, 2016.

 

In order to have time to develop a transition plan from PAG to a new investment advisor, on December 27, 2017, the Board approved (specifically in accordance with Rule 15a-4(b)(1)(ii) of the 1940 Act) and authorized the Company to enter into an interim investment advisory agreement between the Company and House Hanover, LLC, a Delaware limited liability company (“House Hanover”) (the “Interim Investment Advisory Agreement”), in accordance with Rule 15a-4 of the 1940 Act. The effective date of the Interim Investment Advisory Agreement was January 1, 2018. As of April 1, 2018, the Company has not made any payments to House Hanover under the Interim Advisory Agreement. The amount payable to House Hanover through April 1, 2018 under the Interim Investment Advisory Agreement is approximately $120,000.

 

In accordance with Rule 15a-4(a)(2) of the 1940 Act, the Interim Investment Advisory Agreement was not submitted to a vote of stockholders of the Company and the duration of the Interim Investment Advisory Agreement is not greater than 150 days following the date on which the PAG Investment Advisory Agreement was terminated (the Interim Investment Advisory Agreement will terminate on May 30, 2018, the date of the 2018 Annual Meeting).

 

Subject to approval by the Company’s stockholders, on April 5, 2018, the Board, including a majority of the independent directors, reviewed and approved the new (not interim) investment advisory agreement (the “New Investment Advisory Agreement”) with House Hanover, which is controlled by Mr. Mark DiSalvo, our Interim President and Interim Chief Executive Officer. For the avoidance of doubt, Mr. DiSalvo did not vote on the approval of the New Investment Advisory Agreement. The terms and conditions of the New Investment Advisory Agreement are substantially similar to the PAG Investment Advisory Agreement and the Interim Investment Advisory Agreement (except for (i) the limitations on the duration of the Interim Investment Advisory Agreement contained in Rule 15a-4 of the 1940 Act as set forth above and (ii) the stockholder approval requirements of the New Investment Advisory Agreement). The Board believes the approval of the New Investment Advisory Agreement will provide continuity of advisory services to the Company and that the New Investment Advisory Agreement will be in the best interests of the Company and its stockholders. The Board considered the reimbursement of certain costs and expenses of House Hanover as set forth in the summary below when approving the New Investment Advisory Agreement.

 

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The Company is not aware of any financial condition of House Hanover that is reasonably likely to impair the financial ability of House Hanover to fulfill its commitment to the Company under the New Investment Advisory Agreement. Additionally, House Hanover has reported that it has no financial commitment that impairs its ability to meet contractual and fiduciary commitments to clients in Part 2A of Form ADV.

 

The New Investment Advisory Agreement is attached hereto as Exhibit A, and the summary description of the New Investment Advisory Agreement contained herein is qualified in its entirety by the complete text of the New Investment Advisory Agreement, as reflected in Exhibit A.

 

The address of House Hanover is 800 Turnpike Street, Suite 300, North Andover, Massachusetts 01845. Mr. DiSalvo is the principal executive officer of House Hanover, his address is Attn: Mark DiSalvo, 800 Turnpike Street, Suite 300, North Andover, Massachusetts 01845, and his principal occupation is the President and CEO of Sema4, Inc. House Hanover, as a limited liability company, does not have any directors or general partners.

 

House Hanover is owned 100% by Sema4, Inc. and Sema4, Inc., in turn, is owned 100% by Mark DiSalvo. The address of Sema4, Inc. is 800 Turnpike Street, Suite 300, North Andover, Massachusetts 01845.

 

Material Changes in Investment Advisory Agreement

 

The terms and conditions of the New Investment Advisory Agreement and the PAG Investment Advisory Agreement are substantially similar, including all management fees payable by the Company. Neither the New Investment Advisory Agreement nor the PAG Investment Advisory Agreement, contain an incentive fee component, as would be typical of many external investment advisory agreements.

 

For the fiscal year ended December 31, 2017, the aggregate fees payable to PAG under the PAG Investment Advisory Agreement was $453,133. If the proposed fee under the New Investment Advisory Agreement would have been in effect, the aggregate fees payable to House Hanover would have been the same. There would have been no change in the fees payable under the investment advisory agreements.

 

The terms and conditions of the New Investment Advisory Agreement and the Interim Investment Advisory Agreement are substantially similar, except that (i) the Interim Investment Advisory Agreement did not require approval in accordance with Rule 15a-4 of the 1940 Act and (ii) the duration of the New Investment Advisory Agreement is one year from the Effective Date and thereafter shall continue automatically for successive annual periods, provided that such continuance is specifically approved at least annually by (a) the vote of the Board, or by the vote of a majority of the outstanding voting securities of the Company and (b) the vote of a majority of the members of the Board who are not parties to this New Investment Advisory Agreement or “interested persons” (as such term is defined in Section 2(a)(19) of the 1940 Act) of any such party, in accordance with the requirements of the 1940 Act, as opposed to a 150 day limitation on the term, as set forth in the Interim Investment Advisory Agreement, and discussed elsewhere in this proxy statement.

 

Summary of New Investment Advisory Agreement

 

Advisory Services

 

House Hanover is registered as an investment adviser under the 1940 Act and will serve as the Company’s investment advisor pursuant to the New Investment Advisory Agreement in accordance with the 1940 Act. House Hanover is owned by and an affiliate of Mr. Mark DiSalvo, the Company’s Interim President, Interim Chief Executive Officer, and a director of the Company. 

 

Subject to supervision by the Company’s Board, House Hanover will oversee the Company’s day-to-day operations and provide the Company with investment advisory services. Under the terms of the New Investment Advisory Agreement, House Hanover, will among other things: (i) determine the composition and allocation of the portfolio of the Company, the nature and timing of the changes therein and the manner of implementing such changes; (ii) identify, evaluate and negotiate the structure of the investments made by the Company; (iii) execute, close, service and monitor the Company’s investments; (iv) determine the securities and other assets that the Company shall purchase, retain, or sell; (v) perform due diligence on prospective portfolio companies; (vi) provide the Company with such other investment advisory, research and related services as the Company may, from time to time, reasonably require for the investment of its funds; and (vii) if directed by the Board, assist in the execution and closing of the sale of the Company’s assets or a sale of the equity of the Company in one or more transactions. House Hanover’s services under the New Investment Advisory Agreement may not be exclusive and it is free to furnish similar services to other entities so long as its services to the Company are not impaired. At the request of the Company, House Hanover, upon any transition of the Company’s investment advisory relationship to another investment advisor or upon any internalization, shall provide reasonable transition assistance to the Company and any successor investment advisor.

 

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Advisory Fee

 

Pursuant to the New Investment Advisory Agreement, the Company will pay House Hanover a base management fee for investment advisory and management services. The cost of the base management fee will ultimately be borne by the Company’s stockholders. The New Investment Advisory Agreement does not contain an incentive fee component.

 

The base management fee is calculated at an annual rate of 1.00% of the Company’s gross assets, including assets purchased with borrowed funds or other forms of leverage and excluding cash and cash equivalents net of all indebtedness of the Company for borrowed money and other liabilities of the Company. The base management fee is payable quarterly in arrears, and determined as set forth in the preceding sentence at the end of the two most recently completed calendar quarters. The Board may retroactively adjust the valuation of the Company’s assets and the resulting calculation of the base management fee in the event the Company or any of its assets are sold or transferred to an independent third party or the Company or House Hanover receives an audit report or other independent third party valuation of the Company. To the extent that any such adjustment increases or decreases the base management fee of any prior period, the Company will be obligated to pay the amount of increase to House Hanover or House Hanover will be obligated to refund the decreased amount, as applicable.

 

Payment of Expenses

 

House Hanover will bear all compensation expense (including health insurance, pension benefits, payroll taxes and other compensation related matters) of its employees and bear the costs of any salaries or directors’ fees of any officers or directors of the Company who are affiliated persons (as defined in the 1940 Act) of House Hanover. However, House Hanover, subject to approval by the Board of the Company, will be entitled to reimbursement for the portion of any compensation expense and the costs of any salaries of any such employees to the extent attributable to services performed by such employees for the Company. During the term of the New Investment Advisory Agreement, House Hanover will also bear all of its costs and expenses for office space rental, office equipment, utilities and other non-compensation related overhead allocable to performance of its obligations under the New Investment Advisory Agreement.

 

Except as provided in the preceding paragraph the Company will reimburse House Hanover all direct and indirect costs and expenses incurred by it during the term of the New Investment Advisory Agreement for: (i) due diligence of potential investments of the Company, (ii) monitoring performance of the Company’s investments, (iii) serving as officers of the Company, (iv) serving as directors and officers of portfolio companies of the Company, (v) providing managerial assistance to portfolio companies of the Company, and (vi) enforcing the Company’s rights in respect of its investments and disposing of its investments; provided, however, that, any third party expenses incurred by House Hanover in excess of $50,000 in the aggregate in any calendar quarter will require advance approval by the Board of the Company.

 

In addition to the foregoing, the Company will also be responsible for the payment of all of the Company’s other expenses, including the payment of the following fees and expenses:

 

organizational and offering expenses;
expenses incurred in valuing the Company’s assets and computing its net asset value per share (including the cost and expenses of any independent valuation firm);
subject to the guidelines approved by the Board, expenses incurred by House Hanover that are payable to third parties, including agents, consultants or other advisors, in monitoring financial and legal affairs for the Company and in monitoring the Company’s investments and performing due diligence on the Company’s prospective portfolio companies or otherwise related to, or associated with, evaluating and making investments;
interest payable on debt, if any, incurred to finance the Company’s investments and expenses related to unsuccessful portfolio acquisition efforts;
offerings of the Company’s common stock and other securities;
administration fees;
transfer agent and custody fees and expenses;
U.S. federal and state registration fees of the Company (but not House Hanover);
all costs of registration and listing the Company’s shares on any securities exchange;
U.S. federal, state and local taxes;
independent directors’ fees and expenses;
costs of preparing and filing reports or other documents required of the Company (but not House Hanover) by the SEC or other regulators;
costs of any reports, proxy statements or other notices to stockholders, including printing costs;
the costs associated with individual or group stockholders;
the Company’s allocable portion of the fidelity bond, directors and officers/errors and omissions liability insurance, and any other insurance premiums;
direct costs and expenses of administration and operation of the Company, including printing, mailing, long distance telephone, copying, secretarial and other staff, independent auditors and outside legal costs;

and all other non-investment advisory expenses incurred by the Company in connection with administering the Company’s business.

 

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Duration and Termination

 

Unless terminated earlier as described below, the New Investment Advisory Agreement will continue in effect for a period of one (1) year from its effective date. It will remain in effect from year to year thereafter if approved annually by the Company’s Board or by the affirmative vote of the holders of a majority of the Company’s outstanding voting securities, and, in either case, if also approved by a majority of Company’s directors who are neither parties to the New Investment Advisory Agreement nor “interested persons” (as defined under the 1940 Act) of any such party. The New Investment Advisory Agreement may be terminated at any time, without the payment of any penalty, (i) upon written notice, effective on the date set forth in such notice, by the vote of a majority of the outstanding voting securities of the Company or by the vote of the Company’s directors, or (ii) upon 60 days’ written notice, by House Hanover. The New Investment Advisory Agreement automatically terminates in the event of its “assignment,” as defined in the 1940 Act.

 

Indemnification

 

The New Investment Advisory Agreement provides that, absent willful misfeasance, bad faith or negligence in the performance of their duties, or by reason of the material breach or reckless disregard of their duties and obligations under the New Investment Advisory Agreement, House Hanover and its officers, managers, employees and members are entitled to indemnification from the Company for any damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) arising from the rendering of House Hanover’s services under the New Investment Advisory Agreement or otherwise as the Company’s investment advisor. The amounts payable for indemnification will be calculated net of payments recovered by the indemnified party under any insurance policy with respect to such losses.

 

At all times during the term of the New Investment Advisory Agreement and for one year thereafter, House Hanover is obligated to maintain directors and officers/errors and omission liability insurance in an amount and with a provider reasonably acceptable to the Board of the Company.

 

Factors Considered by the Board

 

On April 5, 2018, the Board, including a majority of independent directors, met and discussed the New Investment Advisory Agreement. In evaluating the New Investment Advisory Agreement, the Board reviewed certain materials furnished separately by the Company, which included market information regarding the terms of other investment advisory agreements with other publicly traded business development companies.

 

In approving the New Investment Advisory Agreement, the Board considered a number of factors. Among other things, the Board considered the following matters and reached the following conclusions:

 

Nature, Extent and Quality of Investment Advisory Services. The Board, including the independent directors, considered the nature, extent and quality of the investment advisory services to be provided by House Hanover to the Company. The Board understands that the services to be performed and the personnel performing such services will be effectively the same as under the Interim Investment Advisory Agreement. The Board reviewed the expected resources of House Hanover and the composition, education and experience of its investment professionals. They concluded that the nature, quality and extent of the services to be provided to the Company by House Hanover are appropriate and that the Company is likely to benefit from the provision of these services.

 

Investment Performance. The Board reviewed House Hanover’s historical investment performance and compared House Hanover’s prior performance with the performance of comparable investment companies. The Board concluded that, although past performance is not necessarily indicative of future results, the favorable performance record of House Hanover was an important factor in their evaluation of the quality of services expected to be provided by House Hanover under the New Investment Advisory Agreement. The Board, in its consideration of House Hanover’s historical investment performance, considered House Hanover’s performance as the Company’s interim investment advisor since January 1, 2018, but did not include work for any other business development company, as House Hanover had not previously served as an investment advisor for a business development company.

 

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Costs of the Services Provided to the Company and the Profits Realized by House Hanover. The Board considered comparative data based on publicly available information with respect to services rendered and the advisory fees (including management fees and incentive fees) paid to investment advisors of other business development companies with similar investment objectives. The comparative data outlined management fees and incentive fees paid to such investment advisors, including the calculation of such management fees and incentive fees, in relation to such other companies’ total assets and the services rendered by such investment advisors. In light of this comparative data, the Board considered the Company’s operating expenses and expense ratio compared to such other companies. Based upon its review, the Board concluded that, although the fee structures vary among business development companies, the management fees to be paid under the New Investment Advisory Agreement was at the low end of the range and the fact that the Company would not have to pay an incentive fee was a favorable factor when compared to fees payable under agreements of comparable business development companies described in the comparative data then available.

   

Profitability of Investment Adviser. The Board reviewed information on the expected profitability of House Hanover in serving as the Company’s investment adviser. It concluded that the expected profitability of House Hanover with respect to the Company in relation to the services rendered was reasonable and that the financial condition of House Hanover was sound. It also concluded that the management fees and other compensation payable by the Company to House Hanover was reasonable in relation to the nature, extent and quality of the services provided, taking into account the fees charged by other advisors for managing comparable business development companies.

 

On the basis of the information provided to it and its evaluation thereof, the Board, including a majority of the independent directors, voted to approve the New Investment Advisory Agreement, subject to approval by the Company’s stockholders. For the avoidance of doubt, Mr. DiSalvo did not vote on the approval of the New Investment Advisory Agreement.

 

Conclusion and Recommendation; Required Vote

 

The Board believes that the approval of the New Investment Advisory Agreement is in the best interests of the Company and its stockholders.

 

The affirmative vote of “a majority of the outstanding shares of common stock” entitled to vote at the Annual Meeting is required for the approval of this proposal. Because we have elected to be regulated as a business development company under the 1940 Act, the definition of “a majority of the outstanding shares of common stock” as defined under the 1940 Act must be used for purposes of this proposal. The 1940 Act defines “a majority of the outstanding shares” as (i) 67% or more of the voting securities present at the Annual Meeting if the holders of more than 50% of the outstanding voting securities of the Company are present or represented by proxy, or (ii) more than 50% of the Company’s outstanding shares of common stock as of the Record Date, whichever is the less. Abstentions and broker non-votes will have the effect of a vote against this proposal.

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL OF THE NEW INVESTMENT ADVISORY AGREEMENT.

 

 23 

 

 

PROPOSAL 4: ADJOURNMENT OF THE ANNUAL MEETING

 

The Company’s stockholders may be asked to consider and act upon one or more adjournments of the Annual Meeting, if necessary or appropriate, to solicit additional proxies in favor of any or all of the other proposals set forth in this proxy statement.

 

If a quorum is not present at the Annual Meeting, the Company’s stockholders may be asked to vote on the proposal to adjourn the Annual Meeting to solicit additional proxies. If a quorum is present at the Annual Meeting, but there are not sufficient votes at the time of the Annual Meeting to approve one or more of the proposals, the Company’s stockholders may also be asked to vote on the proposal to approve the adjournment of the Annual Meeting to permit further solicitation of proxies in favor of the other proposals. However, a stockholder vote may be taken on one of the proposals in this proxy statement prior to any such adjournment if there are sufficient votes for approval on such proposal.

 

If the adjournment proposal is submitted for a vote at the Annual Meeting, and if the Company’s stockholders vote to approve the adjournment proposal, the meeting will be adjourned for not more than 120 days following the original record date to enable the Board to solicit additional proxies in favor of one or more proposals. If the adjournment proposal is approved, and the Annual Meeting is adjourned, the Board will use the additional time to solicit additional proxies in favor of any of the proposals to be presented at the Annual Meeting, including the solicitation of proxies from stockholders that have previously voted against the relevant proposal.

 

The Board believes that, if the number of shares of the Company’s common stock voting in favor of any of the proposals presented at the Annual Meeting is insufficient to approve a proposal, it is in the best interests of the Company’s stockholders to enable the Board, for a limited period of time, to continue to seek to obtain a sufficient number of additional votes in favor of the proposal. Any signed proxies received by the Company in which no voting instructions are provided on such matter will be voted in favor of an adjournment in these circumstances. The time and place of the adjourned meeting will be announced at the time the adjournment is taken. Any adjournment of the Annual Meeting for the purpose of soliciting additional proxies will allow the Company’s stockholders who have already sent in their proxies to revoke them at any time prior to their use at the Annual Meeting adjourned or postponed.

 

THE BOARD OF DIRECTORS RECOMMENDS THE STOCKHOLDERS VOTE “FOR” THE ADJOURNMENT OF THE ANNUAL MEETING, IF NECESSARY OR APPROPRIATE, TO SOLICIT ADDITIONAL PROXIES.

 

 24 

 

  

OTHER BUSINESS

 

The Board knows of no other business that may properly be presented for action at the Annual Meeting. If any matters do come before the Annual Meeting on which action can properly be taken, the persons named as proxies will vote in their discretion on any such matter. The submission of a proposal does not guarantee its inclusion in the Company’s proxy statement or presentation at the Annual Meeting unless certain securities law requirements are met.

 

SUBMISSION OF STOCKHOLDER PROPOSALS

 

Pursuant to Rule 14a-8 under the Exchange Act, some stockholder proposals may be eligible for inclusion in the Company’s 2018 proxy statement. Any stockholder proposal under Rule 14a-8 must be submitted, along with proof of ownership of the Company’s stock in accordance with Rule 14a-8(b)(2), to the Company’s principal executive offices in care of the Company’s Secretary by letter to 800 Turnpike Street, Suite 300, North Andover, Massachusetts 01845. Failure to deliver a proposal in accordance with this procedure may result in the proposal not being deemed timely received. The Company must have received all submissions no later than the close of business (5:00 p.m. Eastern Time) on Friday, March 23, 2018, which the Company has determined to be a reasonable time before it expects to begin to print and send its proxy materials. The Company encourages any stockholder interested in submitting a proposal to contact the Company’s Secretary in advance of this deadline to discuss the proposal, and stockholders may find it helpful to consult knowledgeable counsel with regard to the detailed requirements of applicable securities laws. Submitting a stockholder proposal does not guarantee that we will include it in the Company’s proxy statement. The Board of Directors reviews all stockholder proposals and will take appropriate action on such proposals.

 

In addition, under the Company’s Bylaws, any stockholder who intends to nominate a candidate for election to the Board or to propose any business at the 2018 Annual Meeting, other than precatory (non-binding) proposals presented under Rule 14a-8, must have given notice to the Company’s Secretary by no later than the close of business on Friday, March 23, 2018. The notice must include information specified in the Company’s Bylaws, including information concerning the nominee or proposal, as the case may be, and information about the stockholder’s ownership of, and agreements related to, the Company’s stock. The Company will not entertain any proposals or nominations at the 2018 Annual Meeting that do not meet the requirements set forth in the Company’s Bylaws. Also, if the stockholder does not also comply with the requirements of Rule 14a-4(c)(2) under the Exchange Act, the Company’s proxies may exercise discretionary voting authority under proxies that the Company’s Board of Directors solicits to vote in accordance with their best judgment on any such stockholder proposal or nomination. The Bylaws are available on the SEC’s website attached as an exhibit to the Company’s Form 8-K filed with the SEC on March 19, 2015. To make a submission or to request a copy of the Company’s Bylaws, stockholders should contact the Company’s Secretary at the address listed above.

 

No stockholder proposals or nominations were received by the Company for the Annual Meeting by the March 23, 2018 deadline.

 

Because the date of the 2018 Annual Meeting was advanced by more than 30 days from the anniversary date of the Company’s 2017 Annual Meeting of Stockholders, in accordance with Rule 14a-5(f) under the Exchange Act, the Company, in a Form 8-K filed with the SEC on March 12, 2018, notified the stockholders of such change and the March 23, 2018 deadline to submit stockholder proposals.

 

Proxies solicited by the Company will confer discretionary voting authority with respect to any Stockholder proposals, subject to SEC rules governing the exercise of this authority.

 

PRIVACY PRINCIPLES

 

We are committed to maintaining the privacy of our stockholders and to safeguarding their nonpublic personal information. The following information is provided to help you understand what personal information we collect, how we protect that information and why, in certain cases, we may share information with select other parties.

 

Generally, we do not receive any nonpublic personal information relating to our stockholders, although certain nonpublic personal information of our stockholders may become available to us. We do not disclose any nonpublic personal information about our stockholders or former stockholders to anyone, except as permitted by law or as is necessary in order to service stockholder accounts (for example, to a transfer agent or third-party administrator).

 

We restrict access to nonpublic personal information about our stockholders to employees of House Hanover and its affiliates with a legitimate business need for the information. We intend to maintain physical, electronic and procedural safeguards designed to protect the nonpublic personal information of our stockholders.

 

By Order of the Board

 

Gregory J. Cannella
Chief Financial Officer, Secretary and Treasurer
North Andover, Massachusetts
April 25, 2018

 

 25 

 

 

EXHIBIT A

 

New Investment Advisory Agreement

 

INVESTMENT ADVISORY AGREEMENT

 

BETWEEN

 

PRINCETON CAPITAL CORPORATION

 

AND

 

HOUSE HANOVER, LLC

 

THIS INVESTMENT ADVISORY AGREEMENT (this “Agreement”), dated as of May 31, 2018 (the “Effective Date”), is entered into by and between Princeton Capital Corporation, a Maryland corporation (the “Corporation”), and House Hanover, LLC, a Delaware limited liability company (the “Adviser”).

 

WHEREAS, the Corporation and the Adviser, entered into that certain Interim Investment Advisory Agreement dated as of January 1, 2018 (the “Interim Investment Advisory Agreement”), whereby the Adviser agreed to furnish investment advisory services to the Corporation on an interim basis in accordance with Rule 15a-4 of the Investment Company Act of 1940, as amended (the “Investment Company Act”);

 

WHEREAS, the Interim Investment Advisory Agreement (in accordance with Rule 15a-4(b)(1)(ii) of the Investment Company Act) has a term not to exceed one hundred fifty days from the effective date of the Interim Investment Advisory Agreement (i.e., the Interim Investment Advisory Agreement terminates on May 31, 2018);

 

WHEREAS, the Adviser has agreed to furnish investment advisory services to the Corporation, which has elected to operate as a business development company under the Investment Company Act; and

 

WHEREAS, this Agreement has been approved in accordance with the provisions of the Investment Company Act, and the Adviser is willing to furnish such services upon the terms and conditions herein set forth.

 

NOW, THEREFORE, in consideration of the mutual premises and covenants herein contained and other good and valuable consideration, the receipt of which is hereby acknowledged, it is agreed by and between the parties hereto as follows:

 

1. In General. During the term of this Agreement, the Adviser agrees, all as more fully set forth herein, to act as investment advisor to the Corporation with respect to the investment of the Corporation’s assets and to supervise and arrange for the day-to-day operations of the Corporation and the purchase of assets for and the sale of assets held in the investment portfolio of the Corporation.

 

 A-1 

 

 

2. Duties and Obligations of the Adviser with Respect to Investment of Assets of the Corporation.

 

(a) Subject to the succeeding provisions of this paragraph and subject to the direction and control of the Board of Directors, during the term of this Agreement, the Adviser shall act as the investment advisor to the Company and manage the investment and reinvestment of the assets of the Company. Without limiting the generality of the foregoing, the Adviser shall, during the term and subject to the provisions of this Agreement, (i) determine the composition of the portfolio of the Corporation, the nature and timing of the changes therein and the manner of implementing such changes; (ii) identify, evaluate and negotiate the structure of the investments made by the Corporation; (iii) execute, close, service and monitor the investments that the Corporation makes; (iv) determine the securities and other assets that the Corporation will purchase, retain or sell; (v) perform due diligence on prospective portfolio companies; (vi) provide the Corporation with such other investment advisory, research and related services as the Corporation may, from time to time, reasonably require for the investment of its funds; and (vii) if directed by the Board of Directors, assist in the execution and closing of the sale of the Corporation’s assets or a sale of the equity of the Corporation in one or more transactions, however structured, in each case as approved by the Board of Directors. Nothing contained herein shall be construed to restrict the Corporation’s right to hire its own employees or to contract for administrative services to be performed by third parties, including but not limited to, the calculation of the net asset value of the Corporation’s shares.

 

(b) In the performance of its duties under this Agreement, the Adviser shall at all times conform to, act in accordance with, and act so that the Corporation is in compliance with, any requirements imposed by (i) the provisions of the Investment Company Act and the Investment Advisers Act of 1940, as amended (the “Advisers Act”), and of any rules or regulations in force thereunder, subject to the terms of any exemptive order applicable to the Corporation; (ii) any other applicable provision of law; (iii) the provisions of the Charter and the Bylaws of the Corporation, as such documents are amended from time to time; (iv) the investment objectives, policies and restrictions applicable to the Corporation as set forth in the Corporation’s proxy or information statement as it may be amended from time to time by the Board of Directors; and (v) any policies and determinations of the Board of Directors that are provided in writing to the Adviser.

 

(c) The Adviser will provide qualified personnel to fulfill its duties hereunder and, except as set forth in the following sentence, will bear all costs and expenses incurred in connection with its investment advisory duties hereunder. Except as provided in Section 5 hereof, the Corporation shall reimburse the Adviser for all direct and indirect costs and expenses incurred by the Adviser during the term of this Agreement for (i) due diligence of potential investments of the Corporation, (ii) monitoring performance of the Corporation’s investments, (iii) serving as officers of the Corporation, (iv) serving as directors and officers of portfolio companies of the Corporation, (v) providing managerial assistance to portfolio companies of the Corporation, and (vi) enforcing the Corporation’s rights in respect of its investments and disposing of its investments; provided, however, that, any third party expenses incurred by the Adviser in excess of $50,000 in the aggregate in any calendar quarter require advance approval by the Board of Directors. All allocations of costs and expenses made pursuant to this paragraph (c) shall be made pursuant to allocation guidelines approved from time to time by the Board of Directors. The Corporation shall also be responsible for the payment of all the Corporation’s other expenses, including payment of the fees payable to the Adviser under Section 6 hereof; organizational and offering expenses; expenses incurred in valuing the Corporation’s assets and computing its net asset value per share (including the cost and expenses of any independent valuation firm); subject to the limitations in the proviso in the immediately preceding sentence, expenses incurred by the Adviser that are payable to third parties, including agents, consultants or other advisors, in monitoring financial and legal affairs for the Corporation and in monitoring the Corporation’s investments and performing due diligence on the Corporation’s prospective portfolio companies or otherwise related to, or associated with, evaluating and making investments; interest payable on debt, if any, incurred to finance the Corporation’s investments and expenses related to unsuccessful portfolio acquisition efforts; offerings of the Corporation’s common stock and other securities; administration fees; transfer agent and custody fees and expenses; federal and state registration fees of the Corporation (but not the Adviser); all costs of registration and listing the Corporation’s shares on any securities exchange; federal, state and local taxes; independent directors’ fees and expenses; costs of preparing and filing reports or other documents required of the Corporation (but not the Adviser) by the Securities and Exchange Commission (“SEC”) or other regulators; costs of any reports, proxy statements or other notices to stockholders, including printing costs; the costs associated with individual or group stockholders; the Corporation’s allocable portion of the fidelity bond, directors and officers/errors and omissions liability insurance, and any other insurance premiums; direct costs and expenses of administration and operation of the Corporation, including printing, mailing, long distance telephone, copying, secretarial and other staff, independent auditors and outside legal costs; and all other non-investment advisory expenses incurred by the Corporation in connection with the administering the Corporation’s business.

 

 A-2 

 

 

(d) The Adviser shall, at all times during the term of this Agreement and for one year thereafter, maintain directors and officers/errors and omissions liability insurance in an amount and with a provider reasonably acceptable to the Board of Directors.

 

(e) The Adviser will place orders either directly with the issuer or with any broker or dealer. Subject to the other provisions of this paragraph, in placing orders with brokers and dealers, the Adviser will attempt to obtain the best price and the most favorable execution of its orders. In placing orders, the Adviser will consider the experience and skill of the firm’s securities traders as well as the firm’s financial responsibility and administrative efficiency. Consistent with this obligation, the Adviser may select brokers on the basis of the research, statistical and pricing services they provide to the Corporation and other clients of the Adviser. Information and research received from such brokers will be in addition to, and not in lieu of, the services required to be performed by the Adviser hereunder. A commission paid to such brokers may be higher than that which another qualified broker would have charged for effecting the same transaction, provided that the Adviser determines in good faith that such commission is reasonable in terms either of the transaction or the overall responsibility of the Adviser to the Corporation and its other clients and that the total commissions paid by the Corporation will be reasonable in relation to the benefits to the Corporation over the long term, subject to review by the Board of Directors of the Corporation from time to time with respect to the extent and continuation of such practice to determine whether the Corporation benefits, directly or indirectly, from such practice.

 

(f) The Adviser may not assign or delegate, whether to a sub-adviser or otherwise, and whether by operation of law, merger or otherwise, all or any portion of its obligations under this Agreement without the prior written consent of the Board of Directors, which consent the Board of Directors may give, withhold, delay or condition for any reason or no reason in its sole discretion. Any purported assignment or delegation in violation of the immediately preceding sentence shall be void and of no force or effect.

 

 A-3 

 

 

(g) At the request of the Corporation, the Adviser, upon any transition of the Corporation’s investment advisory relationship to another investment adviser or upon any internalization, shall provide reasonable transition assistance to the Corporation and any successor investment adviser.

 

3. Services Not Exclusive. Nothing in this Agreement shall prevent the Adviser or any officer, employee or other affiliate thereof from acting as investment advisor for any other person, firm or corporation, or from engaging in any other lawful activity, and shall not in any way limit or restrict the Adviser or any of its officers, employees or agents from buying, selling or trading any securities for its or their own accounts or for the accounts of others for whom it or they may be acting; provided, however, that the Adviser will not undertake, and will cause its employees not to undertake, activities which, in its reasonable judgment, will adversely affect the performance of the Adviser’s obligations under this Agreement.

 

4. No Agency Cross Transactions. From time to time, the Adviser or brokers or dealers affiliated with it may find themselves in a position to buy for certain of their brokerage clients (each an “Account”) securities which the Adviser’s investment advisory clients wish to sell, and to sell for certain of their brokerage clients securities which advisory clients wish to buy. Where one of the parties is an advisory client, the Adviser or the affiliated broker or dealer cannot participate in this type of transaction (known as a cross transaction) on behalf of an advisory client and retain commissions from one or both parties to the transaction without the advisory client’s consent. This is because in a situation where the Adviser is making the investment decision (as opposed to a brokerage client who makes his own investment decisions), and the Adviser or an affiliate is receiving commissions from both sides of the transaction, there is a potential conflicting division of loyalties and responsibilities on the Adviser’s part regarding the advisory client. The SEC has adopted a rule under the Advisers Act which permits the Adviser or its affiliates to participate on behalf of an Account in agency cross transactions if the advisory client has given written consent in advance. Neither the Adviser nor its affiliates may participate in agency cross transactions involving an Account without the prior written consent of the Board of Directors, which consent the Board of Directors may give, withhold, delay or condition for any reason or no reason in its sole discretion.

 

5. Expenses. During the term of this Agreement, the Adviser will bear all compensation expense (including health insurance, pension benefits, payroll taxes and other compensation related matters) of its employees and shall bear the costs of any salaries or directors’ fees of any officers or directors of the Corporation who are affiliated persons (as defined in the Investment Company Act) of the Adviser; provided, however, that the Adviser, subject to approval by the Board of Directors, shall be entitled to reimbursement for the portion of any compensation expense and the costs of any salaries of any such employees to the extent attributable to services performed by such employees for the Corporation. During the term of this Agreement, the Adviser will also bear all costs and expenses incurred by the Adviser for office space rental, office equipment, utilities and other non-compensation related overhead allocable to performance of its obligations under this Agreement.

 

 A-4 

 

 

6. Compensation of the Adviser. During the term of this Agreement, the Adviser, for its services to the Corporation, will be entitled to receive a management fee (the “Base Management Fee”) from the Corporation. The Base Management Fee will be calculated at an annual rate of 1.00% of the Corporation’s gross assets, including assets purchased with borrowed funds or other forms of leverage and excluding cash and cash equivalents, net of all indebtedness of the Corporation for borrowed money and other liabilities of the Corporation. The Base Management Fee is payable quarterly in arrears on a calendar quarter basis. The Base Management Fee will be calculated based on the average value of the Corporation’s net assets, determined as set forth in the second sentence of this Section 6, at the end of the two most recently completed calendar quarters prior to the quarter for which such fees are being calculated. In the event that (a) the Corporation or any of its assets are sold or transferred to an independent third party or (b) the Corporation or the Adviser receives an audit report or other independent third party valuation of any asset of the Corporation, the Board of Directors may adjust the value of the Corporation’s assets, and the resulting calculations of Base Management Fee, on a retroactive basis to account for the value of such asset in such sale, audit report or valuation. To the extent that any such adjustment increases the Base Management Fee payable with respect to any prior period, the Corporation shall promptly pay the amount of such increase to the Adviser. To the extent than any such adjustment decreases the Base Management Fee payable with respect to any prior period, the Adviser shall promptly refund the amount of such decrease to the Corporation; provided, that if the Adviser has not refunded any such amount prior to the date that the next Base Management Fee payment is due, then the Corporation may offset the amount of such refund against the Base Management Fee payment then due. Base Management Fees for any partial month or quarter will be appropriately pro-rated.

 

7. Indemnification. The Adviser (and its officers, managers, employees and members) shall not be liable to the Corporation for any action taken or omitted to be taken by the Adviser in connection with the performance of any of its duties or obligations under this Agreement or otherwise as an investment adviser of the Corporation (except to the extent specified in Section 36(b) of the Investment Company Act concerning loss resulting from a breach of fiduciary duty (as the same is finally determined by judicial proceedings) with respect to the receipt of compensation for services), and the Corporation shall indemnify, defend and protect the Adviser (and its officers, managers, employees and members) (collectively, the “Indemnified Parties”) and hold them harmless from and against all damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) incurred by the Indemnified Parties in or by reason of any pending, threatened or completed action, suit, investigation or other proceeding (including an action or suit by or in the right of the Corporation or its security holders) arising out of or otherwise based upon the performance of any of the Adviser’s duties or obligations under this Agreement or otherwise as an investment adviser of the Corporation. (For clarity, in the event that there is a need to access the Adviser’s “E&O” liability insurance in the normal course of Adviser’s duties under this Agreement, the Corporation shall indemnify the Indemnified Parties for the cost of the Adviser’s deductible under Adviser’s liability insurance policy to the extent permitted under this Section 7). Notwithstanding the preceding sentence of this Section 7 to the contrary, nothing contained herein shall protect or be deemed to protect the Indemnified Parties against or entitle or be deemed to entitle the Indemnified Parties to indemnification in respect of, any liability to the Corporation or its security holders to which the Indemnified Parties would otherwise be subject by reason of willful misfeasance, bad faith or negligence in the performance of the Adviser’s duties, or by reason of the material breach or reckless disregard of the Adviser’s duties and obligations under this Agreement, and nothing contained herein shall constitute a waiver of any rights which the Corporation may have which may not be waived under applicable law. In calculating amounts payable to an Indemnified Party hereunder, the amount of any indemnified losses shall be computed net of any payments recovered by the Indemnified Party under any insurance policy with respect to such losses. If the amount recovered by an Indemnified Party under any insurance policy is received after payment by the Corporation to an Indemnified Party of any amount required to be paid by the Corporation under this Section 7, the Indemnified Party shall promptly repay to Corporation the amount of such insurance recovery.

 

 A-5 

 

 

8. Representations, Warranties and Covenants of Adviser. The Adviser represents, warrants and covenants to the Corporation as follows:

 

(a) The Adviser is a limited liability company duly organized, validly existing and in good standing under the laws of the state of Delaware and is registered to conduct business in the Commonwealth of Massachusetts. The Adviser has all necessary power and authority to enter into this Agreement and to perform its obligations under this Agreement. The execution and delivery by the Adviser of this Agreement and the performance by the Adviser of its obligations under this Agreement have been duly authorized by all requisite action on the part of the Adviser. This Agreement has been duly executed and delivered by the Adviser, and this Agreement constitutes a legal, valid and binding obligation of the Adviser, enforceable against the Adviser in accordance with its terms.

 

(b) The Adviser is duly registered as an investment adviser under the Advisers Act. The Adviser will at all times have in effect all registrations, licenses, bonds and approvals necessary for it to perform all of its obligations under this Agreement.

 

(c) The Adviser shall at all times comply in all respects with all applicable federal and state laws governing its operations, including, without limitation, the Investment Company Act and the Advisers Act.

 

(d) There has been no event, fact or circumstance that would require disclosure by or regarding the Adviser or any of its advisory affiliates (as defined in Form ADV) in response to Item 11 of Part 1A of Form ADV.

 

(e) Except as the Adviser has disclosed to the Corporation in writing prior to the date of this Agreement, (i) there are no actions, suits, claims, investigations or other legal proceedings pending or threatened by or against the Adviser or any of its affiliates, members or executive officers, and (ii) there is no outstanding order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any governmental authority or arbitrator against the Adviser or any of its affiliates, members or executive officers.

 

(f) The Adviser will promptly (and in any event within three business days) advise the Board of Directors in writing of any event, fact or circumstance that results in any of the foregoing representations, warranties or covenants being or becoming incorrect in any respect as of the date of this Agreement or as of any time during the term of this Agreement.

 

 A-6 

 

 

9. Effectiveness; Duration and Termination.

 

(a) A condition precedent to the effectiveness of this Agreement is the approval of this Agreement by the vote of a majority of the outstanding voting securities of the Corporation entitled to be cast by the holders thereof, and this Agreement shall not become effective until such approval is obtained.

 

(b) This Agreement may be terminated at any time, without the payment of any penalty, (i) upon written notice, effective on the date set forth in such notice, by the vote of a majority of the outstanding voting securities of the Corporation or by the vote of the Corporation’s Directors, or (ii) upon 60 days’ written notice, by the Adviser. From and after the Effective Date, the provisions of Section 7 of this Agreement shall remain in full force and effect, and the Adviser and the other Indemnified Parties shall remain entitled to the benefits thereof, notwithstanding any termination of this Agreement. Further, notwithstanding the termination or expiration of this Agreement as aforesaid, the Adviser shall be entitled to amounts owed under Section 6 through the date of termination or expiration, if any.

 

(c) Unless earlier terminated in accordance with its terms, this Agreement shall commence on the Effective Date and continue in effect for one year from the Effective Date and thereafter shall continue automatically for successive annual periods, provided that such continuance is specifically approved at least annually by (A) the vote of the Board of Directors, or by the vote of a majority of the outstanding voting securities of the Corporation and (B) the vote of a majority of the members of the Board of Directors who are not parties to this Agreement or “interested persons” (as such term is defined in Section 2(a)(19) of the Investment Company Act) of any such party, in accordance with the requirements of the Investment Company Act.

 

(d) This Agreement will automatically terminate in the event of its “assignment” (as such term is defined for purposes of Section 15(a)(4) of the Investment Company Act).

 

10. Notices. Any notice under this Agreement shall be in writing to the other party at such address as the other party may designate from time to time for the receipt of such notice and shall be deemed to be received on the earlier of the date actually received, the second business day after sending the same (charges prepaid) if such notice is sent via reputable overnight delivery service or on the fourth day after the postmark if such notice is mailed first class postage prepaid.

 

11. Amendment of this Agreement. This Agreement may only be amended by mutual consent, but the consent of the Corporation must be obtained in conformity with the requirements of the Investment Company Act. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

 

 A-7 

 

 

12. Entire Agreement. This Agreement contains the entire agreement of the parties and supersedes all prior agreements, understandings and arrangements with respect to the subject matter hereof.

 

13. Governing Law; Consent to Jurisdiction; Jury Trial Waiver.

 

(a) This Agreement and all claims arising hereunder or relating hereto shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any conflict of laws principles that would result in the application of the laws of any other jurisdiction, and in accordance with the applicable provisions of the Investment Company Act. In such case, to the extent the applicable laws of the State of Delaware, or any of the provisions herein, conflict with the provisions of the Investment Company Act, the latter shall control.

 

(b) Each of the parties to this Agreement consents to submit to the exclusive personal jurisdiction of the Delaware Chancery Court, or if such court does not have proper jurisdiction, any other state or federal court sitting in the State of Delaware in connection with any action or proceeding arising out of or relating to this Agreement and agrees that all claims in respect of any such action or proceeding may be heard and determined in any such court. Each of the parties to this Agreement agrees not to assert in any action or proceeding arising out of or relating to this Agreement that venue in Delaware is improper, and waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives and bond, surety or other security that might be required of any other party with respect thereto.

 

(c) EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION THEREWITH OR ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY RELATED TRANSACTION, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

 

14. Miscellaneous.

 

(a) The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding on, and shall inure to the benefit of the parties hereto and their respective successors.

 

 A-8 

 

 

(b) This Agreement has been freely and fairly negotiated between the parties hereto. If an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties and no presumption or burden of proof will arise favoring or disfavoring any party because of the authorship of any provision of this Agreement. Unless the context requires otherwise, any agreements, documents, instruments or laws defined or referred to in this Agreement will be deemed to mean or refer to such agreements, documents, instruments or laws as from time to time amended, modified or supplemented, including (i) in the case of agreements, documents or instruments, by consent and (ii) in the case of laws, by succession of comparable successor statutes. All references in this Agreement to any particular law will be deemed to refer also to any rules and regulations promulgated under that law. The words “include,” “includes” and “including” will be deemed to be followed by “without limitation.” The word “or” is used in the inclusive sense of “and/or” unless the context requires otherwise. References to a person or entity are also to their permitted successors and assigns. Pronouns in masculine, feminine and neuter genders will be construed to include any other gender, and words in the singular form will be construed to include the plural and vice versa, unless the context requires otherwise. When a reference in this Agreement is made to an Article or Section, such reference is to an Article or Section of this Agreement unless otherwise indicated. The words “this Agreement,” “herein,” “hereof,” “hereby,” “hereunder” and words of similar import refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited.

 

(c) Subject to Section 2(f) hereof, all of the terms, agreements, covenants, representations, warranties and conditions of this Agreement are binding upon, and inure to the benefit of and are enforceable by, the parties and their respective successors and permitted assigns.

 

15. Counterparts. This Agreement may be executed in counterparts by the parties hereto, each of which shall constitute an original counterpart, and all of which, together, shall constitute one Agreement. The exchange of copies of this Agreement and of executed signature pages by facsimile transmission or by electronic mail in “portable document format” (“.pdf”) or by a combination of such means, will constitute effective execution and delivery of this Agreement as to the parties hereto and may be used in lieu of an original Agreement for all purposes. Signatures of the parties transmitted by facsimile or by .pdf shall be deemed to be their original signatures for all purposes.

 

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 A-9 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Investment Advisory Agreement to be executed by their duly authorized officers, all as of the day and the year first above written.

 

  PRINCETON CAPITAL CORPORATION
     
  By:  
    Name: Greg Cannella
    Title:   Chief Financial Officer
     
  HOUSE HANOVER, LLC
     
  By:  
    Name: Mark S. DiSalvo
    Title:   President

 

 A-10 

 

 

EXHIBIT B

 

Proxy Card

 

 

 

 B-1 

 

 

 

 B-2 

 

 

 

B-3