Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2024
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 814-00754
SLR INVESTMENT CORP.
(Exact name of registrant as specified in its charter)
Maryland
26-1381340
(State of Incorporation)
(I.R.S. Employer
Identification Number)
500 Park Avenue
New York, N.Y.
10022
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (212) 993-1670
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol
Name of Each Exchange on Which Registered
Common Stock, par value $0.01 per share
SLRC
The NASDAQ Global Select Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was
required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”,
“smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b))
by the registered public accounting firm that prepared or issued its audit report. Yes ☒ No ☐
If securities are registered pursuant to Section 12(b) of the Exchange Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to
§240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of common stock held by non-affiliates of the Registrant on June 28, 2024 based on the closing price on that date of $16.09 on the NASDAQ Global Select Market was approximately $802.4 million. For the purposes of
calculating this amount only, all directors and executive officers of the Registrant have been treated as affiliates. There were 54,554,634 shares of the Registrant’s common stock outstanding as of February 21, 2025.
Auditor Firm Id: 185
Auditor Name: KPMG LLP
Auditor Location: New York, NY
Table of Contents
SLR INVESTMENT CORP.
FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2024
TABLE OF CONTENTS
Page
PART I
Item 1.
Business
1
Item 1A.
Risk Factors
28
Item 1B.
Unresolved Staff Comments
64
Item 1C.
Cybersecurity
64
Item 2.
Properties
65
Item 3.
Legal Proceedings
65
Item 4.
Mine Safety Disclosures
65
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
66
Item 6.
Reserved
70
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
71
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
93
Item 8.
Financial Statements and Supplementary Data
94
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
143
Item 9A.
Controls and Procedures
143
Item 9B.
Other Information
143
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
143
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
144
Item 11.
Executive Compensation
148
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
150
Item 13.
Certain Relationships and Related Transactions, and Director Independence
152
Item 14.
Principal Accountant Fees and Services
154
PART IV
Item 15.
Exhibit and Financial Statement Schedules
156
Item 16.
Form 10-K Summary
159
Signatures
160
1
Table of Contents
PART I
Item 1. Business
SLR Investment Corp. (the “Company”, “SLRC”, “we” or “our”), a Maryland corporation formed in November 2007, is a closed-end, externally managed, non-diversified management investment company that
has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). Furthermore, as the Company is an investment company, it continues to
apply the guidance in FASB Accounting Standards Codification (“ASC”) Topic 946. In addition, for U.S. federal income tax purposes, the Company has elected to be treated, and intends to qualify annually, as a regulated
investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).
In February 2010, we completed our initial public offering and a concurrent private offering of shares to our senior management team.
We invest primarily in privately held U.S. middle-market companies, where we believe the supply of primary capital is limited and the investment opportunities are most attractive. Our investment objective is to
generate both current income and capital appreciation through debt and equity investments. We invest primarily in leveraged middle-market companies in the form of senior secured loans, financing leases and to a lesser
extent, unsecured loans and equity securities. We define “middle market” to refer to companies with annual revenues typically between $50 million and $1 billion. From time to time, we may also invest directly in the debt
and equity of public companies that are thinly traded and such investments will not be limited to any minimum or maximum market capitalization. In addition, we may invest in foreign markets, including emerging markets.
Our business is focused primarily on the direct origination of investments through portfolio companies or their financial sponsors. Our investments generally range between $5 million and $100 million each, although we
expect that this investment size will vary proportionately with the size of our capital base and/or with strategic initiatives.
In addition, we may invest a portion of our portfolio in other types of investments, which we refer to as opportunistic investments, which are not our primary focus but are intended to enhance our overall returns.
These investments may include, but are not limited to, direct investments in public companies that are not thinly traded and securities of leveraged companies located in select countries outside of the United States. The
securities that we invest in are typically rated below investment grade. Securities rated below investment grade are often referred to as “leveraged loans,” “high yield” or “junk” securities, and may be considered “high risk”
compared to debt instruments that are rated investment grade. In addition, some of our debt investments will not fully amortize during their lifetime, which means that a borrower may be unable to payoff its debt due to
bankruptcy or other reasons and therefore we may write-off such debt investment prior to its scheduled maturity. Upon such an occurrence, we may realize a loss or a substantial amount of unpaid principal and interest due
upon maturity.
Our investment activities are managed by SLR Capital Partners, LLC (“SLR Capital Partners” or the “Investment Adviser”) and supervised by our board of directors (the “Board” or “board of directors”), a
majority of whom are non-interested, as such term is defined in Section 2(a)(19) of the 1940 Act. SLR Capital Management, LLC (“SLR Capital Management”) provides the administrative services necessary for us to
operate.
On April 1, 2022, we acquired SLR Senior Investment Corp., a Maryland corporation (“SUNS”), pursuant to that certain Agreement and Plan of Merger (the “Merger Agreement”), dated as of December 1, 2021,
by and among us, SUNS, Solstice Merger Sub, Inc., a Maryland corporation and our wholly-owned subsidiary (“Merger Sub”), and, solely for the limited purposes set forth therein, the Investment Adviser. Pursuant to the
Merger Agreement, Merger Sub merged with and into SUNS, with SUNS continuing as the surviving company and as SUNS’s wholly-owned subsidiary (the “Merger”) and, immediately thereafter, SUNS merged with and
into us, with us continuing as the surviving company (together with the Merger, the “Mergers”). In accordance with the terms of the Merger Agreement, at the effective time of the Merger, each outstanding share of SUNS’s
common stock was converted into the right to receive 0.7796 shares of our common stock (with SUNS’s stockholders receiving cash in lieu of fractional shares of our common stock). As a result of the Mergers, we issued
an aggregate of 12,511,825 shares of our common stock to former SUNS stockholders.
As of December 31, 2024, our investment portfolio totaled $2.0 billion and our net asset value was $992.9 million. Our portfolio was comprised of debt and equity investments in 122 portfolio companies.
2
Table of Contents
SLR Capital Partners
SLR Capital Partners, our investment adviser, is controlled and led by Michael S. Gross, our Chairman, Co-Chief Executive Officer and President, and Bruce Spohler, our Co-Chief Executive Officer and Chief
Operating Officer. They are supported by a team of investment professionals. SLR Capital Partners’ investment team has extensive experience in leveraged lending and private equity, as well as significant contacts with
financial sponsors.
In addition, SLR Capital Partners currently serves as investment adviser to private funds and managed accounts as well as to SCP Private Credit Income BDC LLC, an unlisted BDC that primarily invests in first
lien loans to upper middle market private leveraged companies, SLR HC BDC LLC, an unlisted BDC that primarily invests in first lien healthcare cash flow loans and life science loans, and SLR Private Credit BDC II LLC,
an unlisted BDC focused on first lien senior secured floating rate loans. As of February 21, 2025, Mr. Gross and Mr. Spohler beneficially owned, either directly or indirectly, approximately 8.3% of our outstanding common
stock.
Mr. Gross has over 30 years of experience in the private equity, distressed debt and mezzanine (i.e., actually or structurally subordinated) lending businesses and has been involved in originating, structuring,
negotiating, consummating and managing private equity, distressed debt and mezzanine lending transactions. Prior to his current role as our Chairman, Co-Chief Executive Officer and President, Mr. Gross founded Apollo
Investment Corporation, a publicly traded BDC. He served as its chairman from February 2004 to July 2006 and its chief executive officer from February 2004 to February 2006. Under his management, Apollo Investment
Corporation raised approximately $930 million in gross proceeds in an initial public offering in April 2004, built a dedicated investment team and infrastructure and invested approximately $2.3 billion in over 65 companies
in conjunction with 50 different private equity sponsors. Mr. Gross is also a founder and a former senior partner of Apollo Global Management, a leading private equity firm. During his tenure at Apollo Global
Management, Mr. Gross was a member of the investment committee that was responsible for overseeing more than $13 billion of investments in over 150 companies.
Mr. Gross also has served on the boards of directors of more than 20 public and private companies. As a result, Mr. Gross has developed an extensive network of private equity sponsor relationships as well as
relationships with management teams of public and private companies, investment bankers, attorneys and accountants that we believe should provide us with significant business opportunities.
We also rely on the over 30 years of experience of Mr. Spohler, who has served as our Chief Operating Officer and a partner of SLR Capital Partners since its inception and as Co-Chief Executive Officer since
June 2019. Previously, Mr. Spohler was a managing director and a former co-head of U.S. Leveraged Finance for CIBC World Markets. He held numerous senior roles at CIBC World Markets, including serving on the U.S.
Management Committee, Global Executive Committee and the Deals Committee, which approves all of CIBC World Markets’ U.S. corporate finance debt capital decisions. During Mr. Spohler’s tenure, he was responsible
for senior loan, high yield and mezzanine origination and execution, as well as CIBC World Markets’ below investment grade loan portfolio in the United States. As a co-head of U.S. Leveraged Finance, Mr. Spohler
oversaw over 300 capital raising and merger and acquisition transactions, comprising over $40 billion in market capitalization.
SLR Capital Partners’ senior investment professionals have been active participants in the primary and secondary leveraged credit markets throughout their careers. They have effectively managed portfolios of
senior secured, distressed and mezzanine debt as well as other investment types. The depth of their prior experience and credit market experience has led them through various stages of the economic cycle as well as several
market disruptions.
SLR Capital Management
Pursuant to an administration agreement (the “Administration Agreement”), SLR Capital Management furnishes us with office facilities, equipment and clerical, bookkeeping and record keeping services at such
facilities. Under the Administration Agreement, SLR Capital Management also performs, or oversees the performance of, our required administrative services, which include, among other things, being responsible for the
financial records which we are required to maintain and preparing reports to our stockholders. In addition, SLR Capital Management assists us in determining and publishing our net asset value, oversees the preparation and
filing of our tax returns and the printing and dissemination of reports to our stockholders, and generally oversees the payment of our expenses and the performance of administrative and professional services rendered to us
by others. SLR Capital Management also provides managerial assistance, if any, on our behalf to those portfolio companies that request such assistance.
3
Table of Contents
License Agreement
We have entered into a license agreement with SLR Capital Partners pursuant to which SLR Capital Partners has agreed to grant us a non-exclusive, royalty-free license to use the name “SLR” and “SOLAR”.
Under this agreement, we have a right to use the SLR and SOLAR name for so long as the Third Amended and Restated Investment Advisory and Management Agreement (the “Advisory Agreement”) with our investment
adviser is in effect. Other than with respect to this limited license, we will have no legal right to the “SLR” or “SOLAR” name.
Market Opportunity
The Company invests directly and indirectly in leveraged middle-market companies, including in senior secured loans, and to a lesser extent, unsecured loans and equity securities. We believe that the size of this
market, coupled with leveraged companies’ need for flexible sources of capital at attractive terms and rates, creates an attractive investment environment for us.
•Middle-market companies continue to face increasing difficulty in accessing the capital markets. While many middle-market companies were formerly able to raise funds by issuing high-yield bonds, we believe
this approach to financing has become more difficult in recent years as institutional investors have sought to invest in larger, more liquid offerings. In addition, many private finance companies that historically
financed their lending and investing activities through securitization transactions have lost that source of funding and reduced lending significantly. Moreover, consolidation of lenders and market participants and
the illiquid nature of investments have resulted in fewer middle-market lenders and market participants.
•There is a large pool of uninvested private equity capital likely to seek additional capital to support their investments. We believe there is more than $500 billion of uninvested private equity capital seeking debt
financing to support acquisitions.
•The significant amount of debt maturing through 2025 should provide additional demand for capital. A high volume of financings are expected to mature through 2025. We believe that this supply of prospective
lending opportunities coupled with a lack of available credit in the middle-market lending space may offer attractive risk-adjusted returns to investors. Risk-adjusted return compares returns against the amount of
risk incurred. The term “risk-adjusted return” does not imply that an investment is no risk or low risk.
•Investing in private middle-market debt provides an attractive risk reward profile. In general, terms for illiquid, middle-market subordinated debt have been more attractive than those for larger corporations
which are typically more liquid. We believe this is because fewer institutions are able to invest in illiquid asset classes.
Therefore, we believe that there is an attractive opportunity to invest in leveraged middle-market companies, including in senior secured loans, unitranche loans and, to a lesser extent, unsecured loans and equity
securities, and that we are well positioned to serve this market.
Competitive Advantages and Strategy
We believe that we have the following competitive advantages over other providers of financing to leveraged companies:
Management Experience
As managing partner, Mr. Gross has principal management responsibility for SLR Capital Partners, to which he currently dedicates substantially all of his time. Mr. Gross has over 30 years of experience in
leveraged finance, private equity and distressed debt investing. Mr. Spohler, our Co-Chief Executive Officer, Chief Operating Officer and a partner of SLR Capital Partners, has over 30 years of experience in evaluating and
executing leveraged finance transactions.
Investment Capacity
The proceeds from our public offerings and the concurrent private placement, the borrowing capacities under the senior secured credit facility led by Citibank, N.A. (the “Credit Facility”) and the SUNS SPV LLC
senior secured credit facility (the “SPV Credit Facility”), our $85 million of unsecured notes due 2025 (the “2025 Unsecured Notes”), our $75 million of unsecured notes due 2026 (the “2026 Unsecured Notes”), our $50
million of unsecured senior notes due 2027 (the “2027 Unsecured Notes”), our $135 million of unsecured notes due 2027 (the “2027 Series F Unsecured Notes”), our $49 million of unsecured notes due 2027 (the “2027
Series G Unsecured Notes”), the available capital at our significant subsidiaries and the expected repayments of existing portfolio company investments provide us with a substantial amount of capital available for
deployment into new investment opportunities. We believe we are well positioned for the current marketplace.
4
Table of Contents
The Company’s Leverage
As of December 31, 2024, we had total outstanding borrowings of approximately $1.0 billion. Under the provisions of the 1940 Act, we are permitted to issue senior securities in amounts such that our asset
coverage ratio, as defined in the 1940 Act, equals at least 150% of gross assets less all liabilities and indebtedness not represented by senior securities, after each issuance of senior securities. As of December 31, 2024, our
asset coverage ratio was 195.4%. We believe our relatively low level of leverage provides us with a competitive advantage as proceeds from our investments are available for reinvestment as opposed to being consumed by
debt repayment. We may increase our relative level of debt in the future. However, we do not currently anticipate operating with a substantial amount of debt relative to our total assets.
Proprietary Sourcing and Origination
We believe that SLR Capital Partners’ senior investment professionals’ longstanding relationships with financial sponsors, commercial and investment banks, management teams and other financial intermediaries
provide us with a strong pipeline of proprietary origination opportunities. We expect to continue leveraging the relationships Mr. Gross established while sourcing and originating investments at Apollo Investment
Corporation as well as the financial sponsor relationships Mr. Spohler developed while he was a co-head of CIBC World Markets’ U.S. Leveraged Finance Group.
Versatile Transaction Structuring and Flexibility of Capital
We believe SLR Capital Partners’ senior investment team’s broad experience and ability to draw upon its extensive experience enable us to identify, assess and structure investments successfully across all levels
of a company’s capital structure and to manage potential risk and return at all stages of the economic cycle. The attempt to manage risk does not imply low risk or no risk. While we are subject to significant regulation as a
BDC, we are not subject to many of the regulatory limitations that govern traditional lending institutions such as banks. As a result, we believe that we can be more flexible than such lending institutions in selecting and
structuring investments, adjusting investment criteria, transaction structures and, in some cases, the types of securities in which we invest.
Emphasis on Achieving Strong Risk-Adjusted Returns
SLR Capital Partners uses a structured investment and risk management process that emphasizes research and analysis. SLR Capital Partners seeks to build our portfolio on a “bottom-up” basis, choosing and
sizing individual positions based on their relative risk/reward profiles as a function of the associated downside risk, volatility, correlation with the existing portfolio and liquidity. At the same time, SLR Capital Partners
takes into consideration a variety of factors in managing our portfolio and imposes portfolio-based risk constraints promoting a more diverse portfolio of investments and limiting issuer and industry concentration. We do
not pursue short-term origination targets. We believe this approach enables us to build an attractive investment portfolio that meets our return and value criteria over the long term. We believe it is critical to conduct
extensive due diligence on investment targets. In evaluating new investments we, through SLR Capital Partners, conduct a rigorous due diligence process.
Dedication of Resources to Industries with Substantial Information Flow
We dedicate our investing resources to industries characterized by strong cash flow and in which SLR Capital Partners’ investment professionals have deep investment experience. As a result of their investment
experience, Messrs. Gross and Spohler, together with SLR Capital Partners’ other senior investment professionals, have long-term relationships with management consultants and management teams in the industries we
target, as well as substantial information concerning those industries.
Longer Investment Horizon
Unlike private equity and venture capital funds, we will not be subject to standard periodic capital return requirements. Such requirements typically stipulate that the capital of these funds, together with any capital
gains on such invested funds, can only be invested once and must be returned to investors after a pre-agreed time period. We believe that our flexibility to make investments with a long-term view and without the capital
return requirements of traditional private investment vehicles provides us with the opportunity to generate favorable returns relative to the risks of our invested capital and enables us to be a better long-term partner for our
portfolio companies.
5
Table of Contents
Investments
The Company seeks to create a diverse portfolio that includes senior secured loans, and to a lesser extent unsecured loans and equity securities by investing approximately $5 million to $100 million of capital, on
average, in the securities of leveraged companies, including middle-market companies. We expect that this investment size will vary with the size of our capital base and/or for strategic initiatives. Structurally, unsecured
loans usually rank subordinate in priority of payment to senior debt, such as senior bank debt. As such, other creditors may rank senior to us in the event of insolvency. However, unsecured loans rank senior to common and
preferred equity in a borrower’s capital structure. Due to its higher risk profile and often less restrictive covenants as compared to senior loans, unsecured loans generally earn a higher return than senior secured loans.
In addition to senior secured loans and unsecured loans, we may invest a portion of our portfolio in opportunistic investments, which are not our primary focus, but are intended to enhance our returns to our
investors. These investments may include direct investments in public companies that are not thinly traded and securities of leveraged companies located in select countries outside of the United States. The securities that we
invest in are typically rated below investment grade. Securities rated below investment grade are speculative and are often referred to as “leveraged loans,” “high yield” or “junk” securities, and may be considered “high
risk” compared to debt instruments that are rated investment grade. In addition, some of our debt investments will not fully amortize during their lifetime, which means that a borrower may be unable to payoff its debt due to
bankruptcy or other reasons and therefore we may write-off such debt investment prior to its scheduled maturity. Upon such an occurrence, we may realize a loss or a substantial amount of unpaid principal and interest due
upon maturity. We may invest up to 30% of our total assets in such opportunistic investments, including loans issued by non-U.S. issuers, subject to compliance with our regulatory obligations as a BDC under the 1940 Act.
We have and will continue to borrow funds to make investments. As a result, we will be exposed to the risks of leverage, which may be considered a speculative investment technique. The use of leverage
magnifies the potential for loss on amounts invested and therefore increases the risks associated with investing in our securities. In addition, the costs associated with our borrowings, including any increase in management
fees payable to our investment adviser, SLR Capital Partners, will be borne by our common stockholders.
Moreover, we may acquire investments in the secondary market and, in analyzing such investments, we will seek to employ a substantially similar analytical process as we use for our primary investments.
We may utilize instruments such as forward contracts, currency options and interest rate swaps, caps, collars and floors to seek to hedge against fluctuations in the relative values of our portfolio positions from
changes in currency exchange rates and market interest rates. Hedging against a decline in the values of our portfolio positions does not eliminate the possibility of fluctuations in the values of such positions or prevent losses
if the values of such positions decline. However, such hedging can establish other positions designed to gain from those same developments, thereby offsetting the decline in the value of such portfolio positions. Such
hedging transactions may also limit the opportunity for gain if the values of the underlying portfolio positions should increase. It may not be possible to hedge against an exchange rate or interest rate fluctuation that is so
generally anticipated that we are not able to enter into a hedging transaction at an acceptable price. Moreover, for a variety of reasons, we may not seek to establish a perfect correlation between such hedging instruments and
the portfolio holdings being hedged. Any such imperfect correlation may prevent us from achieving the intended hedge and expose us to risk of loss. In addition, it may not be possible to hedge fully or perfectly against
currency fluctuations affecting the value of securities denominated in non-U.S. currencies because the value of those securities is likely to fluctuate as a result of factors not related to currency fluctuations.
Our principal focus is to provide senior secured loans to leveraged companies in a variety of industries. We generally seek to target companies that generate positive cash flows and/or have substantial assets that
secure our loans. We generally seek to invest in companies from the broad variety of industries in which our investment adviser has direct experience.
6
Table of Contents
The following is a representative list of the industries in which we may invest:
•Aerospace & Defense
•Air Freight & Logistics
•Airlines
•Asset Management
•Automobiles
•Auto Components
•Auto Parts & Equipment
•Biotechnology
•Building Products
•Capital Markets
•Chemicals
•Commercial Services & Supplies
•Communications Equipment
•Construction & Engineering
•Consumer Finance
•Containers & Packaging
•Distributors
•Diversified Consumer Services
•Diversified Financial Services
•Diversified Real Estate Activities
•Diversified Telecommunications Services
•Education Services
•Energy Equipment & Services
•Food Products
•Food & Staples Retailing
•Footwear
•Health Care Equipment & Supplies
•Health Care Facilities
•Health Care Providers & Services
•Health Care Technology
•Hotels, Restaurants & Leisure
•Household & Personal Products
•Industrial Conglomerates
•Insurance
•Internet & Catalog Retail
•Internet Software & Services
•IT Services
•Leisure Equipment & Products
•Life Sciences Tools & Services
•Machinery
•Media
•Metals & Mining
•Multiline Retail
•Multi-Sector Holdings
•Oil, Gas & Consumable Fuels
•Packaged Foods & Meats
•Paper & Forest Products
•Personal Products
•Pharmaceuticals
•Professional Services
•Research & Consulting Services
•Road & Rail
•Software
•Specialty Retail
•Textiles, Apparel & Luxury Goods
•Thrifts & Mortgage Finance
•Trading Companies & Distributors
•Transportation Infrastructure
•Water Utilities
•Wireless Telecommunications Services
We may also invest in other industries if we are presented with attractive opportunities.
We may invest, to the extent permitted by law, in the securities and instruments of other investment companies, including private funds. We may also participate in negotiated co-investment transactions with
certain affiliates, each of whose investment adviser is SLR Capital Partners, or an investment adviser controlling, controlled by or under common control with SLR Capital Partners and is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and
7
Table of Contents
other pertinent factors, and pursuant to the conditions of the most recent exemptive order obtained from the Securities and Exchange Commission (the “SEC”) on June 13, 2017 (the “Exemptive Order”). Pursuant to the
Exemptive Order, we are permitted to co-invest with our affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) of our independent directors make certain conclusions in connection with a co-
investment transaction, including, but not limited to, that (1) the terms of the potential co-investment transaction, including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve
overreaching in respect of us or our stockholders on the part of any person concerned, and (2) the potential co-investment transaction is consistent with the interests of our stockholders and is consistent with our then-current
investment objective and strategies.
At December 31, 2024, our portfolio consisted of 122 portfolio companies and was invested 30.7% in cash flow senior secured loans, 35.8% in asset-based senior secured loans / SLR Credit Solutions (“SLR
Credit”) / SLR Healthcare ABL / SLR Business Credit, 21.6% in equipment senior secured financings / SLR Equipment Finance (“SLR Equipment”) / Kingsbridge Holdings, LLC (“KBH”) and 11.9% in life science senior
secured loans, in each case, measured at fair value. We expect that our portfolio will continue to include primarily senior secured loans, financing leases and to a lesser extent, unsecured loans and equity securities. In
addition, we also expect to invest a portion of our portfolio in opportunistic investments, which are not our primary focus, but are intended to enhance our risk-adjusted returns to stockholders. These investments may
include, but are not limited to, securities of public companies and debt and equity securities of companies located outside of the United States.
While our primary investment objective is to maximize current income and capital appreciation through investments in U.S. senior and subordinated loans, other debt securities and equity, we may also invest a
portion of the portfolio in opportunistic investments, including foreign securities.
Listed below are our top ten portfolio companies and industries based on their fair value and represented as a percentage of total assets as of December 31, 2024 and December 31, 2023:
TOP TEN PORTFOLIO COMPANIES AND INDUSTRIES AS OF DECEMBER 31, 2024
Portfolio Company
% of
Total Assets
SLR Credit Solutions*
11.8 %
Kingsbridge Holdings, LLC*
10.3 %
SLR Business Credit*
5.1%
SLR Equipment Finance*
4.5%
SLR Senior Lending Program LLC*
2.0%
Outset Medical, Inc.
1.9%
Enhanced Capital Group, LLC
1.8%
SLR Healthcare ABL*
1.7%
Ardelyx, Inc.
1.6%
Cerapedics, Inc.
1.5%
* Denotes investments in which we are deemed to exercise a controlling influence over the management or policies of a company, as defined in the 1940 Act, due to beneficially owning, either directly or through one or more
controlled companies, more than 25% of the outstanding voting securities of the investment.
Industry
% of
Total Assets
Diversified Financial Services
22.7 %
Multi-Sector Holdings
15.2 %
Health Care Providers & Services
11.1 %
Health Care Equipment & Supplies
5.5%
Pharmaceuticals
3.1%
Diversified Consumer Services
2.7%
Capital Markets
2.6%
Media
2.5%
Software
2.3%
Asset Management
2.0%
8
Table of Contents
TOP TEN PORTFOLIO COMPANIES AND INDUSTRIES AS OF DECEMBER 31, 2023
Portfolio Company
% of
Total Assets
SLR Credit Solutions*
11.3 %
Kingsbridge Holdings, LLC*
9.4%
SLR Equipment Finance*
4.9%
SLR Business Credit*
3.6%
Arcutis Biotherapeutics, Inc.
2.7%
Outset Medical, Inc.
1.8%
SLR Senior Lending Program LLC*
1.7%
Enhanced Capital Group, LLC
1.7%
BridgeBio Pharma, Inc.
1.6%
Vapotherm, Inc.
1.5%
* Denotes investments in which we are deemed to exercise a controlling influence over the management or policies of a company, as defined in the 1940 Act, due to beneficially owning, either directly or through one or
more controlled companies, more than 25% of the outstanding voting securities of the investment.
Industry
% of
Total Assets
Diversified Financial Services
18.7 %
Multi-Sector Holdings
14.8 %
Health Care Providers & Services
11.2 %
Health Care Equipment & Supplies
6.5%
Pharmaceuticals
4.9%
Biotechnology
3.1%
Software
3.0%
Insurance
2.5%
Diversified Consumer Services
1.9%
Commercial Services & Supplies
1.9%
Set forth below is a brief description of each portfolio company in which we have made an investment that represents 5% or greater of our total assets as of December 31, 2024.
SLR Credit Solutions
We invested in SLR Credit as an independent commercial finance company that provides primarily senior secured loans for both asset-based and cash flow financings to middle-market companies. Its team of
experienced, responsive professionals has underwritten, closed and managed more than $20 billion in secured debt commitments across a wide range of industries. As of December 31, 2024, SLR Credit had 27 funded
commitments to 22 different issuers with total funded loans of approximately $317.6 million on total assets of $364.3 million. SLR Credit’s competitors include other specialty finance companies and small banks. As with
most finance companies, SLR Credit is exposed to interest rate risk, which it mostly mitigates by issuing loans with floating rates.
Kingsbridge Holdings, LLC
On November 3, 2020, the Company acquired 87.5% of the equity securities of KBH through KBH Topco LLC (“KBHT”), a Delaware corporation. KBH is a residual focused independent mid-ticket lessor of
equipment primarily to U.S. large corporate companies. The Company invested $216.6 million to effect the transaction, of which $136.6 million was invested to acquire 87.5% of KBHT’s equity and $80.0 million in KBH’s
debt. The existing management team of KBH committed to continuing to lead KBH after the transaction. The Company currenlty owns 90.625% of KBHT equity and the KBH management team owns the remaining
9.375% of KBHT’s equity. As of December 31, 2024, KBHT had total assets of $920.1 million.
SLR Business Credit
SLR Business Credit is a leading asset-backed lending commercial finance company that provides asset-backed financings to U.S. based small-to-medium-sized businesses in a variety of industries. SLR Business
Credit currently manages a highly diverse portfolio of directly-originated and underwritten senior-secured commitments. As of December 31, 2024, the portfolio totaled approximately $858.0 million of commitments, of
which $488.4 million were funded, on total assets of $527.1 million.
9
Table of Contents
Investment Selection Process
SLR Capital Partners is committed to and utilizes a value-oriented investment philosophy with a focus on the preservation of capital and a commitment to managing downside exposure.
Portfolio Company Characteristics.
We have identified several criteria that we believe are important in identifying and investing in prospective portfolio companies. These criteria provide general guidelines for our investment decisions; however, not
all of these criteria will be met by each prospective portfolio company in which we choose to invest.
Stable Earnings and Strong Free Cash Flow. We seek to invest in companies that have demonstrated stable earnings through economic cycles. We target companies that can de-lever through consistent generation
of cash flows rather than relying solely on growth to service and repay our loans.
Value Orientation. Our investment philosophy places a premium on fundamental analysis from an investor’s perspective and has a distinct value orientation. We focus on companies in which we can invest at
relatively low multiples of operating cash flow and that are profitable at the time of investment on an operating cash flow basis.
Value of Assets. The prospective value of the assets, if any, that collateralize the loans in which we invest, is an important factor in our credit analysis. Our analysis emphasizes both tangible assets, such as
accounts receivable, inventory, equipment and real estate, and intangible assets, such as intellectual property, customer lists, networks and databases. In some of our transactions, the company’s fundings may be derived
from a borrowing base determined by the value of the company’s assets.
Strong Competitive Position in Industry. We seek to invest in target companies that have developed leading market positions within their respective markets and are well positioned to capitalize on growth
opportunities. We seek companies that demonstrate significant competitive advantages versus their competitors, which we believe should help to protect their market position and profitability.
Diversified Customer and Supplier Base. We seek to invest in businesses that have a diversified customer and supplier base. We believe that companies with a diversified customer and supplier base are generally
better able to endure economic downturns, industry consolidation, changing business preferences and other factors that may negatively impact their customers, suppliers and competitors.
Exit Strategy. We predominantly invest in companies that provide multiple alternatives for an eventual exit. We look for opportunities that provide an exit typically within three years of the initial capital
commitment.
We generally seek companies that we believe will have or provide a steady stream of cash flow to repay our loans and reinvest in their respective businesses. We believe that such internally generated cash flow,
leading to the payment of our interest, and the repayment of our principal, represents a key means by which we will be able to exit from our investments over time.
In addition, we also seek to invest in companies whose business models and expected future cash flows or cash positions offer attractive exit possibilities. These companies include candidates for strategic
acquisition by other industry participants and companies that may repay our investments through an initial public offering of common stock or another capital market transaction. We underwrite our investments on a held-
to-maturity basis, but expensive capital is often repaid prior to stated maturity.
Experienced and Committed Management. We generally require that portfolio companies have an experienced management team. We also require portfolio companies have in place proper incentives to induce
management to succeed and to act in concert with our interests as investors, including having significant equity interests.
Strong Sponsorship. We generally aim to invest alongside other sophisticated investors. We typically seek to partner with successful financial sponsors who have historically generated high returns. We believe
that investing in these sponsors’ portfolio companies enables us to benefit from their direct involvement and due diligence.
SLR Capital Partners’ investment team works in concert with sponsors to proactively manage investment opportunities by acting as a partner throughout the investment process. We actively focus on the middle-
market financial sponsor community, with a
10
Table of Contents
particular focus on the upper-end of the middle-market (sponsors with equity funds of $500 million to $5 billion). We favor such sponsors because they typically:
•buy larger companies with strong business franchises;
•invest significant amounts of equity in their portfolio companies;
•value flexibility and creativity in structuring their transactions;
•possess longer track records over multiple investment funds;
•have a deeper management bench;
•have better ability to withstand downturns; and
•possess the ability to support portfolio companies with additional capital.
We divide our coverage of these sponsors among our more senior investment professionals, who are responsible for day-to-day interaction with financial sponsors. Our coverage approach aims to act proactively,
consider all investments in the capital structure, provide quick feedback, deliver on commitments, and are constructive throughout the life cycle of an investment.
Due Diligence
Our “private equity” approach to credit investing typically incorporates extensive in-depth due diligence often alongside the private equity sponsor. In conducting due diligence, we will use publicly available
information as well as information from relationships with former and current management teams, consultants, competitors and investment bankers. We believe that our due diligence methodology allows us to screen a high
volume of potential investment opportunities on a consistent and thorough basis.
Our due diligence typically includes:
•review of historical and prospective financial information;
•review and valuation of assets;
•research relating to the company’s management, industry, markets, products and services and competitors;
•on-site visits;
•discussions with management, employees, customers or vendors of the potential portfolio company;
•review of senior loan documents; and
•background investigations.
We also expect to evaluate the private equity sponsor making the investment. Further, due to SLR Capital Partners’ considerable repeat business with sponsors, we have direct experience with the management
teams of many sponsors. A private equity sponsor is typically the controlling stockholder upon completion of an investment and as such is considered critical to the success of the investment. The equity sponsor is evaluated
along several key criteria, including:
•investment track record;
•industry experience;
•capacity and willingness to provide additional financial support to the company through additional capital contributions, if necessary; and
•reference checks.
Throughout the due diligence process, a deal team is in constant dialogue with the management team of the company in which we are considering investing to ensure that any concerns are addressed as early as
possible through the process and that unsuitable investments are filtered out before considerable time has been invested.
Upon the completion of due diligence and a decision to proceed with an investment in a company, the investment professionals leading the investment present the investment opportunity to SLR Capital Partners’
investment committee, which then determines whether to pursue the potential investment. Additional due diligence with respect to any investment may be conducted on our behalf by attorneys and independent accountants
prior to the closing of the investment, as well as other outside advisers, as appropriate.
11
Table of Contents
The Investment Committee
All new investments are required to be approved by a consensus of the investment committee of SLR Capital Partners, which is led by Messrs. Gross and Spohler. The members of SLR Capital Partners’
investment committee receive no compensation from us. Such members may be employees or partners of SLR Capital Partners and may receive compensation or profit distributions from SLR Capital Partners.
Investment Structure
Once we determine that a prospective portfolio company is suitable for investment, we work with the management of that company and its other capital providers, including senior, junior and equity capital
providers, to structure an investment. We negotiate among these parties to agree on how our investment is expected to perform relative to the other capital in the portfolio company’s capital structure.
The Company seeks to create a diverse portfolio that includes senior secured loans and to a lesser extent, unsecured loans and equity securities by investing approximately $5 million to $100 million of capital.
With respect to our senior secured loans, we seek to obtain security interests in the assets of our portfolio companies that serve as collateral in support of the repayment of these loans. This collateral may take the form of
first or second priority liens on the assets of a portfolio company.
We structure our unsecured loans primarily subordinated loans that provide for relatively high, fixed or floating interest rates that provide us with significant current interest income. These loans typically have
interest-only payments in the early years, with amortization of principal, if any, deferred to the later years of the unsecured loans. In some cases, we may enter into loans that, by their terms, convert into equity or additional
debt securities or defer payments of interest for the first few years after our investment. Also, in some cases, our unsecured loans may be collateralized by a subordinated lien on some or all of the assets of the borrower.
Typically, our senior secured and unsecured loans have final maturities of five to ten years. However, we expect that our portfolio companies often may repay these loans early, generally within three to four years
from the date of initial investment. In some cases and when available, we seek to structure these loans with prepayment premiums to capture foregone interest.
In the case of our senior secured and unsecured loan investments, we tailor the terms of the investment to the facts and circumstances of the transaction and the prospective portfolio company, negotiating a
structure that protects our rights and manages our risk while creating incentives for the portfolio company to achieve its business plan and improve its profitability. For example, in addition to seeking a senior or fulcrum
position in the capital structure of our portfolio companies, we will seek to limit the downside potential of our investments by:
•requiring a total return on our investments (including both interest and potential capital appreciation) that compensates us for credit risk;
•incorporating “put” rights and call protection into the investment structure; and
•negotiating covenants in connection with our investments that afford our portfolio companies as much flexibility in managing their businesses as possible, consistent with preservation of our capital. Such
restrictions may include affirmative and negative covenants, default penalties, lien protection, change of control provisions and board rights, including either observation or participation rights.
Our investments may include equity features, such as warrants or options to buy a minority interest in the portfolio company. Any warrants we receive with our debt securities generally require only a nominal cost
to exercise, and thus, as a portfolio company appreciates in value, we may achieve additional investment return from this equity interest. We may structure the warrants to provide provisions protecting our rights as a
minority interest holder, as well as puts, or rights to sell such securities back to the company, upon the occurrence of specified events. In many cases, we also obtain registration rights in connection with these equity
securities, which may include demand and “piggyback” registration rights. In addition, we may from time to time make direct equity investments in portfolio companies.
We generally seek to hold most of our investments to maturity or repayment, but will sell our investments earlier, including if a liquidity event takes place such as the sale or recapitalization of a portfolio company.
12
Table of Contents
Ongoing Relationships with Portfolio Companies
SLR Capital Partners monitors our portfolio companies on an ongoing basis. SLR Capital Partners monitors the financial trends of each portfolio company to determine if it is meeting its business plan and to
assess the appropriate course of action for each company.
SLR Capital Partners has several methods of evaluating and monitoring the performance and fair value of our investments, which include the following:
•Assessment of success in adhering to each portfolio company’s business plan and compliance with covenants;
13
Table of Contents
•Periodic and regular contact with portfolio company management and, if appropriate, the financial or strategic sponsor, to discuss financial position, requirements and accomplishments;
•Comparisons to other SLR Capital Partners invested portfolio companies in the industry, if any;
•Attendance at and participation in board meetings; and
•Review of monthly and quarterly financial statements and financial projections for portfolio companies.
In addition to various risk management and monitoring tools, SLR Capital Partners also uses an investment rating system to characterize and monitor our expected level of returns on each investment in our
portfolio.
We use an investment rating scale of 1 to 4. The following is a description of the conditions associated with each investment rating:
Investment
Rating
Summary Description
1
Involves the least amount of risk in our portfolio, the portfolio company is performing above expectations, and the trends and risk factors are generally favorable (including a potential exit).
2
Risk that is similar to the risk at the time of origination, the portfolio company is performing as expected, and the risk factors are neutral to favorable; all new investments are initially assessed a grade of
2.
3
The portfolio company is performing below expectations, may be out of compliance with debt covenants, and requires procedures for closer monitoring.
4
The investment is performing well below expectations and is not anticipated to be repaid in full.
SLR Capital Partners monitors and, when appropriate, changes the investment ratings assigned to each investment in our portfolio. As of December 31, 2024 and December 31, 2023 the weighted average
investment rating on the fair market value of our portfolio was a 2. In connection with our valuation process, SLR Capital Partners reviews these investment ratings on a quarterly basis.
Valuation Procedures
Rule 2a-5 under the 1940 Act addresses the fair valuation of fund investments. The rule sets forth requirements for good faith determinations of fair value, as well as for the performance of fair value
determinations, including related oversight and reporting obligations. The rule also defines “readily available market quotations” for purposes of the definition of “value” under the 1940 Act, and the SEC noted that this
definition will apply in all contexts under the 1940 Act. The Company complies with Rule 2a-5’s valuation requirements.
We conduct the valuation of our assets, pursuant to which our net asset value is determined, at all times consistent with U.S. generally accepted accounting principles (“GAAP”) and the 1940 Act. The Board will
(1) periodically assess and manage valuation risks; (2) establish and apply fair value methodologies; (3) test fair value methodologies; (4) oversee and evaluate third-party pricing services, as applicable; (5) oversee the
reporting required by Rule 2a-5 under the 1940 Act; and (6) maintain recordkeeping requirements under Rule 2a-5.
It is anticipated that in respect of many of the Company’s assets, readily available market quotations will not be obtainable and that such assets will be valued at fair value. A market quotation is readily available
for a security only when that quotation is a quoted price (unadjusted) in active markets for identical investments that the Company can access at the measurement date, provided that a quotation will not be readily available if
it is not reliable. If the Company anticipates using a market quotation for a security, it will also monitor for circumstances that may necessitate the use of fair value, such as significant events that may cause concern over the
reliability of a market quotation.
Under procedures established by the Board, we value investments, including certain senior secured debt, subordinated debt and other debt securities with maturities greater than 60 days, for which market quotations
are readily available and deemed to represent fair value under GAAP, at such market quotations (unless they are deemed not to represent fair value). A market quotation is readily available for a security only when that
quotation is a quoted price (unadjusted) in active markets for identical investments that the Company can access at the measurement date, provided that a quotation will not be readily available if it is not reliable. If the
Company anticipates using a market quotation for a security, it will also monitor for circumstances that may necessitate the use of fair value, such as significant events that may cause concern over the reliability of a market
quotation. We attempt to obtain market
14
Table of Contents
quotations from at least two brokers or dealers (if available, otherwise from a principal market maker or a primary market dealer or other independent pricing service). We utilize mid-market pricing as a practical expedient
for fair value unless a different point within the range is more representative. If and when market quotations are deemed not to represent fair value, we may utilize independent third-party valuation firms to assist us in
determining the fair value of material assets. Accordingly, such investments go through our multi-step valuation process as described below. In each such case, independent valuation firms, that may from time to time be
engaged by the Board, consider observable market inputs together with significant unobservable inputs in arriving at their valuation recommendations. Debt investments with maturities of 60 days or less shall each be valued
at cost plus accreted discount, or minus amortized premium, which is expected to approximate fair value, unless such valuation, in the judgment of the Investment Adviser, does not represent fair value, in which case such
investments shall be valued at fair value as determined in good faith by or under the direction of the Board. Investments that are not publicly traded or whose market quotations are not readily available are valued at fair
value as determined in good faith by or under the direction of the Board. Such determination of fair values involves subjective judgments and estimates.
With respect to investments for which market quotations are not readily available or when such market quotations are deemed not to represent fair value under GAAP, the Board has approved a multi-step valuation
process each quarter, as described below:
(1)our quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals of the Investment Adviser responsible for the portfolio investment;
(2)preliminary valuation conclusions are then documented and discussed with senior management of the Investment Adviser;
(3)independent valuation firms engaged by the Board conduct independent appraisals and review the Investment Adviser’s preliminary valuations and make their own independent assessment for all material
assets;
(4)the audit committee of the Board reviews the preliminary valuation of the Investment Adviser and that of the independent valuation firm and responds to the valuation recommendation of the independent
valuation firm, if any, to reflect any comments; and
(5)the Board discusses valuations and determines the fair value of each investment in our portfolio in good faith based on the input of the Investment Adviser, the respective independent valuation firm, if any, and
the audit committee.
The valuation principles set forth above may be modified from time to time, in whole or in part, as determined by the Board in its sole discretion.
Investments in all asset classes are valued utilizing a market approach, an income approach, or both approaches, as appropriate. However, in accordance with ASC 820-10, certain investments that qualify as
investment companies in accordance with ASC 946 may be valued using net asset value as a practical expedient for fair value. The market approach uses prices and other relevant information generated by market
transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation approaches to convert future amounts (for example, cash flows or earnings) to a single present
amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that we may take into account in fair
value pricing our investments include, as relevant: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call
protection provisions, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business,
comparisons of financial ratios of peer companies that are public, M&A comparables, our principal market (as the reporting entity) and enterprise values, among other factors. When available, broker quotations and/or
quotations provided by pricing services are considered as an input in the valuation process. For the fiscal year ended December 31, 2024, there was no change to the Company’s valuation approaches or techniques and the
nature of the related inputs considered in the valuation process.
ASC Topic 820 classifies the inputs used to measure these fair values into the following hierarchy:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities, accessible by the Company at the measurement date.
Level 2: Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or other observable inputs other than quoted prices.
Level 3: Unobservable inputs for the asset or liability.
In all cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level of input that is significant to the fair value measurement. Our
assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each investment. The exercise of judgment is based in part on our
knowledge of the asset class and our prior experience.
15
Table of Contents
Competition
Our primary competitors provide financing to middle-market companies and include other BDCs, commercial and investment banks, commercial financing companies and, to the extent they provide an alternative
form of financing, private equity funds. Additionally, alternative investment vehicles, such as hedge funds, frequently invest in middle-market companies. As a result, competition for investment opportunities at middle-
market companies can be intense. While many middle-market companies were previously able to raise senior debt financing through traditional large financial institutions, we believe this approach to financing will become
more difficult as implementation of U.S. and international financial reforms limits the capacity of large financial institutions to hold non-investment grade leveraged loans on their balance sheets. We believe that many of
these financial institutions have de-emphasized their service and product offerings to middle-market companies in particular.
Many of our competitors are substantially larger and have considerably greater financial, technical and marketing resources than we do. For example, some competitors may have a lower cost of funds and access
to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of investments and
establish more relationships than us. Furthermore, many of our competitors are not subject to the regulatory restrictions that the 1940 Act imposes on us as a BDC. We use the industry information available to Messrs. Gross
and Spohler and the other investment professionals of SLR Capital Partners to assess investment risks and determine appropriate pricing for our investments in portfolio companies. In addition, we believe that the
relationships of Messrs. Gross and Spohler and the other investment professionals of our Investment Adviser enable us to learn about, and compete effectively for, financing opportunities with attractive leveraged companies
in the industries in which we seek to invest.
Staffing
We do not currently have any employees. Mr. Gross, our Chairman and Co-Chief Executive Officer and President, and Mr. Spohler, our Co-Chief Executive Officer and Chief Operating Officer and board
member, are managing members and senior investment professionals of, and have financial and controlling interests in, SLR Capital Partners. In addition, Mr. Shiraz Kajee, our Chief Financial Officer and Treasurer, serves
as the Chief Financial Officer for SLR Capital Partners. Guy Talarico, our Chief Compliance Officer and Secretary, serves as the Chief Compliance Officer and General Counsel for SLR Capital Partners.
Our day-to-day investment operations are managed by SLR Capital Partners. Based upon its needs, SLR Capital Partners may hire additional investment professionals. In addition, we will reimburse SLR Capital
Management for the allocable portion of overhead and other expenses incurred by it in performing its obligations under the Administration Agreement, including rent, and the allocable portion of the cost of the Company’s
Chief Compliance Officer and Chief Financial Officer and their respective staffs.
Sarbanes-Oxley Act of 2002
The Sarbanes-Oxley Act of 2002 imposes a wide variety of regulatory requirements on publicly-held companies and their insiders. Many of these requirements affect us. For example:
•pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended (the “1934 Act”), our Co-Chief Executive Officers and Chief Financial Officer must certify as to the accuracy of the financial
statements contained in our periodic reports;
•pursuant to Item 307 of Regulation S-K, our periodic reports must disclose our conclusions about the effectiveness of our disclosure controls and procedures;
•pursuant to Rule 13a-15 of the 1934 Act, our management is required to prepare an annual report regarding its assessment of our internal control over financial reporting and to obtain an audit of the effectiveness
of internal control over financial reporting performed by our independent registered public accounting firm; and
•pursuant to Item 308 of Regulation S-K and Rule 13a-15 of the 1934 Act, our periodic reports must disclose whether there were significant changes in our internal controls over financial reporting or in other
factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
The Sarbanes-Oxley Act of 2002 requires us to review our current policies and procedures to determine whether we comply with the Sarbanes-Oxley Act of 2002 and the regulations promulgated thereunder. We
will continue to monitor our compliance with all regulations that are adopted under the Sarbanes-Oxley Act of 2002 and will take actions necessary to ensure that we are in compliance therewith.
16
Table of Contents
Business Development Company Regulations
A BDC is regulated by the 1940 Act. A BDC must be organized in the United States for the purpose of investing in or lending to primarily private companies and making significant managerial assistance available
to those investments that constitute qualifying assets (as discussed below). A BDC may use capital provided by public stockholders and from other sources to make long-term, private investments in businesses. A BDC
provides stockholders the ability to retain the liquidity of a publicly-traded stock while sharing in the possible benefits, if any, of investing in primarily privately owned companies.
We may not change the nature of our business so as to cease to be, or withdraw our election as, a BDC unless authorized by vote of a majority of our outstanding voting securities, as required by the 1940 Act. A
majority of the outstanding voting securities of a company is defined under the 1940 Act as the lesser of: (a) 67% or more of such company’s voting securities present at a meeting if more than 50% of the outstanding voting
securities of such company are present or represented by proxy, or (b) more than 50% of the outstanding voting securities of such company. We do not anticipate any substantial change in the nature of our business.
As with other companies regulated by the 1940 Act, a BDC must adhere to certain substantive regulatory requirements. A majority of our directors must be persons who are not interested persons, as that term is
defined in the 1940 Act. Additionally, we are required to provide and maintain a bond issued by a reputable fidelity insurance company to protect the BDC. Furthermore, as a BDC, we are prohibited from protecting any
director or officer against any liability to us or our stockholders arising from willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such person’s office.
As a BDC, we are required to meet an asset coverage ratio, reflecting the value of our total assets to our total senior securities, which include all of our borrowings and any preferred stock we may issue in the
future, of at least 150%. We may also be prohibited under the 1940 Act from knowingly participating in certain transactions with our affiliates without the prior approval of our directors who are not interested persons and,
in some cases, prior approval by the SEC.
We are generally not able to issue and sell our common stock at a price below net asset value per share without annual stockholder approval. We may, however, sell our common stock, or warrants, options or
rights to acquire our common stock, at a price below the then-current net asset value of our common stock if the Board determines that such sale is in our best interests and the best interests of our stockholders, and our
stockholders approve such sale. At this time, we do not have stockholder approval for such sales.
As a BDC, we were substantially limited in our ability to co-invest in privately negotiated transactions with affiliated funds until we obtained an exemptive order from the SEC. The Exemptive Order permits us to
participate in negotiated co-investment transactions with certain affiliates, each of whose investment adviser is an investment adviser that controls, is controlled by or is under common control with SLR Capital Partners and
is registered as an investment adviser under the Advisers Act, in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors,
and pursuant to the conditions to the Exemptive Order. If we are unable to rely on the Exemptive Order for a particular opportunity, such opportunity will be allocated first to the entity whose investment strategy is the most
consistent with the opportunity being allocated, and second, if the terms of the opportunity are consistent with more than one entity’s investment strategy, on an alternating basis. Although our investment professionals will
endeavor to allocate investment opportunities in a fair and equitable manner, we and our common stockholders could be adversely affected to the extent investment opportunities are allocated among us and other investment
vehicles managed or sponsored by, or affiliated with, our executive officers, directors and members of our investment adviser.
We will be periodically examined by the SEC for compliance with the federal securities laws, including the 1940 Act.
Qualifying Assets
Under the 1940 Act, a BDC may not acquire any asset other than assets of the type listed in Section 55(a) of the 1940 Act, which are referred to as qualifying assets, unless, at the time the acquisition is made,
qualifying assets represent at least 70% of the BDC’s total assets. The principal categories of qualifying assets relevant to our business are the following:
(1) Securities purchased in transactions not involving any public offering from the issuer of such securities, which issuer (subject to certain limited exceptions) is an eligible portfolio company, or from any person
who is, or has been during the preceding 13 months, an affiliated person of an eligible portfolio company, or from any other person, subject to such rules as may be prescribed by the SEC. An eligible portfolio company is
defined in the 1940 Act as any issuer which:
(a) is organized under the laws of, and has its principal place of business in, the United States;
(b) is not an investment company (other than a small business investment company wholly owned by the BDC); and
17
Table of Contents
(c) satisfies any of the following:
i. does not have any class of securities that is traded on a national securities exchange;
ii. has a class of securities listed on a national securities exchange, but has an aggregate market value of outstanding voting and non-voting common equity of less than $250 million;
iii. is controlled by a BDC or a group of companies including a BDC and the BDC has an affiliated person who is a director of the eligible portfolio company; or
iv. is a small and solvent company having total assets of not more than $4.0 million and capital and surplus of not less than $2.0 million.
(2) Securities of any eligible portfolio company which we control, which, as defined by the 1940 Act, is presumed to exist where a BDC beneficially owns more than 25% of the outstanding voting securities of the
portfolio company.
(3) Securities purchased in a private transaction from a U.S. issuer that is not an investment company or from an affiliated person of the issuer, or in transactions incident thereto, if the issuer is in bankruptcy and
subject to reorganization or if the issuer, immediately prior to the purchase of its securities, was unable to meet its obligations as they came due without material assistance other than conventional lending or financing
arrangements.
(4) Securities of an eligible portfolio company purchased from any person in a private transaction if there is no ready market for such securities and we already own 60% of the outstanding equity of the eligible
portfolio company.
(5) Securities received in exchange for or distributed on or with respect to securities described in (1) through (4) above, or pursuant to the exercise of warrants or rights relating to such securities.
(6) Cash, cash equivalents, U.S. government securities or high-quality debt securities maturing in one year or less from the time of investment.
(7) Office furniture and equipment, interests in real estate and leasehold improvements and facilities maintained to conduct the business operations of the BDC, deferred organization and operating expenses, and
other noninvestment assets necessary and appropriate to its operations as a BDC, including notes of indebtedness of directors, officers, employees, and general partners held by a BDC as payment for securities of such
company issued in connection with an executive compensation plan described in Section 57(j) of the 1940 Act.
Under Section 55(b) of the 1940 Act, the value of a BDC’s assets shall be determined as of the date of the most recent financial statements filed by such company with the SEC pursuant to Section 13 of the 1934
Act, and shall be determined no less frequently than annually.
Significant Managerial Assistance to Portfolio Companies
As a BDC, we offer, and must provide upon request, significant managerial assistance to our portfolio companies that constitute qualifying assets. This assistance could involve, among other things, monitoring the
operations of our portfolio companies, participating in board and management meetings, consulting with and advising officers of portfolio companies and providing other organizational and financial guidance. We may also
receive fees for these services. SLR Capital Management provides such managerial assistance, if any, on our behalf to portfolio companies that request this assistance.
Temporary Investments
Pending investment in other types of “qualifying assets,” as described above, our investments may consist of cash, cash equivalents, U.S. government securities or high-quality investment grade debt securities
maturing in one year or less from the time of investment, which we refer to, collectively, as temporary investments, so that 70% of our assets are qualifying assets. Typically, we will invest in U.S. Treasury bills or in
repurchase agreements, provided that such repurchase agreements are fully collateralized by cash or securities issued by the U.S. government or its agencies. A repurchase agreement involves the purchase by an investor,
such as us, of a specified security and the simultaneous agreement by the seller to repurchase it at an agreed-upon future date and at a price that is greater than the purchase price by an amount that reflects an agreed-upon
interest rate. There is no percentage restriction on the proportion of our assets that may be invested in such repurchase agreements. However, if more than 25% of our total assets constitute repurchase agreements from a
single counterparty, we would not meet the diversification tests in order to qualify as a RIC for U.S. federal income tax purposes. Thus, we do not intend to enter into repurchase agreements with a single counterparty in
excess of this limit. SLR Capital Partners will monitor the creditworthiness of the counterparties with which we enter into repurchase agreement transactions.
18
Table of Contents
Senior Securities
We are permitted, under specified conditions, to issue multiple classes of indebtedness and one class of stock senior to our common stock if our asset coverage, as defined in the 1940 Act, is at least equal to 150%
immediately after each such issuance. In addition, while certain senior securities remain outstanding, we may be required to make provisions to prohibit any distribution to our stockholders or the repurchase of such
securities or shares unless we meet the applicable asset coverage ratios at the time of the distribution or repurchase. We may also borrow amounts up to 5% of the value of our total assets for temporary purposes without
regard to asset coverage. We may borrow money, which would magnify the potential for gain or loss on amounts invested and may increase the risk of investing in us.
Code of Ethics
We and SLR Capital Partners have each adopted a code of ethics pursuant to Rule 17j-1 under the 1940 Act and Rule 204A-1 under the Advisers Act, respectively, that establishes procedures for personal
investments and restricts certain transactions by our personnel. Our codes of ethics generally do not permit investments by our employees in securities that may be purchased or held by us. Each code of ethics is available on
the EDGAR Database on the SEC’s Internet site at http://www.sec.gov. You may also obtain copies of the codes of ethics, after paying a duplicating fee, by electronic request at the following Email address:
publicinfo@sec.gov.
Compliance Policies and Procedures
We and our Investment Adviser have adopted and implemented written policies and procedures reasonably designed to detect and prevent violation of the federal securities laws. We are required to review these
compliance policies and procedures annually for their adequacy and the effectiveness of their implementation and to designate a chief compliance officer to be responsible for their administration. Guy Talarico currently
serves as our Chief Compliance Officer.
Proxy Voting Policies and Procedures
We have delegated our proxy voting responsibility to the Investment Adviser. A summary of the Proxy Voting Policies and Procedures of the Investment Adviser are set forth below. The guidelines are reviewed
periodically by the Investment Adviser and our independent directors, and, accordingly, are subject to change.
As an investment adviser registered under the Advisers Act, SLR Capital Partners has a fiduciary duty to act solely in the best interests of its clients. As part of this duty, it recognizes that it must vote securities
held by its clients in a timely manner free of conflicts of interest. These policies and procedures for voting proxies for investment advisory clients are intended to comply with Section 206 of, and Rule 206(4)-6 under, the
Advisers Act.
Our investment adviser votes proxies relating to our portfolio securities in the best interest of our stockholders. SLR Capital Partners reviews on a case-by-case basis each proposal submitted for a proxy vote to
determine its impact on our investments. Although it generally votes against proposals that may have a negative impact on our investments, it may vote for such a proposal if there exists compelling long-term reasons to do
so. The proxy voting decisions of our Investment Adviser are made by the senior investment professionals who are responsible for monitoring each of our investments. To ensure that our vote is not the product of a conflict
of interest, it requires that: (i) anyone involved in the decision making process disclose to a managing member of SLR Capital Partners any potential conflict that he or she is aware of and any contact that he or she has had
with any interested party regarding a proxy vote, and (ii) employees involved in the decision making process or vote administration are prohibited from revealing how we intend to vote on a proposal in order to reduce any
attempted influence from interested parties.
You may obtain information about how we voted proxies by making a written request for proxy voting information to: SLR Capital Partners, LLC, 500 Park Avenue, New York, NY 10022.
Privacy Principles
We endeavor to maintain the privacy of our recordholders and to safeguard their non-public 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 such information with select other parties.
19
Table of Contents
Generally, we will not receive any non-public personal information about the recordholders of the common stock of the Company, although certain of our recordholders’ non-public information may become
available to us. The non-public personal information that we may receive falls into the following categories:
•Information we receive from recordholders, whether we receive it orally, in writing or electronically. This includes recordholders’ communications to us concerning their investment;
•Information about recordholders’ transaction history with us; and
•Other general information that we may obtain about recordholders, such as demographic and contact information such as addresses.
We disclose non-public person information about recordholders:
•to our affiliates (such as SLR Capital Partners and SLR Capital Management) and their employees for everyday business purposes;
•to our service providers (such as our accountants, attorneys, custodians, transfer agent, underwriter and proxy solicitors) and their employees as is necessary to service recordholder accounts or otherwise provide
the applicable service;
•to comply with court orders, subpoenas, lawful discovery requests, or other legal or regulatory requirements; or
•as allowed or required by applicable law or regulation.
When the Company shares non-public recordholder personal information referred to above, the information is made available for limited business purposes and under controlled circumstances designed to protect
our recordholders’ privacy. The Company does not permit use of recordholder information for any non-business or marketing purpose, nor does the Company permit third parties to rent, sell, trade or otherwise release or
disclose information to any other party.
The Company’s service providers, such as SLR Capital Partners, SLR Capital Management, and its transfer agent, are required to maintain physical, electronic, and procedural safeguards to protect recordholder
non-public personal information; to prevent unauthorized access or use; and to dispose of such information when it is no longer required.
Personnel of affiliates may access recordholder information only for business purposes. The degree of access is based on the sensitivity of the information and on personnel need for the information to service a
recordholder’s account or comply with legal requirements.
If a recordholder ceases to be a recordholder, we will adhere to the privacy policies and practices as described above. We may choose to modify our privacy policies at any time. Before we do so, we will notify
recordholders and provide a description of our privacy policy.
Taxation as a Regulated Investment Company
As a BDC, we elected to be treated, and intend to qualify annually, as a RIC under Subchapter M of the Code. As a RIC, we generally will not have to pay corporate-level U.S. federal income taxes on any ordinary
income or capital gains that we timely distribute to our stockholders as dividends. To continue to qualify as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements (as
described below). In addition, to qualify for RIC tax treatment, we must distribute to our stockholders, for each taxable year, at least 90% of our “investment company taxable income,” which generally is our ordinary
income plus the excess of our realized net short-term capital gains over our realized net long-term capital losses (the “Annual Distribution Requirement”). If we qualify as a RIC and satisfy the Annual Distribution
Requirement, then we will not be subject to U.S. federal income tax on the portion of our investment company taxable income and net capital gain (i.e., realized net long-term capital gains in excess of realized net short-term
capital losses) we distribute (or are deemed to distribute) to stockholders. We will be subject to U.S. federal income tax at the regular corporate rates on any ordinary income or capital gain not distributed (or deemed not
distributed) to our stockholders.
We will be subject to a 4% nondeductible U.S. federal excise tax on certain undistributed income unless we distribute in a timely manner an amount at least equal to the sum of (1) 98% of our ordinary income for
each calendar year, (2) 98.2% of our capital gain net income for the one-year period ending October 31 in that calendar year and (3) any ordinary income and net capital gains that we recognized in preceding years, but were
not distributed during such years, and on which we paid no U.S. federal income tax (the “Excise Tax Avoidance Requirement”).
20
Table of Contents
In order to qualify as a RIC for U.S. federal income tax purposes, we must, among other things:
•at all times during each taxable year, have in effect an election to be treated as a BDC under the 1940 Act;
•derive in each taxable year at least 90% of our gross income from (a) dividends, interest, payments with respect to certain securities loans, gains from the sale of stock or other securities or currencies, or other
income derived with respect to our business of investing in such stock, securities or currencies and (b) net income derived from an interest in a “qualified publicly traded partnership;” and
•diversify our holdings so that at the end of each quarter of the taxable year:
•at least 50% of the value of our assets consists of cash, cash equivalents, U.S. government securities, securities of other RICs, and other securities if such other securities of any one issuer do not represent
more than 5% of the value of our assets or more than 10% of the outstanding voting securities of the issuer; and
•no more than 25% of the value of our assets is invested in (i) the securities, other than U.S. government securities or securities of other RICs, of one issuer, (ii) the securities of two or more issuers that are
controlled, as determined under applicable tax rules, by us and that are engaged in the same or similar or related trades or businesses or (iii) the securities of one or more “qualified publicly traded
partnerships.”
We may be required to recognize taxable income in circumstances in which we do not receive cash. For example, if we hold debt obligations that are treated under applicable tax rules as having original issue
discount (such as debt instruments with payment-in-kind (“PIK”) income or, in certain cases, increasing interest rates or debt instruments issued with warrants), we must include in income each year a portion of the original
issue discount that accrues over the life of the obligation, regardless of whether cash representing such income is received by us in the same taxable year. Because any original issue discount accrued will be included in our
investment company taxable income for the year of accrual, we may be required to make a distribution to our stockholders in order to satisfy the Annual Distribution Requirement, even though we will not have received any
corresponding cash amount.
Because we may use debt financing, we will be subject to certain asset coverage ratio requirements under the 1940 Act and financial covenants under loan and credit agreements that could, under certain
circumstances, restrict us from making distributions necessary to satisfy the Annual Distribution Requirement. If we are unable to obtain cash from other sources or are otherwise limited in our ability to make distributions,
we could fail to qualify for RIC tax treatment and thus become subject to corporate-level U.S. federal income tax.
Certain of our investment practices may be subject to special and complex U.S. federal income tax provisions that may, among other things: (i) disallow, suspend or otherwise limit the allowance of certain losses
or deductions; (ii) convert lower taxed long-term capital gain into higher taxed short-term capital gain or ordinary income; (iii) convert an ordinary loss or a deduction into a capital loss (the deductibility of which is more
limited); (iv) cause us to recognize income or gain without a corresponding receipt of cash; (v) adversely affect the time as to when a purchase or sale of securities is deemed to occur; (vi) adversely alter the characterization
of certain complex financial transactions; and (vii) produce income that will not be qualifying income for purposes of the 90% gross income test described above. We will monitor our transactions and may make certain tax
elections in order to mitigate the potential adverse effect of these provisions.
Gain or loss realized by us from the sale or exchange of warrants acquired by us as well as any loss attributable to the lapse of such warrants generally will be treated as capital gain or loss. The treatment of such
gain or loss as long-term or short-term will depend on how long we have held a particular warrant. Upon the exercise of a warrant acquired by us, our tax basis in the stock purchased under the warrant will equal the sum of
the amount paid for the warrant plus the strike price paid on the exercise of the warrant.
Failure to Qualify as a Regulated Investment Company
If we were unable to qualify for treatment as a RIC, we would be subject to U.S. federal income tax on all of our taxable income at regular corporate rates. We would not be able to deduct distributions to
stockholders, nor would distributions be required. Such distributions would be taxable to our stockholders as dividends and, provided certain holding period and other requirements were met, could qualify for treatment as
“qualified dividend income” in the hands of non-corporate stockholders (and thus eligible for the current 20% maximum rate) to the extent of our current and accumulated earnings and profits. Subject to certain limitations
under the Code, corporate distributees would be eligible for the dividends received deduction. Distributions in excess of our current and accumulated earnings and profits would be treated first as a return of capital to the
extent of the stockholder’s tax basis, and any remaining distributions would be treated as a capital gain. To requalify as a RIC in a subsequent taxable year, we would be required to satisfy the RIC qualification requirements
for that year and dispose of any earnings and profits from any year in which we failed to qualify as a RIC. Subject to a limited exception applicable to RICs that qualified as such under Subchapter M of the Code for at least
one year
21
Table of Contents
prior to disqualification and that requalify as a RIC no later than the second year following the non-qualifying year, we could be subject to tax on any unrealized net built-in gains in the assets held by us during the period in
which we failed to qualify as a RIC that are recognized within the subsequent five years, unless we made a special election to pay corporate-level U.S. federal income tax on such built-in gain at the time of our requalification
as a RIC.
Investment Advisory Fees
Pursuant to the Advisory Agreement, we have agreed to pay SLR Capital Partners a fee for investment advisory and management services consisting of two components — a base management fee and a
performance-based incentive fee.
On April 1, 2022, in connection with the consummation of the Mergers, we entered into a letter agreement (the “Letter Agreement”) pursuant to which the Investment Adviser voluntarily agreed to a permanent 25
basis point reduction of the annual base management fee rate payable by us to the Investment Adviser pursuant to the Advisory Agreement. Following the Letter Agreement, the base management fee is now determined by
taking the average value of the Company’s gross assets at the end of the two most recently completed calendar quarters calculated at an annual rate of 1.50% on gross assets up to 200% of the Company’s total net assets as
of the immediately preceding quarter end and 1.00% on gross assets that exceed 200% of the Company’s total net assets as of the immediately preceding quarter end. For purposes of computing the base management fee,
gross assets exclude temporary assets acquired at the end of each fiscal quarter for purposes of preserving investment flexibility in the next fiscal quarter. Temporary assets include, but are not limited to, U.S. treasury bills,
other short-term U.S. government or government agency securities, repurchase agreements or cash borrowings.
The performance-based incentive fee has two parts, as follows: one is calculated and payable quarterly in arrears based on our pre-incentive fee net investment income for the immediately preceding calendar
quarter. For this purpose, pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees (other than fees for providing managerial assistance), such as
commitment, origination, structuring, diligence and consulting fees or other fees that we receive from portfolio companies) accrued during the calendar quarter, minus our operating expenses for the quarter (including the
base management fee, expenses payable under the Administration Agreement to SLR Capital Management, and any interest expense and dividend paid on any issued and outstanding preferred stock, but excluding the
performance-based incentive fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with pay in kind income and
zero coupon securities), accrued income that we have not yet received in cash. Pre-incentive fee net investment income does not include any realized capital gains, computed net of all realized capital losses or unrealized
capital appreciation or depreciation. Pre-incentive fee net investment income, expressed as a rate of return on the value of our net assets at the end of the immediately preceding calendar quarter, is compared to a hurdle of
1.75% per quarter (7.00% annualized). Our net investment income used to calculate this part of the incentive fee is also included in the amount of our gross assets used to calculate the 1.50% base management fee. We pay
SLR Capital Partners an incentive fee with respect to our pre-incentive fee net investment income in each calendar quarter as follows:
•no performance-based incentive fee in any calendar quarter in which our pre-incentive fee net investment income does not exceed the hurdle of 1.75%;
•100% of our pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle but is less than 2.1875% in any calendar quarter
(8.75% annualized). We refer to this portion of our pre-incentive fee net investment income (which exceeds the hurdle but is less than 2.1875%) as the “catch-up.” The “catch-up” is meant to provide our
investment adviser with 20% of our pre-incentive fee net investment income as if a hurdle did not apply if this net investment income exceeds 2.1875% in any calendar quarter; and
•20% of the amount of our pre-incentive fee net investment income, if any, that exceeds 2.1875% in any calendar quarter (8.75% annualized) is payable to SLR Capital Partners (once the hurdle is reached and the
catch-up is achieved, 20% of all pre-incentive fee investment income thereafter is allocated to SLR Capital Partners).
22
Table of Contents
The following is a graphical representation of the calculation of the income-related portion of the performance-based incentive fee:
Quarterly Incentive Fee Based on Net Investment Income
Pre-incentive fee net investment income
(expressed as a percentage of the value of net assets)
Percentage of pre-incentive fee net investment income
allocated to SLR Capital Partners
These calculations are appropriately pro-rated for any period of less than three months. You should be aware that a rise in the general level of interest rates can be expected to lead to higher interest rates applicable
to our debt investments. Accordingly, an increase in interest rates would make it easier for us to meet or exceed the incentive fee hurdle rate and may result in a substantial increase of the amount of incentive fees payable to
our investment adviser with respect to pre-incentive fee net investment income.
The second part of the incentive fee is determined and payable in arrears as of the end of each calendar year (or upon termination of the Advisory Agreement, as of the termination date), and equals 20% of our
realized capital gains, if any, on a cumulative basis from inception through the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the
aggregate amount of any previously paid capital gain incentive fees with respect to each of the investments in our portfolio.
Examples of Quarterly Incentive Fee Calculation
Example 1: Income Related Portion of Incentive Fee (*):
Alternative 1:
Assumptions
Investment income (including interest, dividends, fees, etc.) = 1.25%
Hurdle rate(1) = 1.75%
Management fee(2) = 0.375%
Other expenses (legal, accounting, custodian, transfer agent, etc.)(3) = 0.20%
Pre-incentive fee net investment income
(investment income – (management fee + other expenses)) = 0.675%
Pre-incentive net investment income does not exceed hurdle rate, therefore there is no incentive fee.
Alternative 2:
Assumptions
Investment income (including interest, dividends, fees, etc.) = 2.70%
Hurdle rate(1) = 1.75%
Management fee(2) = 0.375%
Other expenses (legal, accounting, custodian, transfer agent, etc.)(3) = 0.20%
Pre-incentive fee net investment income
(investment income – (management fee + other expenses)) = 2.125%
(*) The hypothetical amount of pre-incentive fee net investment income shown is based on a percentage of total net assets. Incentive fee = 100% × pre-incentive fee net investment income, subject to the “catch-up”(4)
= 100% × (2.125% – 1.75%)
= 0.375%
23
Table of Contents
Alternative 3:
Assumptions
Investment income (including interest, dividends, fees, etc.) = 3.00%
Hurdle rate(1) = 1.75%
Management fee(2) = 0.375%
Other expenses (legal, accounting, custodian, transfer agent, etc.)(3) = 0.20%
Pre-incentive fee net investment income
(investment income – (management fee + other expenses)) = 2.425%
Incentive fee = 20% × pre-incentive fee net investment income, subject to “catch-up”(4)
Incentive fee = 100% × “catch-up” + (20% × (pre-incentive fee net investment income – 2.1875%))
Catch-up = 2.1875% – 1.75%
= 0.4375%
Incentive fee = (100% × 0.4375%) + (20% × (2.425% – 2.1875%))
= 0.4375% + (20% × 0.2375%)
= 0.4375% + 0.0475%
= 0.485%
(1)Represents 7% annualized hurdle rate.
(2)Represents 1.50% annualized management fee.
(3)Excludes organizational and offering expenses.
(4)The “catch-up” provision is intended to provide our investment adviser with an incentive fee of 20% on all of our pre-incentive fee net investment income as if a hurdle rate did not apply when our net investment income
exceeds 2.1875% in any calendar quarter.
Example 2: Capital Gains Portion of Incentive Fee:
Alternative 1:
Assumptions
•Year 1: $20 million investment made in Company A (“Investment A”), and $30 million investment made in Company B (“Investment B”)
•Year 2: Investment A sold for $50 million and fair market value (“FMV”) of Investment B was determined to be $32 million
•Year 3: FMV of Investment B determined to be $25 million
•Year 4: Investment B sold for $31 million
The capital gains portion of the incentive fee would be:
•Year 1: None
•Year 2: Capital gains incentive fee of $6 million ($30 million realized capital gains on the sale of Investment A multiplied by 20%)
•Year 3: None
$5 million (20% multiplied by ($30 million cumulative capital gains less $5 million cumulative capital depreciation)) less $6 million (previous capital gains fee paid in Year 2)
•Year 4: Capital gains incentive fee of $200,000
$6.2 million ($31 million cumulative realized capital gains multiplied by 20%) less $6 million (capital gains fee taken in Year 2)
Alternative 2:
Assumptions
•Year 1: $20 million investment made in Company A (“Investment A”), $30 million investment made in Company B (“Investment B”) and $25 million investment made in Company C (“Investment C”)
24
Table of Contents
•Year 2: Investment A sold for $50 million, FMV of Investment B determined to be $25 million and FMV of Investment C determined to be $25 million
•Year 3: FMV of Investment B determined to be $27 million and Investment C sold for $30 million
•Year 4: FMV of Investment B determined to be $24 million
•Year 5: Investment B sold for $20 million
The capital gains incentive fee, if any, would be:
•Year 1: None
•Year 2: $5 million capital gains incentive fee
20% multiplied by $25 million ($30 million realized capital gains on Investment A less unrealized capital depreciation on Investment B)
•Year 3: $1.4 million capital gains incentive fee
(1)
$6.4 million (20% multiplied by $32 million ($35 million cumulative realized capital gains less $3 million unrealized capital depreciation)) less $5 million capital gains fee received in Year 2
•Year 4: None
•Year 5: None
$5 million (20% multiplied by $25 million (cumulative realized capital gains of $35 million less realized capital losses of $10 million)) less $6.4 million cumulative capital gains fee paid in Year 2 and Year 3
(1)As illustrated in Year 3 of Alternative 2 above, if the Company were to be wound up on a date other than December 31 of any year, the Company may have paid aggregate capital gain incentive fees that are
more than the amount of such fees that would be payable if the Company had been wound up on December 31 of such year.
Payment of Our Expenses
All investment professionals of the Investment Adviser and their respective staffs, when and to the extent engaged in providing investment advisory and management services, and the compensation and routine
overhead expenses of such personnel allocable to such services, are provided and paid for by SLR Capital Partners. We bear all other costs and expenses of our operations and transactions, including (without limitation):
•the cost of our organization and public offerings;
•the cost of calculating our net asset value, including the cost of any third-party valuation services;
•the cost of effecting sales and repurchases of our shares and other securities;
•interest payable on debt, if any, to finance our investments;
•fees payable to third parties relating to, or associated with, making investments, including fees and expenses associated with performing due diligence reviews of prospective investments and advisory fees;
•transfer agent and custodial fees;
•fees and expenses associated with marketing efforts;
•federal and state registration fees and any stock exchange listing fees;
•federal, state and local taxes;
•independent directors’ fees and expenses;
•brokerage commissions;
•fidelity bond, directors and officers errors and omissions liability insurance and other insurance premiums;
•direct costs and expenses of administration, including printing, mailing, long distance telephone and staff;
25
Table of Contents
•fees and expenses associated with independent audits and outside legal costs;
•costs associated with our reporting and compliance obligations under the 1940 Act and applicable federal and state securities laws; and
•all other expenses incurred by either SLR Capital Management or us in connection with administering our business, including payments under the Administration Agreement that will be based upon our allocable
portion of overhead and other expenses incurred by SLR Capital Management in performing its obligations under the Administration Agreement, including rent, the fees and expenses associated with performing
compliance functions, and our allocable portion of the costs of compensation and related expenses of our Chief Compliance Officer and our Chief Financial Officer and their respective staffs.
Available Information
The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is
(http://www.sec.gov).
Our internet address is www.slrinvestmentcorp.com. We make available free of charge on our website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and
amendments to those reports as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Information contained on our website is not incorporated by reference into this annual
report on Form 10-K, and you should not consider information contained on our website to be part of this annual report on Form 10-K.
Summary Risk Factors
Risks Relating to Our Investments
•We operate in a highly competitive market for investment opportunities.
•Our investments are very risky and highly speculative.
•The lack of liquidity in our investments may make it difficult for us to dispose of our investments at a favorable price, which may adversely affect our ability to meet our investment objectives.
•Our portfolio may be concentrated in a limited number of portfolio companies and industries, which will subject us to a risk of significant loss if any of these companies performs poorly or defaults on its
obligations under any of its debt instruments or if there is a downturn in a particular industry.
•Economic sanction laws in the United States and other jurisdictions may prohibit us and our affiliates from transacting with certain countries, individuals and companies.
•If we cannot obtain additional capital because of either regulatory or market price constraints, we could be forced to curtail or cease our new lending and investment activities, our net asset value could decrease
and our level of distributions and liquidity could be affected adversely.
•We may suffer a loss if a portfolio company defaults on a loan and the underlying collateral is not sufficient.
•Prepayments of our debt investments by our portfolio companies could adversely impact our results of operations and reduce our return on equity.
•We may be exposed to higher risks with respect to our investments that include original issue discount or PIK interest.
Risks Relating to an Investment in Our Securities
•Our shares may trade at a substantial discount from net asset value and may continue to do so over the long term.
•Our common stock price may be volatile and may decrease substantially.
•Our business and operation could be negatively affected if we become subject to any securities litigation or stockholder activism, which could cause us to incur significant expense, hinder execution of investment
strategy and impact our stock price.
26
Table of Contents
•There is a risk that investors in our equity securities may not receive distributions consistent with historical levels or at all or that our distributions may not grow over time and a portion of our distributions may
be a return of capital.
•We may reduce or defer our dividends and choose to incur U.S. federal excise tax in order to preserve cash and maintain flexibility.
•We may choose to pay distributions in our own common stock, in which case our stockholders may be required to pay U.S. federal income taxes in excess of the cash distributions they receive.
•Sales of substantial amounts of our common stock in the public market may have an adverse effect on the market price of our common stock.
•The net asset value per share of our common stock may be diluted if we issue or sell shares of our common stock at prices below the then current net asset value per share of our common stock or securities to
subscribe for or convertible into shares of our common stock.
•To the extent we use debt or preferred stock to finance our investments, changes in interest rates will affect our cost of capital and net investment income.
•Our stock repurchase program could affect the price of our common stock and increase volatility and may be suspended or terminated at any time, which may result in a decrease in the trading price of our
common stock.
Risks Relating to Our Business and Structure
•We are dependent upon SLR Capital Partners’ key personnel for our future success.
•Our business model depends to a significant extent upon strong referral relationships with financial sponsors, and the inability of the senior investment professionals of our Investment Adviser to maintain or
develop these relationships, or the failure of these relationships to generate investment opportunities, could adversely affect our business.
•Our financial condition and results of operations will depend on SLR Capital Partners’ ability to manage our future growth effectively by identifying, investing in and monitoring companies that meet our
investment criteria.
•We may need to raise additional capital to grow because we must distribute most of our income.
•Any failure on our part to maintain our status as a BDC would reduce our operating flexibility and we may be limited in our investment choices as a BDC.
•Regulations governing our operation as a BDC affect our ability to, and the way in which we will, raise additional capital. As a BDC, the necessity of raising additional capital may expose us to risks, including
the typical risks associated with leverage.
•We have and will continue to borrow money, which would magnify the potential for loss on amounts invested and may increase the risk of investing in us.
•It is likely that the terms of any current or future long-term or revolving credit or warehouse facility we may enter into in the future could constrain our ability to grow our business.
•There will be uncertainty as to the value of our portfolio investments, which may impact our net asset value.
•There are significant potential conflicts of interest, including SLR Capital Partners’ management of other investment funds such as SCP Private Credit Income BDC LLC, SLR HC BDC LLC, and SLR Private
Credit BDC II LLC, which could impact our investment returns, and an investment in SLR Investment Corp. is not an investment in SCP Private Credit Income BDC LLC, SLR HC BDC LLC, or SLR Private
Credit BDC II LLC.
•We may be obligated to pay our Investment Adviser incentive compensation even if we incur a loss.
•Our incentive fee may induce SLR Capital Partners to pursue speculative investments.
•We may become subject to corporate-level U.S. federal income tax if we are unable to qualify and maintain our qualification for tax treatment as a regulated investment company under Subchapter M of the Code.
•The failure in cyber security systems, as well as the occurrence of events unanticipated in our disaster recovery systems and management continuity planning, could impair our ability to conduct business
effectively.
•Any inability or perceived inability to adequately address privacy concerns, or comply with applicable laws and regulations, even if unfounded, may result in adverse consequences to the Company.
27
Table of Contents
•Our business is subject to increasingly complex corporate governance, public disclosure and accounting requirements that could adversely affect our business and financial results.
28
Table of Contents
Item 1A. Risk Factors.
Before you invest in our securities, you should be aware of various risks, including those described below. You should carefully consider these risk factors, together with all of the other information included in this
annual report on Form 10-K before you decide whether to make an investment in our securities. The risks described in this document and set out below are not the only risks we face. If any of the following events occur, our
business, financial condition and results of operations could be materially adversely affected. In such case, our net asset value and the trading price of our common stock could decline or the value of our preferred stock,
debt securities, subscription rights or warrants may decline, and you may lose all or part of your investment.
Risks Relating to Our Investments
We operate in a highly competitive market for investment opportunities.
A number of entities compete with us to make the types of investments that we target in leveraged companies. We compete with other BDCs, public and private funds, commercial and investment banks,
commercial financing companies and, to the extent they provide an alternative form of financing, private equity funds. Many of our competitors are substantially larger and have considerably greater financial, technical and
marketing resources than we do. For example, some competitors may have a lower cost of funds and access to funding sources that are not available to us. In addition, some of our competitors may have higher risk
tolerances or different risk assessments than we have, which could allow them to consider a wider variety of investments and establish more relationships and offer better pricing and a more flexible structure than we are
able to do. Furthermore, many of our potential competitors are not subject to the regulatory restrictions that the 1940 Act imposes on us as a BDC. If we are unable to source attractive investments, we may hold a greater
percentage of our assets in cash and cash equivalents than anticipated, which could impact potential returns on our portfolio. We cannot assure you that the competitive pressures we face will not have a material adverse
effect on our business, financial condition and results of operations. Also, as a result of this competition, we may not be able to take advantage of attractive investment opportunities from time to time, and we can offer no
assurance that we will be able to identify and make investments that are consistent with our investment objective.
Participants in our industry compete on several factors, including price, flexibility in transaction structure, customer service, reputation, market knowledge and speed in decision-making. We do not seek to compete
primarily based on the interest rates we will offer, and we believe that some of our competitors may make loans with interest rates that will be comparable to or lower than the rates we offer. We may lose investment
opportunities if we do not match our competitors’ pricing, terms and structure. However, if we match our competitors’ pricing, terms and structure, we may experience decreased net interest income and increased risk of
credit loss.
Our investments are very risky and highly speculative.
We invest primarily in leveraged middle-market companies in the form of senior secured loans, financing leases and to a lesser extent, unsecured loans and equity securities.
Senior Secured Loans. When we make a senior secured term loan investment in a portfolio company, we generally take a security interest in the available assets of the portfolio company, including the equity
interests of its subsidiaries, which we expect to help mitigate the risk that we will not be repaid. However, there is a risk that the collateral securing our loans may decrease in value over time, may be difficult to sell in a
timely manner, may be difficult to appraise and may fluctuate in value based upon the success of the business and market conditions, including as a result of the inability of the portfolio company to raise additional capital,
and, in some circumstances, our lien could be subordinated to claims of other creditors. In addition, deterioration in a portfolio company’s financial condition and prospects, including its inability to raise additional capital,
may be accompanied by deterioration in the value of the collateral for the loan. Consequently, the fact that a loan is secured does not guarantee that we will receive principal and interest payments according to the loan’s
terms, or at all, or that we will be able to collect on the loan should we be forced to enforce our remedies.
Unsecured Loans and Preferred Securities. Our unsecured and preferred investments are generally subordinated to senior loans and are generally unsecured. As such, other creditors may rank senior to us in the
event of an insolvency. This may result in an above average amount of risk and loss of principal.
Equity Investments. When we invest in senior secured loans, unitranche loans, unsecured loans or preferred securities, we may acquire common equity securities as well. In certain other unique circumstances we
may also make equity investments in businesses that make senior loans and/or leases, such as our investments in Kingsbridge Holdings, LLC, SLR Credit Solutions, SLR Equipment Finance, SLR Business Credit and SLR
Healthcare ABL. In addition, we may invest directly in the equity securities of portfolio companies without limitation as to market capitalization. For instance, we may invest in thinly traded companies, the prices of which
may be subject to erratic market movement. Our goal is ultimately to exit such equity interests and realize gains upon our disposition of such interests. However, the equity interests we receive may not appreciate in value
and, in fact, may decline in value. Accordingly,
29
Table of Contents
we may not be able to realize gains from our equity interests, and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset any other losses we experience.
In addition, investing in middle-market companies involves a number of significant risks, including:
•these companies may have limited financial resources and may be unable to meet their obligations under their debt securities that we hold, which may be accompanied by a deterioration in the value of any
collateral and a reduction in the likelihood of us realizing any guarantees we may have obtained in connection with our investment;
•they typically have shorter operating histories, narrower product lines and smaller market shares than larger businesses, which tend to render them more vulnerable to competitors’ actions and market conditions,
as well as general economic downturns;
•they are more likely to depend on the management talents and efforts of a small group of persons; therefore, the death, disability, resignation or termination of one or more of these persons could have a material
adverse impact on our portfolio company and, in turn, on us;
•they generally have less predictable operating results, may from time to time be parties to litigation, may be engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence, and
may require substantial additional capital to support their operations, finance expansion or maintain their competitive position. In addition, our executive officers, directors and our Investment Adviser may, in the
ordinary course of business, be named as defendants in litigation arising from our investments in the portfolio companies; and
•they may have difficulty accessing the capital markets to meet future capital needs, which may limit their ability to grow or to repay their outstanding indebtedness upon maturity.
The lack of liquidity in our investments may make it difficult for us to dispose of our investments at a favorable price, which may adversely affect our ability to meet our investment objectives.
We generally make investments in private companies. We invest and expect to continue investing in companies whose securities have no established trading market and whose securities are and will be subject to
legal and other restrictions on resale or whose securities are and will be less liquid than are publicly-traded securities. Investments purchased by us that are liquid at the time of purchase may subsequently become illiquid
due to events relating to the issuer of the investments, market events, economic conditions or investor perceptions. The illiquidity of our investments may make it difficult for us to sell such investments if the need arises. In
addition, if we are required to liquidate all or a portion of our portfolio quickly, we may realize significantly less than the value at which we have previously recorded our investments. As a result, we do not expect to achieve
liquidity in our investments in the near-term. However, to maintain our qualification as a BDC and as a RIC, we may have to dispose of investments if we do not satisfy one or more of the applicable criteria under the
respective regulatory frameworks. Domestic and foreign markets are complex and interrelated, so that events in one sector of the world markets or economy, or in one geographical region, can reverberate and have
materially negative consequences for other markets, economic or regional sectors in a manner that may not be foreseen and which may negatively impact the liquidity of our investments and materially harm our business. In
addition, we may face other restrictions on our ability to liquidate an investment in a portfolio company to the extent that we have material non-public information regarding such portfolio company.
Our portfolio may be concentrated in a limited number of portfolio companies and industries, which will subject us to a risk of significant loss if any of these companies performs poorly or defaults on its obligations
under any of its debt instruments or if there is a downturn in a particular industry.
Our portfolio may be concentrated in a limited number of portfolio companies and industries. The Company is classified as a non-diversified investment company within the meaning of the 1940 Act, which means
that it is not limited by the 1940 Act with respect to the proportion of its assets that it could invest in a single portfolio company. To the extent that we assume large positions in the securities of a small number of portfolio
companies, our net asset value could fluctuate to a greater extent than that of a diversified investment company as a result of changes in the financial condition or the market’s assessment of the portfolio company. We could
also be more susceptible to any single economic or regulatory occurrence than a diversified investment company. As of December 31, 2024, our investments in SLR Credit Solutions, Kingsbridge Holdings, LLC and SLR
Business Credit comprised 11.8%, 10.3% and 5.1%, respectively, of our total assets and our investments in the diversified financial services, multi-sector holdings and health care providers & services industries comprised
22.7%, 15.2% and 11.1%, respectively, of our total assets. Beyond the asset diversification requirements associated with our qualification as a RIC under Subchapter M of the Code, we do not have fixed guidelines for
diversification, and while we are not targeting any specific industries, our investments may be concentrated in relatively few industries or portfolio companies. As a result, the aggregate returns we realize may be
significantly adversely affected if a small number of
30
Table of Contents
investments perform poorly or if we need to write down the value of any one investment. Additionally, a downturn in any particular industry in which we are invested could also significantly impact the aggregate returns we
realize.
31
Table of Contents
Our investments in securities rated below investment grade are speculative in nature and are subject to additional risk factors such as the increased possibility of default, illiquidity of the security, and changes in value
based on changes in interest rates.
The securities that we invest in are typically rated below investment grade. Securities rated below investment grade are speculative and are often referred to as “leveraged loans,” “high yield” or “junk” securities,
and may be considered “high risk” compared to debt instruments that are rated investment grade. High yield securities are regarded as having predominantly speculative characteristics with respect to the issuer’s capacity to
pay interest and repay principal in accordance with the terms of the obligations and involve major risk exposure to adverse conditions. In addition, high yield securities generally offer a higher current yield than that available
from higher grade issues, but typically involve greater risk. These securities are especially sensitive to adverse changes in general economic conditions, to changes in the financial condition of their issuers and to price
fluctuation in response to changes in interest rates. During periods of economic downturn or rising interest rates, issuers of below investment grade instruments may experience financial stress that could adversely affect
their ability to make payments of principal and interest and increase the possibility of default. The secondary market for high yield securities may not be as liquid as the secondary market for more highly rated securities. In
addition, many of our debt investments will not fully amortize during their lifetime, which means that a borrower may be unable to pay off its debt due to bankruptcy or other reasons and therefore we may write-off such
debt investment prior to its scheduled maturity. Upon such an occurrence, we may realize a loss or a substantial amount of unpaid principal and interest due upon maturity.
Price declines and illiquidity in the corporate debt markets have adversely affected, and may continue to adversely affect, the fair value of our portfolio investments, reducing our net asset value through increased net
unrealized depreciation. Any unrealized depreciation that we experience on our loan portfolio may be an indication of future realized losses, which could reduce our income available for distribution and could
adversely affect our ability to service our outstanding borrowings.
As a BDC, we are required to carry our investments at market value or, if no market value is ascertainable, at fair value as determined in good faith by or under the direction of our board of directors. Decreases in
the market values or fair values of our investments are recorded as unrealized depreciation. Any unrealized depreciation in our loan portfolio could be an indication of a portfolio company’s inability to meet its repayment
obligations to us with respect to the affected loans. This could result in realized losses in the future and ultimately in reductions of our income available for distribution in future periods and could materially adversely affect
our ability to service our outstanding borrowings. Depending on market conditions, we could incur substantial losses in future periods, which could further reduce our net asset value and have a material adverse impact on
our business, financial condition and results of operations.
Economic sanction laws in the United States and other jurisdictions may prohibit us and our affiliates from transacting with certain countries, individuals and companies.
Economic sanction laws in the United States and other jurisdictions may prohibit us or our affiliates from transacting with certain countries, individuals and companies. In the United States, the U.S. Department of
the Treasury’s Office of Foreign Assets Control administers and enforces laws, executive orders and regulations establishing U.S. economic and trade sanctions, which prohibit, among other things, transactions with, and the
provision of services to, certain non-U.S. countries, territories, entities and individuals. These types of sanctions may significantly restrict or completely prohibit investment activities in certain jurisdictions, and if we, our
portfolio companies or other issuers in which we invest were to violate any such laws or regulations, we may face significant legal and monetary penalties.
The Foreign Corrupt Practices Act, or FCPA, and other anti-corruption laws and regulations, as well as anti-boycott regulations, may also apply to and restrict our activities, our portfolio companies and other
issuers of our investments. If an issuer or we were to violate any such laws or regulations, such issuer or we may face significant legal and monetary penalties. The U.S. government has indicated that it is particularly
focused on FCPA enforcement, which may increase the risk that an issuer or us becomes the subject of such actual or threatened enforcement. In addition, certain commentators have suggested that private investment firms
and the funds that they manage may face increased scrutiny and/or liability with respect to the activities of their underlying portfolio companies. As such, a violation of the FCPA or other applicable regulations by us or an
issuer of our portfolio investments could have a material adverse effect on us. We are committed to complying with the FCPA and other anti-corruption laws and regulations, as well as anti-boycott regulations, to which it is
subject. As a result, we may be adversely affected because of our unwillingness to enter into transactions that violate any such laws or regulations.
32
Table of Contents
If we cannot obtain additional capital because of either regulatory or market price constraints, we could be forced to curtail or cease our new lending and investment activities, our net asset value could decrease and
our level of distributions and liquidity could be affected adversely.
Our ability to secure additional financing and satisfy our financial obligations under indebtedness outstanding from time to time will depend upon our future operating performance, which is subject to the
prevailing general economic and credit market conditions, including interest rate levels and the availability of credit generally, and financial, business and other factors, many of which are beyond our control. The worsening
of current economic and capital market conditions could have a material adverse effect on our ability to secure financing on favorable terms, if at all.
If we are unable to obtain debt capital, then our equity investors will not benefit from the potential for increased returns on equity resulting from leverage to the extent that our investment strategy is successful and
we may be limited in our ability to make new commitments or fundings to our portfolio companies.
We may suffer a loss if a portfolio company defaults on a loan and the underlying collateral is not sufficient.
In the event of a default by a portfolio company on a secured loan, we will only have recourse to the assets collateralizing the loan. If the underlying collateral value is less than the loan amount, we will suffer a
loss. In addition, we sometimes make loans that are unsecured, which are subject to the risk that other lenders may be directly secured by the assets of the portfolio company. In the event of a default, those collateralized
lenders would have priority over us with respect to the proceeds of a sale of the underlying assets. In cases described above, we may lack control over the underlying asset collateralizing our loan or the underlying assets of
the portfolio company prior to a default, and as a result the value of the collateral may be reduced by acts or omissions by owners or managers of the assets.
In the event of bankruptcy of a portfolio company, we may not have full recourse to its assets in order to satisfy our loan, or our loan may be subject to equitable subordination. In addition, certain of our loans are
subordinate to other debt of the portfolio company. If a portfolio company defaults on our loan or on debt senior to our loan, or in the event of a portfolio company bankruptcy, our loan will be satisfied only after the senior
debt receives payment. Where debt senior to our loan exists, the presence of inter-creditor arrangements may limit our ability to amend our loan documents, assign our loans, accept prepayments, exercise our remedies
(through “standstill” periods) and control decisions made in bankruptcy proceedings relating to the portfolio company. Bankruptcy and portfolio company litigation can significantly increase collection losses and the time
needed for us to acquire the underlying collateral in the event of a default, during which time the collateral may decline in value, causing us to suffer further losses.
If the value of the collateral underlying our loan declines or interest rates increase during the term of our loan, a portfolio company may not be able to obtain the necessary funds to repay our loan at maturity
through refinancing. Decreasing collateral value and/or periods of increasing interest rates may hinder a portfolio company’s ability to refinance our loan because the underlying collateral cannot satisfy the debt service
coverage requirements necessary to obtain new financing. If a borrower is unable to repay our loan at maturity, we could suffer a loss which may adversely impact our financial performance.
The business, financial condition and results of operations of our portfolio companies could be adversely affected by worldwide economic conditions, as well as political and economic conditions in the countries in
which they conduct business.
The business and operating results of our portfolio companies may be impacted by worldwide economic conditions. Any deterioration of general economic conditions may lead to significant declines in corporate
earnings or loan performance, and the ability of corporate borrowers to service their debt, any of which could trigger a period of global economic slowdown, and have an adverse impact on our performance and financial
results, and the value and the liquidity of our investments. In an economic downturn, we could have non-performing assets or an increase in non-performing assets, and we would anticipate that the value of our portfolio
would decrease during these periods. For instance, concerns of economic slowdown in China and other emerging markets and signs of deteriorating sovereign debt conditions in Europe could lead to disruption and instability
in the global financial markets. The significant debt in the United States and European countries is expected to hinder growth in those countries for the foreseeable future. In the future, the U.S. government may not be able
to meet its debt payments unless the federal debt ceiling is raised. If legislation increasing the debt ceiling is not enacted, as needed, and the debt ceiling is reached, the U.S. federal government may stop or delay making
payments on its obligations. Any default by the U.S. government on its obligations or any prolonged U.S. government shutdown could negatively impact the U.S. economy and our portfolio companies. Multiple factors
relating to the international operations of some of our portfolio companies and to particular countries in which they operate could negatively impact their business, financial condition and results of operations. In addition,
concerns over the United States’ debt ceiling and budget-deficit have driven downgrades by rating agencies to the U.S. government’s credit rating. Downgrades by rating agencies to the U.S. government’s credit rating or
concerns about its credit and deficit levels in general could cause interest rates and borrowing costs to rise, which may negatively impact both the perception of credit risk associated with our debt portfolio and our ability to
access the debt markets on
33
Table of Contents
favorable terms. In addition, a decreased U.S. government credit rating, any default by the U.S. government on its obligations, or any prolonged U.S. government shutdown could create broader financial turmoil and
uncertainty, which may weigh heavily on our financial performance and the value of our common stock. U.S. debt ceiling and budget deficit concerns have increased the possibility of additional credit-rating downgrades
and economic slowdowns or a recession in the U.S.
Some of the products of our portfolio companies are developed, manufactured, assembled, tested or marketed outside the United States. Any conflict or uncertainty in these countries, including due to natural
disasters, public health concerns, political unrest or safety concerns, could harm their business, financial condition and results of operations. In addition, if the government of any country in which their products are
developed, manufactured or sold sets technical or regulatory standards for products developed or manufactured in or imported into their country that are not widely shared, it may lead some of their customers to suspend
imports of their products into that country, require manufacturers or developers in that country to manufacture or develop products with different technical or regulatory standards and disrupt cross-border manufacturing,
marketing or business relationships which, in each case, could harm their businesses.
Our failure to make follow-on investments in our portfolio companies could impair the value of our portfolio.
Following an initial investment in a portfolio company, we may make additional investments in that portfolio company as “follow-on” investments, in order to: (i) increase or maintain in whole or in part our
ownership percentage; (ii) exercise warrants, options or convertible securities that were acquired in the original or subsequent financing; or (iii) attempt to preserve or enhance the value of our investment. We may elect not
to make follow-on investments or otherwise lack sufficient funds to make those investments. We will have the discretion to make any follow-on investments, subject to the availability of capital resources. The failure to
make follow-on investments may, in some circumstances, jeopardize the continued viability of a portfolio company and our initial investment, or may result in a missed opportunity for us to increase our participation in a
successful operation. Even if we have sufficient capital to make a desired follow-on investment, we may elect not to make a follow-on investment because we may not want to increase our concentration of risk, either
because we prefer other opportunities or because we are subject to BDC requirements that would prevent such follow-on investments or the desire to maintain our RIC tax treatment.
Where we do not hold controlling equity interests in our portfolio companies, we may not be in a position to exercise control over our portfolio companies or to prevent decisions by management of our portfolio
companies that could decrease the value of our investments.
Although we hold controlling equity positions in some of our portfolio companies, we do not currently hold controlling equity positions in the majority of our portfolio companies. As a result, we are subject to the
risk that a portfolio company in which we do not have a controlling interest may make business decisions with which we disagree, and that the management and/or stockholders of such portfolio company may take risks or
otherwise act in ways that are adverse to our interests. Due to the lack of liquidity of the debt and equity investments that we typically hold in our portfolio companies, we may not be able to dispose of our investments in the
event we disagree with the actions of a portfolio company and may therefore suffer a decrease in the value of our investments.
Prepayments of our debt investments by our portfolio companies could adversely impact our results of operations and reduce our return on equity.
We are subject to the risk that the investments we make in our portfolio companies may be prepaid prior to maturity. When this occurs, we may reduce our borrowings outstanding or reinvest these proceeds in
temporary investments, pending their future investment in new portfolio companies. These temporary investments, if any, will typically have substantially lower yields than the debt investment being prepaid and we could
experience significant delays in reinvesting these amounts. Any future investment in a new portfolio company may also be at lower yields than the debt investment that was prepaid. As a result, our results of operations
could be materially adversely affected if one or more of our portfolio companies elect to prepay amounts owed to us. Additionally, prepayments could negatively impact our return on equity, which could result in a decline
in the market price of our common stock.
We may choose to waive or defer enforcement of covenants in the debt securities held in our portfolio, which may cause us to lose all or part of our investment in these companies.
We structure the debt investments in our portfolio companies to include business and financial covenants placing affirmative and negative obligations on the operation of the company’s business and its financial
condition.
However, from time to time we may elect to waive breaches of these covenants, including our right to payment, or waive or defer enforcement of remedies, such as acceleration of obligations or foreclosure on
collateral, depending upon the financial condition and prospects of the particular portfolio company. These actions may reduce the likelihood of our receiving the full amount of future payments of interest or principal and be
accompanied by a deterioration in the value of the underlying collateral as many of these
34
Table of Contents
companies may have limited financial resources, may be unable to meet future obligations and may go bankrupt. This could negatively impact our ability to pay distributions, could adversely affect our results of operation
and financial condition and cause the loss of all or part of your investment.
In addition, some of the loans in which we may invest may be “covenant-lite” loans. We use the term “covenant-lite” loans to refer generally to loans that do not have a complete set of financial maintenance
covenants.
Generally, “covenant-lite” loans provide borrower companies more freedom to negatively impact lenders because their covenants are incurrence-based, which means they are only tested and can only be breached
following an affirmative action of the borrower, rather than by a deterioration in the borrower’s financial condition. Accordingly, to the extent we invest in “covenant-lite” loans, we may have fewer rights against a borrower
and may have a greater risk of loss on such investments as compared to investments in or exposure to loans with financial maintenance covenants.
Our loans could be subject to equitable subordination by a court which would increase our risk of loss with respect to such loans.
Courts may apply the doctrine of equitable subordination to subordinate the claim or lien of a lender against a borrower to claims or liens of other creditors of the borrower, when the lender or its affiliates is found
to have engaged in unfair, inequitable or fraudulent conduct. The courts have also applied the doctrine of equitable subordination when a lender or its affiliates is found to have exerted inappropriate control over a client,
including control resulting from the ownership of equity interests in a client. We have made direct equity investments or received warrants in connection with loans. Payments on one or more of our loans, particularly a loan
to a client in which we may also hold an equity interest, may be subject to claims of equitable subordination. If we were deemed to have the ability to control or otherwise exercise influence over the business and affairs of
one or more of our portfolio companies resulting in economic hardship to other creditors of that company, this control or influence may constitute grounds for equitable subordination and a court may treat one or more of
our loans as if it were unsecured or common equity in the portfolio company. In that case, if the portfolio company were to liquidate, we would be entitled to repayment of our loan on a pro-rata basis with other unsecured
debt or, if the effect of subordination was to place us at the level of common equity, then on an equal basis with other holders of the portfolio company’s common equity only after all of its obligations relating to its debt and
preferred securities had been satisfied.
An investment strategy focused primarily on privately held companies presents certain challenges, including the lack of available information about these companies, a dependence on the talents and efforts of only a
few key portfolio company personnel and a greater vulnerability to economic downturns.
We invest primarily in privately held companies. Generally, little public information exists about these companies, and we are required to rely on the ability of SLR Capital Partners’ investment professionals to
obtain adequate information to evaluate the potential returns from investing in these companies. If we are unable to uncover all material information about these companies, we may not make a fully informed investment
decision, and we may lose money on our investments. Also, smaller privately held companies frequently have less diverse product lines and smaller market presence than larger competitors. These factors could adversely
affect our investment returns as compared to companies investing primarily in the securities of public companies.
Our portfolio companies may incur debt that ranks equally with, or senior to, our investments in such companies.
We invest primarily in leveraged middle-market companies in the form of senior secured loans, financing leases and to a lesser extent, unsecured loans and equity securities. Our portfolio companies typically
have, or may be permitted to incur, other debt that ranks equally with, or senior to, the debt securities in which we invest. By their terms, such debt instruments may provide that the holders are entitled to receive payment of
interest or principal on or before the dates on which we are entitled to receive payments in respect of the debt securities in which we invest. Also, in the event of insolvency, liquidation, dissolution, reorganization or
bankruptcy of a portfolio company, holders of debt instruments ranking senior to our investment in that portfolio company would typically be entitled to receive payment in full before we receive any distribution in respect
of our investment. After repaying such senior creditors, such portfolio company may not have any remaining assets to use for repaying its obligation to us. In the case of debt ranking equally with debt securities in which we
invest, we would have to share on an equal basis any distributions with other creditors holding such debt in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio company.
Any such limitations on the ability of our portfolio companies to make principal or interest payments to us, if at all, may reduce our net asset value and have a negative material adverse impact to our business, financial
condition and results of operation.
35
Table of Contents
Our investments in foreign securities may involve significant risks in addition to the risks inherent in U.S. investments.
Our investment strategy contemplates potential investments in debt securities of foreign companies, including emerging market companies. Investing in foreign companies may expose us to additional risks not
typically associated with investing in U.S. companies. These risks include changes in exchange control regulations, political and social instability, expropriation, imposition of foreign taxes, less liquid markets and less
available information than is generally the case in the United States, higher transaction costs, less government supervision of exchanges, brokers and issuers, less developed bankruptcy laws, difficulty in enforcing
contractual obligations, lack of uniform accounting and auditing standards and greater price volatility. These risks may be more pronounced for portfolio companies located or operating primarily in emerging markets,
whose economies, markets and legal systems may be less developed.
Although most of our investments will be U.S. dollar-denominated, any investments denominated in a foreign currency will be subject to the risk that the value of a particular currency will change in relation to one
or more other currencies. Among the factors that may affect currency values are trade balances, the level of short-term interest rates, differences in relative values of similar assets in different currencies, long-term
opportunities for investment and capital appreciation, and political developments. We may employ hedging techniques to minimize these risks, but we can offer no assurance that we will, in fact, hedge currency risk, or that
if we do, such strategies will be effective.
We may expose ourselves to risks if we engage in hedging transactions.
If we engage in hedging transactions, we may expose ourselves to risks associated with such transactions. We may utilize instruments such as forward contracts, currency options and interest rate swaps, caps,
collars and floors to seek to hedge against fluctuations in the relative values of our portfolio positions from changes in currency exchange rates and market interest rates. Hedging against a decline in the values of our
portfolio positions does not eliminate the possibility of fluctuations in the values of such positions or prevent losses if the values of such positions decline. However, such hedging can establish other positions designed to
gain from those same developments, thereby offsetting the decline in the value of such portfolio positions. Such hedging transactions may also limit the opportunity for gain if the values of the underlying portfolio positions
should increase. It may not be possible to hedge against an exchange rate or interest rate fluctuation that is so generally anticipated that we are not able to enter into a hedging transaction at an acceptable price.
The success of our hedging transactions will depend on our ability to correctly predict movements in currencies and interest rates. Therefore, while we may enter into such transactions to seek to reduce currency
exchange rate and interest rate risks, unanticipated changes in currency exchange rates or interest rates may result in poorer overall investment performance than if we had not engaged in any such hedging transactions. In
addition, the degree of correlation between price movements of the instruments used in a hedging strategy and price movements in the portfolio positions being hedged may vary. Moreover, for a variety of reasons, we may
not seek to establish a perfect correlation between such hedging instruments and the portfolio holdings being hedged. Any such imperfect correlation may prevent us from achieving the intended hedge and expose us to risk
of loss. In addition, it may not be possible to hedge fully or perfectly against currency fluctuations affecting the value of securities denominated in non-U.S. currencies because the value of those securities is likely to
fluctuate as a result of factors not related to currency fluctuations. To the extent we engage in hedging transactions, we also face the risk that counterparties to the derivative instruments we hold may default, which may
expose us to unexpected losses from positions where we believed that our risk had been appropriately hedged.
Our Investment Adviser may not be able to achieve the same or similar returns as those achieved for other funds it currently manages or by our senior investment professionals while they were employed at prior
positions.
Our Investment Adviser manages other funds, including other BDCs, and may manage other entities in the future. The track record and achievements of these other entities are not necessarily indicative of future
results that will be achieved by our Investment Adviser because these other entities may have investment objectives and strategies that differ from ours. Additionally, although in the past our senior investment professionals
held senior positions at a number of investment firms, their track record and achievements are not necessarily indicative of future results that will be achieved by our Investment Adviser. In their roles at such other firms, our
senior investment professionals were part of investment teams, and they were not solely responsible for generating investment ideas. In addition, such investment teams arrived at investment decisions by consensus.
36
Table of Contents
We may be exposed to higher risks with respect to our investments that include original issue discount or PIK interest.
Zero-coupon bonds pay interest only at maturity rather than at intervals during the life of the security. Deferred interest rate bonds generally provide for a period of delay before the regular payment of interest
begins. PIK securities are debt obligations that pay “interest” in the form of other debt obligations, instead of in cash. Each of these instruments is normally issued and traded at a deep discount from face value. Zero-coupon
bonds, deferred interest rate bonds and PIKs allow an issuer to avoid or delay the need to generate cash to meet current interest payments and, as a result, may involve greater credit risk than bonds that pay interest currently
or in cash. In addition, such investments experience greater volatility in market value due to changes in interest rates than debt obligations that provide for regular payments of interest.
To the extent we invest in original issue discount instruments, including PIK, zero coupon bonds, and debt securities with attached warrants, investors will be exposed to the risks associated with the inclusion of
such non-cash income in taxable and accounting income prior to receipt of cash, including the following:
•The interest payments deferred on a PIK loan are subject to the risk that the borrower may default when the deferred payments are due in cash at the maturity of the loan;
•The interest rates on PIK loans are higher to reflect the time-value of money on deferred interest payments and the higher credit risk of borrowers who may need to defer interest payments;
•PIK instruments may have unreliable valuations because the accruals require judgments about ultimate collectability of the deferred payments and the value of the associated collateral;
•An election to defer PIK income payments by adding them to principal increases our gross assets and, thus, increases future base fees to the Investment Adviser and, because income payments will then be payable
on a larger principal amount, the PIK election also increases the Investment Adviser’s future income incentive fees at a compounding rate;
•Market prices of original issue discount instruments are more volatile because they are affected to a greater extent by interest rate changes than instruments that pay interest periodically in cash;
•The deferral of interest on a PIK loan increases its loan-to-value ratio, which is a measure of the riskiness of a loan; and
•Original issue discount creates the risk of non-refundable cash payments to the Investment Adviser based on non-cash accruals that may never be realized.
Risks Relating to an Investment in Our Securities
Our shares may trade at a substantial discount from net asset value and may continue to do so over the long term.
Shares of BDCs may trade at a market price that is less than the net asset value that is attributable to those shares. The possibility that our shares of common stock will trade at a substantial discount from net asset
value over the long term is separate and distinct from the risk that our net asset value will decrease. We cannot predict whether shares of our common stock will trade above, at or below our net asset value in the future. If
our common stock trades below its net asset value, we will generally not be able to issue additional shares or sell our common stock at its market price without first obtaining the approval for such issuance from our
stockholders and our independent directors. If additional funds are not available to us, we could be forced to curtail or cease our new lending and investment activities, and our net asset value could decrease and our level of
distributions could be impacted.
Our common stock price may be volatile and may decrease substantially.
The trading price of our common stock may fluctuate substantially. The price of our common stock that will prevail in the market may be higher or lower than the price you pay, depending on many factors, some
of which are beyond our control and may not be directly related to our operating performance. These factors include, but are not limited to, the following:
•price and volume fluctuations in the overall stock market from time to time;
•investor demand for our shares;
•significant volatility in the market price and trading volume of securities of BDCs or other companies in our sector, which are not necessarily related to the operating performance of these companies;
•exclusion of our common stock from certain market indices, such as the Russell 2000 Financial Services Index, which could reduce the ability of certain investment funds to own our common stock and put short-
term selling pressure on our common stock;
•changes in regulatory policies or tax guidelines with respect to RICs or BDCs;
37
Table of Contents
•failure to qualify as a RIC, or the loss of RIC tax treatment;
•any shortfall in revenue or net income or any increase in losses from levels expected by investors or securities analysts;
•changes, or perceived changes, in the value of our portfolio investments;
•departures of SLR Capital Partners’ key personnel;
•operating performance of companies comparable to us;
•changes in the prevailing interest rates;
•loss of a major funding source; or
•general economic conditions and trends and other external factors.
Our businesses may be adversely affected by litigation and regulatory proceedings.
From time to time, we may be subject to legal actions as well as various regulatory, governmental and law enforcement inquiries, investigations and subpoenas. In any such claims or actions, demands for
substantial monetary damages may be asserted against us and may result in financial liability or an adverse effect on our reputation among investors. In addition, the new presidential administration will lead to leadership
changes at a number of U.S. federal regulatory agencies with oversight over our industry. Any changes or reforms may impose additional costs or result in other limitations on us.
In connection with acquisitions of, and investments in, businesses complementary to our business, we have been and may be in the future subject to securities litigation or stockholder activism in connection with
such acquisitions or investments. Securities litigation and stockholder activism, including potential proxy contests, could result in substantial costs and divert management’s and our board of directors’ attention and
resources from our business. We may be unable to accurately estimate our exposure to litigation risk when we record balance sheet reserves for probable loss contingencies. As a result, any reserves we establish to cover any
settlements or judgments may not be sufficient to cover our actual financial exposure, which may have a material impact on our results of operations or financial condition. In regulatory enforcement matters, claims for
disgorgement, the imposition of penalties and the imposition of other remedial sanctions are possible.
There is a risk that investors in our equity securities may not receive distributions consistent with historical levels or at all or that our distributions may not grow over time and a portion of our distributions may be a
return of capital.
We intend to make distributions on a quarterly basis to our stockholders out of assets legally available for distribution. We cannot assure you that we will achieve investment results that will allow us to make a
specified level of cash distributions. Our ability to pay distributions might be adversely affected by the impact of one or more of the risk factors described in this annual report on Form 10-K. If we violate certain covenants
under our existing or future credit facilities or other leverage, we may be limited in our ability to make distributions. If we declare a distribution and if more stockholders opt to receive cash distributions rather than
participate in our dividend reinvestment plan, we may be forced to sell some of our investments in order to make cash distribution payments. To the extent we make distributions to stockholders that include a return of
capital, such portion of the distribution essentially constitutes a return of the stockholder’s investment. Although such return of capital may not be taxable, such distributions would generally decrease a stockholder’s basis in
our common stock and may therefore increase such stockholder’s tax liability for capital gains upon the future sale of such stock. A return of capital distribution may cause a stockholder to recognize a capital gain from the
sale of our common stock even if the stockholder sells its shares for less than the original purchase price.
As a RIC, if we do not distribute a certain percentage of our income annually, we may suffer adverse tax consequences, including possibly losing the U.S. federal income tax benefits allowable to RICs. We cannot
assure you that you will receive distributions at a particular level or at all.
In certain cases, we may recognize income before or without receiving the accompanying cash. Depending on the amount of noncash income, this could result in difficulty satisfying the annual distribution
requirement applicable to RICs. Accordingly, we may have to sell some portfolio investments at times it would not consider advantageous, raise additional debt or equity capital or reduce new investments to meet these
distribution requirements.
38
Table of Contents
We may reduce or defer our dividends and choose to incur U.S. federal excise tax in order to preserve cash and maintain flexibility.
In order to maintain our tax treatment as a RIC, we must distribute to stockholders for each taxable year at least 90% of our investment company taxable income (i.e., net ordinary income plus realized net short-
term capital gains in excess of realized net long-term capital losses). If we qualify for taxation as a RIC, we generally will not be subject to corporate-level US federal income tax on our investment company taxable income
and net capital gains (i.e., realized net long-term capital gains in excess of realized net short-term capital losses) that we timely distribute to stockholders. We will be subject to a 4% U.S. federal excise tax on undistributed
earnings of a RIC unless we distribute each calendar year at least the sum of (i) 98.0% of our ordinary income for the calendar year, (ii) 98.2% of our capital gains in excess of capital losses for the one-year period ending on
October 31 of the calendar year, and (iii) any ordinary income and net capital gains that were recognized for preceding years, but were not distributed during such years and on which we paid no U.S. federal income tax. Any
net operating losses that we incur in periods during which we qualify as a RIC will not offset net capital gains (i.e., net realized long-term capital gains in excess of net realized short-term capital losses) that we are otherwise
required to distribute, and we cannot pass such net operating losses through to our stockholders. In addition, net operating losses that we carry over to a taxable year in which we qualify as a RIC normally cannot offset
ordinary income or capital gains.
Under the Code, we may satisfy certain of our RIC distributions with dividends paid after the end of the current year. In particular, if we pay a distribution in January of the following year that was declared in
October, November, or December of the current year and is payable to stockholders of record in the current year, the dividend will be treated for all US federal income tax purposes as if it were paid on December 31 of the
current year. In addition, under the Code, we may pay dividends, referred to as “spillover dividends,” that are paid during the following taxable year that will allow us to maintain our qualification for taxation as a RIC and
eliminate our liability for corporate-level U.S. federal income tax. Under these spillover dividend procedures, we may defer distribution of income earned during the current year until December of the following year. For
example, we may defer distributions of income earned during 2025 until as late as December 31, 2026. If we choose to pay a spillover dividend, we will incur the 4% U.S. federal excise tax on some or all of the distribution.
We may take certain actions with respect to the timing and amounts of our distributions in order to preserve cash and maintain flexibility in response to changes in economic conditions. For example, we may
reduce our dividends and/or defer dividends to the following taxable year. If we defer our dividends, we may choose to utilize the spillover dividend rules discussed above and incur the 4% U.S. federal excise tax on such
amounts. To further preserve cash, we may combine these reductions or deferrals of dividends with one or more distributions that are payable partially in our stock as discussed below under “We may choose to pay
distributions in our own stock, in which case our stockholders may be required to pay U.S. federal income taxes in excess of the cash distributions they receive.”
We may choose to pay distributions in our own common stock, in which case our stockholders may be required to pay U.S. federal income taxes in excess of the cash distributions they receive.
We may distribute taxable distributions that are payable in part in shares of our common stock. Under certain applicable provisions of the Code and published guidance, distributions of a publicly offered RIC that
are in cash or in shares of stock at the election of stockholders may be treated as taxable distributions. The Internal Revenue Service has issued a revenue procedure indicating that this rule will apply if the total amount of
cash to be distributed is not less than 20% of the total distribution. Under this revenue procedure, if too many stockholders elect to receive their distributions in cash, the cash available for distribution must be allocated
among the stockholders electing to receive cash (with the balance of distributions paid in stock). In no event will any stockholder electing to receive cash, receive less than the lesser of (a) the portion of the distribution such
stockholder has elected to receive in cash or (b) an amount equal to his or her entire distribution times the percentage limitation on cash available for distribution. If we decide to make any distributions consistent with this
revenue procedure that are payable in part in our stock, taxable stockholders receiving such distributions will be required to include the full amount of the distribution (whether received in cash, our stock, or a combination
thereof) as ordinary income (or as long-term capital gain to the extent such distribution is properly reported as a capital gain distribution) to the extent of our current and accumulated earnings and profits for U.S. federal
income tax purposes. As a result, a U.S. stockholder may be required to pay tax with respect to such distributions in excess of any cash received. If a U.S. stockholder sells the stock it receives as a distribution in order to pay
this tax, the sales proceeds may be less than the amount included in income with respect to the distribution, depending on the market price of our stock at the time of the sale. Furthermore, with respect to non-U.S.
stockholders, we may be required to withhold U.S. tax with respect to such distributions, including in respect of all or a portion of such distribution that is payable in stock. If a significant number of our stockholders
determine to sell shares of our stock in order to pay taxes owed on distributions, it may put downward pressure on the trading price of our stock.
39
Table of Contents
Sales of substantial amounts of our common stock in the public market may have an adverse effect on the market price of our common stock.
As of February 21, 2025, Messrs. Gross and Spohler beneficially owned, either directly or indirectly, approximately 8.3% of our outstanding common stock. Such shares are generally available for resale without
restriction, subject to the provisions of Rule 144 promulgated under the Securities Act of 1933, as amended (the “Securities Act”). Sales of substantial amounts of our common stock, or the availability of such common stock
for sale, could adversely affect the prevailing market prices for our common stock. If this occurs and continues, it could impair our ability to raise additional capital through the sale of securities should we desire to do so.
We may be unable to invest the net proceeds raised from any offerings on acceptable terms or allocate net proceeds from any offering of our securities in ways with which you may not agree.
We cannot assure you that we will be able to find enough appropriate investments that meet our investment criteria or that any investment we complete using the proceeds from any securities offering will produce
a sufficient return. Until we identify new investment opportunities, we intend to either invest the net proceeds of future offerings in cash equivalents, U.S. government securities and other high-quality debt investments that
mature in one year or less or use the net proceeds from such offerings to reduce then-outstanding obligations.
We have significant flexibility in investing the net proceeds of any offering of our securities and may use the net proceeds from an offering in ways with which you may not agree or for purposes other than those
contemplated at the time of the offering.
The net asset value per share of our common stock may be diluted if we issue or sell shares of our common stock at prices below the then current net asset value per share of our common stock or securities to
subscribe for or that are convertible into shares of our common stock.
We will generally not be able to issue additional shares or sell our common stock at its market price without first obtaining the approval for such issuance from our stockholders and our independent directors. Any
offering of our common stock that requires stockholder approval must occur, if at all, within one year after receiving such stockholder approval. At our 2011 Annual Stockholders Meeting, our stockholders authorized us to
sell or otherwise issue warrants or securities to subscribe for or convertible into shares of our common stock subject to certain limitations (including, without limitation, that the number of shares issuable does not exceed
25% of our then outstanding common stock and that the exercise or conversion price thereof is not, at the date of issuance, less than the market value per share of our common stock). Such authorization has no expiration.
We may also use newly issued shares to implement our dividend reinvestment plan, whether our shares are trading at a premium or at a discount to our then current net asset value per share. Any decision to issue
or sell shares of our common stock below our then current net asset value per share or securities to subscribe for or convertible into shares of our common stock would be subject to the determination by our board of
directors that such issuance or sale is in our and our stockholders’ best interests.
If we were to issue or sell shares of our common stock below our then current net asset value per share, such issuances or sales would result in an immediate dilution to the net asset value per share of our common
stock.
This dilution would occur as a result of the issuance or sale of shares at a price below the then current net asset value per share of our common stock and a proportionately greater decrease in the stockholders’
interest in our earnings and assets and their voting interest in us than the increase in our assets resulting from such issuance or sale. Because the number of shares of common stock that could be so issued and the timing of
any issuance is not currently known, the actual dilutive effect cannot be predicted.
In addition, if we issue warrants or securities to subscribe for or convertible into shares of our common stock, subject to certain limitations, the exercise or conversion price per share could be less than net asset
value per share at the time of exercise or conversion (including through the operation of anti-dilution protections).
Because we would incur expenses in connection with any issuance of such securities, such issuance could result in a dilution of the net asset value per share at the time of exercise or conversion. This dilution
would include reduction in net asset value per share as a result of the proportionately greater decrease in the stockholders’ interest in our earnings and assets and their voting interest than the increase in our assets resulting
from such issuance.
Further, if our current stockholders do not purchase any shares to maintain their percentage interest, regardless of whether such offering is above or below the then current net asset value per share, their voting
power will be diluted. For example, if we sell an additional 10% of our common stock at a 5% discount from net asset value, a stockholder who does not participate in that offering for its proportionate interest will suffer net
asset value dilution of up to 0.5% or $5 per $1,000 of net asset value.
40
Table of Contents
Similarly, all distributions declared in cash payable to stockholders that are participants in our dividend reinvestment plan are automatically reinvested in shares of our common stock. As a result, stockholders that
opt out of the dividend reinvestment plan may experience dilution over time. Stockholders who do not elect to receive distributions in shares of common stock may experience accretion to the net asset value of their shares
if our shares are trading at a premium and dilution if our shares are trading at a discount. The level of accretion or discount would depend on various factors, including the proportion of our stockholders who participate in
the plan, the level of premium or discount at which our shares are trading and the amount of the distribution payable to a stockholder.
If we issue preferred stock, the net asset value and market value of our common stock may become more volatile.
We cannot assure you that the issuance of preferred stock would result in a higher yield or return to the holders of the common stock. The issuance of preferred stock would likely cause the net asset value and
market value of the common stock to become more volatile. If the distribution rate on the preferred stock were to approach the net rate of return on our investment portfolio, the benefit of leverage to the holders of the
common stock would be reduced. If the distribution rate on the preferred stock were to exceed the net rate of return on our portfolio, the leverage would result in a lower rate of return to the holders of common stock than if
we had not issued preferred stock. Any decline in the net asset value of our investments would be borne entirely by the holders of common stock. Therefore, if the market value of our portfolio were to decline, the leverage
would result in a greater decrease in net asset value to the holders of common stock than if we were not leveraged through the issuance of preferred stock. This greater net asset value decrease would also tend to cause a
greater decline in the market price for the common stock. We might be in danger of failing to maintain the required asset coverage of the preferred stock or of losing our ratings on the preferred stock or, in an extreme case,
our current investment income might not be sufficient to meet the distribution requirements on the preferred stock. In order to counteract such an event, we might need to liquidate investments in order to fund a redemption
of some or all of the preferred stock. In addition, we would pay (and the holders of common stock would bear) all costs and expenses relating to the issuance and ongoing maintenance of the preferred stock, including higher
advisory fees if our total return exceeds the distribution rate on the preferred stock. Holders of preferred stock may have different interests than holders of common stock and may at times have disproportionate influence
over our affairs.
Our board of directors is authorized to reclassify any unissued shares of common stock into one or more classes of preferred stock, which could convey special rights and privileges to its owners.
Under Maryland General Corporation Law and our charter, our board of directors is authorized to classify and reclassify any authorized but unissued shares of stock into one or more classes of stock, including
preferred stock. Prior to issuance of shares of each class or series, the board of directors is required by Maryland law and our charter to set the preferences, conversion or other rights, voting powers, restrictions, limitations as
to other distributions, qualifications and terms or conditions of redemption for each class or series. Thus, the board of directors could authorize the issuance of shares of preferred stock with terms and conditions which could
have the effect of delaying, deferring or preventing a transaction or a change in control that might involve a premium price for holders of our common stock or otherwise be in their best interest. The cost of any such
reclassification would be borne by our existing common stockholders. The issuance of shares of preferred stock convertible into shares of common stock might also reduce the net income and net asset value per share of our
common stock upon conversion, provided that we will only be permitted to issue such convertible preferred stock to the extent we comply with the requirements of Section 61 of the 1940 Act, including obtaining common
stockholder approval. These effects, among others, could have an adverse effect on your investment in our common stock.
Certain matters under the 1940 Act require the separate vote of the holders of any issued and outstanding preferred stock. For example, holders of preferred stock would vote separately from the holders of
common stock on a proposal to cease operations as a BDC. In addition, the 1940 Act provides that holders of preferred stock are entitled to vote separately from holders of common stock to elect two preferred stock
directors. In the event distributions become two full years in arrears, holders of any preferred stock would have the right to elect a majority of the directors until such arrearage is completely eliminated. Preferred
stockholders also have class voting rights on certain matters, including changes in fundamental investment restrictions and conversion to open-end status, and accordingly can veto any such changes. Restrictions imposed on
the declarations and payment of distributions to the holders of our common stock and preferred stock, both by the 1940 Act and by requirements imposed by rating agencies or the terms of our credit facilities, might impair
our ability to maintain our qualification for tax treatment as a RIC for U.S. federal income tax purposes. While we would intend to redeem our preferred stock to the extent necessary to enable us to distribute our income as
required to maintain our qualification as a RIC, there can be no assurance that such actions could be effected in time to meet the tax requirements.
To the extent we use debt or preferred stock to finance our investments, changes in interest rates will affect our cost of capital and net investment income.
To the extent we borrow money, or issue preferred stock, to make investments, our net investment income will depend, in part, upon the difference between the rate at which we borrow funds or pay distributions
on preferred stock and the rate at which we invest those funds. In addition, many of our debt investments and borrowings have floating interest rates that reset on a periodic basis, and
41
Table of Contents
many of our investments are subject to interest rate floors. As a result, we can offer no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income in the
event we use debt to finance our investments. In periods of rising interest rates, our cost of funds have increased, and could continue to increase, because the interest rates on the amounts borrowed under our credit facilities
or certain other financing arrangements are typically floating, except to the extent we issue fixed rate debt or preferred stock, which could reduce our net investment income, and the interest rate on investments with an
interest rate floor (such as a SOFR floor) above current levels will not increase until interest rates exceed the applicable floor. We expect that our long-term fixed-rate investments will generally be financed with equity and
long-term debt. In periods of declining interest rates, we may earn less interest income from investments and our cost of funds will also decrease, to a lesser extent, given certain of our currently outstanding indebtedness
bears interest at fixed rates, resulting in lower net investment income.
We may use interest rate risk management techniques in an effort to limit our exposure to interest rate fluctuations. Such techniques may include various interest rate hedging activities to the extent permitted by
the 1940 Act. These activities could limit our ability to participate in the benefits of lower interest rates with respect to the hedged borrowings. Adverse developments resulting from changes in interest rates or hedging
transactions could have a material adverse effect on our business, financial condition and results of operations.
You should also be aware that the rise in the general level of interest rates can be expected to lead to higher interest rates applicable to our debt investments. Accordingly, such increase in interest rates makes it
easier for us to meet or exceed the incentive fee hurdle rate and may result in a substantial increase of the amount of incentive fees payable to our Investment Adviser with respect to our pre-incentive fee net investment
income. Also, an increase in interest rates available to investors could make an investment in our common stock less attractive if we are not able to increase our distribution rate, which could reduce the value of our common
stock.
We may in the future determine to fund a portion of our investments with preferred stock, which would magnify the potential for loss and the risks of investing in us in a similar way as our borrowings.
Preferred stock, which is another form of leverage, has the same risks to our common stockholders as borrowings because the distributions on any preferred stock we issue must be cumulative. Payment of such
distributions and repayment of the liquidation preference of such preferred stock must take preference over any distributions or other payments to our common stockholders, and preferred stockholders are not subject to any
of our expenses or losses and are not entitled to participate in any income or appreciation in excess of their stated preference.
Our stock repurchase program could affect the price of our common stock and increase volatility and may be suspended or terminated at any time, which may result in a decrease in the trading price of our common
stock.
On May 7, 2024, our board of directors most recently extended our share repurchase program (the “Program”), under which we can repurchase up to $50 million shares of our outstanding common stock. Under
the Program, purchases can be made at management’s discretion from time to time in open-market transactions, in accordance with all applicable securities laws and regulations, and at prices below the Company’s NAV as
reported in its most recently published consolidated financial statements. We have in the past, and could in the future, enter into a plan to repurchase shares of our common stock pursuant to the Program in a manner
intended to comply with the requirements of Rule 10b5-1 under the 1934 Act. Unless further amended or extended by our board of directors, we expect the Program to be in place until the earlier of May 7, 2025 or until $50
million of our outstanding shares of common stock have been repurchased.
The Program is discretionary and whether purchases will be made under the Program and how much will be purchased at any time is uncertain and dependent on prevailing market prices and trading volumes, all of
which we cannot predict. These activities could have the effect of maintaining the market price of our common stock or retarding a decline in the market price of the common stock, and, as a result, the price of our common
stock could be higher than the price that otherwise might exist in the open market. Repurchases pursuant to the Program could affect the price of our common stock and increase its volatility. The existence of the Program
could also cause the price of our common stock to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for our common stock. There can be no assurance that any
stock repurchases will enhance stockholder value because the market price of our common stock could decline below the levels at which we repurchased such shares. Any failure to repurchase shares after we have
announced our intention to do so could negatively impact our reputation and investor confidence in us and could negatively impact our stock price. Although the Program is intended to enhance long-term stockholder value,
short-term stock price fluctuations could reduce the Program’s effectiveness.
42
Table of Contents
Risks Relating to Our Business and Structure
We are dependent upon SLR Capital Partners’ key personnel for our future success.
We depend on the diligence, skill and network of business contacts of Messrs. Gross and Spohler, who serve as the managing partners of SLR Capital Partners and who lead SLR Capital Partners’ investment
team. Messrs. Gross and Spohler, together with the other dedicated investment professionals available to SLR Capital Partners, evaluate, negotiate, structure, close and monitor our investments. Our future success will
depend on the diligence, skill, network of business contacts and continued service of Messrs. Gross and Spohler and the other investment professionals available to SLR Capital Partners. We cannot assure you that
unforeseen business, medical, personal or other circumstances would not lead any such individual to terminate his relationship with us. The loss of Messrs. Gross or Spohler, or any of the other senior investment
professionals who serve on SLR Capital Partners’ investment team, could have a material adverse effect on our ability to achieve our investment objective as well as on our financial condition and results of operations. In
addition, we can offer no assurance that SLR Capital Partners will remain our Investment Adviser.
The senior investment professionals of SLR Capital Partners are and may in the future become affiliated with entities engaged in business activities similar to those intended to be conducted by us, and may have
conflicts of interest in allocating their time. We expect that Messrs. Gross and Spohler will dedicate a significant portion of their time to the activities of SLR Investment Corp.; however, they may be engaged in other
business activities which could divert their time and attention in the future. Specifically, Mr. Gross serves as Co-Chief Executive Officer and President of SCP Private Credit Income BDC LLC, SLR HC BDC LLC, and
SLR Private Credit BDC II LLC. In addition, Mr. Spohler serves as Co-Chief Executive Officer and Chief Operating Officer of SCP Private Credit Income BDC LLC, SLR HC BDC LLC, and SLR Private Credit BDC II
LLC.
Our business model depends to a significant extent upon strong referral relationships with financial sponsors, and the inability of the senior investment professionals of our Investment Adviser to maintain or develop
these relationships, or the failure of these relationships to generate investment opportunities, could adversely affect our business.
We expect that the principals of our Investment Adviser will maintain and develop their relationships with financial sponsors, and we will rely to a significant extent upon these relationships to provide us with
potential investment opportunities. If the senior investment professionals of our Investment Adviser fail to maintain their existing relationships or develop new relationships with other sponsors or sources of investment
opportunities, we will not be able to grow our investment portfolio. In addition, individuals with whom the senior investment professionals of our Investment Adviser have relationships are not obligated to provide us with
investment opportunities, and, therefore, there is no assurance that such relationships will generate investment opportunities for us. If our Investment Adviser is unable to source investment opportunities, we may hold a
greater percentage of our assets in cash and cash equivalents than anticipated, which could impact potential returns on our portfolio.
A disruption in the capital markets and the credit markets could negatively affect our business.
As a BDC, we must maintain our ability to raise additional capital for investment purposes. Without sufficient access to the capital markets or credit markets, we may be forced to curtail our business operations or
we may not be able to pursue new business opportunities. Disruptive conditions in the financial industry and the impact of new legislation in response to those conditions could restrict our business operations and could
adversely impact our results of operations and financial condition.
If the fair value of our assets declines substantially, we may fail to maintain the asset coverage ratios imposed upon us by the 1940 Act and our existing credit facilities. Any such failure could result in an event of
default and all of our debt being declared immediately due and payable and would affect our ability to issue senior securities, including borrowings, and pay distributions, which could materially impair our business
operations. Our liquidity could be impaired further by an inability to access the capital markets or to draw on our credit facilities. For example, we cannot be certain that we will be able to renew our existing credit facilities
as they mature or to consummate new borrowing facilities to provide capital for normal operations, including new originations. Reflecting concern about the stability of the financial markets, many lenders and institutional
investors have reduced or ceased providing funding to borrowers. This market turmoil and tightening of credit have led to increased market volatility and widespread reduction of business activity generally.
If we are unable to renew or replace our existing credit facilities and consummate new facilities on commercially reasonable terms, our liquidity will be reduced significantly. If we consummate new facilities but
are then unable to repay amounts outstanding under such facilities and are declared in default or are unable to renew or refinance these facilities, we would not be able to initiate significant originations or to operate our
business in the normal course. These situations may arise due to circumstances that we may be unable to control, such as inaccessibility to the credit markets, a severe decline in the value of the U.S. dollar, an economic
downturn or an operational problem that affects third parties or us, and could materially damage our business. Moreover, we are unable to predict when economic and market conditions may become more favorable. Even if
such conditions improve broadly and significantly over the long term, adverse conditions in particular sectors of the financial markets could adversely impact our business.
43
Table of Contents
Our financial condition and results of operations will depend on SLR Capital Partners’ ability to manage our future growth effectively by identifying, investing in and monitoring companies that meet our investment
criteria.
Our ability to achieve our investment objective and to grow depends on SLR Capital Partners’ ability to identify, invest in and monitor companies that meet our investment criteria. Accomplishing this result on a
cost-effective basis is largely a function of SLR Capital Partners’ structuring of the investment process, its ability to provide competent, attentive and efficient services to us and its ability to access financing for us on
acceptable terms. The investment team of SLR Capital Partners has substantial responsibilities under the Advisory Agreement, and they may also be called upon to provide managerial assistance to our portfolio companies
as the principals of our administrator. In addition, the members of SLR Capital Partners’ investment team have similar responsibilities with respect to the management of other investment portfolios, including the investment
portfolios of SCP Private Credit Income BDC LLC, SLR HC BDC LLC, and SLR Private Credit BDC II LLC. Such demands on their time may distract them or slow our rate of investment. In order to grow, we and SLR
Capital Partners will need to retain, train, supervise and manage new investment professionals. However, we can offer no assurance that any such investment professionals will contribute effectively to the work of the
Investment Adviser. Any failure to manage our future growth effectively could have a material adverse effect on our business, financial condition and results of operations.
We may need to raise additional capital to grow because we must distribute most of our income.
We may need additional capital to fund growth in our investments. We expect to issue equity securities and expect to borrow from financial institutions in the future. A reduction in the availability of new capital
could limit our ability to grow. We must distribute at least 90% of our investment company taxable income to our stockholders to maintain our tax treatment as a RIC. As a result, any such cash earnings may not be
available to fund investment originations. We expect to borrow from financial institutions and issue additional debt and equity securities. If we fail to obtain funds from such sources or from other sources to fund our
investments, it could limit our ability to grow, which may have an adverse effect on the value of our securities. In addition, as a BDC, our ability to borrow or issue additional preferred stock may be restricted if our total
assets are less than 150% of our total borrowings and preferred stock.
Any failure on our part to maintain our status as a BDC would reduce our operating flexibility and we may be limited in our investment choices as a BDC.
The 1940 Act imposes numerous constraints on the operations of BDCs. For example, BDCs are required to invest at least 70% of their total assets in specified types of securities, primarily in private companies or
thinly-traded U.S. public companies, cash, cash equivalents, U.S. government securities and other high quality debt investments that mature in one year or less. Furthermore, any failure to comply with the requirements
imposed on BDCs by the 1940 Act could cause the SEC to bring an enforcement action against us and/or expose us to claims of private litigants. In addition, upon approval of a majority of our stockholders, we may elect to
withdraw our status as a BDC. If we decide to withdraw our election, or if we otherwise fail to qualify, or maintain our qualification, as a BDC, we may be subject to the substantially greater regulation under the 1940 Act as
a closed-end investment company. Compliance with such regulations would significantly decrease our operating flexibility, and could have a material adverse effect on our business, financial condition and results of
operations.
Regulations governing our operation as a BDC affect our ability to, and the way in which we will, raise additional capital. As a BDC, the necessity of raising additional capital may expose us to risks, including the
typical risks associated with leverage.
In order to satisfy the tax requirements applicable to a RIC, to avoid payment of excise taxes and to minimize or avoid payment of income taxes, we intend to distribute to our stockholders substantially all of our
ordinary income and realized net capital gains except for certain realized net long-term capital gains, which we may retain, pay applicable income taxes with respect thereto and elect to treat as deemed distributions to our
stockholders. We may issue debt securities or preferred stock and/or borrow money from banks or other financial institutions, which we refer to collectively as “senior securities,” up to the maximum amount permitted by
the 1940 Act. Under the provisions of the 1940 Act, we had been permitted, as a BDC, to issue senior securities in amounts such that our asset coverage ratio, as defined in the 1940 Act, equals at least 200% of gross assets
less all liabilities and indebtedness not represented by senior securities, after each issuance of senior securities. However, our stockholders have approved a resolution permitting us to be subject to a 150% asset coverage
ratio effective as of October 12, 2018. If the value of our assets declines, we may be unable to satisfy the asset coverage test. If that happens, we may be required to sell a portion of our investments and, depending on the
nature of our leverage, repay a portion of our indebtedness at a time when such sales may be disadvantageous. Also, any amounts that we use to service our indebtedness would not be available for distributions to our
common stockholders. Furthermore, as a result of issuing senior securities, we would also be exposed to typical risks associated with leverage, including an increased risk of loss. In addition, because our management fee is
calculated as a percentage of our gross assets, which includes any borrowings for investment purposes, the management fee expenses will increase if we incur additional indebtedness.
44
Table of Contents
As of December 31, 2024, we had $482.0 million outstanding under the Credit Facility, composed of $342.0 million of revolving credit and $140.0 million outstanding of term loans, and $165.1 million
outstanding under our SPV Credit Facility. We also had $49.0 million outstanding of 2027 Series G Unsecured Notes, $135.0 million outstanding of the 2027 Series F Unsecured Notes, $50.0 million outstanding of the
2027 Unsecured Notes, $75.0 million outstanding of the 2026 Unsecured Notes, and $85.0 million outstanding of the 2025 Unsecured Notes. If we issue preferred stock, the preferred stock would rank “senior” to common
stock in our capital structure, preferred stockholders would generally vote together with common stockholders but would have separate voting rights on certain matters and might have other rights, preferences, or privileges
more favorable than those of our common stockholders, and the issuance of preferred stock could have the effect of delaying, deferring or preventing a transaction or a change of control that might involve a premium price
for holders of our common stock or otherwise be in your best interest.
We are not generally able to issue and sell our common stock at a price below net asset value per share. We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a
price below the then-current net asset value per share of our common stock if our board of directors determines that such sale is in the best interests of SLR Investment Corp. and its stockholders, and our stockholders
approve such sale. In any such case, the price at which our securities are to be issued and sold may not be less than a price that, in the determination of our board of directors, closely approximates the market value of such
securities (less any distributing commission or discount). If we raise additional funds by issuing more common stock or senior securities convertible into, or exchangeable for, our common stock, then the percentage
ownership of our stockholders at that time will decrease, and you might experience dilution. This dilution would occur as a result of a proportionately greater decrease in a stockholder’s interest in our earnings and assets and
voting interest in us than the increase in our assets resulting from such issuance. Because the number of future shares of common stock that may be issued below our net asset value per share and the price and timing of such
issuances are not currently known, we cannot predict the actual dilutive effect of any such issuance. We cannot determine the resulting reduction in our net asset value per share of any such issuance. We also cannot predict
whether shares of our common stock will trade above, at or below our net asset value.
Our credit ratings may not reflect all risks of an investment in our debt securities.
Our credit ratings are an assessment by third parties of our ability to pay our obligations. Consequently, real or anticipated changes in our credit ratings will generally affect the market value of our publicly issued
debt securities. Our credit ratings, however, may not reflect the potential impact of risks related to market conditions generally or other factors discussed above on the market value of, or trading market for, any publicly
issued debt securities.
Our stockholders may experience dilution in their ownership percentage if they opt out of our dividend reinvestment plan.
All distributions declared in cash payable to stockholders that are participants in our dividend reinvestment plan are automatically reinvested in shares of our common stock. In the event we issue new shares in
connection with our dividend reinvestment plan, our stockholders that do not elect to receive distributions in shares of common stock may experience dilution in their ownership percentage over time as a result of such
issuance.
We have and will continue to borrow money, which would magnify the potential for loss on amounts invested and may increase the risk of investing in us.
We borrow money as part of our business plan. Borrowings, also known as leverage, magnify the potential for loss on amounts invested and, therefore, increase the risks associated with investing in our securities.
As of December 31, 2024, we had $482.0 million outstanding under the Credit Facility, composed of $342.0 million of revolving credit and $140.0 million outstanding of term loans, and $165.1 million outstanding under
our SPV Credit Facility. We also had $49.0 million outstanding of 2027 Series G Unsecured Notes, $135.0 million outstanding of the 2027 Series F Unsecured Notes, $50.0 million outstanding of the 2027 Unsecured Notes,
$75.0 million outstanding of the 2026 Unsecured Notes, and $85.0 million outstanding of the 2025 Unsecured Notes. We may borrow from and issue senior debt securities to banks, insurance companies and other lenders in
the future. Lenders of these senior securities, including the Credit Facility, the SPV Credit Facility, the 2027 Series G Unsecured Notes, the 2027 Series F Unsecured Notes, the 2027 Unsecured Notes, the 2026 Unsecured
Notes, and the 2025 Unsecured Notes, will have fixed dollar claims on our assets that are superior to the claims of our common stockholders, and we would expect such lenders to seek recovery against our assets in the
event of a default. If the value of our assets increases, then leveraging would cause the net asset value attributable to our common stock to increase more sharply than it would have had we not leveraged. Conversely, if the
value of our assets decreases, leveraging would cause net asset value to decline more sharply than it otherwise would have had we not leveraged. Similarly, any decrease in our income would cause net income to decline
more sharply than it would have had we not borrowed. Also, any increase in our income in excess of interest payable on the borrowed funds would cause our net investment income to increase more than it would without
the leverage, while any decrease in our income would cause net investment income to decline more sharply than it would have had we not borrowed. Such a decline could also negatively affect our ability to make
distribution payments on our common stock, scheduled debt payments or other payments related to our securities. Leverage is generally considered a speculative investment technique. Our ability
45
Table of Contents
to service any debt that we incur will depend largely on our financial performance and will be subject to prevailing economic conditions and competitive pressures. Moreover, as the management fee payable to our
Investment Adviser, SLR Capital Partners, will be payable based on our gross assets, including those assets acquired through the use of leverage, SLR Capital Partners will have a financial incentive to incur leverage which
may not be consistent with our stockholders’ interests. In addition, our common stockholders will bear the burden of any increase in our expenses as a result of leverage, including any increase in the management fee
payable to SLR Capital Partners.
As a BDC, we had generally been required to meet a coverage ratio of total assets to total borrowings and other senior securities, which include all of our borrowings and any preferred stock that we may issue in
the future, of at least 200%. However, our stockholders have approved a resolution permitting us to be subject to a 150% asset coverage ratio effective as of October 12, 2018. Even though we are subject to a 150% asset
coverage ratio effective as of October 12, 2018, contractual leverage limitations under our existing credit facilities or future borrowings may limit our ability to incur additional indebtedness. On August 28, 2019, we entered
into the Credit Facility, which was amended on December 28, 2021, which permits 150% asset coverage. Some of our wholly and/or substantially owned portfolio companies, including Kingsbridge Holdings, LLC, SLR
Credit Solutions, SLR Equipment Finance, SLR Business Credit and SLR Healthcare ABL, may incur significantly more leverage than we can but we do not consolidate Kingsbridge Holdings, LLC, SLR Credit Solutions,
SLR Equipment Finance, SLR Business Credit and SLR Healthcare ABL and their leverage is non-recourse to us. Additionally, the Credit Facility and the SPV Credit Facility require us to comply with certain financial and
other restrictive covenants including maintaining an asset coverage ratio of not less than 150% at any time. Failure to maintain compliance with these covenants could result in an event of default and all of our debt being
declared immediately due and payable. If this ratio declines below 150%, we may not be able to incur additional debt and could be required by law to sell a portion of our investments to repay some debt when it is
disadvantageous to do so, which could have a material adverse effect on our operations, and we may not be able to make distributions. The amount of leverage that we employ will depend on our Investment Adviser’s and
our board of directors’ assessment of the market and other factors at the time of any proposed borrowing. We cannot assure you that we will be able to obtain credit at all or on terms acceptable to us.
In addition, our credit facilities impose, and any other debt facility into which we may enter would likely impose, financial and operating covenants that restrict our business activities, including limitations that
could hinder our ability to finance additional loans and investments or to make the distributions required to maintain RIC tax treatment under Subchapter M of the Code.
The debt securities that we may issue will be governed by an indenture or other instrument containing covenants restricting our operating flexibility. We, and indirectly our stockholders, bear the cost of issuing
and servicing such debt securities. Any convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more favorable than those of our common stock.
Illustration. The following table illustrates the effect of leverage on returns from an investment in our common stock assuming various annual returns on our portfolio, net of interest expense. The calculations in
the table below are hypothetical and actual returns may be higher or lower than those appearing in the table below.
Assumed total return
(net of interest expense)
(10)%
(5)%
0%
5%
10%
Corresponding return to stockholder(1)
(30.9 )%
(18.5 )%
(6.2)%
6.1%
18.5 %
(1)Assumes $2.4 billion in total assets (inclusive of temporary cash assets of $398 million) and $1.0 billion in total debt outstanding, which reflects our total assets and total debt outstanding as of December 31, 2024, and a
cost of funds of 5.91%. Excludes non-leverage related expenses.
In order for us to cover our annual interest payments on our outstanding indebtedness at December 31, 2024, we must achieve annual returns on our December 31, 2024 total assets of at least 2.5%.
It is likely that the terms of any current or future long-term or revolving credit or warehouse facility we may enter into in the future could constrain our ability to grow our business.
Our current lenders have, and any future lender or lenders may have, fixed dollar claims on our assets that are senior to the claims of our stockholders and, thus, will have a preference over our stockholders with
respect to our assets in the collateral pool. Our current credit facilities and borrowings also subject us to various financial and operating covenants, including, but not limited to, maintaining certain financial ratios and
minimum tangible net worth amounts. Future credit facilities and borrowings will likely subject us to similar or additional covenants. In addition, we may grant a security interest in our assets in connection with any such
credit facilities and borrowings.
46
Table of Contents
Our credit facilities generally contain customary default provisions such as a minimum net worth amount, a profitability test, and a restriction on changing our business and loan quality standards. In addition, our
credit facilities require or are expected to require the repayment of all outstanding debt on the maturity, which may disrupt our business and potentially the business of our portfolio companies that are financed through our
credit facilities. An event of default under our credit facilities would likely result, among other things, in termination of the availability of further funds under our credit facilities and accelerated maturity dates for all
amounts outstanding under our credit facilities, which would likely disrupt our business and, potentially, the business of the portfolio companies whose loans we finance through our credit facilities. This could reduce our
revenues and, by delaying any cash payment allowed to us under our credit facilities until the lender has been paid in full, reduce our liquidity and cash flow and impair our ability to grow our business and maintain RIC tax
treatment.
The terms of future available financing may place limits on our financial and operational flexibility. If we are unable to obtain sufficient capital in the future, we may be forced to reduce or discontinue our
operations, not be able to make new investments, or otherwise respond to changing business conditions or competitive pressures.
Our quarterly and annual operating results are subject to fluctuation as a result of the nature of our business, and if we fail to achieve our investment objective, the net asset value of our common stock may decline.
We could experience fluctuations in our quarterly and annual operating results due to a number of factors, some of which are beyond our control, including, but not limited to, the interest rate payable on the debt
securities that we acquire, the default rate on such securities, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, changes in our portfolio composition, the
degree to which we encounter competition in our markets, market volatility in our publicly traded securities and the securities of our portfolio companies, and general economic conditions. As a result of these factors, results
for any period should not be relied upon as being indicative of performance in future periods. In addition, any of these factors could negatively impact our ability to achieve our investment objectives, which may cause our
net asset value of our common stock to decline.
Our investments may be in portfolio companies that may have limited operating histories and financial resources.
We expect that our portfolio will continue to consist of investments that may have relatively limited operating histories. These companies may be particularly vulnerable to U.S. and foreign economic downturns,
may have more limited access to capital and higher funding costs, may have a weaker financial position and may need more capital to expand or compete. These businesses also may experience substantial variations in
operating results. They may face intense competition, including from companies with greater financial, technical and marketing resources. Furthermore, some of these companies do business in regulated industries and could
be affected by changes in government regulation. Accordingly, these factors could impair their cash flow or result in other events, such as bankruptcy, which could limit their ability to repay their obligations to us, and may
adversely affect the return on, or the recovery of, our investment in these companies.
We cannot assure you that any of our investments in our portfolio companies will be successful. Our portfolio companies compete with larger, more established companies with greater access to, and resources for,
further development in these new technologies. Therefore, we may lose our entire investment in any or all of our portfolio companies.
There will be uncertainty as to the value of our portfolio investments, which may impact our net asset value.
A large percentage of our portfolio investments are in the form of securities that are not publicly traded. The fair value of securities and other investments that are not publicly traded may not be readily
determinable. We value these securities on a quarterly basis in accordance with our valuation policy, which is at all times consistent with GAAP. Our board of directors will (1) periodically assess and manage valuation risks;
(2) establish and apply fair value methodologies; (3) test fair value methodologies; (4) oversee and evaluate third-party pricing services; (5) oversee the reporting required by Rule 2a-5 under the 1940 Act; and (6) maintain
recordkeeping requirements under Rule 2a-5. Our board of directors utilizes the services of third-party valuation firms to aid it in determining the fair value of material assets. The board of directors discusses valuations and
determines the fair value in good faith based on the input of our Investment Adviser and, when utilized, the respective third-party valuation firms. The factors that may be considered in fair value pricing our investments
include the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings, the markets in which the portfolio company does business, comparisons to publicly traded
companies, discounted cash flow and other relevant factors. Because such valuations, and particularly valuations of private securities and private companies, are inherently uncertain, may fluctuate over short periods of time
and may be based on estimates, our determinations of fair value may differ materially from the values that would have been used if a ready market for these securities existed. Our net asset value could be adversely affected
if our determinations regarding the fair value of our investments were materially higher than the values that we ultimately realize upon the disposal of such securities.
47
Table of Contents
Our equity ownership in a portfolio company may represent a control investment. Our ability to exit an investment in a timely manner because we are in a control position or have access to inside information in the
portfolio company could result in a realized loss on the investment.
If we obtain a control investment in a portfolio company our ability to divest ourselves from a debt or equity investment could be restricted due to illiquidity in a private stock, limited trading volume on a public
company’s stock, inside information on a company’s performance, insider blackout periods, or other factors that could prohibit us from disposing of the investment as we would if it were not a control investment.
Additionally, we may choose not to take certain actions to protect a debt investment in a control investment portfolio company. As a result, we could experience a decrease in the value of our portfolio company holdings and
potentially incur a realized loss on the investment.
There are significant potential conflicts of interest, including SLR Capital Partners’ management of other investment funds such as SCP Private Credit Income BDC LLC, SLR HC BDC LLC, and SLR Private Credit
BDC II LLC, which could impact our investment returns, and an investment in SLR Investment Corp. is not an investment in SCP Private Credit Income BDC LLC, SLR HC BDC LLC, or SLR Private Credit BDC II
LLC.
Our executive officers and directors, as well as the current and future partners of our Investment Adviser, SLR Capital Partners, may serve as officers, directors or principals of entities that operate in the same or a
related line of business as we do. For example, SLR Capital Partners presently serves as the Investment Adviser to (i) SCP Private Credit Income BDC LLC, an unlisted BDC that focuses on investing primarily in senior
secured loans, including non-traditional asset-based loans and first lien loans, (ii) SLR HC BDC LLC, an unlisted BDC whose principal focus is to invest directly and indirectly in senior secured loans and other debt
instruments typically to middle market companies within the healthcare industry, and (iii) SLR Private Credit BDC II LLC, an unlisted BDC whose principal focus is to invest in first lien senior secured floating rate loans
primarily to upper middle market leveraged companies with EBITDA between approximately $25 million and $250 million that have significant free cash flow and are in non-cyclical industries in which the Investment
Adviser has significant experience. In addition, Michael S. Gross, our Chairman, Co-Chief Executive Officer and President, Bruce Spohler, our Co-Chief Executive Officer and Chief Operating Officer and board member,
Shiraz Y. Kajee, our Chief Financial Officer and Treasurer, and Guy F. Talarico, our Chief Compliance Officer and Secretary, serve in similar capacities for SCP Private Credit Income BDC LLC, SLR HC BDC LLC, and
SLR Private Credit BDC II LLC. Accordingly, they may have obligations to investors in those entities, the fulfillment of which obligations might not be in the best interests of us or our stockholders. In addition, we note
that any affiliated investment vehicle formed in the future and managed by our Investment Adviser or its affiliates may, notwithstanding different stated investment objectives, have overlapping investment objectives with
our own and, accordingly, may invest in asset classes similar to those targeted by us. As a result, SLR Capital Partners may face conflicts in allocating investment opportunities between us and such other entities. Although
SLR Capital Partners will endeavor to allocate investment opportunities in a fair and equitable manner, it is possible that, in the future, we may not be given the opportunity to participate in investments made by investment
funds managed by our Investment Adviser or an investment manager affiliated with our Investment Adviser. In any such case, when SLR Capital Partners identifies an investment, it will be forced to choose which
investment fund should make the investment.
As a BDC, we were substantially limited in our ability to co-invest in privately negotiated transactions with affiliated funds until we obtained an exemptive order from the SEC. The most recent exemptive order,
received on June 13, 2017, permits us to participate in negotiated co-investment transactions with certain affiliates, each of whose investment adviser is an investment adviser that controls, is controlled by or is under
common control with SLR Capital Partners and is registered as an Investment Adviser under the Advisers Act, in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as
regulatory requirements and other pertinent factors, and pursuant to the conditions to the Exemptive Order. If we are unable to rely on the Exemptive Order for a particular opportunity, such opportunity will be allocated first
to the entity whose investment strategy is the most consistent with the opportunity being allocated, and second, if the terms of the opportunity are consistent with more than one entity’s investment strategy, on an alternating
basis. Although our investment professionals will endeavor to allocate investment opportunities in a fair and equitable manner, we and our common stockholders could be adversely affected to the extent investment
opportunities are allocated among us and other investment vehicles managed or sponsored by, or affiliated with, our executive officers, directors and members of our Investment Adviser.
48
Table of Contents
SLR Capital Partners and certain investment advisory affiliates may determine that an investment is appropriate for us and for one or more of those other funds. In such event, depending on the availability of such
investment and other appropriate factors, SLR Capital Partners or its affiliates may determine that we should invest side-by-side with one or more other funds. Any such investments will be made only to the extent permitted
by applicable law and interpretive positions of the SEC and its staff, and consistent with SLR Capital Partners’ allocation procedures. Related party transactions may occur among SLR Investment Corp., SLR Credit
Solutions, Equipment Operating Leases LLC, Loyer Capital LLC, SLR Equipment Finance, SLR Business Credit, SLR Healthcare ABL, SLR Senior Lending Program LLC and SLR Senior Lending Program SPV LLC.
These transactions may occur in the normal course of business. No administrative or other fees are paid to SLR Capital Partners by SLR Credit Solutions, Equipment Operating Leases LLC, Loyer Capital LLC, SLR
Equipment Finance, SLR Business Credit, SLR Healthcare ABL, SLR Senior Lending Program LLC and SLR Senior Lending Program SPV LLC.
In the ordinary course of our investing activities, we pay management and incentive fees to SLR Capital Partners and reimburse SLR Capital Partners for certain expenses it incurs. As a result, investors in our
common stock will invest on a “gross” basis and receive distributions on a “net” basis after expenses, resulting in a lower rate of return than an investor might achieve through direct investments. Accordingly, there may be
times when the management team of SLR Capital Partners has interests that differ from those of our stockholders, giving rise to a conflict.
We entered into an amended and restated royalty-free license agreement on February 25, 2021 with our Investment Adviser, pursuant to which our Investment Adviser has granted us a non-exclusive license to use
the marks “SOLAR” and “SLR.” Under the license agreement, we have the right to use the “SLR Investment” name for so long as SLR Capital Partners or one of its affiliates remains our Investment Adviser. In addition, we
pay SLR Capital Management, an affiliate of SLR Capital Partners, our allocable portion of overhead and other expenses incurred by SLR Capital Management in performing its obligations under the Administration
Agreement, including rent, the fees and expenses associated with performing compliance functions, and our allocable portion of the compensation of our chief compliance officer and our chief financial officer and their
respective staffs. These arrangements create conflicts of interest that our board of directors must monitor.
Our ability to enter into transactions involving derivatives and financial commitment transactions may be limited.
Through comprehensive global regulatory regimes impacting derivatives (e.g., the Dodd-Frank Act, European Market Infrastructure Regulation (“EMIR”), Markets in Financial Investments Regulation/Markets in
Financial Instruments Directive), certain over-the-counter derivatives transactions in which we may engage are subject to various requirements, such as mandatory central clearing of transactions which include additional
margin requirements and in certain cases trading on electronic platforms, pre-and post-trade transparency reporting requirements and mandatory bi-lateral exchange of initial margin for non-cleared swaps. The Dodd-Frank
Act also created new categories of regulated market participants, such as “swap dealers,” “security-based swap dealers,” “major swap participants,” and “major security-based swap participants” who are subject to
significant new capital, registration, recordkeeping, reporting, disclosure, business conduct and other regulatory requirements. Even if we are not located in a particular jurisdiction or directly subject to the jurisdiction’s
derivatives regulations, we may still be impacted to the extent we enter into a derivatives transaction with a regulated market participant or counterparty that is organized in that jurisdiction or otherwise subject to that
jurisdiction’s derivatives regulations.
The effect of such requirements will be likely to (directly or indirectly) increase our overall costs of entering into derivatives transactions. In particular, new margin requirements, position limits and significantly
higher capital charges resulting from new global capital regulations, even if not directly applicable to us, may cause an increase in the pricing of derivatives transactions entered into by market participants to whom such
requirements apply or affect our overall ability to enter into derivatives transactions with certain counterparties. Administrative costs related to such requirements such as registration, recordkeeping, reporting, and
compliance, even if not directly applicable to us, may also be reflected in our derivatives transactions. Requirements to trade certain derivatives transactions on electronic trading platforms and trade reporting requirements
may lead to (among other things) fragmentation of the markets, higher transaction costs or reduced availability of derivatives, and/or a reduced ability to hedge, all of which could adversely affect the performance of certain
of our trading strategies. In addition, changes to derivatives regulations may impact the tax and/or accounting treatment of certain derivatives, which could adversely impact us.
In November 2020, the SEC adopted new rules regarding the ability of a BDC (or a registered investment company) to use derivatives and other transactions that create future payment or delivery obligations.
BDCs that use derivatives would be subject to a value-at-risk leverage limit, certain other derivatives risk management program and testing requirements and requirements related to board reporting. These new requirements
would apply unless the BDC qualified as a “limited derivatives user,” as defined in the SEC’s adopted rules. A BDC that enters into reverse repurchase agreements or similar financing transactions would need to aggregate
the amount of indebtedness associated with the reverse repurchase agreements or similar financing transactions and could either (i) comply with the asset coverage requirements of the Section 18 of the 1940 Act when
engaging in reverse repurchase agreements or (ii) choose to treat such agreements as derivative transactions under the adopted rule. Under the adopted rule, a BDC may enter into an
49
Table of Contents
unfunded commitment agreement that is not a derivatives transaction, such as an agreement to provide financing to a portfolio company, if the BDC has a reasonable belief, at the time it enters into such an agreement, that it
will have sufficient cash and cash equivalents to meet its obligations with respect to all of its unfunded commitment agreements, in each case as it becomes due. If the BDC cannot meet this test, it is required to consider
unfunded commitments for purposes of computing the BDC’s asset coverage. Collectively, these requirements may limit our ability to use derivatives and/or enter into certain other financial contracts.
We may be obligated to pay our Investment Adviser incentive compensation even if we incur a loss.
Our Investment Adviser will be entitled to incentive compensation for each fiscal quarter in an amount equal to a percentage of the excess of our pre-incentive fee net investment income for that quarter (before
deducting incentive compensation) above a performance threshold for that quarter. Accordingly, since the performance threshold is based on a percentage of our net asset value, decreases in our net asset value make it easier
to achieve the performance threshold. Our pre-incentive fee net investment income for incentive compensation purposes excludes realized and unrealized capital losses or depreciation that we may incur in the fiscal quarter,
even if such capital losses or depreciation result in a net loss on our statement of operations for that quarter.
Thus, we may be required to pay SLR Capital Partners incentive compensation for a fiscal quarter even if there is a decline in the value of our portfolio or we incur a net loss for that quarter.
Our incentive fee may induce SLR Capital Partners to pursue speculative investments.
The incentive fee payable by us to SLR Capital Partners may create an incentive for SLR Capital Partners to pursue investments on our behalf that are riskier or more speculative than would be the case in the
absence of such compensation arrangement. The incentive fee payable to our Investment Adviser is calculated based on a percentage of our return on invested capital. This may encourage our Investment Adviser to use
leverage to increase the return on our investments. Under certain circumstances, the use of leverage may increase the likelihood of default, which would impair the value of our common stock. In addition, our Investment
Adviser receives the incentive fee based, in part, upon net capital gains realized on our investments. Unlike that portion of the incentive fee based on income, there is no hurdle rate applicable to the portion of the incentive
fee based on net capital gains. As a result, our Investment Adviser may have a tendency to invest more capital in investments that are likely to result in capital gains as compared to income producing securities. Such a
practice could result in our investing in more speculative securities than would otherwise be the case, which could result in higher investment losses, particularly during economic downturns.
The incentive fee payable by us to our Investment Adviser also may induce SLR Capital Partners to invest on our behalf in instruments that have a deferred interest feature, even if such deferred payments would
not provide the cash necessary to enable us to pay current distributions to our stockholders. Under these investments, we would accrue interest over the life of the investment but would not receive the cash income from the
investment until the end of the term. Our net investment income used to calculate the income portion of our investment fee, however, includes accrued interest. Thus, a portion of this incentive fee would be based on income
that we have not received in cash. In addition, the “catch-up” portion of the incentive fee may encourage SLR Capital Partners to accelerate or defer interest payable by portfolio companies from one calendar quarter to
another, potentially resulting in fluctuations in timing and distribution amounts.
We may invest, to the extent permitted by law, in the securities and instruments of other investment companies, including private funds, and, to the extent we so invest, will bear our ratable share of any such
investment company’s expenses, including management and performance fees. We will also remain obligated to pay management and incentive fees to SLR Capital Partners with respect to the assets invested in the securities
and instruments of other investment companies. With respect to each of these investments, each of our stockholders will bear his or her share of the management and incentive fee of SLR Capital Partners as well as
indirectly bearing the management and performance fees and other expenses of any investment companies in which we invest.
50
Table of Contents
We may become subject to corporate-level U.S. federal income tax if we are unable to qualify and maintain our qualification for tax treatment as a regulated investment company under Subchapter M of the Code.
Although we have elected to be treated as a RIC under Subchapter M of the Code, no assurance can be given that we will continue to be able to qualify for and maintain RIC tax treatment. To maintain RIC tax
treatment under the Code, we must meet the following annual distribution, income source and asset diversification requirements on an ongoing basis.
•The Annual Distribution Requirement for a RIC will be satisfied if we distribute to our stockholders on an annual basis at least 90% of our net ordinary income and realized net short-term capital gains in excess
of realized net long-term capital losses, if any. Because we may use debt financing, we are subject to certain asset coverage ratio requirements under the 1940 Act and financial covenants under loan and credit
agreements that could, under certain circumstances, restrict us from making distributions necessary to satisfy the Annual Distribution Requirement. If we are unable to obtain cash from other sources, we could fail
to qualify for RIC tax treatment and become subject to corporate-level U.S federal income tax.
•The income source requirement will be satisfied if we obtain at least 90% of our income for each year from certain passive investments, including interest, dividends, gains from the sale of stock or securities, or
similar sources.
•The asset diversification requirement will be satisfied if we meet certain asset diversification requirements at the end of each quarter of our taxable year. Failure to meet those requirements may result in our
having to dispose of certain investments quickly in order to prevent the loss of RIC tax treatment. Because most of our investments will be relatively illiquid, any such dispositions could be made at
disadvantageous prices and could result in substantial losses.
If we fail to qualify for RIC tax treatment for any reason and become subject to corporate income tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income available for
distribution and the amount of our distributions. Such a failure could have a material adverse effect on us, the net asset value of our common stock and the total return, if any, obtainable from your investment in our common
stock.
We may have difficulty satisfying the Annual Distribution Requirement in order to qualify and maintain RIC tax treatment if we recognize income before or without receiving cash representing such income.
In accordance with GAAP and tax requirements, we include in income certain amounts that we have not yet received in cash, such as contractual PIK interest, which represents contractual interest added to a loan
balance and due at the end of such loan’s term. In addition to the cash yields received on our loans, in some instances, certain loans may also include any of the following: end-of-term payments, exit fees, balloon payment
fees or prepayment fees. The increases in loan balances as a result of contractual PIK arrangements are included in income for the period in which such PIK interest was accrued, which is often in advance of receiving a cash
payment, and are separately identified on our statements of cash flows. We also may be required to include in income certain other amounts prior to receiving the related cash.
Any warrants that we receive in connection with our debt investments will generally be valued as part of the negotiation process with the particular portfolio company. As a result, a portion of the aggregate
purchase price for the debt investments and warrants will be allocated to the warrants that we receive. This will generally result in “original issue discount” for U.S. federal income tax purposes, which we must recognize as
ordinary income, increasing the amount that we are required to distribute to qualify for the U.S. federal income tax benefits applicable to RICs. Because these warrants generally will not produce distributable cash for us at
the same time as we are required to make distributions in respect of the related original issue discount, we would need to obtain cash from other sources or to pay a portion of our distributions using shares of newly issued
common stock, consistent with Internal Revenue Service requirements, to satisfy the Annual Distribution and Excise Tax Avoidance requirements.
Other features of the debt instruments that we hold may also cause such instruments to generate original issue discount, resulting in a distribution requirement in excess of current cash interest received. Since in
certain cases we may recognize income before or without receiving cash representing such income, we may have difficulty meeting the RIC tax requirement to distribute at least 90% of our net ordinary income and realized
net short-term capital gains in excess of realized net long-term capital losses, if any. Under such circumstances, we may have to sell some of our investments at times we would not consider advantageous, raise additional
debt or equity capital or reduce new investment originations to meet these distribution requirements. If we are unable to obtain cash from other sources and are otherwise unable to satisfy such distribution requirements, we
may fail to qualify for the U.S. federal income tax benefits allowable to RICs and, thus, become subject to a corporate-level U.S. federal income tax on all our income.
51
Table of Contents
Provisions of the Maryland General Corporation Law and of our charter and bylaws could deter takeover attempts and have an adverse impact on the price of our common stock.
The Maryland General Corporation Law and our charter and bylaws contain provisions that may discourage, delay or make more difficult a change in control of SLR Investment Corp. or the removal of our
directors. We are subject to the Maryland Business Combination Act, subject to any applicable requirements of the 1940 Act. Our board of directors has adopted a resolution exempting from the Maryland Business
Combination Act any business combination between us and any other person, subject to prior approval of such business combination by our board of directors, including approval by a majority of our disinterested directors.
If the resolution exempting business combinations is repealed or our board of directors does not approve a business combination, the Maryland Business Combination Act may discourage third parties from trying to acquire
control of us and increase the difficulty of consummating such an offer. Our bylaws exempt from the Maryland Control Share Acquisition Act (the “Control Share Act”) acquisitions of our stock by any person. If we amend
our bylaws to repeal the exemption from the Control Share Act, the Control Share Act also may make it more difficult for a third party to obtain control of us and increase the difficulty of consummating such a transaction.
The SEC staff has rescinded its position that, under the 1940 Act, an investment company may not avail itself of the Control Share Act. As a result, we will amend our bylaws to be subject to the Control Share Act only if
our board of directors determines that it would be in our best interests.
We have also adopted measures that may make it difficult for a third party to obtain control of us, including provisions of our charter classifying our board of directors in three classes serving staggered three-year
terms, and authorizing our board of directors to classify or reclassify shares of our stock in one or more classes or series, to cause the issuance of additional shares of our stock and to amend our charter without stockholder
approval to increase or decrease the number of shares of stock that we have authority to issue. These provisions, as well as other provisions of our charter and bylaws, may delay, defer or prevent a transaction or a change in
control that might otherwise be in the best interests of our stockholders.
The foregoing provisions are expected to discourage certain coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of us to negotiate first with our board of
directors. However, these provisions may deprive a stockholder of the opportunity to sell such stockholder’s shares at a premium to a potential acquirer. We believe that the benefits of these provisions outweigh the potential
disadvantages of discouraging any such acquisition proposals because, among other things, the negotiation of such proposals may improve their terms. Our board of directors has considered both the positive and negative
effects of the foregoing provisions and determined that they are in the best interest of our stockholders.
Our bylaws designate the Circuit Court for Baltimore City, Maryland as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders and provide that claims
relating to causes of action under the Securities Act may only be brought in federal district courts, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors,
officers or agents, if any, and could discourage lawsuits against us and our directors, officers and agents, if any.
Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if that court does not have jurisdiction, the United States District
Court for the District of Maryland, Northern Division, will be the sole and exclusive forum for (a) any Internal Corporate Claim, as such term is defined in the MGCL, (b) any derivative action or proceeding brought on our
behalf (other than actions arising under federal securities laws), (c) any action asserting a claim of breach of any duty owed by any of our directors, officers or other agents to us or to our stockholders, (d) any action asserting
a claim against us or any of our directors, officers or other agents arising pursuant to any provision of the MGCL or our charter or bylaws or (e) any other action asserting a claim against us or any of our directors, officers or
other employees that is governed by the internal affairs doctrine. With respect to any proceeding described in the foregoing sentence that is in the Circuit Court for Baltimore City, Maryland, our stockholders consent to the
assignment of the proceeding to the Business and Technology Case Management Program pursuant to Maryland Rule 16-308 or any successor thereof. None of the foregoing actions, claims or proceedings may be brought in
any court sitting outside the State of Maryland unless we consent in writing to such court. Our bylaws do not apply to lawsuits asserting claims brought to enforce a duty or liability arising exclusively under the Securities
Act, the 1934 Act, or the 1940 Act, or any other claim for which the federal courts have exclusive jurisdiction.
52
Table of Contents
Unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America shall, to the fullest extent permitted by law, be the sole and exclusive forum for the
resolution of any complaint asserting a cause of action arising under the Securities Act. This paragraph does not apply to claims arising exclusively under the 1934 Act or the 1940 Act, or any other claim for which the
federal courts have exclusive jurisdiction. These exclusive forum provisions may limit the ability of our stockholders to bring a claim in a judicial forum that such stockholders find favorable for disputes with us or our
directors, officers, or agents, if any, which may discourage such lawsuits against us and our directors, officers, and agents, if any. Alternatively, if a court were to find the choice of forum provisions contained in our bylaws
to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could materially adversely affect our business, financial condition, and
operating results. For example, under the Securities Act, federal courts have concurrent jurisdiction over all suits brought to enforce any duty or liability created by the Securities Act, and investors cannot waive compliance
with the federal securities laws and the rules and regulations thereunder.
The failure in cyber security systems, as well as the occurrence of events unanticipated in our disaster recovery systems and management continuity planning could impair our ability to conduct business effectively.
The occurrence of a disaster, such as a cyber-attack against us or against a third party that has access to our data or networks, a natural catastrophe, an industrial accident, failure of our disaster recovery systems, or
consequential employee error, could have an adverse effect on our ability to communicate or conduct business, negatively impacting our operations and financial condition. This adverse effect can become particularly acute
if those events affect our electronic data processing, transmission, storage, and retrieval systems, or impact the availability, integrity, or confidentiality of our data.
We depend heavily upon computer systems to perform necessary business functions. We rely on the Investment Adviser’s enterprise-wide cybersecurity program, to protect its information, including due oversight
of the cybersecurity programs of our key service providers and processes for the assessment, identification, and management of material risks from cybersecurity threats, including those associated with the use of third-party
service providers. Despite the Investment Adviser’s implementation of a variety of security measures, our computer systems, networks, and data, like those of other companies, could be subject to cyber-attacks and
unauthorized access, use, alteration, or destruction, such as from physical and electronic break-ins or unauthorized tampering. If one or more of these events occurs, it could potentially jeopardize the confidential,
proprietary, and other information processed, stored in, and transmitted through our computer systems and networks. Such an attack could cause interruptions or malfunctions in our operations, which could result in
financial losses, litigation, regulatory penalties, client dissatisfaction or loss, reputational damage, and increased costs associated with mitigation of damages and remediation. If unauthorized parties gain access to such
information and technology systems, they may be able to steal, publish, delete or modify private and sensitive information, including nonpublic personal information related to stockholders (and their beneficial owners) and
material nonpublic information. The systems the Investment Adviser has implemented to manage risks relating to these types of events could prove to be inadequate and, if compromised, could become inoperable for
extended periods of time, cease to function properly or fail to adequately secure private information. Breaches such as those involving covertly introduced malware, impersonation of authorized users and industrial or other
espionage may not be identified even with sophisticated prevention and detection systems, potentially resulting in further harm and preventing them from being addressed appropriately. The failure of these systems or of
disaster recovery plans for any reason could cause significant interruptions in our and our Investment Adviser’s operations and result in a failure to maintain the security, confidentiality or privacy of sensitive data, including
personal information relating to stockholders, material nonpublic information and other sensitive information in our possession.
A disaster or a disruption in the infrastructure that supports our business, including a disruption involving electronic communications or other services used by us or third parties with whom we conduct business, or
directly affecting our headquarters, could have a material adverse impact on our ability to continue to operate our business without interruption and to protect us, insofar as is practicable, from the hazards of cybersecurity
threats and vulnerabilities in accordance with applicable legal requirements and guidance. Our disaster recovery programs may not be sufficient to mitigate the harm that may result from such a disaster or disruption. In
addition, insurance and other safeguards might only partially reimburse us for our losses, if at all.
Although we are not currently aware of any cyber-attacks or other incidents that, individually or in the aggregate, have materially affected, or would reasonably be expected to materially affect, its operations or
financial condition, there has been an increase in the frequency and sophistication of the cyber and security threats faced in the marketplace. Cyber-attacks and other security threats could originate from a wide variety of
sources, including cyber criminals, nation state hackers, hacktivists and other outside or inside parties. We may be a target for attacks because, as a specialty finance company, we hold confidential and other sensitive
information, including price information, about existing and potential investments. Further, we are dependent on third-party vendors for hosting hardware, software and data processing systems that we do not control. We
also rely on third-party service providers for certain aspects of its business, including for certain information systems, technology and administration of our portfolio companies and compliance matters. While we rely on the
cybersecurity strategy and policies implemented by the Investment Adviser, our reliance on the Investment Adviser and third-party service providers removes certain cybersecurity functions from outside of the
53
Table of Contents
Company’s immediate control, and cyber-attacks on the Investment Adviser, on us or on third-party service providers could adversely affect us, our business, and our reputation. The costs related to cyber-attacks or other
security threats or disruptions may not be fully insured or indemnified by others, including by our third-party providers. As our reliance on computer hardware and software systems, data processing systems, and other
technology has increased, so have the risks posed to such systems, both those the Investment Adviser controls and those provided by third-party vendors. Cyber-attacks may originate from a wide variety of sources, and
while the Investment Adviser has implemented processes, procedures, and internal controls designed to mitigate cybersecurity risks and cyber-attacks, these measures do not guarantee that a cyber-attack will not occur or
that our financial results, operations, or confidential information, personal, or other sensitive information will not be negatively impacted by such an incident, especially because the techniques of threat actors change
frequently and are often not recognized until launched. The Investment Adviser relies on industry accepted security measures and technology to securely maintain confidential and proprietary information maintained on its
information systems, as well as on policies and procedures to protect against the unauthorized or unlawful disclosure of confidential, personal, or other sensitive information. Although the Investment Adviser takes
protective measures and endeavors to strengthen its computer systems, software, technology assets, and networks to prevent and address potential cyber-attacks, there can be no assurance that any of these measures prove
effective. The Investment Adviser expects to be required to devote increasing levels of funding and resources, which may in part be allocated to us, to comply with evolving cybersecurity and privacy laws and regulations
and to continually monitor and enhance its cybersecurity procedures and controls. In addition, we, the Investment Adviser, the Administrator, or their employees, if any, may also be the target of fraudulent emails or other
targeted attempts to gain unauthorized access to confidential, personal, or other sensitive information. Many jurisdictions have also enacted laws requiring companies to notify individuals of data security breaches involving
certain types of personal information, with which we and the Investment Adviser must comply in the event of a security incident or cyber-attack. The result of any security incident or cyber-attack may include disrupted
operations, misstated or unreliable financial data, fraudulent transfers or requests for transfers of money, liability for stolen information (including personal information), investigations, misappropriation of assets, increased
cybersecurity protection and insurance costs, litigation and damage to our business relationships, regulatory fines or penalties, or other adverse effects on our business, financial condition or results of operations. The
Investment Adviser may be required to expend significant additional resources to modify its protective measures and to investigate and remediate vulnerabilities or other exposures arising from operational and security risks
related to cyber-attacks. The rapid evolution and increasing prevalence of artificial intelligence technologies may also increase cybersecurity risks.
Third parties with which we do business may also be sources of cybersecurity or other technological risk. We outsource certain functions and these relationships allow for the storage and processing of our
information, as well as client, counterparty, employee, and borrower information. While we engage in actions to reduce our exposure resulting from outsourcing, ongoing threats may result in unauthorized access, loss,
exposure, destruction, or other cybersecurity incident that affects our data, resulting in increased costs and other consequences as described above.
In addition, cybersecurity has become a top priority for global lawmakers and regulators around the world, and some jurisdictions have proposed or enacted laws requiring companies to notify regulators and
individuals of data security breaches involving certain types of personal data. In particular, state and federal laws and regulations related to cybersecurity compliance continue to evolve and change, which may require
substantial investments in new technology, software and personnel, which could affect the Company’s profitability. These changes may also result in enhanced and unforeseen consequences for cyber-related breaches and
incidents, which may further adversely affect the Company’s profitability. If we fail to comply with the relevant and increasing laws and regulations, we could suffer financial losses, a disruption of our businesses, liability
to investors, regulatory intervention or reputational damage.
Policies of remote working, whether by the Investment Adviser, the Administrator, us or by our or their respective service providers, could strain technology resources, introduce operational risks and otherwise
heighten the risks described above. Remote working environments may be less secure and more susceptible to hacking attacks, including phishing and social engineering attempts.
We, our Investment Adviser and our portfolio companies are subject to risks associated with cyber-attacks.
Cybersecurity risks are exacerbated by the rapidly increasing volume of highly sensitive data, including our proprietary business information, personal information of the Investment Adviser’s employees, our
investors and others, and other sensitive information that the Investment Adviser collects, processes, and stores in its data centers and on its networks or those of third-party service providers. The secure processing,
maintenance, and transmission of this information are critical to our operations.
There is a risk that encryption and other protective measures against cyber-attacks may be circumvented, particularly to the extent that new computing technologies increase the speed and computing power
available.
54
Table of Contents
Even the most well-protected information, networks, systems and facilities remain potentially vulnerable because the techniques used in such attempted security breaches evolve and generally are not recognized
until launched against a target, and in some cases are designed not to be detected and, in fact, may not be detected. A significant actual or potential theft, loss, corruption, exposure, fraudulent use or misuse of investor or
other personal information, proprietary business data or other sensitive information, whether by third parties or as a result of malfeasance by the Investment Adviser’s employees or otherwise, non-compliance with
applicable contractual or other legal obligations regarding such data or intellectual property or a violation of applicable privacy and security policies with respect to such data could result in significant investigation,
remediation and other costs, fines, penalties, litigation or regulatory actions against the Company and significant reputational harm, any of which could harm our business and results of operations. Cybersecurity risks
require continuous and increasing attention and other resources from the Investment Adviser to, among other actions, identify and quantify these risks and upgrade and expand the Investment Adviser’s technologies,
systems and processes to adequately address such risks. Such attention diverts time and other resources from other activities and there is no assurance that the Investment Adviser’s efforts will be effective.
Cybersecurity incidents may adversely impact us and our stockholders. There is no guarantee that we, the Investment Adviser, and/or their respective service providers will be successful in protecting against
cybersecurity incidents.
We can be highly dependent on information systems and systems failures could significantly disrupt our business, which may, in turn, negatively affect the market price of our common stock and our ability to pay
distributions.
Our business is highly dependent upon our and third parties’ communications and information systems. Any failure or interruption of those systems, including as a result of the termination of an agreement with
any third-party service providers, could cause delays or other problems in our activities. Our financial, accounting, data processing, backup or other operating systems and facilities may fail to operate properly or become
disabled or damaged as a result of a number of factors including events that are wholly or partially beyond our control and adversely affect our business.
There could be:
•sudden electrical or telecommunications outages;
•natural disasters such as earthquakes, tornadoes and hurricanes;
•events arising from local or larger scale political or social matters, including terrorist acts; and
•cyber-attacks.
These events, in turn, could have a material adverse effect on our operating results and negatively affect the market price of our common stock and our ability to pay distributions to our stockholders.
Communications with stockholders may be delivered electronically and there may be certain costs and possible risks associated with such electronic delivery. Moreover, the Investment Adviser cannot provide any
assurance that these communication methods are secure and will not be responsible for any computer viruses, problems or malfunctions resulting from the use of such communication methods.
Any inability or perceived inability to adequately address privacy concerns, or comply with applicable laws and regulations, even if unfounded, may result in adverse consequences to the Company.
The Company and the Investment Adviser and its affiliates are subject to numerous laws and regulations in various jurisdictions relating to privacy and the storage, sharing, use, processing, disclosure and
protection of information that the Company and the Investment Adviser hold. The SEC has adopted changes to Regulation S-P, which requires, among other things, that registered investment advisers notify affected
individuals of a breach involving their personal information when there has been an incident that rises to the level of being a reportable breach. In general, these laws and regulations introduce many new obligations on the
Company, the Investment Adviser and its affiliates and service providers and create new rights for parties who have given any of us their personal information, such as investors and others. The scope of data protection and
privacy laws and regulations is rapidly evolving, and such laws and regulations are subject to differing interpretations. Any inability or perceived inability to adequately address privacy concerns or comply with applicable
laws and regulations, even if unfounded, could result in regulatory and third-party liability, increased costs, disruption to the Company’s operations and reputational damage. Obligations to which the Company and/or the
Investment Adviser and its affiliates are subject impose compliance costs and risks of penalties, which could increase significantly as such laws and regulations evolve globally. Moreover, as data protection and privacy laws
and regulations continue to develop, it could be more difficult and/or more costly for the Company and/or the Investment Adviser and its affiliates to collect, store, use, transmit and process personal information.
55
Table of Contents
While the Company and the Investment Adviser and its affiliates take reasonable efforts to comply with data protection and privacy laws and regulations, it is possible that the Company and the Investment Adviser
will not be able to accurately anticipate the ways in which regulators and courts will apply or interpret these laws, and there can be no assurance that Company and/or the Investment Adviser and its affiliates will not be
subject to regulatory or individual legal action, including fines, in the event of a security incident, alleged non-compliance with applicable data protection and privacy laws or regulations or other claim that an individual’s
privacy rights have been violated. Many regulators have indicated an intention to take more aggressive enforcement actions regarding data privacy matters, and private litigation resulting from such matters is increasing and
resulting in large judgments and settlements.
Our board of directors may change our investment objective, operating policies and strategies without prior notice or stockholder approval.
Our board of directors has the authority to modify or waive certain of our operating policies and strategies without prior notice (except as required by the 1940 Act) and without stockholder approval. However,
absent stockholder approval, we may not change the nature of our business so as to cease to be, or withdraw our election as a BDC. We cannot predict the effect any changes to our current operating policies and strategies
would have on our business, operating results and the value of our stock. Nevertheless, the effects may adversely affect our business and impact our ability to make distributions.
Our business is subject to increasingly complex corporate governance, public disclosure and accounting requirements that could adversely affect our business and financial results.
We are subject to changing rules and regulations of federal and state government as well as the stock exchange on which our common stock is listed. These entities, including the Public Company Accounting
Oversight Board, the SEC and the NASDAQ Stock Market, have issued a significant number of new and increasingly complex requirements and regulations over the course of the last several years and continue to develop
additional regulations and requirements in response to laws enacted by Congress. Our efforts to comply with these existing requirements, or any revised or amended requirements, have resulted in, and are likely to continue
to result in, an increase in expenses and a diversion of management’s time from other business activities.
56
Table of Contents
Changes in laws or regulations governing our operations may adversely affect our business.
Changes in the laws or regulations, or the interpretations of the laws and regulations, which govern BDCs, RICs or non-depository commercial lenders could significantly affect our operations and our cost of doing
business. We are subject to federal, state and local laws and regulations and are subject to judicial and administrative decisions that affect our operations, including our loan originations, maximum interest rates, fees and
other charges, disclosures to portfolio companies, the terms of secured transactions, collection and foreclosure procedures, and other trade practices. If these laws, regulations or decisions change, or if we expand our
business into jurisdictions that have adopted more stringent requirements than those in which we currently conduct business, then we may have to incur significant expenses in order to comply or we may have to restrict our
operations. In addition, if we do not comply with applicable laws, regulations and decisions, then we may lose licenses needed for the conduct of our business and be subject to civil fines and criminal penalties, any of which
could have a material adverse effect upon our business results of operations or financial condition.
Changes to United States tariff and import/export regulations may have a negative effect on our portfolio companies and, in turn, harm us.
There has been ongoing discussion and commentary regarding potential significant changes to United States trade policies, treaties and tariffs. The United States has recently enacted and proposed to enact
significant new tariffs. Additionally, President Trump has directed various federal agencies to further evaluate key aspects of United States trade policy, and there continues to exist significant uncertainty about the future
relationship between the United States and other countries with respect to the trade policies, treaties and tariffs. These developments, or the perception that any of them could occur, may have a material adverse effect on
global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between the impacted nations and the United States. Any of these factors could
depress economic activity and restrict our portfolio companies’ access to suppliers or customers and have a material adverse effect on their business, financial condition and results of operations, which in turn would
negatively impact us.
Our Investment Adviser can resign on 60 days’ notice, and we may not be able to find a suitable replacement within that time, resulting in a disruption in our operations that could adversely affect our financial
condition, business and results of operations.
Our Investment Adviser has the right, under the Advisory Agreement, to resign at any time upon 60 days written notice, whether we have found a replacement or not. If our Investment Adviser resigns, we may not
be able to find a new investment adviser or hire internal management with similar experience and ability to provide the same or equivalent services on acceptable terms within 60 days, or at all. If we are unable to do so
quickly, our operations are likely to experience a disruption, our financial condition, business and results of operations as well as our ability to pay distributions are likely to be adversely affected and the market price of our
shares may decline. In addition, the coordination of our internal management and investment activities is likely to suffer if we are unable to identify and reach an agreement with a single institution or group of executives
having the experience possessed by our Investment Adviser and its affiliates. Even if we are able to retain comparable management, whether internal or external, the integration of such management and their lack of
familiarity with our investment objective may result in additional costs and time delays that may adversely affect our financial condition, business and results of operations.
General Risk Factors
Volatility or a prolonged disruption in the credit markets could materially damage our business.
We are required to record our assets at fair value, as determined in good faith by our board of directors, in accordance with our valuation policy. As a result, volatility in the capital markets may have a material
adverse effect on our valuations and our net asset value, even if we hold investments to maturity. Volatility or dislocation in the capital markets may depress our stock price below our net asset value per share and create a
challenging environment in which to raise equity and debt capital. These conditions could continue for a prolonged period of time or worsen in the future. While these conditions persist, we and other companies in the
financial services sector may have to access, if available, alternative markets for debt and equity capital. Equity capital may be difficult to raise because, subject to some limited exceptions which apply to us, as a BDC we
are generally not able to issue additional shares of our common stock at a price less than net asset value without first obtaining approval for such issuance from our stockholders and our independent directors. Any offering
of our common stock that requires stockholder approval must occur, if at all, within one year after receiving such stockholder approval. In addition, our ability to incur indebtedness (including by issuing preferred stock) is
limited by applicable regulations such that our asset coverage, as defined in the 1940 Act, must equal at least 150% immediately after each time we incur indebtedness. The debt capital that will be available, if at all, may be
at a higher cost and on less favorable terms and conditions in the future. Any inability to raise capital could have a negative effect on our business, financial condition and results of operations.
57
Table of Contents
Additionally, our ability to incur indebtedness is limited by the asset coverage ratio for a BDC, as defined under the 1940 Act. Declining portfolio values negatively impact our ability to borrow additional funds
because our net asset value is reduced for purposes of the asset coverage ratio. If the fair value of our assets declines substantially, we may fail to maintain the asset coverage ratio stipulated by the 1940 Act, which could, in
turn, cause us to lose our status as a BDC and materially impair our business operations. A lengthy disruption in the credit markets could also materially decrease demand for our investments.
The significant disruptions in the capital markets experienced in the past have had, and in the future may have, a negative effect on the valuations of our investments and on the potential for liquidity events
involving our investments. The debt capital that may be available to us in the future may be at a higher cost and have less favorable terms and conditions than those currently in effect. If our financing costs increase and we
have no increase in interest income, then our net investment income will decrease. A prolonged inability to raise capital may require us to reduce the volume of investments we originate and could have a material adverse
impact on our business, financial condition and results of operations. This may also increase the probability that other structural risks will negatively impact us. These situations may arise due to circumstances that we may
be unable to control, such as a lengthy disruption in the credit markets, a severe decline in the value of the U.S. dollar, a sharp economic downturn or recession or an operational problem that affects third parties or us, and
could materially damage our business, financial condition and results of operations.
Global economic, regulatory and market conditions may adversely affect our business, results of operations and financial condition, including our revenue growth and profitability.
We and our portfolio companies are subject to regulation by laws at the U.S. federal, state and local levels. These laws and regulations, as well as their interpretation, could change from time to time, including as
the result of interpretive guidance or other directives from the U.S. President and others in the executive branch, and new laws, regulations and interpretations could also come into effect. Any such new or changed laws or
regulations could have a material adverse effect on our business, and political uncertainty could increase regulatory uncertainty in the near term. The effects of legislative and regulatory proposals directed at the financial
services industry or affecting taxation, could negatively impact the operations, cash flows or financial condition of us and our portfolio companies, impose additional costs on us or our portfolio companies, intensify the
regulatory supervision of us or our portfolio companies or otherwise adversely affect our business or the business of our portfolio companies. In addition, if we do not comply with applicable laws and regulations, we could
lose any licenses that we then hold for the conduct of business and could be subject to civil fines and criminal penalties.
Over the last several years, there also has been an increase in regulatory attention to the extension of credit outside of the traditional banking sector, raising the possibility that some portion of the non-bank
financial sector will be subject to new regulation. While it cannot be known at this time whether any regulation will be implemented or what form it will take, increased regulation of non-bank credit extension could
negatively impact our operations, cash flows or financial condition, impose additional costs on us, intensify the regulatory supervision of us or otherwise adversely affect our business, financial condition and results of
operations.
Although we cannot predict the impact, if any, of these changes to our business, they could adversely affect our business, financial condition, operating results and cash flows. Until we know what policy changes
are made and how those changes impact business and the business of our competitors over the long term, we will not know if, overall, it will benefit from them or be negatively affected by them.
Deterioration in the economic conditions in the Eurozone and other regions or countries globally and the resulting instability in global financial markets may pose a risk to our business. Financial markets have
been affected at times by a number of global macroeconomic events, including the following: large sovereign debts and fiscal deficits of several countries in Europe and in emerging markets jurisdictions, levels of non-
performing loans on the balance sheets of European banks, the effect of the United Kingdom leaving the European Union, and instability in the Chinese capital markets.
Various social and political circumstances in the U.S. and around the world (including wars and other forms of conflict, terrorist acts, security operations and catastrophic events such as fires, floods, earthquakes,
tornadoes, hurricanes and global health epidemics) may also contribute to increased market volatility and economic uncertainties or deterioration in the U.S. and worldwide. Such events, including rising trade tensions
between the United States and China, other uncertainties regarding actual and potential shifts in U.S. and foreign, trade, economic and other policies with other countries, the large-scale invasion of Ukraine by Russia that
began in February 2022 and resulting sanctions or other restrictive actions that the United States and other countries have imposed against Russia, an inflationary environment and the ongoing war in the Middle East, could
adversely affect our business, financial condition or results of operations. Additionally, as a result of the 2024 U.S. election, the Republican Party currently controls both the executive and legislative branches of government,
which increases the likelihood that legislation may be adopted that could significantly affect the regulation of U.S. financial markets. Regulatory changes could result in greater competition from banks and other lenders with
which we compete for lending and other investment opportunities. The United States may also potentially withdraw from or renegotiate various trade agreements and take other actions that would change current trade
policies of the United States. These
58
Table of Contents
market and economic disruptions could negatively impact the operating results of our portfolio companies. This could in turn materially reduce our net asset value and dividends and adversely affect our financial prospects
and condition.
In addition, Russia’s invasion of Ukraine and corresponding events have had, and could continue to have, severe adverse effects on regional and global economic markets. Following Russia’s actions, various
governments, including the United States, have issued broad-ranging economic sanctions against Russia, including, among other actions, a prohibition on doing business with certain Russian companies, large financial
institutions, officials and oligarchs; a commitment by certain countries and the European Union to remove selected Russian banks from the Society for Worldwide Interbank Financial Telecommunications, the electronic
banking network that connects banks globally; and restrictive measures to prevent the Russian Central Bank from undermining the impact of the sanctions. The duration of hostilities and the vast array of sanctions and
related events (including cyberattacks and espionage) cannot be predicted. Furthermore, the conflict between the two nations and the varying involvement of the United States and other NATO countries could preclude
prediction as to their ultimate adverse impact on global economic and market conditions, and, as a result, presents material uncertainty and risk with respect to markets globally, which pose potential adverse risks to us and
the performance of our investments and operations, and our ability to achieve our investment objectives. Additionally, to the extent that third parties, investors, or related customer bases have material operations or assets in
Russia or Ukraine, they may have adverse consequences related to the ongoing conflict. Any such market disruptions could affect our portfolio companies’ operations and, as a result, could have a material adverse effect on
our business, financial condition and results of operations.
Additionally, the Federal Reserve raised the federal funds rate in 2022 and 2023. While the Federal Reserve cut its benchmark rate in the third and fourth quarters of 2024 and indicated that there may be additional
rate cuts in 2025, future reductions to benchmark rates are not certain. Additionally, there can be no assurance that the Federal Reserve will not return to making upwards adjustments to the federal funds rate in the future.
These developments, along with the United States government’s credit and deficit concerns, global economic uncertainties and market volatility, could cause interest rates to be volatile, which may negatively impact our
ability to access the debt markets and capital markets on favorable terms.
Events outside of our control, including public health crises, could negatively affect our portfolio companies and our results of our operations.
Periods of market volatility have occurred and could continue to occur in response to pandemics or other events outside of our control. These types of events have adversely affected and could continue to adversely
affect operating results for us and for our portfolio companies. For example, the COVID-19 pandemic adversely impacted global commercial activity and contributed to significant volatility in the equity and debt markets.
The COVID-19 pandemic and restrictive measures taken to contain or mitigate its spread caused, and any similar measures in the future may cause, business shutdowns, or the re-introduction of business shutdowns,
cancellations of events and restrictions on travel, significant reductions in demand for certain goods and services, reductions in business activity and financial transactions, supply chain interruptions, labor shortages,
increased inflationary pressure and overall economic and financial market instability both globally and in the United States. Many states, including those in which we and the portfolio companies in which we invest operate,
have previously issued orders requiring the closure of, or certain restrictions on the operation of, certain businesses. We and our portfolio companies may be materially adversely affected if similar measures are taken in the
future in response to public health crises.
The continued uncertainty related to the sustainability and pace of economic recovery in the U.S. and globally could have a negative impact on our business.
Our business is directly influenced by the economic cycle, and could be negatively impacted by a downturn in economic activity in the U.S. as well as globally. Fiscal and monetary actions taken by U.S. and non-
U.S. government and regulatory authorities could have a material adverse impact on our business. To the extent uncertainty regarding the U.S. or global economy negatively impacts consumer confidence and consumer
credit factors, our business, financial condition and results of operations could be adversely affected. Moreover, Federal Reserve policy, including with respect to certain interest rates and the decision to end its quantitative
easing policy, along with the general policies of the current Presidential administration, may also adversely affect the value, volatility and liquidity of dividend-and interest-paying securities. Market volatility, periods of
rising interest rates, and/or a return to unfavorable economic conditions could adversely affect our business.
59
Table of Contents
There is uncertainty surrounding potential legal, regulatory and policy changes by new presidential administrations in the United States that may directly affect financial institutions and the global economy.
The current administration has called for significant changes to U.S. trade, healthcare, immigration, foreign and government regulatory policy. In this regard, there is significant uncertainty with respect to
legislation, regulation and government policy at the federal level, as well as the state and local levels. Recent events have created a climate of heightened uncertainty and introduced new and difficult-to-quantify
macroeconomic and political risks with potentially far-reaching implications. There has been a corresponding meaningful increase in the uncertainty surrounding interest rates, inflation, foreign exchange rates, trade
volumes and fiscal and monetary policy. To the extent the U.S. Congress or the current administration implements changes to U.S. policy, those changes may impact, among other things, the U.S. and global economy,
international trade and relations, unemployment, immigration, corporate taxes, healthcare, the U.S. regulatory environment, inflation and other areas. Although we cannot predict the impact, if any, of these changes to our
business, they could adversely affect our business, financial condition, operating results and cash flows. Until we know what policy changes are made and how those changes impact our business and the business of our
competitors over the long term, we will not know if, overall, we will benefit from them or be negatively affected by them.
The alternative reference rates that have replaced LIBOR in our credit arrangements and other financial instruments may not yield the same or similar economic results as LIBOR over the life of such transactions.
The London Interbank Offered Rate (“LIBOR”) is an index rate that historically was widely used in lending transactions and was a common reference rate for setting the floating interest rate on private loans.
LIBOR was typically the reference rate used in floating-rate loans extended to our portfolio companies.
The ICE Benchmark Administration (“IBA”) (the entity that is responsible for calculating LIBOR) ceased providing overnight, one, three, six and twelve month USD LIBOR tenors on June 30, 2023. In addition,
the United Kingdom’s Financial Conduct Authority (“FCA”), which oversees the IBA, now prohibits entities supervised by the FCA from using LIBORs, including USD LIBOR, except in very limited circumstances.
In the United States, the Secured Overnight Financing Rate (“SOFR”) is the preferred alternative rate for LIBOR. SOFR is a measure of the cost of borrowing cash overnight, collateralized by U.S. Treasury
securities, and is based on directly observable U.S. Treasury-backed repurchase transactions. SOFR is published by the Federal Reserve Bank of New York each U.S. Government Securities Business Day, for transactions
made on the immediately preceding U.S. Government Securities Business Day. Alternative reference rates that may replace LIBOR, including SOFR for USD transactions, may not yield the same or similar economic results
as LIBOR over the lives of such transactions.
The Company’s loans reference the forward-looking term rate published by CME Group Benchmark Administration Limited based on SOFR (“CME Term SOFR”) or CME Term SOFR plus a fixed spread
adjustment. CME Term SOFR rates are forward-looking rates that are derived by compounding projected overnight SOFR rates over one, three, and six months taking into account the values of multiple consecutive,
executed, one-month and three-month CME Group traded SOFR futures contracts and, in some cases, over-the-counter SOFR Overnight Indexed Swaps as an indicator of CME Term SOFR reference rate values. CME Term
SOFR and the inputs on which it is based are derived from SOFR. Since CME Term SOFR is a relatively new market rate, there will likely be no established trading market for credit agreements or other financial
instruments when they are issued, and an established market may never develop or may not be liquid. Market terms for instruments referencing CME Term SOFR rates may be lower than those of later-issued CME Term
SOFR indexed instruments. Similarly, if CME Term SOFR does not prove to be widely used, the trading price of instruments referencing CME Term SOFR may be lower than those of instruments indexed to indices that are
more widely used. Further, the composition and characteristics of SOFR and CME Term SOFR are not the same as those of LIBOR. Even with the application of a fixed spread adjustment, LIBOR and CME Term SOFR
will not have the same composition and characteristics, and there can be no assurance that the replacement rate, as so adjusted, will be a direct substitute for LIBOR.
There can be no guarantee that SOFR will not be discontinued or fundamentally altered in a manner that is materially adverse to the interests of investors in loans referencing SOFR. If the manner in which SOFR
or CME Term SOFR is calculated is changed, that change may result in a reduction of the amount of interest payable on such loans and the trading prices of the SOFR Loans. In addition, there can be no guarantee that loans
referencing SOFR or CME Term SOFR will continue to reference those rates until maturity or that, in the future, our loans will reference benchmark rates other than CME Term SOFR. Should any of these events occur, our
loans, and the yield generated thereby, could be affected. Specifically, the anticipated yield on our loans may not be fully realized and our loans may be subject to increased pricing volatility and market risk.
60
Table of Contents
Inflation and a rising interest rate environment may adversely affect the business, results of operations and financial condition of us and our portfolio companies.
The recent macroeconomic environment is characterized by record-high inflation, supply chain challenges, labor shortages, strikes, work stoppages, labor disputes, supply chain disruptions and accidents, changing
interest rates, foreign currency exchange volatility, volatility in global capital markets and concerns over actual and potential tariffs and sanctions, inflation and persistent recession risk. The risks associated with the
Company’s and our portfolio companies’ businesses are more severe during periods of economic slowdown or recession.
Any disruptions in the capital markets, as a result of inflation or otherwise, may increase the spread between the yields realized on risk-free and higher risk securities and can result in illiquidity in parts of the
capital markets, significant write-offs in the financial sector and re-pricing of credit risk in the broadly syndicated market. These and any other unfavorable economic conditions could increase our funding costs, limit our
access to the capital markets or result in a decision by lenders not to extend credit to us.
In addition, market conditions (including inflation, supply chain issues and decreased consumer demand) have adversely impacted, and could in the future further impact, the operations of certain of our portfolio
companies. If the financial results of middle-market companies, like those in which we invest, experience deterioration, it could ultimately lead to difficulty in meeting debt service requirements and an increase in defaults,
and further deterioration in market conditions will further depress the outlook for those companies. Further, adverse economic conditions decreased and may in the future decrease the value of collateral securing some of our
loans and the value of our equity investments. Such conditions have required and may in the future require us to modify the payment terms of our investments, including changes in PIK interest provisions and/or cash interest
rates. The performance of certain of our portfolio companies has been, and in the future may be, negatively impacted by these economic or other conditions, which can result in our receipt of reduced interest income from
our portfolio companies and/or realized and unrealized losses related to our investments, and, in turn, may adversely affect distributable income and have a material adverse effect on our results of operations.
Inflation may cause the real value of our investments to decline.
Inflation risk results from the variation in the value of cash flows from a security due to inflation, as measured in terms of purchasing power. We are exposed to inflation risk with respect to any fixed rate
investments that we make, if any, because the interest rate the issuer has to pay us is fixed for the life of the security. To the extent that interest rates reflect the expected inflation rate, floating rate loans have a lower level of
inflation risk.
Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults or non-performance by financial institutions or transactional counterparties, could have a
material adverse effect on us, the Investment Adviser and our portfolio companies.
Cash not held in custody accounts and held by us, our Investment Adviser and by our portfolio companies in non-interest-bearing and interest-bearing operating accounts could, at times, exceed the Federal
Deposit Insurance Corporation (“FDIC”) insurance limits. If such banking institutions were to fail, we, our Investment Adviser, or our portfolio companies could lose all or a portion of those amounts held in excess of such
insurance limits. In addition, actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the
financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity
problems, which could adversely affect our, our Investment Adviser’s and our portfolio companies’ business, financial condition, results of operations, or prospects.
Although we and our Investment Adviser assess our and our portfolio companies’ banking and financing relationships as we believe necessary or appropriate, our and our portfolio companies’ access to funding
sources and other credit arrangements in amounts adequate to finance or capitalize current and projected future business operations could be significantly impaired by factors that affect the financial institutions with which
we, our Investment Adviser or our portfolio companies have arrangements directly or the financial services industry or economy in general. These factors could include, among others, events such as liquidity constraints or
failures, the ability to perform obligations under various types of financial, credit or liquidity agreements or arrangements, disruptions or instability in the financial services industry or financial markets, or concerns or
negative expectations about the prospects for companies in the financial services industry. These factors could involve financial institutions or financial services industry companies with which we, our Investment Adviser or
our portfolio companies have financial or business relationships, but could also include factors involving financial markets or the financial services industry generally.
In addition, investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and
operating covenants, or systemic limitations on access
61
Table of Contents
to credit and liquidity sources, thereby making it more difficult for us, our Investment Adviser, or our portfolio companies to acquire financing on acceptable terms or at all.
Technological innovations and industry disruptions may negatively impact us.
Technological innovations have disrupted traditional approaches in multiple industries and can permit younger companies to achieve success and in the process disrupt markets and market practices. We can
provide no assurance that new businesses and approaches will not be created that would compete with us and/or our portfolio companies or alter the market practices in which SLR Capital Partners and its affiliates and us
have been designed to function within and on which we depend on for our investment return. New approaches could damage our investments, disrupt the market in which we operate and subject us to increased competition,
which could materially and adversely affect our business, financial condition and results of investments.
We are subject to risks associated with artificial intelligence and machine learning technology.
Recent technological advances in artificial intelligence and machine learning technology (“Machine Learning Technology”) pose risks to us and our portfolio companies. We and our portfolio companies could be
exposed to the risks of Machine Learning Technology if third-party service providers or any counterparties use Machine Learning Technology in their business activities. We and the Investment Adviser are not in a position
to control the use of Machine Learning Technology in third-party products or services. Use of Machine Learning Technology could include the input of confidential information in contravention of applicable policies,
contractual or other obligations or restrictions, resulting in such confidential information becoming part accessible by other third-party Machine Learning Technology applications and users. Machine Learning Technology
and its applications continue to develop rapidly, and we cannot predict the risks that may arise from such developments.
Machine Learning Technology is generally highly reliant on the collection and analysis of large amounts of data, and it is not possible or practicable to incorporate all relevant data into the model that Machine
Learning Technology utilizes to operate. Certain data in such models will inevitably contain a degree of inaccuracy and error and could otherwise be inadequate or flawed, which would be likely to degrade the effectiveness
of Machine Learning Technology. To the extent we or our portfolio companies are exposed to the risks of Machine Learning Technology use, any such inaccuracies or errors could adversely impact us or our portfolio
companies.
We are subject to risks related to corporate social responsibility.
Our business (including that of our portfolio companies) faces increasing public scrutiny related to environmental, social and governance (“ESG”) activities. A variety of organizations measure the performance of
companies on ESG topics, and the results of these assessments are widely publicized. If our ESG ratings or performance do not meet the standards set by such investors or our stockholders, they may choose to exclude our
securities from their investments. In addition, investment in funds that specialize in companies that perform well in such assessments remain popular, and major institutional investors have publicly discussed their
consideration of such ESG ratings and measures in making their investment decisions. We risk damage to our brand and reputation if we fail to act responsibly in a number of areas, including, but not limited to, human
rights, climate change, environmental stewardship, support for local communities, corporate governance and transparency or consideration of ESG factors in our investment processes. Adverse incidents with respect to ESG
activities could impact the value of our brand, our relationship with existing and future portfolio companies, the cost of our operations and relationships with investors, all of which could adversely affect our business and
results of operations.
However, regional and investor specific sentiment may differ in what constitutes a material positive or negative ESG corporate practice. There is no guarantee that the Company’s ESG and sustainability practices
will uniformly fit every investor’s definition of best practices for all environmental, social and governance considerations across geographies and investor types. At the same time, “anti-ESG” sentiment has also gained
momentum across the U.S., with a growing number of states, federal agencies, the executive branch and Congress having enacted, proposed or indicated an intent to pursue “anti-ESG” policies, legislation or issued related
legal opinions and engaged in related investigations and litigation. If investors subject to “anti-ESG” legislation view our Investment Adviser’s responsible investing or ESG practices as being in contradiction of such “anti-
ESG” policies, legislation or legal opinions, such investors may not invest in us and it could negatively impact the price of our common stock. In addition, corporate diversity, equity and inclusion (“DEI”) practices have
recently come under increasing scrutiny. For example, some advocacy groups and federal and state officials have asserted that the U.S. Supreme Court’s decision striking down race-based affirmative action in higher
education in June 2023 should be analogized to private employment matters and private contract matters and several media campaigns and cases alleging discrimination based on such arguments have been initiated since the
decision. Additionally, in January 2025, President Trump signed a number of Executive Orders focused on DEI, which indicate continued scrutiny of DEI initiatives and potential related investigations of certain private
entities with respect to DEI initiatives, including publicly traded companies. If we do not successfully manage expectations across varied stakeholder interests, it could erode stakeholder trust, impact our reputation and
62
Table of Contents
constrain our investment opportunities. Such scrutiny of both ESG and DEI related practices could expose our Investment Adviser to the risk of litigation, investigations or challenges by federal or state authorities or result in
reputational harm.
There is also regulatory interest across jurisdictions in improving transparency regarding the definition, measurement and disclosure of ESG factors in order to allow investors to validate and better understand
sustainability claims. For example, the SEC sometimes reviews compliance with ESG commitments in examinations and has taken enforcement actions against registered investment advisers for not establishing adequate or
consistently implementing ESG policies and procedures to meet ESG commitments to investors. In March 2024, the SEC adopted rules aimed at enhancing and standardizing climate-related disclosures; however, these rules
are stayed pending the outcome of consolidated legal challenges in the Eighth Circuit Court of Appeals. At the state level, in October 2023, California enacted legislation that will ultimately require certain companies that do
business in California to publicly disclose their Scopes 1, 2, and 3 greenhouse gas emissions, with third party assurance of such data, and issue public reports on their climate-related financial risk and related mitigation
measures. Compliance with any new laws or regulations increases our regulatory burden and could result in increased legal, accounting and compliance costs, make some activities more difficult, time-consuming and costly,
affect the manner in which we or our portfolio companies conduct our businesses and adversely affect our profitability.
We and our portfolio companies are subject to the risk that ESG and sustainability measures might continue to be introduced. Additionally, compliance with any new laws or regulations increases our regulatory
burden and could make compliance more difficult and expensive, affect the manner in which we or our portfolio companies conduct our businesses and adversely affect our profitability.
The effect of global climate change may impact the operations of our portfolio companies.
There may be evidence of global climate change. Climate change creates physical and financial risk and some of our portfolio companies may be adversely affected by climate change. For example, the needs of
customers of energy companies vary with weather conditions, primarily temperature and humidity. To the extent weather conditions are affected by climate change, energy use could increase or decrease depending on the
duration and magnitude of any changes. Increases in the cost of energy could adversely affect the cost of operations of our portfolio companies if the use of energy products or services is material to their business. A
decrease in energy use due to weather changes may affect some of our portfolio companies’ financial condition, through decreased revenues. Extreme weather conditions in general require more system backup, adding to
costs, and can contribute to increased system stresses, including service interruptions. Energy companies could also be affected by the potential for lawsuits against or taxes or other regulatory costs imposed on greenhouse
gas emitters, based on links drawn between greenhouse gas emissions and climate change.
We cannot predict how changes in tax law will affect us, our investments, or our stockholders, and any such legislation could adversely affect our business.
Legislative or other actions relating to taxes could have a negative effect on us. The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by
the Internal Revenue Service and the U.S. Treasury Department. New legislation and any other tax law developments, including new or revised U.S. Treasury regulations, administrative interpretations or court decisions,
could negatively and perhaps retroactively affect our ability to qualify for tax treatment as a RIC or the U.S. federal income tax consequences to us and our stockholders, or could have other adverse consequences. Investors
are urged to consult with their tax advisor regarding tax legislative, regulatory, or administrative developments and proposals and their potential effect on an investment in our common stock.
Uncertainty about U.S. government initiatives could negatively impact our business, financial condition and results of operations.
The U.S. government has recently called for significant changes to U.S. trade, healthcare, immigration, foreign and government regulatory policy. In this regard, there is significant uncertainty with respect to
legislation, regulation and government policy at the federal level, as well as the state and local levels. Recent events have created a climate of heightened uncertainty and introduced new and difficult-to-quantify
macroeconomic and political risks with potentially far-reaching implications. There has been a corresponding meaningful increase in the uncertainty surrounding interest rates, inflation, foreign exchange rates, trade
volumes and fiscal and monetary policy. To the extent the U.S. Congress or the current administration implements changes to U.S. policy, those changes may impact, among other things, the U.S. and global economy,
international trade and relations, unemployment, immigration, corporate taxes, healthcare, the U.S. regulatory environment, inflation and other areas.
A particular area identified as subject to potential change, amendment or repeal includes the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the “Dodd-Frank Act,” including the Volcker Rule
and various swaps and derivatives regulations, credit risk retention requirements and the authorities of the Federal Reserve, the Financial Stability Oversight Council and the SEC. Given the uncertainty associated with the
manner in which and whether the provisions of the Dodd-Frank Act will be implemented, repealed, amended, or replaced, the full impact such requirements will have on our business, results of operations or financial
63
Table of Contents
condition is unclear. The changes resulting from the Dodd-Frank Act or any changes to the regulations already implemented thereunder may require us to invest significant management attention and resources to evaluate
and make necessary changes in order to comply with new statutory and regulatory requirements. Failure to comply with any such laws, regulations or principles, or changes thereto, may negatively impact our business,
results of operations or financial condition. While we cannot predict what effect any changes in the laws or regulations or their interpretations would have on us as a result of recent financial reform legislation, these changes
could be materially adverse to us and our stockholders.
64
Table of Contents
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Risk Management and Strategy
We recognize the importance of assessing, identifying, and managing material risks from cybersecurity threats, as such term is defined in Item 106(a) of Regulation S-K. These risks include, among other things,
operational risks, financial loss, intellectual property theft, fraud, extortion, loss of sensitive data, harm to individuals including stockholders, violation of privacy or security laws, increased costs associated with mitigation of
damages and remediation, and other legal and reputational risks. We have implemented several cybersecurity processes and controls to aid in our efforts to assess, identify, and manage such material risks.
We rely on the Investment Adviser’s enterprise-wide cybersecurity program to protect our information, including due oversight of the cybersecurity programs of our key service providers and processes for the
assessment, identification, and management of material risks from cybersecurity threats, including those associated with the use of third-party service providers. The Investment Adviser considers such cybersecurity threats
as part of its broader risk management framework, and its cybersecurity program is designed to, among other things, protect us, insofar as is practicable, from the hazards of cybersecurity threats and vulnerabilities in
accordance with applicable legal requirements and guidance. The Investment Adviser collaborates with third-party subject-matter experts, as necessary, to identify and assess material cybersecurity threat risks and evaluate
and test its cybersecurity protections, including through continuous network and endpoint monitoring, employee anti-phishing training, vulnerability assessments, and penetration testing to inform the Investment Adviser’s
risk identification and assessment. The Investment Adviser also performs due diligence reviews on third parties that have access to our systems or data, or facilities that house such systems or data, and continually monitors
cybersecurity threat risks identified through such diligence.
Together with management, the Board has designated an Information Security Group (“ISG”) to monitor issues relating to cybersecurity and work with the Investment Adviser’s third-party Information Technology
(“IT”) service provider to evaluate potential cyber risk vulnerabilities. While its composition may change over time, the ISG currently consists of our Chief Financial Officer and Chief Compliance Officer. The ISG,
together with the Investment Adviser’s third-party IT service provider, annually reviews the cyber risks applicable to our business and the measures established by the Investment Adviser and other service providers to
protect against those risks and recommends changes or enhancements, as necessary. The Investment Adviser’s management and the third-party IT service provider also monitor the Investment Adviser’s network to identify
internal and external cybersecurity threats and vulnerabilities in order to determine any steps that should be taken to protect information stored on the Investment Adviser’s network and promptly inform the ISG of any
identified cybersecurity threats or vulnerabilities. The ISG also makes inquiries of the Investment Adviser’s management and the third-party IT service provider regarding such efforts.
Material Impact of Cybersecurity Risks
The potential impact of risks from cybersecurity threats on us are assessed on an ongoing basis, and how such risks could materially affect our business strategy, operational results, or financial condition are
regularly evaluated. During the reporting period, we did not identify any risks from cybersecurity threats, including as a result of previous cybersecurity incidents, that we believe have materially affected, or are reasonably
likely to materially affect, our business strategy, operational results, or financial condition. We further describe cybersecurity risks that we face in “The failure in cyber security systems, as well as the occurrence of events
unanticipated in our disaster recovery systems and management continuity planning could impair our ability to conduct business effectively” and “We, our Investment Adviser and our portfolio companies are subject to risks
associated with cyber-attacks” under “Item 1A. Risk Factors” of this annual report on Form 10-K.
Governance
The Board has overall responsibility for risk oversight, including risks related to cybersecurity threats. The Board is aware of the critical nature of managing these risks and has sought to establish oversight
mechanisms to ensure effective governance in managing risks associated with cybersecurity and appropriate review of the protections provided to us by the Investment Adviser.
In conducting its duties, the ISG relies on the experience and expertise of the Investment Adviser’s third-party IT service provider, which includes, among other things, over two decades of managing network
security for companies, a track record of collaborating with management teams on incident response and threat mitigation, and, through various partnerships, vetting and implementing cutting-edge cybersecurity
technologies. The ISG will provide a report, at least annually, to the entire Board regarding our cybersecurity threat risk management and strategy processes covering topics such as data security posture, results from third-
party assessments, progress towards pre-determined risk mitigation-related goals, the Investment Adviser’s incident response plan, and
65
Table of Contents
cybersecurity threat risks or incidents and developments, as well as the steps the Investment Adviser’s management has taken to respond to and mitigate such risks. The Investment Adviser’s incident response plan provides
guidelines for responding to cyber incidents and facilitates coordination across multiple operational functions of the Investment Adviser. The incident response plan includes notification to the ISG and, depending on its
nature, escalation to the Board, if appropriate. The Board is also encouraged to engage with the ISG on cybersecurity topics at other times, and material cybersecurity threats and risks are also considered by the Board in
relation to other important matters that come before it.
Item 2. Properties
Our offices are located at 500 Park Avenue, New York, New York 10022, and are provided by SLR Capital Management in accordance with the terms of the Administration Agreement. We believe that our office
facilities are suitable and adequate for our business as it is presently conducted.
Item 3. Legal Proceedings
We and our consolidated subsidiaries are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us or our consolidated subsidiaries.
From time to time, we and our consolidated subsidiaries may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our
portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that any such proceedings will have a material effect upon our financial condition or results of
operations.
Item 4. Mine Safety Disclosures
Not applicable.
66
Table of Contents
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Common Stock
Our common stock is traded on the NASDAQ Global Select Market under the symbol “SLRC”. The following table sets forth, for each fiscal quarter during the last two fiscal years, the net asset value (“NAV”)
per share of our common stock, the high and low closing sales prices for our common stock, such sales prices as a percentage of NAV per share and distributions per share.
Price Range
Premium or
(Discount)
of High Closing
Premium or
(Discount) of
Low Closing
Price to
Declared
NAV
High
Low
Price to NAV
NAV
Distributions
Fiscal 2024
Fourth Quarter
$
18.20 $
16.86 $
14.90
(7.4)%
(18.1 )% $
0.41
Third Quarter
18.20
16.25
14.66
(10.7 )
(19.5 )
0.41
Second Quarter
18.20
16.70
14.80
(8.2)
(18.7 )
0.41
First Quarter
18.19
15.76
14.76
(13.4 )
(18.9 )
0.41
Fiscal 2023
Fourth Quarter
$
18.09 $
15.43 $
14.14
(14.7 )%
(21.8 )% $
0.41
Third Quarter
18.06
15.60
14.22
(13.6 )
(21.3 )
0.41
Second Quarter
17.98
15.20
13.59
(15.5 )
(24.4 )
0.41
First Quarter
18.04
16.00
14.12
(11.3 )
(21.7 )
0.41
(1)NAV per share is determined as of the last day in the relevant quarter and therefore may not reflect the NAV per share on the date of the high and low sales prices. The net asset values shown are based on outstanding
shares at the end of each period.
(2)Calculated as of the respective high or low closing price divided by NAV and subtracting 1.
(3)Represents the cash distribution for the specified quarter.
On February 21, 2025, the last reported sales price of our common stock was $17.65 per share. As of February 21, 2025, we had 19 stockholders of record.
Shares of BDCs may trade at a market price that is less than the value of the net assets attributable to those shares. The possibility that our shares of common stock will trade at a discount from net asset value or at
premiums that are unsustainable over the long term is separate and distinct from the risk that our net asset value will decrease. Since our IPO on February 9, 2010, our shares of common stock have traded at both a discount
and a premium to the net assets attributable to those shares. As of February 21, 2025, our shares of common stock traded at a discount equal to approximately 3.0% of the net assets attributable to those shares based upon
our net asset value as of December 31, 2024. It is not possible to predict whether the shares offered hereby will trade at, above, or below net asset value.
Distributions
Tax characteristics of all distributions will be reported to stockholders on Form 1099 after the end of the applicable calendar year. Future quarterly distributions, if any, will be determined by the Board. We expect
that our distributions to stockholders will generally be from accumulated net investment income, from net realized capital gains or from non-taxable return of capital, if any, as applicable.
We have elected to be taxed as a RIC under Subchapter M of the Code. To maintain our RIC tax treatment, we must distribute at least 90% of our ordinary income and realized net short-term capital gains in
excess of realized net long-term capital losses, if any, out of the assets legally available for distribution. In addition, although we currently intend to distribute realized net capital gains (i.e., net long-term capital gains in
excess of short-term capital losses), if any, at least annually, out of the assets legally available for such distributions, we may in the future decide to retain such capital gains for investment.
We maintain an “opt out” dividend reinvestment plan for our common stockholders. As a result, if we declare a distribution, then stockholders’ cash distributions will be automatically reinvested in additional
shares of our common stock, unless they specifically “opt out” of the dividend reinvestment plan so as to receive cash distributions.
(1)
(2)
(2)
(3)
67
Table of Contents
We may not be able to achieve operating results that will allow us to make distributions at a specific level or to increase the amount of these distributions from time to time. In addition, due to the asset coverage
test applicable to us as a business development company, we may in the future be limited in our ability to make distributions. Also, our credit facilities may limit our ability to declare distributions if we default under certain
provisions. If we do not distribute a certain percentage of our income annually, we will suffer adverse tax consequences, including possible loss of the tax benefits available to us as a regulated investment company. In
addition, in accordance with GAAP and tax regulations, we include in income certain amounts that we have not yet received in cash, such as contractual payment-in-kind income, which represents contractual income added
to the loan balance that becomes due at the end of the loan term, or the accrual of original issue or market discount. Since we may recognize income before or without receiving cash representing such income, we may have
difficulty meeting the requirement to distribute at least 90% of our investment company taxable income to obtain tax benefits as a regulated investment company.
With respect to the distributions to stockholders, income from origination, structuring, closing and certain other upfront fees associated with investments in portfolio companies are treated as taxable income and
accordingly, distributed to stockholders.
We cannot assure stockholders that they will receive any distributions at a particular level.
All distributions declared in cash payable to stockholders that are participants in our dividend reinvestment plan are generally automatically reinvested in shares of our common stock. As a result, stockholders that
do not participate in the dividend reinvestment plan may experience dilution over time. Stockholders who do not elect to receive distributions in shares of common stock may experience accretion to the net asset value of
their shares if our shares are trading at a premium and dilution if our shares are trading at a discount. The level of accretion or discount would depend on various factors, including the proportion of our stockholders who
participate in the plan, the level of premium or discount at which our shares are trading and the amount of the distribution payable to a stockholder.
Recent Sales of Unregistered Securities
None.
Issuer Purchases of Equity Securities
None.
68
Table of Contents
Stock Performance Graph
This graph compares the cumulative total return on our common stock with that of the Standard & Poor’s BDC Index, Standard & Poor’s 500 Stock Index and the Russell 2000 Financial Services Index, for the
period from December 31, 2019 through December 31, 2024. The graph assumes that a person invested $10,000 in each of the following: our common stock (SLRC), the S&P BDC Index, the S&P 500 Index, and the
Russell 2000 Financial Services Index. The graph measures total stockholder return, which takes into account both changes in stock price and dividends. It assumes that dividends paid are invested in additional shares of the
same class of equity securities at the frequency with which dividends are paid of such securities during the applicable fiscal year.
The graph and other information furnished under this Part II, Item 5 of this Form 10-K shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C, or to the
liabilities of Section 18 of the 1934 Act. The stock price performance included in the above graph is not necessarily indicative of future stock price performance.
69
Table of Contents
Fees and Expenses
The following table is intended to assist an investor in understanding the costs and expenses that you will bear directly or indirectly. We caution you that some of the percentages indicated in the table below are
estimates and may vary. Except where the context suggests otherwise, whenever this report contains a reference to fees or expenses paid by “us” or “SLRC,” or that “we” will pay fees or expenses, you will indirectly bear
such fees or expenses as an investor in SLR Investment Corp.
Stockholder transaction expenses:
Sales load (as a percentage of offering price)
— %
Offering expenses (as a percentage of offering price)
— %
Dividend reinvestment plan expenses
— %
Total stockholder transaction expenses (as a percentage
of offering price)
— %
Annual expenses (as a percentage of net assets attributable
to common stock) :
Base management fee
3.16 %
Incentive fees payable under the Advisory
Agreement (up to 20%)
2.41 %
Interest payments on borrowed funds
7.20 %
Acquired fund fees and expenses
0.58 %
Other expenses (estimated)
0.94 %
Total annual expenses
14.29%
(1)In the event that the shares of common stock are sold to or through underwriters, a corresponding prospectus supplement will disclose the applicable sales load and the “Example” will be updated accordingly.
(2)The prospectus supplement corresponding to each offering will disclose the applicable offering expenses and total stockholder transaction expenses.
(3)The expenses of the dividend reinvestment plan are included in “other expenses.”
(4)Annual Expenses are presented in this manner because common stockholders will bear all costs of running the Company.
(5)Our 1.50% base management fee under the Advisory Agreement (giving effect to the Letter Agreement) is based on our gross assets, which is defined as all the assets of SLRC, excluding temporary assets, including
those acquired using borrowings for investment purposes, and assumes our gross assets remain consistent with gross assets for the fiscal year ended December 31, 2024. The base management fee is reduced to 1.00% on
gross assets that exceed 200% of total net assets as of the immediately preceding quarter.
(6)Assumes that annual incentive fees earned by our investment adviser, SLR Capital Partners, remain consistent with the incentive fees earned by SLR Capital Partners for the fiscal year ended December 31, 2024. The
incentive fee consists of two parts:
The first part, which is payable quarterly in arrears, equals 20% of the excess, if any, of our “Pre-Incentive Fee Net Investment Income” that exceeds a 1.75% quarterly (7.00% annualized) hurdle rate, which we
refer to as the Hurdle, subject to a “catch-up” provision measured at the end of each calendar quarter. The first part of the incentive fee is computed and paid on income that may include interest that is accrued but
not yet received in cash. The operation of the first part of the incentive fee for each quarter is as follows:
•no incentive fee is payable to our investment adviser in any calendar quarter in which our Pre-Incentive Fee Net Investment Income does not exceed the Hurdle of 1.75%;
•100% of our Pre-Incentive Fee Net Investment Income with respect to that portion of such Pre-Incentive Fee Net Investment Income, if any, that exceeds the Hurdle but is less than 2.1875% in any
calendar quarter (8.75% annualized) is payable to our investment adviser. We refer to this portion of our Pre-Incentive Fee Net Investment Income (which exceeds the Hurdle but is less than 2.1875%) as
the “catch-up.” The “catch-up” is meant to provide our investment adviser with 20% of our Pre-Incentive Fee Net Investment Income, as if a Hurdle did not apply when our Pre-Incentive Fee Net
Investment Income exceeds 2.1875% in any calendar quarter; and
•20% of the amount of our Pre-Incentive Fee Net Investment Income, if any, that exceeds 2.1875% in any calendar quarter (8.75% annualized) is payable to our investment adviser (once the Hurdle is
reached and the catch-up is achieved, 20% of all Pre-Incentive Fee Investment Income thereafter is allocated to our investment adviser).
The second part of the incentive fee equals 20% of our “Incentive Fee Capital Gains,” if any, which equals our realized capital gains on a cumulative basis from inception through the end of each calendar year,
computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees. The second part of the incentive fee
is payable, in arrears, at the end of each calendar year (or upon termination of the Advisory Agreement, as of the termination date).
(1)
(2)
(3)
(2)
(4)
(5)
(6)
(7)
(8)
(9)
70
Table of Contents
(7)We have historically and will in the future borrow funds from time to time to make investments to the extent we determine that the economic situation is conducive to doing so. The costs associated with our outstanding
borrowings are indirectly borne by our investors. For purposes of this section, we have computed interest expense using the average consolidated balance outstanding for borrowings during the fiscal year ended December
31, 2024. We used SOFR or a similar base rate on December 31, 2024 and the interest rate on the Credit Facility, the SPV Credit Facility, the 2027 Series G Unsecured Notes, the 2027 Series F Unsecured Notes, the 2027
Unsecured Notes, the 2026 Unsecured Notes and the 2025 Unsecured Notes on December 31, 2024. We have also included, as applicable, the estimated market discount or amortization of fees incurred in establishing the
Credit Facility, the SPV Credit Facility, the 2027 Series G Unsecured Notes, the 2027 Series F Unsecured Notes, the 2027 Unsecured Notes, the 2026 Unsecured Notes and the 2025 Unsecured Notes as of December 31,
2024. Additionally, we included the estimated cost of commitment fees for unused balances on the Credit Facility and the SPV Credit Facility. As of December 31, 2024, we had $482.0 million outstanding under the Credit
Facility, $165.1 million outstanding under the SPV Credit Facility and $49 million, $135 million, $50 million, $75 million and $85 million outstanding under the 2027 Series G Unsecured Notes, the 2027 Series F
Unsecured Notes, the 2027 Unsecured Notes, the 2026 Unsecured Notes and the 2025 Unsecured Notes, respectively. We may also issue preferred stock, subject to our compliance with applicable requirements under the
1940 Act, although we have no immediate intention to do so.
(8)The holders of shares of our common stock indirectly bear the expenses of our investment in SLR Senior Lending Program LLC (“SSLP”). No management fee is charged on our investments in SSLP in connection with
the administrative services provided to SSLP. Future expenses for SSLP may be substantially higher or lower because certain expenses may fluctuate over time.
(9)“Other expenses” are based on estimated amounts for the current fiscal year, which considers the amounts incurred for the fiscal year ended December 31, 2024 and include our overhead expenses, including payments
under our Administration Agreement based on our allocable portion of overhead and other expenses incurred by SLR Capital Management in performing its obligations under the Administration Agreement.
Example
The following example demonstrates the projected dollar amount of total cumulative expenses that would be incurred over various periods with respect to a hypothetical investment in our common stock. In
calculating the following expense amounts, we have assumed that our annual operating expenses would remain at the levels set forth in the table above and have excluded performance-based incentive fees. As such, the
below example is based on an annual expense ratio of 11.88%. In the event that shares are sold to or through underwriters, a corresponding prospectus supplement will restate this example to reflect the applicable sales load.
1 Year
3 Years
5 Years
10 Years
You would pay the following expenses on a $1,000
investment, assuming a 5% annual return
$
119 $
333 $
518 $
880
The example and the expenses in the tables above should not be considered a representation of our future expenses, and actual expenses may be greater or less than those shown. While the example
assumes, as required by the SEC, a 5% annual return, our performance will vary and may result in a return greater or less than 5%. The incentive fee under the Advisory Agreement, which, assuming a 5% annual return,
would either not be payable or would have an insignificant impact on the expense amounts shown above, is not included in the example. This illustration assumes that we will not realize any capital gains (computed net of
all realized capital losses and unrealized capital depreciation) in any of the indicated time periods. If we achieve sufficient returns on our investments, including through the realization of capital gains, to trigger an incentive
fee of a material amount, our expenses and returns to our investors would be higher. For example, if we assumed that we received our 5% annual return completely in the form of net realized capital gains on our
investments, computed net of all cumulative unrealized depreciation on our investments, the projected dollar amount of total cumulative expenses set forth in the above illustration would be as follows:
1 Year
3 Years
5 Years
10 Years
You would pay the following expenses on a $1,000
investment, assuming a 5% annual return
$
129 $
357 $
550 $
915
In addition, the example assumes no sales load. Also, while the example assumes reinvestment of all distributions at net asset value, participants in our dividend reinvestment plan will receive a number of shares of
our common stock, determined by dividing the total dollar amount of the distribution payable to a participant by the market price per share of our common stock at the close of trading on the distribution payment date, which
may be at, above or below net asset value unless the company makes open market purchases and the shares received will be determined based on the average price paid by our agent, plus commissions.
tem 6. Reserved
71
Table of Contents
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The information contained in this section should be read in conjunction with our Consolidated Financial Statements and notes thereto appearing elsewhere in this report.
Some of the statements in this report constitute forward-looking statements, which relate to future events or our future performance or financial condition. The forward-looking statements contained herein involve
risks and uncertainties, including statements as to:
•our future operating results, including our ability to achieve objectives;
•our business prospects and the prospects of our portfolio companies;
•the impact of investments that we expect to make;
•our contractual arrangements and relationships with third parties;
•the dependence of our future success on the general economy and its impact on the industries in which we invest;
•the impact of any protracted decline in the liquidity of credit markets on our business;
•the ability of our portfolio companies to achieve their objectives;
•the valuation of our investments in portfolio companies, particularly those having no liquid trading market;
•market conditions and our ability to access alternative debt markets and additional debt and equity capital;
•our expected financings and investments;
•the adequacy of our cash resources and working capital;
•the timing of cash flows, if any, from the operations of our portfolio companies;
•the ability of the Investment Adviser to locate suitable investments for us and to monitor and administer our investments;
•the ability of the Investment Adviser to attract and retain highly talented professionals;
•the ability of the Investment Adviser to adequately allocate investment opportunities among the Company and its other advisory clients;
•any conflicts of interest posed by the structure of the management fee and incentive fee to be paid to the Investment Adviser;
•changes in political, economic or industry conditions, relations between the United States, Russia, Ukraine and other nations, the interest rate environment, certain regional bank failures or conditions affecting the
financial and capital markets;
•the escalating conflict in the Middle East;
•changes in the general economy, slowing economy, rising inflation, risk of recession and risks in respect of a failure to increase the U.S. debt ceiling; and
•our ability to anticipate and identify evolving market expectations with respect to environmental, social and governance matters, including the environmental impacts of our portfolio companies’ supply chains and
operations.
These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to
differ materially from those expressed or forecasted in the forward-looking statements, including without limitation:
•an economic downturn could impair our portfolio companies’ ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies;
•a contraction of available credit and/or an inability to access the equity markets could impair our lending and investment activities;
•interest rate volatility could adversely affect our results, particularly because we use leverage as part of our investment strategy;
72
Table of Contents
•currency fluctuations could adversely affect the results of our investments in foreign companies, particularly to the extent that we receive payments denominated in foreign currency rather than U.S. dollars; and
•the risks, uncertainties and other factors we identify in Item 1A. — Risk Factors contained in this Annual Report on Form 10-K for the year ended December 31, 2024 and in our other filings with the SEC.
We generally use words such as “anticipates,” “believes,” “expects,” “intends” and similar expressions to identify forward-looking statements. Our actual results could differ materially from those projected in the
forward-looking statements for any reason, including any factors set forth in “Risk Factors” and elsewhere in this report.
We have based the forward-looking statements included in this report on information available to us on the date of this report, and we assume no obligation to update any such forward-looking statements.
Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may
make directly to you or through reports that we in the future may file with the SEC, including any annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
Overview
SLR Investment Corp. (the “Company”, “SLRC”, “we” or “our”), a Maryland corporation formed in November 2007, is a closed-end, externally managed, non-diversified management investment company that
has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). Furthermore, as the Company is an investment company, it continues to
apply the guidance in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946. In addition, for U.S federal income tax purposes, the Company has elected to be treated as
a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).
We invest primarily in privately held U.S. middle-market companies, where we believe the supply of primary capital is limited and the investment opportunities are most attractive. Our investment objective is to
generate both current income and capital appreciation through debt and equity investments. We invest primarily in leveraged middle-market companies in the form of senior secured loans, financing leases and to a lesser
extent, unsecured loans and equity securities. From time to time, we may also invest in public companies that are thinly traded. Our business is focused primarily on the direct origination of investments through portfolio
companies or their financial sponsors. Our investments generally range between $5 million and $100 million each, although we expect that this investment size will vary proportionately with the size of our capital base
and/or with strategic initiatives. Our investment activities are managed by SLR Capital Partners, LLC (the “Investment Adviser”) and supervised by our board of directors (the “Board”), a majority of whom are non-
interested, as such term is defined in the 1940 Act. SLR Capital Management, LLC (the “Administrator”) provides the administrative services necessary for us to operate.
In addition, we may invest a portion of our portfolio in other types of investments, which we refer to as opportunistic investments, which are not our primary focus but are intended to enhance our overall returns.
These investments may include, but are not limited to, direct investments in public companies that are not thinly traded and securities of leveraged companies located in select countries outside of the United States.
Recent Developments
On February 18, 2025, the Company closed a private offering of $50 million of unsecured notes due 2028 (the “2028 Unsecured Notes”) with a fixed interest rate of 6.14% and a maturity date of February 18,
2028. Interest on the 2028 Unsecured Notes is due semi-annually on February 18th and August 18th. The 2028 Unsecured Notes were issued in a private placement only to qualified institutional buyers.
On February 25, 2025, the Board declared a quarterly distribution of $0.41 per share payable on March 28, 2025 to holders of record as of March 14, 2025.
73
Table of Contents
Investments
Our level of investment activity can and does vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to middle market companies, the level of
merger and acquisition activity for such companies, the general economic environment and the competitive environment for the types of investments we make. As a BDC, we must not acquire any assets other than
“qualifying assets” specified in the 1940 Act unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets (with certain limited exceptions). Qualifying assets include investments in
“eligible portfolio companies.” The definition of “eligible portfolio company” includes certain companies that do not have any securities listed on a national securities exchange and companies whose securities are listed on
a national securities exchange but whose market capitalization is less than $250 million.
Revenue
We generate revenue primarily in the form of interest and dividend income from the securities we hold and capital gains, if any, on investment securities that we may sell. Our debt investments generally have a
stated term of three to seven years and typically bear interest at a floating rate usually determined on the basis of a benchmark Secured Overnight Financing Rate (“SOFR”), commercial paper rate, or the prime rate. Interest
on our debt investments is generally payable monthly or quarterly but may be bi-monthly or semi-annually. In addition, our investments may provide payment-in-kind (“PIK”) income. Such amounts of accrued PIK income
are added to the cost of the investment on the respective capitalization dates and generally become due at maturity of the investment or upon the investment being called by the issuer. We may also generate revenue in the
form of commitment, origination, structuring fees, fees for providing managerial assistance and, if applicable, consulting fees, etc.
Expenses
All investment professionals of the Investment Adviser and their respective staffs, when and to the extent engaged in providing investment advisory and management services, and the compensation and routine
overhead expenses of such personnel allocable to such services, are provided and paid for by the Investment Adviser. We bear all other costs and expenses of our operations and transactions, including (without limitation):
•the cost of our organization and public offerings;
•the cost of calculating our net asset value, including the cost of any third-party valuation services;
•the cost of effecting sales and repurchases of our shares and other securities;
•interest payable on debt, if any, to finance our investments;
•fees payable to third parties relating to, or associated with, making investments, including fees and expenses associated with performing due diligence reviews of prospective investments and advisory fees;
•transfer agent and custodial fees;
•fees and expenses associated with marketing efforts;
•federal and state registration fees and any stock exchange listing fees;
•federal, state and local taxes;
•independent directors’ fees and expenses;
•brokerage commissions;
•fidelity bond, directors and officers errors and omissions liability insurance and other insurance premiums;
•direct costs and expenses of administration, including printing, mailing, long distance telephone and staff;
•fees and expenses associated with independent audits and outside legal costs;
•costs associated with our reporting and compliance obligations under the 1940 Act and applicable federal and state securities laws; and
74
Table of Contents
•all other expenses incurred by either SLR Capital Management or us in connection with administering our business, including payments under the Administration Agreement that will be based upon our allocable
portion of overhead and other expenses incurred by SLR Capital Management in performing its obligations under the Administration Agreement, including rent, the fees and expenses associated with performing
compliance functions, and our allocable portion of the costs of compensation and related expenses of our chief compliance officer and our chief financial officer and their respective staffs.
We expect our general and administrative operating expenses related to our ongoing operations to increase moderately in dollar terms. During periods of asset growth, we generally expect our general and
administrative operating expenses to decline as a percentage of our total assets and increase during periods of asset declines. Incentive fees, interest expense and costs relating to future offerings of securities, among others,
may also increase or reduce overall operating expenses based on portfolio performance, interest rate benchmarks, and offerings of our securities relative to comparative periods, among other factors.
Macroeconomic Environment
Credit markets were highly competitive in 2024 with lower interest rates. The U.S. economy continued to grow during the year amidst declining inflationary pressures. The year ended with an expectation for further
interest rate cuts and uncertainties around a new U.S. government and potential impacts to the economy.
Portfolio and Investment Activity
During the year ended December 31, 2024, we invested approximately $468 million across approximately 50 portfolio companies. This compares to investing approximately $812 million across over 85 portfolio
companies for the year ended December 31, 2023. Investments sold, prepaid or repaid during the year ended December 31, 2024 totaled approximately $634 million versus approximately $750 million for the year ended
December 31, 2023.
At December 31, 2024, our portfolio consisted of 122 portfolio companies and was invested 30.7% in cash flow senior secured loans, 35.8% in asset-based senior secured loans / SLR Credit Solutions (“SLR
Credit”) / SLR Healthcare ABL (“SLR Healthcare”) / SLR Business Credit, 21.6% in equipment senior secured financings / SLR Equipment Finance (“SLR Equipment”) / Kingsbridge Holdings, LLC (“KBH”) and 11.9%
in life science senior secured loans, in each case, measured at fair value, versus 151 portfolio companies and was invested 32.5% in cash flow senior secured loans, 27.8% in asset-based senior secured loans / SLR Credit
Solutions / SLR Healthcare / SLR Business Credit, 23.0% in equipment senior secured financings / SLR Equipment Finance / Kingsbridge Holdings, LLC and 16.7% in life science senior secured loans, in each case,
measured at fair value, at December 31, 2023.
At December 31, 2024, 80.6%, or $1.59 billion, of our income producing investment portfolio* was floating rate and 19.4%, or $383 million, was fixed rate, measured at fair value. At December 31, 2023, 78.7%,
or $1.67 billion, of our income producing investment portfolio* was floating rate and 21.3%, or $451 million, was fixed rate, measured at fair value. As of December 31, 2024 and 2023, we had one and one issuers on non-
accrual status, respectively.
* We have included SLR Credit, SLR Equipment, SLR Healthcare, SLR Business Credit and KBH within our income producing investment portfolio.
SLR Credit Solutions
On December 28, 2012, we acquired an equity interest in Crystal Capital Financial Holdings LLC (“Crystal Financial”) for $275 million in cash. Crystal Financial owned approximately 98% of the outstanding
ownership interest in SLR Credit Solutions, f/k/a Crystal Financial LLC. The remaining financial interest was held by various employees of SLR Credit, through their investment in Crystal Management LP. SLR Credit had
a diversified portfolio of 23 loans having a total par value of approximately $400 million at November 30, 2012 and a $275 million committed revolving credit facility. On July 28, 2016, the Company purchased Crystal
Management LP’s approximately 2% equity interest in SLR Credit for approximately $5.7 million. Upon the closing of this transaction, the Company holds 100% of the equity interest in SLR Credit. On September 30,
2016, Crystal Capital Financial Holdings LLC was dissolved. As of December 31, 2024, total commitments to the revolving credit facility were $300 million.
As of December 31, 2024, SLR Credit had 27 funded commitments to 22 different issuers with total funded loans of approximately $317.6 million on total assets of $364.3 million. As of December 31, 2023, SLR
Credit had 31 funded commitments to 26 different issuers with total funded loans of approximately $406.6 million on total assets of $438.4 million. As of December 31,
75
Table of Contents
2024 and December 31, 2023, the largest loan outstanding totaled $27.9 million and $30.0 million, respectively. For the same periods, the average exposure per issuer was $14.4 million and $15.6 million, respectively. SLR
Credit’s credit facility, which is non-recourse to the Company, had approximately $150.0 million and $218.9 million of borrowings outstanding at December 31, 2024 and December 31, 2023, respectively. For the years
ended December 31, 2024 and December 31, 2023, SLR Credit had net income of $24.9 million and $6.5 million, respectively, on gross income of $55.2 million and $57.8 million, respectively. Due to timing and non-cash
items, there may be material differences between GAAP net income and cash available for distributions. As such, and subject to fluctuations in SLR Credit’s funded commitments, the timing of originations, and the
repayments of financings, the Company cannot guarantee that SLR Credit will be able to maintain consistent dividend payments to us. SLR Credit’s consolidated financial statements for the fiscal years ended December 31,
2024 and December 31, 2023 are attached as an exhibit to this annual report on Form 10-K.
SLR Equipment Finance
On July 31, 2017, we acquired a 100% equity interest in NEF Holdings, LLC, which conducts its business through its wholly-owned subsidiary Nations Equipment Finance, LLC. Effective February 25, 2021,
Nations Equipment Finance, LLC and its related companies are doing business as SLR Equipment Finance. SLR Equipment is an independent equipment finance company that provides senior secured loans and leases
primarily to U.S. based companies. We invested $209.9 million in cash to effect the transaction, of which $145.0 million was invested in the equity of SLR Equipment through our wholly-owned consolidated taxable
subsidiary NEFCORP LLC and our wholly-owned consolidated subsidiary NEFPASS LLC, and $64.9 million was used to purchase certain leases and loans held by SLR Equipment through NEFPASS LLC. On January 31,
2024, SLR Equipment entered into a $225 million senior secured credit facility with a maturity date of January 31, 2027. On March 1, 2024, the credit facility was expanded to $350 million of commitments.
As of December 31, 2024, SLR Equipment had 398 funded equipment-backed leases and loans to 217 different customers with a total net investment in leases and loans of approximately $324.9 million on total
assets of $366.3 million. As of December 31, 2023, SLR Equipment had 150 funded equipment-backed leases and loans to 62 different customers with a total net investment in leases and loans of approximately $203.7
million on total assets of $254.7 million. As of December 31, 2024 and December 31, 2023, the largest position outstanding totaled $17.9 million and $17.9 million, respectively. For the same periods, the average exposure
per customer was $1.5 million and $3.3 million, respectively. SLR Equipment’s credit facility, which is non-recourse to the Company, had approximately $261.0 million and $137.2 million of borrowings outstanding at
December 31, 2024 and December 31, 2023, respectively. For the years ended December 31, 2024 and December 31, 2023, SLR Equipment had net losses of $9.5 million and $6.4 million, respectively, on gross income of
$22.0 million and $19.6 million, respectively. Due to timing and non-cash items, there may be material differences between GAAP net income and cash available for distributions. As such, and subject to fluctuations in SLR
Equipment’s funded commitments, the timing of originations, and the repayments of financings, the Company cannot guarantee that SLR Equipment will be able to maintain consistent dividend payments to us. SLR
Equipment’s consolidated financial statements for the fiscal years ended December 31, 2024 and December 31, 2023 are attached as an exhibit to this annual report on Form 10-K.
Kingsbridge Holdings, LLC
On November 3, 2020, the Company acquired 87.5% of the equity securities of Kingsbridge Holdings, LLC through KBH Topco LLC (“KBHT”), a Delaware corporation. KBH is a residual focused independent
mid-ticket lessor of equipment primarily to U.S. large corporate companies. The Company invested $216.6 million to effect the transaction, of which $136.6 million was invested to acquire 87.5% of KBHT’s equity and
$80.0 million in KBH’s debt. The existing management team of KBH committed to continuing to lead KBH after the transaction. Following the transaction, the Company owned 87.5% of KBHT equity and the KBH
management team owned the remaining 12.5% of KBHT’s equity. On March 13, 2024, as per the terms of the original purchase agreement, the Company acquired 3.125% of KBHT’s equity from the KBH management
team. Effective with this purchase, the Company owns 90.625% of KBHT’s equity and the KBH management team owns the remaining 9.375%.
As of December 31, 2024 and December 31, 2023, KBHT had total assets of $920.1 million and $857.3 million, respectively. For the same periods, debt recourse to KBHT totaled $271.6 million and $249.8
million, respectively, and non-recourse debt totaled $421.6 million and $367.1 million, respectively. None of the debt is recourse to the Company. For the years ended December 31, 2024 and December 31, 2023, KBHT
had net income of $12.0 million and $9.1 million, respectively, on gross income of $341.3 million and $327.4 million, respectively. Due to timing and non-cash items, there may be material differences between GAAP net
income and cash available for distributions. As such, and subject to fluctuations in KBHT’s funded commitments, the timing of originations, and the repayments of financings, the Company cannot guarantee that KBHT will
be able to maintain consistent dividend payments to us. KBHT’s consolidated financial statements for the years ended December 31, 2024 and December 31, 2023 are attached as an exhibit to this annual report on Form 10-
K.
76
Table of Contents
SLR Healthcare ABL
SUNS acquired an equity interest in SLR Healthcare ABL, f/k/a Gemino Healthcare Finance, LLC on September 30, 2013. SLR Healthcare is a commercial finance company that originates, underwrites, and
manages primarily secured, asset-based loans for small and mid-sized companies operating in the healthcare industry. SUNS’s initial investment in SLR Healthcare was approximately $32.8 million. The management team
of SLR Healthcare co-invested in the transaction and continues to lead SLR Healthcare. As of December 31, 2024, SLR Healthcare’s management team and the Company own approximately 7% and 93% of the equity in
SLR Healthcare, respectively. SLRC acquired SLR Healthcare in connection with the Mergers on April 1, 2022. Effective with an amendment dated September 19, 2024, SLR Healthcare has a $160 million non-recourse
credit facility, which is expandable to $200 million under its accordion facility. The maturity date of this facility is March 31, 2026.
SLR Healthcare currently manages a highly diverse portfolio of directly-originated and underwritten senior-secured commitments. As of December 31, 2024, the portfolio totaled approximately $288.3 million of
commitments with a total net investment in loans of $130.2 million on total assets of $138.5 million. As of December 31, 2023, the portfolio totaled approximately $255.0 million of commitments with a total net investment
in loans of $111.3 million on total assets of $118.6 million. At December 31, 2024, the portfolio consisted of 47 issuers with an average balance of approximately $2.8 million versus 42 issuers with an average balance of
approximately $2.6 million at December 31, 2023. All of the commitments in SLR Healthcare’s portfolio are floating-rate, senior-secured, cash-pay loans. SLR Healthcare’s credit facility, which is non-recourse to us, had
approximately $99.6 million and $84.7 million of borrowings outstanding at December 31, 2024 and December 31, 2023, respectively. For the years ended December 31, 2024 and December 31, 2023, SLR Healthcare had
net income of $5.6 million and $5.5 million, respectively, on gross income of $20.0 million and $17.9 million, respectively. Due to timing and non-cash items, there may be material differences between GAAP net income
and cash available for distributions. SLR Healthcare’s consolidated financial statements for the fiscal years ended December 31, 2024 and December 31, 2023 are attached as an exhibit to this annual report on Form 10-K.
SLR Business Credit
SUNS acquired 100% of the equity interests of North Mill Capital LLC (“NMC”) on October 20, 2017. NMC is a leading asset-backed lending commercial finance company that provides senior secured asset-
backed financings to U.S. based small-to-medium-sized businesses primarily in the manufacturing, services and distribution industries. SUNS invested approximately $51.0 million to effect the transaction. Subsequently,
SUNS contributed 1% of its equity interest in NMC to ESP SSC Corporation. Immediately thereafter, SUNS and ESP SSC Corporation contributed their equity interests to NorthMill LLC (“North Mill”). On May 1, 2018,
North Mill merged with and into NMC, with NMC being the surviving company. SUNS and ESP SSC Corporation then owned 99% and 1% of the equity interests of NMC, respectively. The management team of NMC
continues to lead NMC. On June 28, 2019, North Mill Holdco LLC (“NM Holdco”), a newly formed entity, and ESP SSC Corporation acquired 100% of Summit Financial Resources, a Salt Lake City-based provider of
asset-backed financing to small and medium-sized businesses. As part of this transaction, SUNS’s 99% interest in the equity of NMC was contributed to NM Holdco. This approximately $15.5 million transaction was
financed with borrowings on NMC’s credit facility. Effective February 25, 2021, NMC and its related companies are doing business as SLR Business Credit. On June 3, 2021, NMC acquired 100% of Fast Pay Partners
LLC, a Los Angeles-based provider of asset-backed financing to digital media companies. The transaction purchase price of approximately $66.7 million was financed with equity from SUNS of $19.0 million and
borrowings on NMC’s credit facility of $47.7 million. SLRC acquired SLR Business Credit in connection with the Mergers on April 1, 2022. On September 27, 2024, NMC acquired an asset-based factoring portfolio and
operations from Webster Bank, N.A.’s Commercial Services Division. The transaction purchase price of approximately $127 million was funded with $30 million of equity from the Company and the remaining $97 million
from borrowings on NMC’s credit facility.
SLR Business Credit currently manages a highly diverse portfolio of directly-originated and underwritten senior-secured commitments. As of December 31, 2024, the portfolio totaled approximately $858.0
million of commitments, of which $488.4 million were funded, on total assets of $527.1 million. As of December 31, 2023, the portfolio totaled approximately $610.9 million of commitments, of which $273.5 million were
funded, on total assets of $315.3 million. At December 31, 2024, the portfolio consisted of 188 issuers with an average balance of approximately $2.6 million versus 102 issuers with an average balance of approximately
$2.7 million at December 31, 2023. NMC has a senior credit facility with a bank lending group for $325.3 million which expires on November 13, 2025. Borrowings are secured by substantially all of NMC’s assets.
NMC’s credit facility, which is non-recourse to us, had approximately $231.0 million and $222.9 million of borrowings outstanding at December 31, 2024 and December 31, 2023, respectively. For the years ended
December 31, 2024 and December 31, 2023, SLR Business Credit had net income (loss) of $10.5 million and ($9.5) million, respectively, on gross income of $45.9 million and $38.1 million, respectively. Due to timing and
non-cash items, there may be material differences between GAAP net income and cash available for distributions. As such, and subject to fluctuations in SLR Business Credit’s funded commitments, the timing of
originations, and the repayments of financings, the Company cannot guarantee that SLR Business Credit will be able to maintain consistent dividend payments to us. SLR Business Credit’s consolidated financial statements
for the fiscal years ended December 31, 2024 and December 31, 2023 are attached as an exhibit to this annual report on Form 10-K.
77
Table of Contents
Stock Repurchase Program
On May 7, 2024, our Board authorized an extension of a program for the purpose of repurchasing up to $50 million of our outstanding shares of common stock. Under the repurchase program, we may, but are not
obligated to, repurchase shares of our outstanding common stock in the open market from time to time provided that we comply with our code of ethics and the guidelines specified in Rule 10b-18 of the 1934 Act, including
certain price, market volume and timing constraints. In addition, any repurchases will be conducted in accordance with the 1940 Act. Unless further amended or extended by our Board, we expect the repurchase program to
be in place until the earlier of May 7, 2025 or until $50 million of our outstanding shares of common stock have been repurchased. The timing and number of additional shares to be repurchased will depend on a number of
factors, including market conditions. There are no assurances that we will engage in any repurchases beyond what is reported herein. There were no share repurchases during the fiscal year ended December 31, 2024.
During the fiscal year ended December 31, 2023, the Company repurchased 746 shares at an average price of approximately $14.02 per share, inclusive of commissions. The total dollar amount of shares repurchased for the
fiscal year ended December 31, 2023 was $0.01 million.
SLR Senior Lending Program LLC
On October 12, 2022, the Company entered into an amended and restated limited liability company agreement with Sunstone Senior Credit L.P. (the “Investor”) to create a joint venture vehicle, SLR Senior
Lending Program LLC (“SSLP”). SSLP is expected to invest primarily in senior secured cash flow loans. The Company and the Investor each have made initial equity commitments of $50 million, resulting in a total equity
commitment of $100 million. Investment decisions and all material decisions in respect of SSLP must be approved by representatives of the Company and the Investor.
On December 1, 2022, SSLP commenced operations. On December 12, 2022, SSLP, as servicer, and SLR Senior Lending Program SPV LLC (“SSLP SPV”), a newly formed wholly owned subsidiary of SSLP, as
borrower, entered into a $100 million senior secured revolving credit facility (the “SSLP Facility”) with Goldman Sachs Bank USA acting as administrative agent. On October 20, 2023, the SSLP Facility was expanded to
$150 million. Effective with an amendment on March 25, 2024, the SSLP Facility is
scheduled to mature on December 12, 2028 and generally bears interest at a rate of SOFR plus 2.90%. SSLP and SSLP SPV, as applicable, have made certain customary representations and warranties, and are required to
comply with various covenants, including leverage restrictions, reporting requirements and other customary requirements for similar credit facilities. The SSLP Facility also includes usual and customary events of default for
credit facilities of this nature. As of December 31, 2024 and December 31, 2023, borrowings outstanding on the SSLP Facility totaled $96.6 million and $106.9 million, respectively.
As of December 31, 2024 and December 31, 2023, the Company and the Investor had contributed combined equity capital in the amount of $95.75 million and $85.75 million, respectively. As of December 31,
2024 and December 31, 2023, the Company and the Investor’s combined remaining commitments to SSLP totaled $4.25 million and $14.25 million, respectively. The Company, along with the Investor, controls the funding
of SSLP, and SSLP may not call the unfunded commitments of the Company or the Investor without approval of both the Company and the Investor.
As of December 31, 2024 and December 31, 2023, SSLP had total assets of $197.5 million and $195.9 million, respectively. For the same periods, SSLP’s portfolio consisted of floating rate senior secured loans
to 32 and 32 different borrowers, respectively. For the years ended December 31, 2024 and December 31, 2023, SSLP invested $47.6 million in 16 portfolio companies and $188.7 million in 32 portfolio companies,
respectively. For the same periods, investments prepaid totaled $57.5 million and $21.1 million, respectively.
78
Table of Contents
SSLP Portfolio as of December 31, 2024 (dollar amounts in thousands)
Description
Industry
Spread
Above
Index
Floor
Interest
Rate
Maturity
Date
Par
Amount
Cost
Fair
Value
Accession Risk Management Group, Inc.
Insurance
S+475
0.75%
9.08%
11/1/29
$
6,888
$
6,865
$
6,888
Aegis Toxicology Sciences Corporation
Health Care Providers & Services
S+550
1.00%
10.28%
5/9/25
2,895
2,895
2,895
Alkeme Intermediary Holdings, LLC
Insurance
S+575
1.00%
10.08%
10/28/26
5,984
5,861
5,984
All States Ag Parts, LLC
Trading Companies & Distributors
S+600
1.00%
10.59%
9/1/26
2,111
2,111
2,111
BayMark Health Services, Inc.
Health Care Providers & Services
S+500
1.00%
9.59%
6/11/27
3,992
3,992
3,992
CC SAG Holdings Corp.
Diversified Consumer Services
S+525
0.75%
9.58%
6/29/28
8,877
8,877
8,877
Crewline Buyer, Inc.
IT Services
S+675
1.00%
11.11%
11/8/30
5,084
4,966
5,084
CVAUSA Management, LLC
Health Care Providers & Services
S+650
1.00%
10.84%
5/22/29
5,357
5,220
5,357
Erie Construction Mid-west, LLC
Building Products
S+475
1.00%
10.09%
7/30/27
8,000
8,000
8,000
Exactcare Parent, Inc.
Health Care Providers & Services
S+550
1.00%
10.03%
11/5/29
3,203
3,125
3,203
Eyesouth Eye Care Holdco LLC
Health Care Providers & Services
S+550
1.00%
10.15%
10/5/2029
2,646
2,596
2,646
Fertility (ITC) Investment Holdco, LLC
Health Care Providers & Services
S+650
1.00%
11.74%
1/3/29
5,895
5,757
5,895
Foundation Consumer Brands, LLC
Personal Products
S+625
1.00%
10.89%
2/12/27
8,102
8,102
8,102
High Street Buyer, Inc.
Insurance
S+525
0.75%
9.58%
4/16/28
7,527
7,527
7,527
iCIMS, Inc.
Software
S+575
0.75%
10.38%
8/18/28
3,195
3,158
3,195
Kaseya, Inc.
Software
S+550
0.75%
10.75%
6/23/29
9,127
9,127
9,127
Kid Distro Holdings, LLC
Software
S+475
1.00%
9.49%
10/1/29
8,848
8,848
8,848
Legacy Service Partners, LLC
Diversified Consumer Services
S+525
1.00%
9.73%
1/9/29
2,796
2,733
2,796
Maxor Acquisition, Inc.
Health Care Providers & Services
S+600
1.00%
10.46%
3/1/29
6,058
5,906
6,058
Medrina, LLC
Health Care Providers & Services
S+600
1.00%
10.44%
10/20/29
2,386
2,333
2,386
ONS MSO, LLC
Health Care Providers & Services
S+625
1.00%
10.84%
7/8/26
5,833
5,738
5,833
Plastic Management, LLC
Health Care Providers & Services
S+500
1.00%
9.43%
8/18/27
5,579
5,453
5,579
Retina Midco, Inc.
Health Care Providers & Services
S+575
1.00%
10.35%
1/31/26
9,918
9,793
10,116
RQM+ Corp.
Life Sciences Tools & Services
S+675
1.00%
11.34%
8/12/29
5,895
5,895
5,659
RxSense Holdings LLC
Diversified Consumer Services
S+500
1.00%
9.69%
3/13/26
8,875
8,875
8,875
SunMed Group Holdings, LLC
Health Care Equipment & Supplies
S+550
0.75%
10.19%
6/16/28
8,856
8,856
8,856
The Townsend Company, LLC
Commercial Services & Supplies
S+500
1.00%
9.36%
8/15/30
4,117
4,026
4,078
Tilley Distribution, Inc.
Trading Companies & Distributors
S+600
1.00%
10.48%
12/31/26
5,607
5,607
5,495
United Digestive MSO Parent, LLC
Health Care Providers & Services
S+575
1.00%
10.08%
3/30/29
3,433
3,346
3,433
Urology Management Holdings, Inc.
Health Care Providers & Services
S+550
1.00%
9.83%
6/15/27
4,112
4,035
4,112
UVP Management, LLC
Health Care Providers & Services
S+625
1.00%
10.73%
9/15/25
4,858
4,803
4,858
WCI-BXC Purchaser, LLC
Distributors
S+625
1.00%
10.78%
11/6/30
2,875
2,810
2,875
$
177,236
$
178,740
(1)Floating rate instruments accrue interest at a predetermined spread relative to an index, typically the SOFR. These instruments are typically subject to a SOFR floor.
(2)Floating rate debt investments typically bear interest at a rate determined by reference to the SOFR (“S”), and which typically reset monthly, quarterly or semi-annually. For each debt investment, we have provided the
current interest rate in effect as of December 31, 2024.
(3)Represents the fair value in accordance with ASC Topic 820. The determination of such fair value is not included in the Board’s valuation process described elsewhere herein.
(4)The Company also holds this security on its Consolidated Statements of Assets and Liabilities.
(1)
(2)
(3)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
79
Table of Contents
SSLP Portfolio as of December 31, 2023 (dollar amounts in thousands)
Description
Industry
Spread
Above
Index
Floor
Interest
Rate
Maturity
Date
Par
Amount
Cost
Fair
Value
Aegis Toxicology Sciences Corporation
Health Care Providers & Services
S+550
1.00 %
11.13 %
5/9/25
$
2,947
$
2,947
$
2,947
Alkeme Intermediary Holdings, LLC
Insurance
S+650
1.00 %
11.96 %
10/28/26
3,017
2,934
3,017
All States Ag Parts, LLC
Trading Companies & Distributors
S+600
1.00 %
11.61 %
9/1/26
2,133
2,133
2,133
Apex Service Partners, LLC
Diversified Consumer Services
S+700
1.00 %
11.87 %
10/24/30
4,905
4,784
4,783
Atria Wealth Solutions, Inc.
Diversified Financial Services
S+650
1.00 %
11.97 %
5/31/24
2,468
2,468
2,468
BayMark Health Services, Inc.
Health Care Providers & Services
S+500
1.00 %
10.61 %
6/11/27
4,033
4,033
4,033
CC SAG Holdings Corp.
Diversified Consumer Services
S+575
0.75 %
11.22 %
6/29/28
8,969
8,969
8,969
CVAUSA Management, LLC
Health Care Providers & Services
S+650
1.00 %
11.74 %
5/22/29
5,412
5,251
5,412
ENS Holdings III Corp. & ES Opco USA LLC
Trading Companies & Distributors
S+475
1.00 %
10.20 %
12/31/25
1,086
1,086
1,086
Erie Construction Mid-west, LLC
Building Products
S+475
1.00 %
10.20 %
7/30/27
8,457
8,457
8,457
Fertility (ITC) Investment Holdco, LLC
Health Care Providers & Services
S+650
1.00 %
11.97 %
1/3/29
5,955
5,791
5,955
Foundation Consumer Brands, LLC
Personal Products
S+625
1.00 %
11.79 %
2/12/27
8,641
8,641
8,641
GSM Acquisition Corp.
Leisure Equipment & Products
S+500
1.00 %
10.47 %
11/16/26
8,541
8,541
8,541
Higginbotham Insurance Agency, Inc.
Insurance
S+550
1.00 %
10.96 %
11/25/28
7,573
7,573
7,573
High Street Buyer, Inc.
Insurance
S+575
0.75 %
11.25 %
4/16/28
7,604
7,604
7,604
iCIMS, Inc.
Software
S+725
0.75 %
12.62 %
8/18/28
3,089
3,066
3,089
Kaseya, Inc.
Software
S+600
0.75 %
11.38 %
6/23/29
9,058
9,058
9,058
Kid Distro Holdings, LLC
Software
S+550
1.00 %
11.00 %
10/1/27
8,939
8,939
8,939
Maxor Acquisition, Inc.
Health Care Providers & Services
S+675
1.00 %
12.48 %
3/1/29
6,120
5,940
6,120
ONS MSO, LLC
Health Care Providers & Services
S+625
1.00 %
11.62 %
7/8/26
5,922
5,784
5,922
Pinnacle Treatment Centers, Inc.
Health Care Providers & Services
S+650
1.00 %
11.95 %
1/2/26
6,951
6,951
6,951
Plastics Management, LLC
Health Care Providers & Services
S+500
1.00 %
10.45 %
8/18/27
5,637
5,471
5,637
RQM+ Corp.
Life Sciences Tools & Services
S+575
1.00 %
11.36 %
8/12/26
5,955
5,955
5,955
RxSense Holdings LLC
Diversified Consumer Services
S+500
1.00 %
10.48 %
3/13/26
8,968
8,968
8,968
SunMed Group Holdings, LLC
Health Care Equipment & Supplies
S+550
0.75 %
10.96 %
6/16/28
8,948
8,948
8,948
The Townsend Company, LLC
Commercial Services & Supplies
S+625
1.00 %
11.61 %
8/15/29
3,642
3,555
3,642
Tilley Distribution, Inc.
Trading Companies & Distributors
S+600
1.00 %
11.50 %
12/31/26
5,850
5,850
5,850
Ultimate Baked Goods Midco LLC
Packaged Foods & Meats
S+625
1.00 %
11.71 %
8/13/27
8,954
8,954
8,865
United Digestive MSO Parent, LLC
Health Care Providers & Services
S+675
1.00 %
12.25 %
3/30/29
3,411
3,311
3,411
Urology Management Holdings, Inc.
Health Care Providers & Services
S+650
1.00 %
11.93 %
6/15/26
3,179
3,102
3,155
Vessco Midco Holdings, LLC
Water Utilities
S+450
1.00 %
9.96 %
11/2/26
4,304
4,304
4,304
West-NR Parent, Inc.
Insurance
S+625
1.00 %
11.70 %
12/27/27
6,822
6,691
6,822
$
186,059
$
187,255
(1)Floating rate instruments accrue interest at a predetermined spread relative to an index, typically the LIBOR or SOFR. These instruments are typically subject to a LIBOR or SOFR floor.
(2)Floating rate debt investments typically bear interest at a rate determined by reference to either the LIBOR (“L”) or SOFR (“S”), and which typically reset monthly, quarterly or semi-annually. For each debt investment,
we have provided the current interest rate in effect as of December 31, 2023.
(3)Represents the fair value in accordance with ASC Topic 820. The determination of such fair value is not included in the Board’s valuation process described elsewhere herein.
(4)The Company also holds this security on its Consolidated Statements of Assets and Liabilities.
Below is certain summarized financial information for SSLP as of December 31, 2024 and December 31, 2023 and for the years ended December 31, 2024 and December 31, 2023:
December 31, 2024
December 31, 2023
Selected Balance Sheet Information for SSLP (in
thousands):
Investments at fair value (cost $177,236 and $186,059,
respectively)
$
178,740 $
187,255
Cash and other assets
18,721
8,613
Total assets
$
197,461 $
195,868
Debt outstanding ($96,600 and $106,900 face amounts,
respectively, reported net of unamortized debt issuance
costs of $1,572 and $1,697, respectively)
$
95,028 $
105,203
Distributions payable
3,381
1,900
Interest payable and other credit facility related expenses
472
551
Accrued expenses and other payables
398
416
Total liabilities
$
99,279 $
108,070
Members’ equity
$
98,182 $
87,798
Total liabilities and members’ equity
$
197,461 $
195,868
(1)
(2)
(3)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
80
Table of Contents
Year Ended
December 31,
2024
Year Ended
December 31,
2023
Selected Income Statement Information for SSLP
(in thousands):
Interest income
$
24,330 $
10,209
Service fees*
$
512 $
224
Interest and other credit facility expenses
10,916
6,517
Other general and administrative expenses
157
195
Total expenses
$
11,585 $
6,936
Net investment income
$
12,745 $
3,273
Realized gain on investments
320
30
Net change in unrealized gain on investments
308
1,166
Net realized and unrealized gain on investments
628
1,196
Net income
$
13,373 $
4,469
* Service fees are included within the Company’s Consolidated Statements of Operations as other income.
Critical Accounting Policies
The preparation of consolidated financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and revenues and expenses during the periods reported. Actual results could materially differ from those estimates.
We have identified the following items as critical accounting policies. Within the context of these critical accounting policies and disclosed subsequent events herein, we are not currently aware of any other reasonably likely
events or circumstances that would result in materially different amounts being reported.
Valuation of Portfolio Investments
Rule 2a-5 under the 1940 Act addresses the fair valuation of fund investments. The rule sets forth requirements for good faith determinations of fair value, as well as for the performance of fair value
determinations, including related oversight and reporting obligations. The rule also defines “readily available market quotations” for purposes of the definition of “value” under the 1940 Act, and the SEC noted that this
definition will apply in all contexts under the 1940 Act. The Company complies with Rule 2a-5’s valuation requirements.
We conduct the valuation of our assets, pursuant to which our net asset value is determined, at all times consistent with GAAP and the 1940 Act. The Board will (1) periodically assess and manage valuation risks;
(2) establish and apply fair value methodologies; (3) test fair value methodologies; (4) oversee and evaluate third-party pricing services, as applicable; (5) oversee the reporting required by Rule 2a-5 under the 1940 Act; and
(6) maintain recordkeeping requirements under Rule 2a-5.
It is anticipated that in respect of many of the Company’s assets, readily available market quotations will not be obtainable and that such assets will be valued at fair value. A market quotation is readily available
for a security only when that quotation is a quoted price (unadjusted) in active markets for identical investments that the Company can access at the measurement date, provided that a quotation will not be readily available if
it is not reliable. If the Company anticipates using a market quotation for a security, it will also monitor for circumstances that may necessitate the use of fair value, such as significant events that may cause concern over the
reliability of a market quotation.
Our valuation procedures are set forth in more detail in Note 2(b) to the Company’s Consolidated Financial Statements. Determination of fair value involves subjective judgments and estimates. Accordingly, the
notes to our consolidated financial statements express the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on our consolidated financial statements.
Revenue Recognition
The Company records dividend income and interest, adjusted for amortization of premium and accretion of discount, on an accrual basis. Investments that are expected to pay regularly scheduled interest and/or
dividends in cash are generally placed on non-accrual status when principal or interest/dividend cash payments are past due 30 days or more (90 days or more for equipment
81
Table of Contents
financing) and/or when it is no longer probable that principal or interest/dividend cash payments will be collected. Such non-accrual investments are restored to accrual status if past due principal and interest or dividends are
paid in cash, and in management’s judgment, are likely to continue timely payment of their remaining interest or dividend obligations. Interest or dividend cash payments received on investments may be recognized as
income or applied to principal depending upon management’s judgment. Some of our investments may have contractual PIK income. PIK income computed at the contractual rate, as applicable, is accrued and reflected as a
receivable up to the capitalization date. PIK investments offer issuers the option at each payment date of making payments in cash or in additional securities. When additional securities are received, they typically have the
same terms, including maturity dates and interest rates as the original securities issued. On these payment dates, the Company capitalizes the accrued interest or dividends receivable (reflecting such amounts as the basis in
the additional securities received). PIK generally becomes due at the maturity of the investment or upon the investment being called by the issuer. At the point the Company believes PIK is not expected to be realized, the
PIK investment will be placed on non-accrual status. When a PIK investment is placed on non-accrual status, the accrued, uncapitalized interest or dividends is reversed from the related receivable through interest or
dividend income, respectively. The Company does not reverse previously capitalized PIK income. Upon capitalization, PIK is subject to the fair value estimates associated with their related investments. PIK investments on
non-accrual status are restored to accrual status if the Company again believes that PIK is expected to be realized. Loan origination fees, original issue discount, and market discounts are capitalized and amortized into
income using the effective interest method. Upon the prepayment of a loan, any unamortized loan origination fees are recorded as interest income. We record prepayment premiums on loans and other investments as interest
income when we receive such amounts. Capital structuring fees are recorded as other income when earned.
The typically higher yields and interest rates on PIK securities, to the extent we invested, reflects the payment deferral and increased credit risk associated with such instruments and that such investments may
represent a significantly higher credit risk than coupon loans. PIK securities may have unreliable valuations because their continuing accruals require continuing judgments about the collectability of the deferred payments
and the value of any associated collateral. PIK income has the effect of generating investment income and increasing the incentive fees payable at a compounding rate. In addition, the deferral of PIK income also increases
the loan-to-value ratio at a compounding rate. PIK securities create the risk that incentive fees will be paid to the Investment Adviser based on non-cash accruals that ultimately may not be realized, but the Investment
Adviser will be under no obligation to reimburse the Company for these fees. For the fiscal years ended December 31, 2024 and 2023, capitalized PIK income totaled $7.1 million and $11.1 million, respectively.
Net Realized Gain or Loss and Net Change in Unrealized Gain or Loss
We generally measure realized gain or loss by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, without regard to unrealized appreciation or
depreciation previously recognized, but considering unamortized origination or commitment fees and prepayment penalties. The net change in unrealized gain or loss reflects the change in portfolio investment values during
the reporting period, including the reversal of previously recorded unrealized gain or loss, when gains or losses are realized. Gains or losses on investments are calculated by using the specific identification method.
Income Taxes
SLRC, a U.S. corporation, has elected to be treated, and intends to qualify annually, as a RIC under Subchapter M of the Code. In order to qualify for U.S. federal income taxation as a RIC, the Company is
required, among other things, to timely distribute to its stockholders at least 90% of investment company taxable income, as defined by the Code, for each year. Depending on the level of taxable income earned in a given
tax year, we may choose to carry forward taxable income in excess of current year distributions into the next tax year and pay a nondeductible 4% U.S. federal excise tax on such income, as required. To the extent that the
Company determines that its estimated current year annual taxable income will be in excess of estimated current year distributions, the Company accrues an estimated excise tax, if any, on estimated excess taxable income.
Recent Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which enhances disclosure requirements about
significant segment expenses that are regularly provided to the chief operating decision maker (the “CODM”). ASU 2023-07, among other things, (i) requires a single segment public entity to provide all of the disclosures as
required by ASC 280, (ii) requires a public entity to disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment
performance and deciding how to allocate resources and (iii) provides the ability for a public entity to elect more than one performance measure. ASU 2023-07 is effective for the fiscal years beginning after December 15,
2023, and interim periods beginning with the first quarter ended March 31, 2025. Early adoption is permitted and retrospective adoption is required for all prior periods presented. The Company has adopted ASU 2023-07
effective December 31, 2024 and concluded that the application of this guidance did not have any material impact on its consolidated financial statements. See Note 19 for more information on the effects of the adoption of
ASU 2023-07.
82
Table of Contents
RESULTS OF OPERATIONS
Results comparisons are for the fiscal years ended December 31, 2024 and December 31, 2023. Results for the fiscal year ended December 31, 2022 can be found in Item 7 of the Company’s report on Form 10-K
filed on February 27, 2024, which is incorporated by reference herein.
Investment Income
For the fiscal years ended December 31, 2024 and 2023, gross investment income totaled $232.4 million and $229.3 million, respectively. The increase in gross investment income for the year over year period was
primarily due to an increase in dividend income year over year from SSLP and our specialty finance company equity investments.
Expenses
Net expenses totaled $136.1 million and $137.2 million, respectively, for the fiscal years ended December 31, 2024 and 2023, of which $55.4 million and $54.6 million, respectively, were base management fees
and performance-based incentive fees and $71.5 million and $72.5 million, respectively, were interest and other credit facility expenses. Other general and administrative expenses totaled $9.4 million and $10.6 million,
respectively, for the fiscal years ended December 31, 2024 and 2023. Over the same periods, $0.2 million and $0.5 million of performance-based incentive fees were waived. Expenses generally consist of management and
performance-based incentive fees, interest and other credit facility expenses, administrative services fees, insurance expenses, legal fees, directors’ fees, transfer agency fees, printing and proxy expenses, audit and tax
services expenses, and other general and administrative expenses. Interest and other credit facility expenses generally consist of interest, unused fees, agency fees and loan origination fees, if any, among others. The decrease
in expenses for the year over year period was primarily due to lower interest expense on a decrease in average borrowings as well as a reduction in general and administrative expenses, partially offset by higher fees
stemming from higher net investment income.
Net Investment Income
The Company’s net investment income totaled $96.3 million and $92.1 million, or $1.77 and $1.69 per average share, respectively, for the fiscal years ended December 31, 2024 and 2023.
Net Realized Loss
The Company had investment sales and prepayments totaling approximately $634 million and $750 million, respectively, for the fiscal years ended December 31, 2024 and 2023. Net realized losses over the same
periods were $2.3 million and $28.0 million, respectively. Net realized losses for fiscal year 2024 were primarily related to the exit of our investments in NSPC Holdings LLC and NSPC Intermediate Corp. Net realized
losses for fiscal year 2023 were primarily related to our investment in American Teleconferencing Services, Ltd.
Net Change in Unrealized Gain
For the fiscal years ended December 31, 2024 and 2023, net change in unrealized gain on the Company’s assets and liabilities totaled $1.7 million and $12.3 million, respectively. Net unrealized gain for the fiscal
year ended December 31, 2024 was primarily due to appreciation in the value of our investments in KBH Topco, LLC, SLR Credit Solutions, Bayside Parent, LLC and SLR Healthcare ABL, among others, partially offset
the reversal of previously recognized unrealized appreciation on our investment in Alimera Sciences, Inc. as well as by depreciation in the value of our investments in SLR Equipment Finance, SLR-AMI Topco Blocker,
LLC and SOINT, LLC, among others. Net unrealized gain for the fiscal year ended December 31, 2023 was primarily due to the reversal of previously recognized unrealized depreciation on our investment in American
Teleconferencing Services, Ltd., as well as appreciation in the value of our investments in Alimera Sciences, Inc., SLR Healthcare ABL and SLR Senior Lending Program LLC, among others, partially offset by depreciation
in the value of our investments in SLR-AMI Topco Blocker, LLC, KBH Topco, LLC and SLR Credit Solutions, among others.
Net Increase in Net Assets From Operations
For the fiscal years ended December 31, 2024 and 2023, the Company had a net increase in net assets resulting from operations of $95.8 million and $76.4 million, respectively. For the fiscal years ended
December 31, 2024 and 2023, earnings per average share were $1.76 and $1.40, respectively.
83
Table of Contents
LIQUIDITY AND CAPITAL RESOURCES
The Company’s liquidity and capital resources are generated and generally available through its Credit Facility and SPV Credit Facility (as defined below), the 2025 Unsecured Notes, the 2026 Unsecured Notes,
the 2027 Unsecured Notes, the 2027 Series F Unsecured Notes and the 2027 Series G Unsecured Notes (collectively the “Debt Instruments”), through cash flows from operations, investment sales, prepayments of senior
and subordinated loans, income earned on investments and cash equivalents, and periodic follow-on equity and/or debt offerings. As of December 31, 2024, we had a total of $462.9 million of unused borrowing capacity
under the Credit Facility and SPV Credit Facility, subject to borrowing base limits.
We may from time to time issue equity and/or debt securities in either public or private offerings. The issuance of such securities will depend on future market conditions, funding needs and other factors and there
can be no assurance that any such issuance will occur or be successful. The primary uses of existing funds and any funds raised in the future is expected to be for investments in portfolio companies, repayment of
indebtedness, cash distributions to our stockholders, or for other general corporate purposes.
Debt
On December 16, 2024, the Company closed a private offering of $49 million of the 2027 Series G Unsecured Notes with a fixed interest rate of 6.24% and a maturity date of December 16, 2027. Interest on the
2027 Series G Unsecured Notes is due semi-annually on June 16th and December 16th. The 2027 Series G Unsecured Notes were issued in a private placement only to qualified institutional buyers.
On August 16, 2024, the Company closed on Amendment No. 3 to its August 28, 2019 senior secured credit agreement (the
“Credit Facility”). Following this amendment and several commitment increases in the fourth quarter of 2024, the Credit Facility is now composed of $695 million of revolving credit and $140 million of term loans.
Borrowings generally bear interest at a rate per annum equal to the base rate plus a range of 1.75%-2.00% or the alternate base rate plus 0.75%-1.00%. The Credit Facility has a 0% floor, matures in August 2029 and
includes ratable amortization in the final year. Subsequent to Amendment No. 4 on December 3, 2024, the Credit Facility may be increased up to $900 million with additional new lenders or an increase in commitments
from current lenders. The Credit Facility contains certain customary affirmative and negative covenants and events of default. In addition, the Credit Facility contains certain financial covenants that, among other things,
require the Company to maintain a minimum stockholder’s equity and a minimum asset coverage ratio. At December 31, 2024, outstanding USD equivalent borrowings under the Credit Facility totaled $482.0 million,
composed of $342.0 million of revolving credit and $140.0 million of term loans.
On April 1, 2022, we entered into an assumption agreement (the “CF Assumption Agreement”), effective as of the closing of the
Mergers. The CF Assumption Agreement relates to our assumption of the revolving credit facility, originally entered into on August
26, 2011 (as amended from time to time, the “SPV Credit Facility”), by and among SUNS SPV LLC (the “SUNS SPV”), a wholly-owned subsidiary of SUNS, acting as borrower, Citibank, N.A., acting as administrative
agent and collateral agent, and the other
parties thereto. Currently, subsequent to an August 30, 2024 amendment, the commitment under the SPV Credit Facility is $275
million. The stated interest rate on the SPV Credit Facility is SOFR plus 2.25%-2.75% with no SOFR floor requirement, and the
current final maturity date is August 30, 2028. The SPV Credit Facility is secured by all of the assets held by SUNS SPV. Under the
terms of the SPV Credit Facility and related transaction documents, we, as successor to SUNS, and SUNS SPV, as applicable, have
made certain customary representations and warranties and are required to comply with various covenants, including leverage restrictions, reporting requirements and other customary requirements for similar credit facilities.
The SPV Credit Facility also
includes usual and customary events of default for credit facilities of this nature. At December 31, 2024, outstanding USD equivalent borrowings under the SPV Credit Facility totaled $165.1 million.
On April 1, 2022, we entered into an assumption agreement (the “Note Assumption Agreement”), effective as of the closing of the Mergers. The Note Assumption Agreement relates to our assumption of $85
million in aggregate principal amount of five-year, 3.90% senior unsecured notes, due March 31, 2025 and other obligations of SUNS under the Note Purchase Agreement, dated as of March 31, 2020 (the “Note Purchase
Agreement”), by and among SUNS and certain institutional investors. Interest on the 2025 Unsecured Notes is due semi-annually on March 31 and September 30. Pursuant to the Note Assumption Agreement, we expressly
assumed on behalf of SUNS the due and punctual payment of the principal of (and premium, if any) and interest on all the 2025 Unsecured Notes outstanding, and the due and punctual performance and observance of every
covenant and every condition of the Note Purchase Agreement, to be performed or observed by SUNS.
On January 6, 2022, the Company closed a private offering of $135 million of the 2027 Series F Unsecured Notes with a fixed interest rate of 3.33% and a maturity date of January 6, 2027. Interest on the 2027
Series F Unsecured Notes is due semi-annually on January 6 and July 6. The 2027 Series F Unsecured Notes were issued in a private placement only to qualified institutional buyers.
84
Table of Contents
On September 14, 2021, the Company closed a private offering of $50 million of the 2027 Unsecured Notes with a fixed interest rate of 2.95% and a maturity date of March 14, 2027. Interest on the 2027
Unsecured Notes is due semi-annually on March 14 and September 14. The 2027 Unsecured Notes were issued in a private placement only to qualified institutional buyers.
On December 18, 2019, the Company closed a private offering of $75 million of the 2026 Unsecured Notes with a fixed interest rate of 4.375% and a maturity date of December 15, 2026. Interest on the 2026
Unsecured Notes is due semi-annually on June 15 and December 15. The 2026 Unsecured Notes were issued in a private placement only to qualified institutional buyers.
On December 18, 2019, the Company closed a private offering of $125 million of the 2024 Unsecured Notes with a fixed interest rate of 4.20%. Interest on the 2024 Unsecured Notes was due semi-annually on
June 15 and December 15. The 2024 Unsecured Notes were issued in a private placement only to qualified institutional buyers. The 2024 Unsecured notes were repaid in full at maturity on December 15, 2024.
Certain covenants on our issued debt may restrict our business activities, including limitations that could hinder our ability to finance additional loans and investments or to make the distributions required to
maintain our status as a RIC under Subchapter M of the Code. At December 31, 2024, the Company was in compliance with all financial and operational covenants required by the Debt Instruments.
Cash Equivalents
We deem certain U.S. Treasury bills, repurchase agreements and other high-quality, short-term debt securities as cash equivalents. The Company makes purchases that are consistent with its purpose of making
investments in securities described in paragraphs 1 through 3 of Section 55(a) of the 1940 Act. From time to time, including at or near the end of each fiscal quarter, we consider using various temporary investment strategies
for our business. One strategy includes taking proactive steps by utilizing cash equivalents as temporary assets with the objective of enhancing our investment flexibility pursuant to Section 55 of the 1940 Act. More
specifically, from time to time, we may purchase U.S. Treasury bills or other high-quality, short-term debt securities at or near the end of the quarter and typically close out the position on a net cash basis subsequent to
quarter end. We may also utilize repurchase agreements or other balance sheet transactions, including drawing down on the Credit Facility, as deemed appropriate. The amount of these transactions or such drawn cash for
this purpose is excluded from total assets for purposes of computing the asset base upon which the management fee is determined. We held a face amount of $400 million in cash equivalents as of December 31, 2024.
Contractual Obligations
A summary of our significant contractual payment obligations as of December 31, 2024 is as follows:
Payments Due by Period (in millions)
Total
Less than
1 Year
1-3 Years
3-5 Years
More Than
5 Years
Revolving credit facilities
$
507.1 $
— $
— $
507.1 $
—
Unsecured senior notes
394.0
85.0
309.0
—
—
Term loans
140.0
—
—
140.0
—
(1)As of December 31, 2024, we had a total of $462.9 million of unused borrowing capacity under our revolving credit facilities, subject to borrowing base limits.
Under the provisions of the 1940 Act, we are permitted, as a BDC, to issue senior securities in amounts such that our asset coverage ratio, as defined in the 1940 Act, equals at least 150% of gross assets less all
liabilities and indebtedness not represented by senior securities, after each issuance of senior securities. If the value of our assets declines, we may be unable to satisfy the asset coverage test. If that happens, we may be
required to sell a portion of our investments and, depending on the nature of our leverage, repay a portion of our indebtedness at a time when such sales may be disadvantageous. Also, any amounts that we use to service our
indebtedness would not be available for distributions to our common stockholders. Furthermore, as a result of issuing senior securities, we would also be exposed to typical risks associated with leverage, including an
increased risk of loss.
We have also entered into two contracts under which we have future commitments: the Advisory Agreement, pursuant to which the Investment Adviser has agreed to serve as our investment adviser, and the
Administration Agreement, pursuant to which the Administrator has agreed to furnish us with the facilities and administrative services necessary to conduct our day-to-day operations and provide on our behalf managerial
assistance to those portfolio companies to which we are required to provide such assistance. Payments under the Advisory Agreement are equal to (1) a percentage of the value of our average gross assets and (2) a two-part
(1)
85
Table of Contents
incentive fee. Payments under the Administration Agreement are equal to an amount based upon our allocable portion of the Administrator’s overhead in performing its obligations under the Administration Agreement,
including rent, technology systems, insurance and our allocable portion of the costs of our chief financial officer and chief compliance officer and their respective staffs. Either party may terminate each of the Advisory
Agreement and Administration Agreement without penalty upon 60 days written notice to the other. See note 3 to our Consolidated Financial Statements.
On July 31, 2017, the Company, NEFPASS LLC and NEFCORP LLC entered into a servicing agreement. NEFCORP LLC was engaged to provide NEFPASS LLC with administrative services related to the loans
and capital leases held by NEFPASS LLC. NEFPASS LLC may terminate this agreement upon 30 days written notice to NEFCORP LLC.
On October 7, 2022, the Company committed $50 million to SSLP and entered into a servicing agreement. SSLP engaged and retained the Company to provide certain administrative services relating to the
facilities, supplies and necessary ongoing overhead support services for the operation of SSLP’s ongoing business affairs in exchange for a fee.
Senior Securities
Information about our senior securities is shown in the following table (in thousands, except per unit amounts) as of each year ended December 31 for the past ten years, unless otherwise noted. The “—” indicates
information which the SEC expressly does not require to be disclosed for certain types of senior securities.
86
Table of Contents
Class and Year
Total Amount
Outstanding
Asset Coverage
Per Unit
Involuntary Liquidating
Preference Per Unit
Average Market
Value Per Unit
Credit Facility
Fiscal 2024
$
342,043
$
642
—
N/A
Fiscal 2023
407,000
631
—
N/A
Fiscal 2022
293,000
513
—
N/A
Fiscal 2021
222,500
552
—
N/A
Fiscal 2020
126,000
421
—
N/A
Fiscal 2019
42,900
182
—
N/A
Fiscal 2018
96,400
593
—
N/A
Fiscal 2017
245,600
1,225
—
N/A
Fiscal 2016
115,200
990
—
N/A
Fiscal 2015
207,900
1,459
—
N/A
Fiscal 2014
—
—
—
N/A
SPV Credit Facility
Fiscal 2024
165,050
310
—
N/A
Fiscal 2023
206,250
320
—
N/A
Fiscal 2022
155,200
272
—
N/A
2022 Unsecured Notes
Fiscal 2022
—
—
—
N/A
Fiscal 2021
150,000
372
—
N/A
Fiscal 2020
150,000
501
—
N/A
Fiscal 2019
150,000
638
—
N/A
Fiscal 2018
150,000
923
—
N/A
Fiscal 2017
150,000
748
—
N/A
Fiscal 2016
50,000
430
—
N/A
2022 Tranche C Notes
Fiscal 2022
—
—
—
N/A
Fiscal 2021
21,000
52
—
N/A
Fiscal 2020
21,000
70
—
N/A
Fiscal 2019
21,000
89
—
N/A
Fiscal 2018
21,000
129
—
N/A
Fiscal 2017
21,000
105
—
N/A
2023 Unsecured Notes
Fiscal 2023
—
—
—
N/A
Fiscal 2022
75,000
131
—
N/A
Fiscal 2021
75,000
186
—
N/A
Fiscal 2020
75,000
250
—
N/A
Fiscal 2019
75,000
319
—
N/A
Fiscal 2018
75,000
461
—
N/A
Fiscal 2017
75,000
374
—
N/A
2024 Unsecured Notes
Fiscal 2024
—
—
—
N/A
Fiscal 2023
125,000
194
—
N/A
Fiscal 2022
125,000
219
—
N/A
Fiscal 2021
125,000
309
—
N/A
Fiscal 2020
125,000
417
—
N/A
Fiscal 2019
125,000
531
—
N/A
2025 Unsecured Notes
Fiscal 2024
85,000
159
—
N/A
Fiscal 2023
85,000
132
—
N/A
Fiscal 2022
85,000
149
—
N/A
2026 Unsecured Notes
Fiscal 2024
75,000
141
—
N/A
Fiscal 2023
75,000
116
—
N/A
Fiscal 2022
75,000
131
—
N/A
Fiscal 2021
75,000
186
—
N/A
Fiscal 2020
75,000
250
—
N/A
Fiscal 2019
75,000
319
—
N/A
2027 Unsecured Notes
Fiscal 2024
50,000
94
—
N/A
Fiscal 2023
50,000
77
—
N/A
Fiscal 2022
50,000
88
—
N/A
Fiscal 2021
50,000
124
—
N/A
2027 Series F Unsecured Notes
Fiscal 2024
135,000
253
—
N/A
Fiscal 2023
135,000
209
—
N/A
Fiscal 2022
135,000
237
—
N/A
2027 Series G Unsecured Notes
Fiscal 2024
49,000
92
—
N/A
2042 Unsecured Notes
Fiscal 2017
—
—
—
N/A
Fiscal 2016
100,000
859
—
$
1,002
Fiscal 2015
100,000
702
—
982
Fiscal 2014
100,000
2,294
—
943
Senior Secured Notes
Fiscal 2017
—
—
—
N/A
Fiscal 2016
75,000
645
—
N/A
(1)
(2)
(3)
(4)
87
Table of Contents
Fiscal 2015
75,000
527
—
N/A
Fiscal 2014
75,000
1,721
—
N/A
Term Loans
Fiscal 2024
140,000
263
—
N/A
Fiscal 2023
100,000
155
—
N/A
Fiscal 2022
100,000
175
—
N/A
Fiscal 2021
100,000
248
—
N/A
Fiscal 2020
75,000
250
—
N/A
Fiscal 2019
75,000
319
—
N/A
Fiscal 2018
50,000
308
—
N/A
Fiscal 2017
50,000
250
—
N/A
Fiscal 2016
50,000
430
—
N/A
Fiscal 2015
50,000
351
—
N/A
Fiscal 2014
50,000
1,147
—
N/A
NEFPASS Facility
Fiscal 2021
—
—
—
N/A
Fiscal 2020
30,000
100
—
N/A
Fiscal 2019
30,000
128
—
N/A
Fiscal 2018
30,000
185
—
N/A
SSLP Facility
Fiscal 2019
—
—
—
N/A
Fiscal 2018
53,785
331
—
N/A
Total Senior Securities
Fiscal 2024
$
1,041,093
$
1,954
—
N/A
Fiscal 2023
1,183,250
1,834
—
N/A
Fiscal 2022
1,093,200
1,915
—
N/A
Fiscal 2021
818,500
2,029
—
N/A
Fiscal 2020
677,000
2,259
—
N/A
Fiscal 2019
593,900
2,525
—
N/A
Fiscal 2018
476,185
2,930
—
N/A
Fiscal 2017
541,600
2,702
—
N/A
Fiscal 2016
390,200
3,354
—
N/A
Fiscal 2015
432,900
3,039
—
N/A
Fiscal 2014
225,000
5,162
—
N/A
(1)Total amount of each class of senior securities outstanding (in thousands) at the end of the period presented.
(2)The asset coverage ratio for a class of senior securities representing indebtedness is calculated as our consolidated total assets, less all liabilities and indebtedness not represented by senior securities, divided by all senior
securities representing indebtedness. This asset coverage ratio is multiplied by one thousand to determine the Asset Coverage Per Unit. In order to determine the specific Asset Coverage Per Unit for each class of debt, the
total Asset Coverage Per Unit is allocated based on the amount outstanding in each class of debt at the end of the period. As of December 31, 2024, asset coverage was 195.4%.
(3)The amount to which such class of senior security would be entitled upon the involuntary liquidation of the issuer in preference to any security junior to it.
(4)Not applicable except for the 2042 Unsecured Notes which were publicly traded. The Average Market Value Per Unit is calculated by taking the daily average closing price during the period and dividing it by $25 per
share and multiplying the result by one thousand to determine a unit price per thousand consistent with Asset Coverage Per Unit. The average market value for the fiscal 2016, 2015 and 2014 periods was $100,175, $98,196
and $94,301, respectively.
88
Table of Contents
The following is a schedule of financial highlights for the respective years:
Year ended
December 31, 2019
Year ended
December 31, 2018
Year ended
December 31, 2017
Year ended
December 31, 2016
Year ended
December 31, 2015
Per Share Data: (a)
Net asset value, beginning of year
$
21.75 $
21.81 $
21.74 $
20.79 $
22.05
Net investment income
1.71
1.77
1.62
1.68
1.52
Net realized and unrealized gain (loss)
(0.38)
(0.19)
0.05
0.84
(1.18)
Net increase in net assets resulting from
operations
1.33
1.58
1.67
2.52
0.34
Distributions to stockholders (see
note 8(a)):
From net investment income
—
—
(1.60)
(1.60)
(1.60)
From return of capital
(1.55)
(1.64)
—
—
—
Anti-dilution
(0.09)
—
—
0.03
—
Net asset value, end of year
$
21.44 $
21.75 $
21.81 $
21.74 $
20.79
Per share market value, end of year
$
20.62 $
19.19 $
20.21 $
20.82 $
16.43
Total Return(b)
16.22%
2.77%
4.47%
37.49%
(0.29)%
Net assets, end of year (in thousands)
$
905,880 $
919,171 $
921,605 $
918,507 $
882,698
Shares outstanding, end of year
42,260,826
42,260,826
42,260,826
42,248,525
42,464,762
Ratios to average net assets:
Net investment income
7.83%
8.10%
7.43%
7.91%
6.94%
Operating expenses
5.76%
5.83%
5.80%
6.25%
3.84%*
Interest and other credit facility
expenses**
3.13%
2.67%
2.35%
2.73%
1.68%
Total expenses
8.89%
8.50%
8.15%
8.98%
5.52%*
Average debt outstanding (in thousands)
$
561,249 $
508,445 $
414,264 $
495,795 $
262,341
Portfolio turnover ratio
24.1%
39.3%
24.9%
31.0%
13.0%
(a)Calculated using the average shares outstanding method.
(b)Total return is based on the change in market price per share during the year and takes into account distributions, if any, reinvested in accordance with the dividend reinvestment plan. Total return does not include a sales
load.
* The ratio of operating expenses to average net assets and the ratio of total expenses to average net assets is shown net of a voluntary incentive fee waiver (see note 3). For the year ended December 31, 2015, the ratios of
operating expenses to average net assets and total expenses to average net assets would be 4.02% and 5.70%, respectively, without the voluntary incentive fee waiver.
** Ratios shown without the non-recurring costs associated with the amendments and establishment of the Credit Facility and 2022 Unsecured Notes would be 3.13%, 2.67%, 2.29%, 2.39% and 1.68%, respectively for the
years shown.
89
Table of Contents
Off-Balance Sheet Arrangements
From time to time and in the normal course of business, the Company may make unfunded capital commitments to current or prospective portfolio companies. Typically, the Company may agree to provide
delayed-draw term loans or, to a lesser extent, revolving loan or equity commitments. These unfunded capital commitments always take into account the Company’s liquidity and cash available for investment, portfolio and
issuer diversification, and other considerations. Accordingly, the Company had the following unfunded capital commitments at December 31, 2024 and December 31, 2023, respectively:
90
Table of Contents
December 31, 2024
December 31, 2023
(in millions)
SLR Credit Solutions*
$
44.3
$
44.3
Western Veterinary Partners LLC
18.2
—
Arcutis Biotherapeutics, Inc.
12.7
—
BDG Media, Inc.
11.8
10.1
Plastic Management, LLC
10.8
—
CVAUSA Management, LLC
10.2
10.2
SLR Healthcare ABL*
10.0
1.4
Pasadena Private Lending Inc.
8.4
—
SLR Business Credit*
8.0
—
One Touch Direct, LLC
8.0
4.1
The Townsend Company, LLC
7.9
3.3
United Digestive MSO Parent, LLC
7.5
3.9
DeepIntent, Inc.
7.3
3.9
WMD Funding LLC
7.2
—
Copper River Seafoods, Inc.
6.9
7.1
Ardelyx, Inc.
6.6
15.9
SPR Therapeutics, Inc.
6.1
—
SPAR Marketing Force, Inc.
5.4
8.3
33 Across Inc.
4.2
—
Quantcast Corporation
4.1
—
iCIMS, Inc.
3.5
9.8
Foundation Consumer Brands, LLC
3.0
3.0
SLR Equipment Finance*
3.0
2.1
Sightly Enterprises, Inc.
2.7
—
Erie Construction Mid-west, LLC
2.4
2.4
SLR Senior Lending Program LLC*
2.1
7.1
Bayside Opco, LLC
2.1
2.1
Kaseya, Inc.
1.9
3.8
SunMed Group Holdings, LLC
1.6
1.6
EyeSouth Eye Care Holdco LLC
1.3
1.0
RxSense Holdings LLC
1.3
1.3
Tilley Distribution, Inc.
1.2
1.2
Urology Management Holdings, Inc.
0.9
1.5
High Street Buyer, Inc.
0.6
0.6
CC SAG Holdings Corp. (Spectrum Automotive)
0.5
0.5
All States Ag Parts, LLC
0.3
0.3
TAUC Management, LLC
0.3
0.3
Shoes for Crews Global, LLC
0.3
—
Orthopedic Care Partners Management, LLC
—
20.8
Southern Orthodontic Partners Management, LLC
—
17.9
Retina Midco, Inc.
—
9.4
Alkeme Intermediary Holdings, LLC
—
8.5
Legacy Service Partners, LLC
—
5.4
Peter C. Foy & Associates Insurance Services, LLC
—
5.1
West-NR Parent, Inc.
—
5.0
Luxury Asset Capital, LLC
—
4.5
Vertos Medical, Inc.
—
3.3
AMF Levered II, LLC
—
3.2
UVP Management, LLC
—
2.9
Kid Distro Holdings, LLC
—
2.7
Ultimate Baked Goods Midco LLC
—
2.4
Basic Fun, Inc.
—
2.1
GSM Acquisition Corp
—
0.9
Medrina, LLC
—
0.8
Pinnacle Treatment Centers, Inc.
—
0.6
ENS Holdings III Corp, LLC
—
0.6
Crewline Buyer, Inc.
—
0.5
Exactcare Parent, Inc.
—
0.4
WCI-BXC Purchaser, LLC
—
0.3
Vessco Midco Holdings, LLC
—
0.3
Total Commitments
$
234.6
$
248.7
* The Company controls the funding of these commitments and may cancel them at its discretion
91
Table of Contents
The credit agreements of the above loan commitments contain customary lending provisions and/or are subject to the respective portfolio company’s achievement of certain milestones that allow relief to the
Company from funding obligations for previously made commitments in instances where the underlying company experiences materially adverse events that affect the financial condition or business outlook for the
company. Since these commitments may expire without being drawn upon, unfunded commitments do not necessarily represent future cash requirements or future earning assets for the Company. As of December 31, 2024
and December 31, 2023, the Company had sufficient cash available and/or liquid securities available to fund its commitments and had reviewed them for any appropriate fair value adjustment.
In the normal course of business, we invest or trade in various financial instruments and may enter into various investment activities with off-balance sheet risk, which may include forward foreign currency
contracts. Generally, these financial instruments represent future commitments to purchase or sell other financial instruments at specific terms at future dates. These financial instruments contain varying degrees of off-
balance sheet risk whereby changes in the market value or our satisfaction of the obligations may exceed the amount recognized in our Consolidated Statements of Assets and Liabilities.
Distributions
The following table reflects the cash distributions per share on our common stock for the two most recent fiscal years and the current fiscal year to date:
Date Declared
Record Date
Payment Date
Amount
Fiscal 2025
February 25, 2025
March 14, 2025
March 28, 2025
$
0.41
Total 2025
$
0.41
Fiscal 2024
November 6, 2024
December 13, 2024
December 27, 2024
$
0.41
August 7, 2024
September 13, 2024
September 27, 2024
0.41
May 8, 2024
June 13, 2024
June 27, 2024
0.41
February 27, 2024
March 14, 2024
March 28, 2024
0.41
Total 2024
$
1.64
Fiscal 2023
November 7, 2023
December 14, 2023
December 28, 2023
$
0.41
September 5, 2023
September 20, 2023
September 28, 2023
0.136667
August 8, 2023
August 18, 2023
August 30, 2023
0.136667
July 5, 2023
July 20, 2023
August 1, 2023
0.136667
June 1, 2023
June 20, 2023
June 29, 2023
0.136667
May 10, 2023
May 24, 2023
June 1, 2023
0.136667
April 4, 2023
April 20, 2023
May 2, 2023
0.136667
February 28, 2023
March 23, 2023
April 4, 2023
0.136667
February 2, 2023
February 16, 2023
March 1, 2023
0.136667
January 10, 2023
January 26, 2023
February 2, 2023
0.136667
Total 2023
$
1.64
Tax characteristics of all distributions will be reported to stockholders on Form 1099 after the end of the applicable calendar year. Future quarterly distributions, if any, will be determined by the Board. We expect
that our distributions to stockholders will generally be from accumulated net investment income, from net realized capital gains or non-taxable return of capital, if any, as applicable.
92
Table of Contents
We have elected to be taxed as a RIC under Subchapter M of the Code. To maintain our RIC tax treatment, we must distribute at least 90% of our ordinary income and realized net short-term capital gains in
excess of realized net long-term capital losses, if any, out of the assets legally available for distribution. In addition, although we currently intend to distribute realized net capital gains (i.e., net long-term capital gains in
excess of short-term capital losses), if any, at least annually, out of the assets legally available for such distributions, we may in the future decide to retain such capital gains for investment.
We maintain an “opt out” dividend reinvestment plan for our common stockholders. As a result, if we declare a distribution, then stockholders’ cash distributions will be automatically reinvested in additional
shares of our common stock, unless they specifically “opt out” of the dividend reinvestment plan so as to receive cash distributions.
We may not be able to achieve operating results that will allow us to make distributions at a specific level or to increase the amount of these distributions from time to time. In addition, due to the asset coverage
test applicable to us as a business development company, we may in the future be limited in our ability to make distributions. Also, our credit facilities may limit our ability to declare distributions if we default under certain
provisions. If we do not distribute a certain percentage of our income annually, we will suffer adverse tax consequences, including possible loss of the tax benefits available to us as a RIC. In addition, in accordance with
GAAP and tax regulations, we include in income certain amounts that we have not yet received in cash, such as contractual payment-in-kind income, which represents contractual income added to the loan balance that
becomes due at the end of the loan term, or the accrual of original issue or market discount. Since we may recognize income before or without receiving cash representing such income, we may have difficulty meeting the
requirement to distribute at least 90% of our investment company taxable income to obtain tax benefits as a RIC.
With respect to the distributions to stockholders, income from origination, structuring, closing and certain other upfront fees associated with investments in portfolio companies are treated as taxable income and
accordingly, distributed to stockholders.
Related Parties
We have entered into a number of business relationships with affiliated or related parties, including the following:
•We have entered into the Advisory Agreement with the Investment Adviser. Mr. Gross, our Chairman, Co-Chief Executive Officer and President, and Mr. Spohler, our Co-Chief Executive Officer, Chief
Operating Officer and board member, are managing members and senior investment professionals of, and have financial and controlling interests in, the Investment Adviser. In addition, Mr. Kajee, our Chief
Financial Officer and Treasurer, serves as the Chief Financial Officer for the Investment Adviser, and Mr. Talarico, our Chief Compliance Officer and Secretary, serves as Partner, General Counsel and Chief
Compliance Officer for the Investment Adviser.
•The Administrator provides us with the office facilities and administrative services necessary to conduct day-to-day operations pursuant to our Administration Agreement. We reimburse the Administrator for the
allocable portion of overhead and other expenses incurred by it in performing its obligations under the Administration Agreement, including rent, the fees and expenses associated with performing compliance
functions, and the compensation of our chief compliance officer, our chief financial officer and their respective staffs.
•We have entered into a license agreement with the Investment Adviser, pursuant to which the Investment Adviser has granted us a non-exclusive, royalty-free license to use the licensed marks “SOLAR” and
“SLR”.
The Investment Adviser may also manage other funds in the future that may have investment mandates that are similar, in whole and in part, with ours. For example, the Investment Adviser presently serves as
investment adviser to SCP Private Credit Income BDC LLC, an unlisted BDC that focuses on investing primarily in senior secured loans, including non-traditional asset-based loans and first lien loans, SLR HC BDC LLC,
an unlisted BDC whose principal focus is to invest directly and indirectly in senior secured loans and other debt instruments typically to middle market companies within the healthcare industry, and SLR Private Credit BDC
II LLC, an unlisted BDC focused on first lien senior secured floating rate loans. In addition, Mr. Gross, our Chairman, Co-Chief Executive Officer and President, Mr. Spohler, our Co-Chief Executive Officer and Chief
Operating Officer, Mr. Kajee, our Chief Financial Officer and Treasurer, and Mr. Talarico, our Chief Compliance Officer and Secretary, serve in similar capacities for SCP Private Credit Income BDC LLC, SLR HC BDC
LLC and SLR Private Credit BDC II LLC. The Investment Adviser and certain investment advisory affiliates may determine that an investment is appropriate for us and for one or more of those other funds. In such event,
depending on the availability of such investment and other appropriate factors, the Investment Adviser or its affiliates may determine that we should invest side-by-side with one or more other funds. Any such investments
will be made only to the extent permitted by applicable law and interpretive positions of the SEC and its staff, and consistent with the Investment Adviser’s allocation procedures. On June 13, 2017, the Investment Adviser
received an exemptive order that permits the Company to participate in negotiated co-investment transactions with certain affiliates, in a manner consistent with the Company’s investment objective, positions, policies,
strategies and restrictions as well as regulatory requirements and other pertinent factors, and pursuant to various conditions (the
93
Table of Contents
“Exemptive Order”). If the Company is unable to rely on the Exemptive Order for a particular opportunity, such opportunity will be allocated first to the entity whose investment strategy is the most consistent with the
opportunity being allocated, and second, if the terms of the opportunity are consistent with more than one entity’s investment strategy, on an alternating basis. Although the Investment Adviser’s investment professionals
will endeavor to allocate investment opportunities in a fair and equitable manner, the Company and its stockholders could be adversely affected to the extent investment opportunities are allocated among us and other
investment vehicles managed or sponsored by, or affiliated with, our executive officers, directors and members of the Investment Adviser.
Related party transactions may occur among us, SLR Senior Lending Program LLC, SLR Senior Lending Program SPV LLC, SLR Credit, Equipment Operating Leases LLC, KBH, Loyer Capital LLC, SLR
Business Credit, SLR Healthcare and SLR Equipment. These transactions may occur in the normal course of business. No administrative or other fees are paid to the Investment Adviser by SLR Senior Lending Program
LLC, SLR Senior Lending Program SPV LLC, SLR Credit, Equipment Operating Leases LLC, KBH, Loyer Capital LLC, SLR Business Credit, SLR Healthcare or SLR Equipment.
In addition, we have adopted a formal code of ethics that governs the conduct of our officers and directors. Our officers and directors also remain subject to the duties imposed by both the 1940 Act and the
Maryland General Corporation Law.
Item 7A. Quantitative and Qualitative Disclosure About Market Risk
We are subject to financial market risks, including changes in interest rates. Uncertainty with respect to interest rates, inflationary pressures, risks in respect of a failure to increase the U.S. debt ceiling or a
downgrade in the U.S. credit rating, the war between Ukraine and Russia, certain regional bank failures, an inflationary environment, the ongoing war in the Middle East and health epidemics and pandemics introduced
significant volatility in the financial markets, and the effects of this volatility have materially impacted and could continue to materially impact our market risks. Because we fund a portion of our investments with
borrowings, our net investment income is affected by the difference between the rate at which we invest and the rate at which we borrow. As a result, there can be no assurance that a significant change in market interest
rates will not have a material adverse effect on our net investment income. In a low interest rate environment, including a reduction of SOFR to zero, the difference between the total interest income earned on interest
earning assets and the total interest expense incurred on interest bearing liabilities may be compressed, reducing our net interest income and potentially adversely affecting our operating results. Conversely, in a rising
interest rate environment, such difference could potentially increase thereby increasing our net investment income. During the fiscal year ended December 31, 2024, certain investments in our comprehensive investment
portfolio had floating interest rates. These floating rate investments were primarily based on floating SOFR and typically have durations of one to three months after which they reset to current market interest rates.
Additionally, some of these investments have floors. The Company also has credit facilities that are generally based on floating SOFR. Assuming no changes to our balance sheet as of December 31, 2024 and no new
defaults by portfolio companies, a hypothetical one percent decrease in SOFR on our comprehensive floating rate assets and liabilities would decrease our net investment income by approximately three cents per average
share over the next twelve months. Assuming no changes to our balance sheet as of December 31, 2024 and no new defaults by portfolio companies, a hypothetical one percent increase in SOFR on our comprehensive
floating rate assets and liabilities would increase our net investment income by approximately two cents per average share over the next twelve months. However, we may hedge against interest rate fluctuations from time to
time by using standard hedging instruments such as futures, options, swaps and forward contracts subject to the requirements of the 1940 Act. While hedging activities may insulate us against adverse changes in interest
rates, they may also limit our ability to participate in any benefits of certain changes in interest rates with respect to our portfolio of investments. At December 31, 2024, we had no interest rate hedging instruments
outstanding on our balance sheet.
Increase (Decrease) in SOFR
(1.00)%
1.00%
Increase (Decrease) in Net Investment Income Per Share Per
Year
$
(0.03)
$
0.02
We may also have exposure to foreign currencies through various investments. These investments are converted into U.S. dollars at the balance sheet date, exposing us to movements in foreign exchange rates. In
order to reduce our exposure to fluctuations in foreign exchange rates, we may borrow from time to time in such currencies under our multi-currency revolving credit facility or enter into forward currency or similar
contracts.
94
Table of Contents
Item 8. Financial Statements and Supplementary Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Management’s Report on Internal Control Over Financial Reporting
95
Report of Independent Registered Public Accounting Firm
96
Consolidated Statements of Assets and Liabilities as of December 31, 2024 and 2023
98
Consolidated Statements of Operations for the years ended December 31, 2024, 2023 and 2022
99
Consolidated Statements of Changes in Net Assets for the years ended December 31, 2024, 2023 and 2022
100
Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023 and 2022
101
Consolidated Schedules of Investments as of December 31, 2024 and 2023
102
Notes to Consolidated Financial Statements
120
95
Table of Contents
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for establishing and maintaining adequate internal control over financial reporting, and for performing an assessment of the effectiveness of internal control over financial reporting as of
December 31, 2024. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to assets of the Company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of
the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the Company’s assets that could have a material effect on the consolidated financial statements.
Management performed an assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024 based upon criteria in Internal Control – Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on its assessment, management determined that the Company’s internal control over financial reporting was
effective as of December 31, 2024 based upon criteria in Internal Control – Integrated Framework (2013) issued by COSO.
The effectiveness of the Company’s internal control over financial reporting as of December 31, 2024 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report
which appears herein.
96
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
SLR Investment Corp.:
Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated statements of assets and liabilities of SLR Investment Corp. and subsidiaries (the Company), including the consolidated schedules of investments, as of December 31, 2024
and 2023, the related consolidated statements of operations, changes in net assets, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes (collectively, the consolidated
financial statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in the Internal Control – Integrated Framework (2013), issued by
the Committee of Sponsoring Organizations of the Treadway Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its
cash flows for each of the years in the three-year period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over
financial reporting, included in the accompanying management’s report on internal control over financial reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an
opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are
free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Such procedures also included
confirmation of securities owned as of December 31, 2024 and 2023, by correspondence with the custodian, portfolio companies, agents or other appropriate auditing procedures. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included
obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3)
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
97
Table of Contents
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls
may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:
(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does
not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
Fair value of investments
As described in Notes 2 and 6 to the consolidated financial statements, the Company measures its investments at fair value. In determining the fair value of investments classified as Level 3, the Company
makes subjective judgments and estimates using unobservable inputs.
We identified the assessment of the fair value of the majority of such investments as a critical audit matter. A high degree of auditor judgment was required to assess the Company’s fair value assumptions and
changes in these assumptions could have a significant impact on the fair value of investments. Specifically, subjective auditor judgment was required to assess assumptions related to the (1) credit risk
associated with the borrower and its ability to make interest and principal payments for debt investments and (2) selection of comparable companies and the financial performance multiples of such comparable
companies for equity investments. Additionally, the involvement of valuation professionals with specialized skills and knowledge was required to assist in evaluating the Company’s fair value estimates for a
selection of these investments.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s
process to measure the fair value of investments, including controls related to the development of the above assumptions. We also evaluated the Company’s ability to estimate fair value by comparing
dispositions to the Company’s most recent fair value estimate prior to the disposition. For a selection of investments, we evaluated changes in the borrowers assessed credit risk and market yields from the
purchase date to the fair value measurement date by analyzing the changes in the borrower’s leverage ratios and other financial metrics. We also involved valuation professionals with specialized skills and
knowledge who, for a selection of investments, independently developed estimates of fair value using market yields of comparable companies of similar credit risk for debt investments, and financial
performance multiples of comparable companies for equity investments and compared the results to the Company’s fair value estimates.
/s/ KPMG LLP
We have served as the Company’s auditor since 2007.
New York, New York
February 25, 2025
98
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(in thousands, except share and per share amounts)
December 31, 2024
December 31, 2023
Assets
Investments at fair value:
Companies less than 5% owned (cost: $1,019,357 and $1,260,205, respectively)
$
1,027,457
$
1,271,442
Companies 5% to 25% owned (cost: $103,655 and $60,064, respectively)
89,945
44,250
Companies more than 25% owned (cost: $916,554 and $870,128, respectively)
888,232
839,074
Cash
16,761
11,864
Cash equivalents (cost: $397,510 and $332,290, respectively)
397,510
332,290
Dividends receivable
15,375
11,768
Interest receivable
11,993
11,034
Receivable for investments sold
1,573
1,538
Prepaid expenses and other assets
571
608
Total assets
$
2,449,417
$
2,523,868
Liabilities
Debt ($1,041,093 and $1,183,250 face amounts, respectively, reported net of
unamortized debt issuance costs of $9,399 and $5,473, respectively. See note 7)
$
1,031,694
$
1,177,777
Payable for investments and cash equivalents purchased
397,510
332,290
Management fee payable (see note 3)
7,739
8,027
Performance-based incentive fee payable (see note 3)
5,920
5,864
Interest payable (see note 7)
7,836
7,535
Administrative services payable (see note 3)
3,332
1,969
Other liabilities and accrued expenses
2,460
3,767
Total liabilities
$
1,456,491
$
1,537,229
Commitments and contingencies (see note 15)
Net Assets
Common stock, par value $0.01 per share, 200,000,000 and 200,000,000 common shares
authorized, respectively, and 54,554,634 and 54,554,634 shares issued and
outstanding, respectively
$
546
$
546
Paid-in capital in excess of par (see note 2(f))
1,117,606
1,117,930
Accumulated distributable net loss (see note 2(f))
(125,226)
(131,837)
Total net assets
$
992,926
$
986,639
Net Asset Value Per Share
$
18.20
$
18.09
See notes to consolidated financial statements.
99
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Year Ended December 31,
2024
2023
2022
INVESTMENT INCOME:
Interest:
Companies less than 5% owned
$
154,077
$
163,589
$
121,491
Companies 5% to 25% owned
3,881
2,058
—
Companies more than 25% owned
13,055
11,627
9,515
Dividends:
Companies 5% to less than 25% owned
845
—
—
Companies more than 25% owned
52,944
45,986
44,383
Other income:
Companies less than 5% owned
7,117
5,802
2,116
Companies 5% to 25% owned
—
26
—
Companies more than 25% owned
512
224
—
Total investment income
232,431
229,312
177,505
EXPENSES:
Management fees (see note 3)
31,389
31,661
29,982
Performance-based incentive fees (see note 3)
24,039
22,898
15,097
Interest and other credit facility expenses (see note 7)
71,464
72,507
46,087
Administrative services expense (see note 3)
5,520
5,899
5,401
Other general and administrative expenses
3,862
4,756
6,099
Total expenses
136,274
137,721
102,666
Performance-based incentive fees waived (see note 3)
(153)
(500)
(1,527)
Net expenses
136,121
137,221
101,139
Net investment income
$
96,310
$
92,091
$
76,366
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND CASH EQUIVALENTS:
Net realized loss on investments and cash equivalents:
Companies less than 5% owned
$
(2,252)
$
(27,602)
$
(36,485)
Companies more than 25% owned
—
(381)
—
Net realized loss on investments and cash equivalents
(2,252)
(27,983)
(36,485)
Net change in unrealized gain (loss) on investments:
Companies less than 5% owned
(3,137)
20,425
(2,909)
Companies 5% to 25% owned
2,105
(1,384)
—
Companies more than 25% owned
2,731
(6,761)
(18,630)
Net change in unrealized gain (loss) on investments
1,699
12,280
(21,539)
Net realized and unrealized loss on investments and cash
equivalents
(553)
(15,703)
(58,024)
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS
$
95,757
$
76,388
$
18,342
EARNINGS PER SHARE (see note 5)
$
1.76
$
1.40
$
0.35
See notes to consolidated financial statements.
100
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
(in thousands, except share amounts)
Year Ended December 31,
2024
2023
2022
Increase (decrease) in net assets resulting from operations:
Net investment income
$
96,310
$
92,091
$
76,366
Net realized loss
(2,252)
(27,983 )
(36,485 )
Net change in unrealized gain (loss)
1,699
12,280
(21,539 )
Net increase in net assets resulting from operations
95,757
76,388
18,342
Distributions to stockholders (see note 8(a)):
From distributable earnings
(89,470 )
(89,470 )
(57,594 )
From return of capital
—
—
(27,099 )
Net distributions to stockholders
(89,470 )
(89,470 )
(84,693 )
Capital transactions (see note 16):
Issuance of common stock
—
—
226,839
Repurchases of common stock
—
(10 )
(3,038)
Net increase (decrease) in net assets resulting from capital transactions
—
(10 )
223,801
Total increase (decrease) in net assets
6,287
(13,092 )
157,450
Net assets at beginning of year
986,639
999,731
842,281
Net assets at end of year
$
992,926
$
986,639
$
999,731
Capital share activity (see note 16):
Issuance of common stock
—
—
12,511,825
Repurchases of common stock
—
(746 )
(217,271)
Net increase (decrease) from capital share activity
—
(746 )
12,294,554
See notes to consolidated financial statements.
101
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended December 31,
2024
2023
2022
Cash Flows from Operating Activities:
Net increase in net assets resulting from operations
$
95,757
$
76,388
$
18,342
Adjustments to reconcile net increase in net assets resulting from
operations to net cash provided by (used in) operating activities:
Net realized gain on investments and cash equivalents
2,252
27,983
36,485
Net change in unrealized (gain) loss on investments
(1,699)
(12,280)
21,539
Deferred financing costs/market discount amortization
3,645
2,114
2,227
Net accretion of discount on investments
(8,922)
(11,932)
(9,850)
(Increase) decrease in operating assets:
Purchase of investments
(441,087)
(774,888)
(609,645)
Proceeds from disposition of investments
603,193
713,643
531,389
Capitalization of payment-in-kind income
(7,146)
(11,113)
(4,282)
Collections of payment-in-kind income
2,541
497
1,286
Receivable for investments sold
(35)
(414)
254
Interest receivable
(959)
(1,328)
(3,185)
Dividends receivable
(3,607)
(576)
(2,164)
Prepaid expenses and other assets
37
56
(97)
Cash and other net assets acquired in Mergers
—
—
3,640
Increase (decrease) in operating liabilities:
Payable for investments and cash equivalents purchased
65,220
(85,321)
97,570
Management fee payable
(288)
63
529
Performance-based incentive fee payable
56
442
3,558
Administrative services expense payable
1,363
481
(1,201)
Interest payable
301
(408)
3,451
Other liabilities and accrued expenses
(1,307)
(290)
1,213
Net Cash Provided by (Used in) Operating Activities
309,315
(76,883)
91,059
Cash Flows from Financing Activities:
Cash distributions paid
(89,470)
(96,951)
(94,539)
Proceeds from unsecured borrowings
48,970
—
134,914
Repayment of unsecured borrowings
(125,000)
(75,000)
(171,000)
Proceeds from secured borrowings
452,459
1,059,665
844,002
Repayments of secured borrowings
(526,157)
(895,000)
(696,000)
Repurchase of common stock
—
(10)
(3,038)
Net Cash Provided by (Used in) Financing Activities
(239,198)
(7,296)
14,339
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
70,117
(84,179)
105,398
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
344,154
428,333
322,935
CASH AND CASH EQUIVALENTS AT END OF YEAR
$
414,271
$
344,154
$
428,333
Supplemental disclosure of cash flow information:
Cash paid for interest
$
67,518
$
72,915
$
42,636
Non-cash exchange of investments
27,254
—
—
Issuance of shares in connection with the Mergers
—
—
226,839
(1)On April 1, 2022, in connection with the Mergers (as defined in Note 1 “Organization”), the Company acquired net assets of $244,691 for the total stock consideration of $226,839.
See notes to consolidated financial statements.
(1)
102
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2024
(in thousands, except share/unit amounts)
Description
Industry
Spread
Above
Index
Floor
Interest
Rate
Acquisition
Date
Maturity
Date
Par Amount
Cost
Fair
Value
Senior Secured Loans — 112.5%
First Lien Bank Debt/Senior Secured Loans
33Across Inc.
Media
P+232
8.50%
10.82%
1/22/2024
10/31/2025
$
2,774
$
2,774
$
2,774
Aegis Toxicology Sciences Corporation(16)
Health Care Providers & Services
S+550
1.00%
10.28%
5/7/2018
5/9/2025
13,122
13,075
13,122
Alkeme Intermediary Holdings, LLC(16)
Insurance
S+575
1.00%
10.08%
9/20/2023
10/28/2026
16,886
16,531
16,886
All States Ag Parts, LLC(16)
Trading Companies & Distributors
S+600
1.00%
10.59%
4/1/2022
9/1/2026
2,034
2,016
2,034
BayMark Health Services, Inc.(16)
Health Care Providers & Services
S+500
1.00%
9.59%
4/1/2022
6/11/2027
8,180
7,999
8,180
Bayside Opco, LLC(24)
Health Care Providers & Services
S+725
1.00%
11.73%
5/31/2023
5/31/2026
19,905
19,905
19,905
Bayside Parent, LLC(24)
Health Care Providers & Services
S+1000
1.00%
14.48%
5/31/2023
5/31/2026
6,008
6,008
6,008
BDG Media, Inc.
Media
P+525
5.50%
12.75%
7/18/2022
7/31/2025
6,249
6,249
6,249
CC SAG Holdings Corp.(Spectrum Automotive)(16)
Diversified Consumer Services
S+525
0.75%
9.58%
6/29/2021
6/29/2028
30,202
29,814
30,202
Copper River Seafoods, Inc.
Food Products
P+275
—
10.25%
12/1/2023
4/23/2025
5,088
5,088
5,088
CVAUSA Management, LLC(16)
Health Care Providers & Services
S+650
1.00%
10.84%
5/22/2023
5/22/2029
17,191
16,771
17,191
DeepIntent, Inc.
Media
P+185
5.25%
9.35%
12/1/2023
9/30/2027
37,746
37,746
37,746
Enhanced Permanent Capital, LLC(3)
Capital Markets
S+700
1.00%
11.97%
12/29/2020
12/29/2025
44,578
44,220
44,578
EyeSouth Eye Care Holdco LLC
Health Care Providers & Services
S+550
1.00%
9.96%
10/6/2022
10/5/2029
9,625
9,383
9,625
FE Advance, LLC
Diversified Financial Services
S+650
1.00%
10.86%
7/30/2024
7/30/2027
20,894
20,517
20,894
Fertility (ITC) Investment Holdco, LLC
Health Care Providers & Services
S+650
1.00%
11.74%
1/4/2023
1/3/2029
22,368
21,871
22,368
Foundation Consumer Brands, LLC(16)
Personal Products
S+625
1.00%
10.89%
2/12/2021
2/12/2027
25,058
24,691
25,058
Human Interest Inc.
Internet Software & Services
S+735
1.00%
11.90%
6/30/2022
7/1/2027
20,104
20,104
20,104
iCIMS, Inc.
Software
S+575
0.75%
10.38%
8/18/2022
8/18/2028
32,245
31,887
32,245
Kaseya, Inc.(16)
Software
S+550
0.75%
9.83%
6/22/2022
6/23/2029
24,702
24,445
24,702
Kingsbridge Holdings, LLC(2)
Multi-Sector Holdings
S+700
1.00%
11.71%
12/21/2018
12/21/2027
100,500
100,283
100,500
Logix Holding Company, LLC(16)
Communications Equipment
P+475
1.00%
12.25%
9/14/2018
3/20/2025
14,009
13,933
13,449
Luxury Asset Capital, LLC(16)
Thrifts & Mortgage Finance
S+675
1.00%
11.42%
7/15/2022
7/15/2027
30,500
30,149
30,500
Maxor Acquisition, Inc.(16)
Health Care Providers & Services
S+600
1.00%
10.44%
3/1/2023
3/1/2029
21,195
20,755
21,195
One Touch Direct, LLC
Commercial Services & Supplies
P+75
4.00%
8.25%
12/1/2023
3/31/2026
1,030
1,030
1,030
ONS MSO, LLC(16)
Health Care Providers & Services
S+625
1.00%
10.84%
2/10/2023
7/8/2026
27,772
27,317
27,772
Peter C. Foy & Associates Insurance Services, LLC(16)
Insurance
S+550
0.75%
9.83%
4/1/2022
11/1/2028
16,706
16,508
16,706
Plastic Management, LLC(16)
Health Care Providers & Services
S+500
1.00%
9.43%
4/1/2022
8/18/2027
16,965
16,471
16,965
Quantcast Corporation
Commercial Services & Supplies
S+525
2.00%
11.75%
6/14/2024
6/14/2029
10,502
10,380
10,502
Retina Midco, Inc.(16)
Health Care Providers & Services
S+575
1.00%
10.35%
12/18/2023
1/31/2026
27,301
26,985
27,847
RQM+ Corp.(16)
Life Sciences Tools & Services
S+675
1.00%
11.34%
8/20/2021
8/12/2029
23,398
23,201
22,462
RxSense Holdings LLC(16)
Diversified Consumer Services
S+500
1.00%
9.69%
4/1/2022
3/13/2026
2,628
2,582
2,628
Shoes for Crews Global, LLC
Diversified Consumer Services
S+650
1.00%
11.17%
6/30/2024
6/30/2029
3,398
3,398
3,398
Sightly Enterprises, Inc.
Media
P+475
6.00%
12.25%
1/22/2024
12/31/2026
4,813
4,813
4,813
SLR Healthcare ABL(2)(3)(21)
Diversified Financial Services
S+650
—
10.81%
12/31/2024
12/31/2025
4,000
4,000
4,000
Southern Orthodontic Partners Management, LLC(16)
Health Care Providers & Services
S+525
1.00%
9.58%
6/3/2022
7/27/2026
33,158
32,731
33,158
SPAR Marketing Force, Inc.
Media
P+190
—
9.40%
12/1/2023
10/10/2025
9,251
9,251
9,251
SunMed Group Holdings, LLC(16)
Health Care Equipment & Supplies
S+550
0.75%
10.19%
6/16/2021
6/16/2028
14,828
14,584
14,828
See notes to consolidated financial statements.
(7)
(1)
(11)
(14)
(28)
(23)
(26)
103
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2024
(in thousands, except share/unit amounts)
Description
Industry
Spread
Above
Index
Floor
Interest
Rate
Acquisition
Date
Maturity
Date
Par Amount
Cost
Fair
Value
Senior Secured Loans (continued)
TAUC Management, LLC(16)
Health Care Providers & Services
S+700
1.00%
11.48%
4/1/2022
2/12/2027
$
7,002
$
6,829
$
6,302
The Townsend Company, LLC(16)
Commercial Services & Supplies
S+500
1.00%
9.36%
8/17/2023
8/15/2030
19,775
19,275
19,587
Tilley Distribution, Inc.(16)
Trading Companies & Distributors
S+600
1.00%
10.48%
4/1/2022
12/31/2026
3,688
3,590
3,615
TPC 2022, LLC
Capital Markets
S+650
1.00%
10.88%
12/18/2024
12/13/2027
20,000
19,802
19,800
United Digestive MSO Parent, LLC(16)
Health Care Providers & Services
S+575
1.00%
10.08%
3/30/2023
3/30/2029
9,956
9,723
9,956
Urology Management Holdings, Inc.
Health Care Providers & Services
S+550
1.00%
9.83%
2/7/2023
6/15/2027
11,909
11,683
11,909
UVP Management, LLC
Health Care Providers & Services
S+625
1.00%
10.73%
9/18/2023
9/15/2025
13,653
13,518
13,653
Western Veterinary Partners LLC(16)
Diversified Consumer Services
S+500
1.00%
9.33%
1/19/2024
10/29/2027
23,515
23,215
23,515
WMD Funding, LLC(11)
Diversified Financial Services
—
—
11.50%
12/4/2024
7/16/2031
18,330
18,330
18,330
Total First Lien Bank Debt/ Senior Secured Loans
$
845,430
$
852,630
First Lien Life Science Senior Secured Loans
Arcutis Biotherapeutics, Inc.(3)
Pharmaceuticals
S+595
2.50%
10.47%
12/22/2021
8/1/2029
$
33,425
$
34,531
$
35,263
Ardelyx, Inc.(3)
Pharmaceuticals
S+400
4.70%
8.70%
2/23/2022
7/1/2028
39,750
40,033
40,247
Cerapedics, Inc.
Biotechnology
S+620
2.75%
10.72%
12/27/2022
1/1/2028
36,156
36,498
37,889
Meditrina, Inc.
Health Care Equipment & Supplies
S+550
3.45%
10.02%
12/20/2022
12/1/2027
5,051
5,111
5,127
OmniGuide Holdings, Inc. (13)
Health Care Equipment & Supplies
S+580
5.31%
11.11%
7/30/2018
11/1/2025
24,500
26,044
24,622
Outset Medical, Inc.(16)
Health Care Equipment & Supplies
S+515
2.75%
9.67%
11/3/2022
11/1/2027
44,727
45,353
46,405
SPR Therapeutics, Inc.
Health Care Technology
S+515
4.00%
9.67%
1/30/2024
2/1/2029
4,866
4,872
5,021
Vapotherm, Inc.(24)
Health Care Equipment & Supplies
S+600
4.50%
10.52%
2/18/2022
9/20/2027
13,782
14,147
14,254
Total First Lien Life Science Senior Secured Loans
$
206,589
$
208,828
Second Lien Asset-Based Senior Secured Loans
AMF Levered II, LLC
Diversified Financial Services
S+705
1.00%
11.67%
12/24/2021
8/21/2028
$
29,925
$
29,741
$
29,925
FGI Worldwide LLC (3)(16)
Diversified Financial Services
S+650
1.00%
10.86%
4/17/2023
4/17/2028
8,206
8,058
8,206
Pasadena Private Lending Inc.(3)
Diversified Financial Services
S+750
1.00%
11.88%
12/16/2024
4/30/2028
9,825
9,703
9,702
Total Second Lien Asset-Backed Senior Secured Loans
$
47,502
$
47,833
Second Lien Bank Debt / Senior Secured Loans
RD Holdco, Inc.** (2)
Diversified Consumer Services
S+975
1.00%
—
12/23/2013
10/12/2026
$
18,228
$
12,297
$
7,827
Total Senior Secured Loans
$
1,111,818
$
1,117,118
See notes to consolidated financial statements.
(7)
(1)
(27)
(25)
(11)
104
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2024
(in thousands, except share/unit amounts)
Description
Industry
Interest
Rate
Acquisition
Date
Maturity
Date
Par Amount
Cost
Fair
Value
Equipment Financing — 18.2%
A&A Crane and Rigging, LLC (10)
Commercial Services & Supplies
7.78%
3/27/2023
3/27/2028
$
54
$
54
$
54
Aero Operating LLC (10)
Commercial Services & Supplies
8.47-9.09%
2/12/2021
3/1/2025-11/1/2026
259
258
259
AFG Dallas III, LLC (10)
Diversified Consumer Services
10.00-11.29%
8/11/2022
8/11/2026-3/1/2027
743
743
743
Air Methods Corporation (10)
Airlines
7.08-7.13%
11/3/2021
11/3/2026-11/23/2026
2,569
2,591
2,569
Boart Longyear Company (10)
Metals & Mining
8.31-9.77%
5/28/2020
4/1/2025-10/7/2026
997
997
997
Bowman Energy Solutions, LLC (10)
Commercial Services & Supplies
7.42%
7/1/2022
7/1/2026
73
73
73
Carolina’s Contracting, LLC (10)
Diversified Consumer Services
8.40-8.72%
3/7/2023
3/7/2028-5/19/2028
2,912
2,932
2,912
CKD Holdings, Inc. (10)
Road & Rail
8.10-8.60%
9/22/2022
3/22/2026-9/22/2027
1,816
1,816
1,816
Clubcorp Holdings, Inc. (10)
Hotels, Restaurants & Leisure
9.36-13.01%
5/27/2021
4/1/2025-5/1/2028
4,550
4,550
4,550
Complete Equipment Rentals, LLC (10)
Commercial Services & Supplies
6.75-7.15%
3/23/2023
4/15/2028-6/15/2028
1,467
1,450
1,442
Dongwon Autopart Technology Inc. (10)
Auto Components
7.96%
2/2/2021
1/1/2026
658
661
658
Double S Industrial Contractors, Inc. (10)
Commercial Services & Supplies
8.60%
7/28/2023
8/1/2027
85
85
85
Drillers Choice, Inc. (10)
Commercial Services & Supplies
8.00-10.08%
10/31/2022
11/1/2027-6/1/2029
1,089
1,091
1,089
Environmental Protection & Improvement Company, LLC (10)
Road & Rail
8.25%
9/30/2020
10/1/2027
3,798
3,811
3,798
Equipment Operating Leases, LLC (2)(12)
Multi-Sector Holdings
8.37%
4/27/2018
4/27/2025
2,884
2,884
2,812
Extreme Steel Crane & Rigging, LLC (10)
Commercial Services & Supplies
9.52%
3/3/2023
3/3/2027
613
617
613
First American Commercial Bancorp, Inc. (10)
Diversified Financial Services
7.50-9.00%
10/28/2021
10/1/2026-3/1/2027
1,566
1,567
1,566
First National Capital, LLC (10)
Diversified Financial Services
9.00%
11/5/2021
7/1/2026
3,340
3,340
3,340
GMT Corporation (10)
Machinery
10.71%
10/23/2018
1/1/2026
2,496
2,497
2,496
Hawkeye Contracting Company, LLC (10)
Construction & Engineering
10.50%
10/8/2021
11/1/2025
347
347
347
HTI Logistics Corporation (10)
Commercial Services & Supplies
9.94%
11/15/2018
9/1/2025
53
53
51
International Automotive Components Group, North America, Inc. (10)
Auto Components
7.95%
6/23/2021
6/23/2025
1,001
1,002
1,001
Loc Performance Products, LLC (10)
Machinery
10.50%
12/29/2022
6/1/2027
477
477
477
Loyer Capital LLC (2)(12)
Multi-Sector Holdings
8.73-11.52%
5/16/2019
5/16/2026-9/25/2026
7,500
7,500
7,361
Miranda Logistics Enterprise, Inc. (10)
Construction & Engineering
7.69%
4/14/2023
4/14/2028
628
628
628
Mountain Air Helicopters, Inc. (10)
Commercial Services & Supplies
10.00%
7/31/2017
2/28/2025
114
114
114
Nimble Crane LLC (10)
Commercial Services & Supplies
9.18%
7/13/2023
7/13/2028
762
762
762
No Limit Construction Services, LLC (10)
Commercial Services & Supplies
7.73%
5/5/2023
6/1/2028
95
95
95
PCX Aerostructures LLC (10)
Aerospace & Defense
9.32%
11/23/2022
12/1/2028
1,931
1,931
1,931
Rango, Inc. (10)
Commercial Services & Supplies
9.33%
9/24/2019
4/1/2025
101
101
99
Rayzor’s Edge LLC (10)
Diversified Consumer Services
7.69-8.27%
5/19/2023
5/18/2030-6/30/2030
624
624
624
RH Land Construction, LLC & Harbor Dredging LA, Inc. (10)
Construction & Engineering
8.08%
5/10/2023
5/10/2026
69
69
69
Rotten Rock Hardscaping & Tree Service (10)
Diversified Consumer Services
8.21%
12/6/2022
12/6/2027
159
159
159
Signet Marine Corporation (10)
Transportation Infrastructure
8.50%
10/31/2022
6/1/2029
10,291
10,319
10,291
SLR Equipment Finance (2)(9)(17)
Multi-Sector Holdings
8.50%
12/26/2024
12/1/2025
3,000
3,000
3,000
Smiley Lifting Solutions, LLC(10)
Commercial Services & Supplies
7.82-8.61%
6/30/2022
9/15/2026-6/27/2030
5,195
5,195
5,195
ST Coaches, LLC (10)
Road & Rail
8.50%
7/31/2017
1/25/2025
520
520
520
Star Coaches Inc. (10)
Road & Rail
8.42%
3/9/2018
4/1/2025
1,719
1,719
1,633
Superior Transportation, Inc. (10)
Road & Rail
10.22-10.63%
7/31/2017
1/1/2026
1,346
1,346
1,346
The Smedley Company & Smedley Services, Inc. (10)
Commercial Services & Supplies
4.07%
7/31/2017
1/15/2028
970
970
901
Trinity Equipment, Inc. (10)
Commercial Services & Supplies
8.78-8.93%
5/4/2023
5/4/2028-5/19/2028
1,085
1,085
1,085
Trinity Equipment Rentals, Inc. (10)
Commercial Services & Supplies
7.94-7.95%
10/8/2021
11/1/2026-12/1/2026
136
136
136
U.S. Crane & Rigging, LLC (10)
Commercial Services & Supplies
8.73%
12/23/2022
9/1/2028
766
766
766
Wind River Environmental, LLC (10)
Diversified Consumer Services
8.43%
7/31/2019
10/5/2025
72
72
72
Womble Company, Inc. (10)
Energy Equipment & Services
9.11%
12/27/2019
1/1/2025
17
17
17
Worldwide Flight Services, Inc. (10)
Transportation Infrastructure
8.32-9.93%
9/23/2022
9/23/2027-8/16/2028
2,465
2,495
2,465
Zamborelli Enterprises Pacific Southern Foundation (10)
Diversified Consumer Services
8.91%
12/7/2022
1/1/2027
399
401
399
Shares/Units
SLR Equipment Finance Equity Interests (2)(9)(17)*
Multi-Sector Holdings
7/31/2017
200
145,000
107,600
Total Equipment Financing
$
218,920
$
181,016
Preferred Equity – 3.2%
SOINT, LLC (2)(3)(4)
Aerospace & Defense
0.00%
6/8/2012
6/30/2025
—
$
5,241
$
2,500
Veronica Holdings, LLC (Vapotherm)(24)
Health Care Equipment & Supplies
9.00%
9/20/2024
—
13,055,991
27,769
29,182
Total Preferred Equity
$
33,010
$
31,682
See notes to consolidated financial statements.
(1)
(11)
105
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2024
(in thousands, except share/unit amounts)
Description
Industry
Acquisition
Date
Shares/
Units
Cost
Fair
Value
Common Equity/Equity
Interests/Warrants—68.1%
Assertio Holdings, Inc. (8)*
Pharmaceuticals
7/31/2023
12,510
$
51
$
11
Bayside Parent, LLC (24)*
Health Care Providers & Services
5/31/2023
6,526
11,411
7,179
CardioFocus, Inc. Warrants *
Health Care Equipment & Supplies
3/31/2017
90
51
—
Centrexion Therapeutics, Inc. Warrants *
Pharmaceuticals
6/28/2019
289,102
136
47
Conventus Orthopaedics, Inc. Warrants *
Health Care Equipment & Supplies
6/15/2016
157,500
65
—
Delphinus Medical Technologies, Inc. Warrants *
Health Care Equipment & Supplies
8/18/2017
444,388
74
84
Essence Group Holdings Corporation
(Lumeris) Warrants *
Health Care Technology
3/22/2017
260,000
129
131
KBH Topco LLC (Kingsbridge) (2)(5)(18)
Multi-Sector Holdings
11/3/2020
76,125,000
140,920
152,071
Meditrina, Inc. Warrants *
Health Care Equipment & Supplies
12/20/2022
44,049
33
31
RD Holdco, Inc. (Rug Doctor) (2)*
Diversified Consumer Services
12/23/2013
231,177
15,683
—
RD Holdco, Inc. (Rug Doctor) Class B (2)*
Diversified Consumer Services
12/23/2013
522
5,216
—
Senseonics Holdings, Inc. (3)(8)*
Health Care Equipment & Supplies
7/25/2019
469,353
235
246
Shoes for Crews Holdings, LLC
Diversified Consumer Services
6/30/2024
1,884
2,759
2,040
SLR-AMI Topco Blocker, LLC (15)(24)*
Internet & Catalog Retail
6/16/2023
—
24,085
12,778
SLR Business Credit (2)(3)(19)
Diversified Financial Services
4/1/2022
100
111,583
125,370
SLR Credit Solutions (2)(3)(20)
Diversified Financial Services
12/28/2012
280,303
280,737
288,250
SLR Healthcare ABL (2)(3)(21)
Diversified Financial Services
4/1/2022
32,839
34,335
37,850
SLR Senior Lending Program LLC (2)(3)(22)
Asset Management
12/1/2022
—
47,875
49,091
Venus Concept Ltd. Warrants* (f/k/a
Restoration Robotics)
Health Care Equipment & Supplies
5/10/2018
396
110
—
Veronica Holdings, LLC (Vapotherm)(24)*
Health Care Equipment & Supplies
9/20/2027
293,203
330
639
Total Common Equity/Equity Interests/Warrants
$
675,818
$
675,818
Total Investments (6) — 202.0%
$
2,039,566
$
2,005,634
Description
Industry
Acquisition
Date
Maturity
Date
Par Amount
Cash Equivalents —40.0%
U.S. Treasury Bill (4.24% yield)
Government
12/31/2024
2/25/2025
$
400,000
$
397,510
$
397,510
Total Investments & Cash Equivalents — 242.0%
$
2,437,076
$
2,403,144
Liabilities in Excess of Other Assets — (142.0%)
(1,410,218 )
Net Assets — 100.0%
$
992,926
(1)Floating rate debt investments typically bear interest at a rate determined by reference to the Secured Overnight Financing Rate (“SOFR” or “S”) or the prime index rate (“PRIME” or “P”), and which typically reset
monthly, quarterly or semi-annually. For each debt investment we have provided the current rate of interest, or in the case of leases the current implied yield, in effect as of December 31, 2024.
(2)Denotes investments in which we are deemed to exercise a controlling influence over the management or policies of a company, as defined in the Investment Company Act of 1940, as amended (the “1940 Act”), due to
beneficially owning, either directly or through one or more controlled companies, more than 25% of the outstanding voting securities of the investment. Transactions during the year ended December 31, 2024 in these
controlled investments are as follows:
Name of Issuer
Fair Value at
December 31,
2023
Gross
Additions
Gross
Reductions
Realized
Loss
Change in
Unrealized
Gain
(Loss)
Fair Value at
December 31, 2024
Interest/
Dividend/
Other
Income
Equipment Operating Leases, LLC
$
3,296
$
—
$
496
$
—
$
12
$
2,812
$
264
Kingsbridge Holdings, LLC
96,000
4,500
—
—
113
100,500
11,972
KBH Topco, LLC (Kingsbridge)
142,000
4,323
—
—
5,748
152,071
12,159
Loyer Capital LLC
7,361
—
—
—
—
7,361
757
RD Holdco, Inc. (Rug Doctor, common equity)
—
—
—
—
—
—
—
RD Holdco, Inc. (Rug Doctor, class B)
—
—
—
—
—
—
—
RD Holdco, Inc. (debt)
7,827
—
—
—
—
7,827
—
SLR Business Credit (revolver)
—
19,000
19,000
—
—
—
33
SLR Business Credit
90,370
30,000
—
—
5,000
125,370
8,350
SLR Credit Solutions
284,000
—
—
—
4,250
288,250
20,500
SLR Equipment Finance (equity)
120,820
—
—
—
(13,220)
107,600
—
SLR Equipment Finance (debt)
3,850
3,000
3,850
—
—
3,000
28
SLR Healthcare ABL
35,850
—
—
—
2,000
37,850
5,123
SLR Healthcare ABL (revolver)
—
4,000
—
—
—
4,000
1
SLR Senior Lending Program LLC
43,899
5,000
—
—
192
49,091
7,262
SOINT, LLC
3,801
63
—
—
(1,364)
2,500
62
$
839,074
$
69,886
$
23,346
$
—
$
2,731
$
888,232
$
66,511
See notes to consolidated financial statements.
106
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2024
(in thousands, except share/unit amounts)
(3)Indicates assets that the Company believes may not represent “qualifying assets” under Section 55(a) of the 1940 Act. If we fail to invest a sufficient portion of our assets in qualifying assets, we could be prevented from
making follow-on investments in existing portfolio companies or could be required to dispose of investments at inappropriate times in order to comply with the 1940 Act. As of December 31, 2024, on a fair value basis, non-
qualifying assets in the portfolio represented 26.3% of the total assets of the Company.
(4)The Company’s investment in SOINT, LLC includes a one dollar investment in common shares.
(5)Kingsbridge Holdings, LLC is held through KBH Topco LLC, a Delaware corporation.
(6)Aggregate net unrealized appreciation for U.S. federal income tax purposes is $7,625; aggregate gross unrealized appreciation and depreciation for U.S. federal tax purposes is $109,461 and $101,836, respectively, based
on a tax cost of $1,998,009. Unless otherwise noted, all of the Company’s investments are pledged as collateral against the borrowings outstanding on the senior secured credit facility. The Company generally acquires its
investments in private transactions exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”). These investments are generally subject to certain limitations on resale, and may be deemed
to be “restricted securities” under the Securities Act. All investments are Level 3 unless otherwise indicated.
(7)Floating rate instruments accrue interest at a predetermined spread relative to an index, typically the SOFR or PRIME rate. These instruments are often subject to a SOFR or PRIME rate floor.
(8)Denotes a Level 1 investment.
(9)SLR Equipment Finance is held through NEFCORP LLC, a wholly-owned consolidated taxable subsidiary and NEFPASS LLC, a wholly-owned consolidated subsidiary.
(10)Indicates an investment that is wholly held by the Company through NEFPASS LLC.
(11)Interest is paid in kind (“PIK”).
(12)Denotes a subsidiary of SLR Equipment Finance.
(13)OmniGuide Holdings, Inc., Domain Surgical, Inc. and OmniGuide, Inc. are co-borrowers.
(14)Kaseya may elect to defer up to 2.50% of the coupon as PIK.
(15)Through this entity and other intermediate entities, the Company owns approximately 5.7% of the underlying common units of ASC Holdco, LLC, a joint venture which owns certain assets of the former Amerimark
Interactive, LLC.
(16)Indicates an investment that is wholly or partially held by the Company through its wholly-owned financing subsidiary SUNS SPV LLC. Such investments are pledged as collateral under the Senior Secured Revolving
SPV Credit Facility (see Note 7 to the consolidated financial statements) and are not generally available to creditors, if any, of the Company.
(17)See note 11 to the consolidated financial statements.
See notes to consolidated financial statements.
107
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2024
(in thousands, except share/unit amounts)
(18)See note 12 to the consolidated financial statements.
(19)See note 14 to the consolidated financial statements.
(20)See note 10 to the consolidated financial statements.
(21)See note 13 to the consolidated financial statements.
(22)See note 18 to the consolidated financial statements.
(23)Spread is S+200 Cash / 4.75% PIK.
(24)Denotes investments in which we are an “Affiliated Person” but do not exercise a controlling influence, as defined in the 1940 Act, due to beneficially owning, either directly or through one or more controlled
companies, more than 5% but less than 25% of the outstanding voting securities of the investment. Transactions during the year ended December 31, 2024 in these affiliated investments are as follows:
Name of Issuer
Fair Value at
December 31,
2023
Gross
Additions
Gross
Reductions
Realized
Gain
(Loss)
Change in
Unrealized
Gain
(Loss)
Fair Value at
December 31,
2024
Interest/
Dividend
Income
Bayside Opco, LLC
$
19,415
$
626
$
136
$
—
$
—
$
19,905
$
2,543
Bayside Parent, LLC (loan)
5,153
855
—
—
—
6,008
850
Bayside Parent, LLC (equity)
3,815
—
—
—
3,364
7,179
—
SLR-AMI Topco Blocker, LLC
15,867
—
—
—
(3,089)
12,778
—
Vapotherm, Inc.
—
14,080
—
—
108
14,254
488
Veronica Holdings, LLC (preferred equity)
—
27,644
—
—
1,413
29,182
845
Veronica Holdings, LLC (common equity)
—
330
—
—
309
639
—
$
44,250
$
43,535
$
136
$
—
$
2,105
$
89,945
$
4,726
(25) Certain tranches have a spread of S+795, certain tranches have a spread of S+425 and certain tranches have a spread of S+400.
(26) Certain tranches have a spread of S+650 and certain tranches have a spread of S+700 (5.00% PIK/2.00% Cash).
(27) Spread is S+600 Cash / 1.00% PIK.
(28) Certain tranches have a spread of S+550 and certain tranches have a spread of S+650.
* Non-income producing security.
** Investment is on non-accrual status.
See notes to consolidated financial statements.
108
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2024
(in thousands)
Industry Classification
Percentage of Total
Investments (at fair
value) as of
December 31, 2024
Diversified Financial Services (includes SLR Credit Solutions, SLR Business Credit and SLR Healthcare ABL)
27.7%
Multi-Sector Holdings (includes Kingsbridge Holdings, LLC, SLR Equipment Finance, Equipment Operating Leases, LLC and Loyer Capital LLC)
18.6%
Health Care Providers & Services
13.6%
Health Care Equipment & Supplies
6.8%
Pharmaceuticals
3.8%
Diversified Consumer Services
3.3%
Capital Markets
3.2%
Media
3.0%
Software
2.8%
Asset Management
2.4%
Commercial Services & Supplies
2.2%
Biotechnology
1.9%
Insurance
1.7%
Thrifts & Mortgage Finance
1.5%
Personal Products
1.2%
Life Sciences Tools & Services
1.1%
Internet Software & Services
1.0%
Communications Equipment
0.7%
Internet & Catalog Retail
0.6%
Transportation Infrastructure
0.6%
Road & Rail
0.5%
Trading Companies & Distributors
0.3%
Health Care Technology
0.3%
Food Products
0.3%
Hotels, Restaurants, & Leisure
0.2%
Aerospace & Defense
0.2%
Machinery
0.1%
Airlines
0.1%
Auto Components
0.1%
Construction & Engineering
0.1%
Metals & Mining
0.1%
Energy Equipment & Services
0.0%
Total Investments
100.0%
See notes to consolidated financial statements.
109
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2023
(in thousands, except share/unit amounts)
Description
Industry
Spread
Above
Index
Floor
Interest
Rate
Acquisition
Date
Maturity
Date
Par
Amount
Cost
Fair
Value
Senior Secured Loans — 129.5%
First Lien Bank Debt/Senior Secured Loans
Accession Risk Management Group, Inc.
(f/k/a RSC Acquisition, Inc.)
Insurance
S+550
0.75 %
11.00 %
4/1/2022
11/1/2029
$
6,958
$
6,932
$
6,932
Aegis Toxicology Sciences Corporation(16)
Health Care Providers & Services
S+550
1.00 %
11.13 %
5/7/2018
5/9/2025
13,360
13,188
13,360
Alkeme Intermediary Holdings, LLC
Insurance
S+650
1.00 %
11.96 %
9/20/2023
10/28/2026
8,514
8,277
8,514
All States Ag Parts, LLC(16)
Trading Companies & Distributors
S+600
1.00 %
11.61 %
4/1/2022
9/1/2026
2,063
2,036
2,063
Atria Wealth Solutions, Inc.(16)
Diversified Financial Services
S+650
1.00 %
11.97 %
9/14/2018
5/31/2024
16,243
16,159
16,243
Basic Fun, Inc.(16)
Specialty Retail
S+650
1.00 %
12.14 %
10/30/2020
7/2/2024
2,150
2,145
2,150
BayMark Health Services, Inc.(16)
Health Care Providers & Services
S+500
1.00 %
10.61 %
4/1/2022
6/11/2027
8,265
8,016
8,265
Bayside Opco, LLC(27)
Health Care Providers & Services
S+725
1.00 %
12.75 %
5/31/2023
5/31/2026
19,415
19,415
19,415
Bayside Parent, LLC(27)
Health Care Providers & Services
S+1000
1.00 %
15.50 %
5/31/2023
5/31/2026
5,153
5,153
5,153
BDG Media, Inc.
Media
P+525
5.50 %
13.75 %
7/18/2022
7/31/2025
7,854
7,854
7,854
CC SAG Holdings Corp. (Spectrum
Automotive)(16)
Diversified Consumer Services
S+575
0.75 %
11.22 %
6/29/2021
6/29/2028
30,510
30,031
30,510
Copper River Seafoods, Inc.
Food Products
P+275
—
11.25 %
12/1/2023
4/23/2025
4,949
4,949
4,949
Crewline Buyer, Inc.
IT Services
S+675
1.00 %
12.10 %
11/8/2023
11/8/2030
5,084
4,958
4,957
CVAUSA Management, LLC(16)
Health Care Providers & Services
S+650
1.00 %
11.74 %
5/22/2023
5/22/2029
17,366
16,873
17,366
DeepIntent, Inc.
Media
P+175
—
10.25 %
12/1/2023
3/25/2025
21,067
21,067
21,067
Enhanced Permanent Capital, LLC(3)
Capital Markets
S+700
1.00 %
12.44 %
12/29/2020
12/29/2025
42,521
41,864
42,521
ENS Holdings III Corp. & ES Opco
USA LLC (Bluefin)(16)
Trading Companies & Distributors
S+475
1.00 %
10.20 %
4/1/2022
12/31/2025
4,505
4,398
4,505
Exactcare Parent, Inc.
Health Care Providers & Services
S+650
1.00 %
11.89 %
11/3/2023
11/5/2029
3,228
3,140
3,139
Fertility (ITC) Investment Holdco, LLC
Health Care Providers & Services
S+650
1.00 %
11.97 %
1/4/2023
1/3/2029
22,596
22,000
22,596
Foundation Consumer Brands, LLC(16)
Personal Products
S+625
1.00 %
11.79 %
2/12/2021
2/12/2027
26,726
26,181
26,726
GSM Acquisition Corp.
Leisure Equipment & Products
S+500
1.00 %
10.47 %
4/1/2022
11/16/2026
2,371
2,296
2,371
See notes to consolidated financial statements.
(7)
(1)
(11)
(11)
110
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2023
(in thousands, except share/unit amounts)
Description
Industry
Spread
Above
Index
Floor
Interest
Rate
Acquisition
Date
Maturity
Date
Par
Amount
Cost
Fair
Value
Senior Secured Loans (continued)
Higginbotham Insurance Agency, Inc.(16)
Insurance
S+550
1.00 %
10.96 %
4/1/2022
11/25/2028
$
21,210
$
21,210
$
21,210
Human Interest Inc
Internet Software & Services
S+785
1.00 %
13.19 %
6/30/2022
7/1/2027
20,104
19,943
20,104
iCIMS, Inc.
Software
S+725
0.75 %
12.10 %
8/18/2022
8/18/2028
31,059
30,642
31,059
Kaseya, Inc.(16)
Software
S+600
0.75 %
10.86 %
6/22/2022
6/23/2029
24,519
24,215
24,519
Kid Distro Holdings, LLC (Distro Kid)(16)
Software
S+550
1.00 %
11.00 %
9/24/2021
10/1/2027
20,207
19,934
20,207
Kingsbridge Holdings, LLC(2) .
Multi-Sector Holdings
S+700
1.00 %
12.52 %
12/21/2018
12/21/2024
96,000
95,897
96,000
Logix Holding Company, LLC(16)
Communications Equipment
P+475
1.00 %
13.25 %
9/14/2018
12/22/2024
14,009
13,613
13,729
Luxury Asset Capital, LLC(16)
Thrifts & Mortgage Finance
S+675
1.00 %
12.21 %
7/15/2022
7/15/2027
30,500
30,032
30,500
Maxor Acquisition, Inc.(16)
Health Care Providers & Services
S+675
1.00 %
12.48 %
3/1/2023
3/1/2029
17,604
17,128
17,604
Medrina, LLC
Health Care Providers & Services
S+625
1.00 %
11.67 %
10/20/2023
10/20/2029
2,410
2,351
2,350
NSPC Intermediate Corp. (National Spine)
Health Care Providers & Services
S+800
1.00 %
13.53 %
4/1/2022
2/13/2026
2,216
2,143
2,216
One Touch Direct, LLC
Commercial Services & Supplies
P+75
—
9.25 %
12/1/2023
3/31/2025
4,915
4,915
4,915
ONS MSO, LLC
Health Care Providers & Services
S+625
1.00 %
11.62 %
2/10/2023
7/8/2026
28,110
27,454
28,110
Orthopedic Care Partners Management, LLC
Health Care Providers & Services
S+650
1.00 %
12.11 %
8/17/2022
5/16/2024
5,488
5,470
5,488
Peter C. Foy & Associates Insurance
Services, LLC(16)
Insurance
S+600
0.75 %
11.47 %
4/1/2022
11/1/2028
16,877
16,636
16,539
Pinnacle Treatment Centers, Inc.(16)
Health Care Providers & Services
S+650
1.00 %
11.86 %
1/22/2020
1/2/2026
22,687
22,405
22,687
Plastic Management, LLC(16)
Health Care Providers & Services
S+500
1.00 %
10.45 %
4/1/2022
8/18/2027
17,140
16,488
17,140
Retina Midco, Inc.(16)
Health Care Providers & Services
S+575
1.00 %
11.38 %
12/18/2023
1/31/2026
28,146
27,592
27,583
RQM+ Corp.(16)
Life Sciences Tools & Services
S+575
1.00 %
11.36 %
8/20/2021
8/12/2026
23,636
23,327
23,636
RxSense Holdings LLC(16)
Diversified Consumer Services
S+500
1.00 %
10.48 %
4/1/2022
3/13/2026
2,656
2,573
2,656
SCP Eye Care, LLC
Health Care Providers & Services
S+575
1.00 %
11.17 %
10/6/2022
10/5/2029
10,015
9,728
10,015
SHO Holding I Corporation (Shoes
for Crews)(16)
Footwear
S+523
1.00 %
10.87 %
4/1/2022
4/27/2024
5,658
5,557
5,092
See notes to consolidated financial statements.
(7)
(1)
(26)
(14)
111
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2023
(in thousands, except share/unit amounts)
Description
Industry
Spread
Above
Index
Floor
Interest
Rate
Acquisition
Date
Maturity
Date
Par
Amount
Cost
Fair
Value
Senior Secured Loans (continued)
Southern Orthodontic Partners Management, LLC(16)
Health Care Providers & Services
S+625
1.00 %
11.72 %
6/3/2022
1/27/2026
$
15,545
$
15,300
$
15,545
SPAR Marketing Force, Inc.
Media
P+190
—
10.40 %
12/1/2023
10/10/2024
8,461
8,461
8,461
Stryten Resources LLC
Auto Parts & Equipment
S+800
1.00 %
13.47 %
8/11/2021
10/12/2026
25,659
25,341
26,044
SunMed Group Holdings, LLC(16)
Health Care Equipment & Supplies
S+550
0.75 %
10.96 %
6/16/2021
6/16/2028
14,982
14,676
14,982
TAUC Management, LLC(16)
Health Care Providers & Services
P+450
1.00 %
13.00 %
4/1/2022
2/12/2027
6,891
6,646
6,409
The Townsend Company, LLC(16)
Commercial Services & Supplies
S+625
1.00 %
11.61 %
8/17/2023
8/15/2029
10,276
10,030
10,276
Tilley Distribution, Inc.(16)
Trading Companies & Distributors
S+600
1.00 %
11.50 %
4/1/2022
12/31/2026
3,808
3,663
3,808
Ultimate Baked Goods Midco LLC (Rise Baking)(16)
Packaged Foods & Meats
S+625
1.00 %
10.96 %
8/12/2021
8/13/2027
26,359
25,811
26,095
United Digestive MSO Parent, LLC
Health Care Providers & Services
S+675
1.00 %
12.25 %
3/30/2023
3/30/2029
9,812
9,544
9,812
Urology Management Holdings, Inc
Health Care Providers & Services
S+650
1.00 %
11.93 %
2/7/2023
6/15/2026
9,205
8,983
9,136
UVP Management, LLC
Health Care Providers & Services
S+625
1.00 %
11.75 %
9/18/2023
9/15/2025
16,922
16,550
16,499
Vessco Midco Holdings, LLC
Water Utilities
P+350
1.00 %
12.00 %
4/1/2022
11/2/2026
15
15
15
WCI-BXC Purchaser, LLC
Distributors
S+625
1.00 %
11.64 %
11/6/2023
11/6/2030
2,904
2,833
2,832
West-NR Parent, Inc.(16)
Insurance
S+625
1.00 %
11.70 %
8/1/2023
12/27/2027
9,015
8,848
9,015
Total First Lien Bank Debt/Senior Secured Loans
$
862,886
$
872,944
Second Lien Asset-Based Senior Secured Loans
AMF Levered II, LLC
Diversified Financial Services
S+705
1.00 %
12.52 %
12/24/2021
8/21/2028
$
29,925
$
29,474
$
29,326
FGI Worldwide LLC
Diversified Financial Services
S+650
1.00 %
11.86 %
4/17/2023
4/17/2028
8,206
8,023
8,206
Total Second Lien Bank Asset-Backed Senior Secured Loans
$
37,497
$
37,532
Second Lien Bank Debt/Senior
Secured Loans
RD Holdco, Inc.** (2)
Diversified Consumer Services
S+975
1.00 %
—
12/23/2013
10/12/2026
$
15,654
$
12,297
$
7,827
See notes to consolidated financial statements.
(7)
(1)
(11)
112
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2023
(in thousands, except share/unit amounts)
Description
Industry
Spread
Above
Index
Floor
Interest
Rate
Acquisition
Date
Maturity
Date
Par
Amount
Cost
Fair
Value
Senior Secured Loans (continued)
First Lien Life Science Senior
Secured Loans
Alimera Sciences, Inc.(16)
Pharmaceuticals
S+515
4.60 %
10.50 %
12/31/2019
5/1/2028
$
34,738
$
34,945
$
37,274
Arcutis Biotherapeutics, Inc.(3)
Pharmaceuticals
S+745
0.10 %
12.90 %
12/22/2021
1/1/2027
66,849
68,169
68,186
Ardelyx, Inc.(3)
Pharmaceuticals
S+795
1.00 %
13.32 %
2/23/2022
3/1/2027
17,228
17,306
17,766
BridgeBio Pharma, Inc.(3)
Biotechnology
—
—
9.00 %
11/17/2021
11/17/2026
40,753
40,567
40,854
Cerapedics, Inc.
Biotechnology
S+620
2.75 %
11.55 %
12/27/2022
1/1/2028
36,156
36,260
36,156
Glooko, Inc.(16)
Health Care Technology
S+790
0.10 %
13.35 %
9/30/2021
10/1/2026
9,927
10,010
10,373
Meditrina, Inc.
Health Care Equipment & Supplies
S+550
3.45 %
10.85 %
12/20/2022
12/1/2027
3,367
3,374
3,401
Neuronetics, Inc.(16)
Health Care Equipment & Supplies
S+565
3.95 %
11.00 %
3/2/2020
3/29/2028
30,878
30,921
30,878
OmniGuide Holdings, Inc. (13)
Health Care Equipment & Supplies
S+580
5.31 %
11.25 %
7/30/2018
11/1/2025
24,500
24,874
24,623
Outset Medical, Inc.(3)(16)
Health Care Equipment & Supplies
S+515
2.75 %
10.50 %
11/3/2022
11/1/2027
44,727
44,837
44,839
Vapotherm, Inc.
Health Care Equipment & Supplies
S+930
1.00 %
14.75 %
2/18/2022
2/1/2027
37,670
38,094
38,235
Vertos Medical, Inc.
Health Care Equipment & Supplies
S+515
4.75 %
10.50 %
6/14/2023
7/1/2028
6,651
6,604
6,651
Total First Lien Life Science Senior Secured Loans
$
355,961
$
359,236
Total Senior Secured Loans
$
1,268,641
$
1,277,539
Description
Industry
Interest
Rate
Acquisition
Date
Maturity
Date
Par Amount
Cost
Fair
Value
Equipment Financing — 26.0%
A&A Crane and Rigging, LLC (10)
Commercial Services & Supplies
7.78%
3/27/2023
3/27/2028
$
69
$
69
$
69
Aero Operating LLC (10)
Commercial Services & Supplies
8.47-9.64%
2/12/2021
3/1/2025-11/1/2026
1,345
1,343
1,343
AFG Dallas III, LLC (10)
Diversified Consumer Services
10.00-11.29%
8/11/2022
8/11/2026-3/1/2027
1,099
1,099
1,099
Air Methods Corporation (10)
Airlines
7.08-7.13%
11/3/2021
11/3/2026-11/23/2026
3,103
3,142
3,103
AmeraMex International, Inc. (10)
Commercial Services & Supplies
10.00%
3/29/2019
10/15/2024
381
381
385
Bazzini, LLC (10)
Food & Staples Retailing
10.46%
12/23/2022
1/1/2028
1,985
2,043
1,985
Boart Longyear Company (10)
Metals & Mining
8.31-10.44%
5/28/2020
7/1/2024-10/7/2026
2,447
2,447
2,447
Bowman Energy Solutions, LLC (10)
Commercial Services & Supplies
7.42%
7/1/2022
7/1/2026
114
114
114
C-Port/Stone LLC (10)
Oil, Gas & Consumable Fuels
8.54%
10/7/2022
11/1/2027
6,247
6,098
6,060
See notes to consolidated financial statements.
(7)
(1)
(22)
(24)
(1)
113
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2023
(in thousands, except share/unit amounts)
Description
Industry
Interest
Rate
Acquisition
Date
Maturity
Date
Par Amount
Cost
Fair
Value
Equipment Financing (continued)
Capital City Jet Center, Inc. (10)
Airlines
10.00%
4/4/2018
6/22/2026
$
1,242
$
1,242
$
1,242
Carolina’s Contracting, LLC (10)
Diversified Consumer Services
8.40-8.72%
3/7/2023
3/7/2028-5/18/2028
3,523
3,554
3,523
CKD Holdings, Inc. (10)
Road & Rail
8.10-8.60%
9/22/2022
3/22/2026-9/22/2027
2,863
2,863
2,863
Clubcorp Holdings, Inc. (10)
Hotels, Restaurants & Leisure
9.36-13.01%
5/27/2021
4/1/2025-5/1/2028
6,461
6,461
6,461
Complete Equipment Rentals, LLC (10)
Commercial Services & Supplies
6.75-7.15%
3/23/2023
4/1/2028-6/1/2028
1,837
1,810
1,806
Dongwon Autopart Technology Inc. (10)
Auto Components
7.96%
2/2/2021
1/1/2026
1,266
1,277
1,266
Double S Industrial Contractors, Inc. (10)
Commercial Services & Supplies
8.60%
7/28/2023
8/1/2027
112
112
112
Drillers Choice, Inc. (10)
Commercial Services & Supplies
8.00-10.08%
10/31/2022
11/1/2027-6/1/2029
1,873
1,875
1,873
Energy Drilling Services, LLC (10)
Diversified Consumer Services
6.58-9.16%
8/26/2022
11/9/2025-9/1/2027
1,076
1,076
1,076
Environmental Protection & Improvement
Company, LLC (10)
Road & Rail
8.25%
9/30/2020
10/1/2027
4,564
4,585
4,564
Equipment Operating Leases, LLC (2)(12)
Multi-Sector Holdings
8.37%
4/27/2018
4/27/2025
3,381
3,381
3,296
Extreme Steel Crane & Rigging, LLC (10)
Commercial Services & Supplies
9.52%
3/3/2023
3/3/2027
847
854
847
First American Commercial Bancorp, Inc. (10)
Diversified Financial Services
7.50-9.02%
10/28/2021
10/1/2026-3/1/2027
2,279
2,281
2,279
First National Capital, LLC (10)
Diversified Financial Services
9.00%
11/5/2021
7/1/2026
5,290
5,290
5,290
Georgia Jet, Inc. (10)
Airlines
8.00%
12/4/2017
1/4/2024
25
25
25
GMT Corporation (10)
Machinery
10.71%
10/23/2018
1/1/2026
3,813
3,816
3,813
Hawkeye Contracting Company, LLC (10)
Construction & Engineering
10.50%
10/8/2021
11/1/2025
689
689
689
HTI Logistics Corporation (10)
Commercial Services & Supplies
9.69-9.94%
11/15/2018
5/1/2024-9/1/2025
153
153
149
International Automotive Components Group,
North America, Inc. (10)
Auto Components
7.95%
6/23/2021
6/23/2025
3,787
3,801
3,711
Kool Pak, LLC (10)
Road & Rail
8.58%
2/5/2018
3/1/2024
29
29
29
Loc Performance Products, LLC (10)
Machinery
10.50%
12/29/2022
6/1/2027
636
636
636
Loyer Capital LLC (2)(12)
Multi-Sector Holdings
8.73-11.52%
5/16/2019
5/16/2024-9/25/2024
7,500
7,500
7,361
Lux Credit Consultants, LLC (10)
Road & Rail
8.28-12.09%
6/17/2021
12/1/2024-12/1/2026
10,911
10,911
10,911
Lux Vending, LLC (10)
Consumer Finance
12.46-13.26%
8/20/2021
8/20/2024-11/1/2024
632
636
632
See notes to consolidated financial statements.
(1)
114
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2023
(in thousands, except share/unit amounts)
Description
Industry
Interest
Rate
Acquisition
Date
Maturity
Date
Par Amount
Cost
Fair
Value
Equipment Financing (continued)
Miranda Logistics Enterprise, Inc. (10)
Construction & Engineering
7.69%
4/14/2023
4/14/2028
$
787
$
787
$
787
Mountain Air Helicopters, Inc. (10)
Commercial Services & Supplies
10.00%
7/31/2017
2/28/2025
248
247
248
Nimble Crane LLC (10)
Commercial Services & Supplies
9.18%
7/13/2023
7/13/2028
934
934
934
No Limit Construction Services, LLC (10)
Commercial Services & Supplies
7.73%
5/5/2023
6/1/2028
118
118
118
Ozzies, Inc. (10)
Commercial Services & Supplies
10.72%
12/23/2022
1/1/2027
1,621
1,668
1,621
PCX Aerostructures LLC (10)
Aerospace & Defense
9.32%
11/23/2022
12/1/2028
2,311
2,311
2,311
Rane Light Metal Castings Inc. (10)
Machinery
10.00%
6/1/2020
6/1/2024
56
56
56
Rango, Inc. (10)
Commercial Services & Supplies
9.33%
9/24/2019
11/1/2024
573
583
563
Rayzor’s Edge LLC (10)
Diversified Consumer Services
7.69-8.27%
5/19/2023
5/18/2030-6/30/2030
711
711
711
RH Land Construction, LLC & Harbor Dredging
LA, Inc. (10)
Construction & Engineering
8.08%
5/10/2023
5/10/2026
114
114
114
Royal Express Inc. (10)
Road & Rail
9.53%
1/17/2019
2/1/2024
148
148
148
Rotten Rock Hardscaping & Tree Service (10)
Diversified Consumer Services
8.21%
12/6/2022
12/6/2027
204
204
204
Rutt Services, LLC (10)
Commercial Services & Supplies
8.95%
8/11/2023
8/11/2030
1,176
1,179
1,176
Signet Marine Corporation (10)
Transportation Infrastructure
8.50%
10/31/2022
10/1/2029
12,272
12,310
12,272
SLR Equipment Finance(2)
Multi-Sector Holdings
8.50%
1/24/2022
1/27/2024
3,850
3,850
3,850
Smiley Lifting Solutions, LLC(10)
Commercial Services & Supplies
7.82-8.61%
6/30/2022
9/15/2026-6/27/2030
5,945
5,945
5,945
ST Coaches, LLC (10)
Road & Rail
8.50%
7/31/2017
1/25/2025
583
583
583
Star Coaches Inc. (10)
Road & Rail
8.42%
3/9/2018
4/1/2025
2,327
2,327
2,211
Superior Transportation , Inc. (10)
Road & Rail
10.22-10.63%
7/31/2017
1/1/2026
2,279
2,279
2,279
The Smedley Company & Smedley
Services, Inc. (10)
Commercial Services & Supplies
4.07%
7/31/2017
1/15/2028
1,397
1,397
1,270
Trinity Equipment, Inc. (10)
Commercial Services & Supplies
8.78-8.93%
5/4/2023
5/4/2028-5/19/2028
1,345
1,345
1,345
Trinity Equipment Rentals, Inc. (10)
Commercial Services & Supplies
7.94-8.75%
10/8/2021
11/1/2024-12/1/2026
361
361
361
U.S. Crane & Rigging, LLC (10)
Commercial Services & Supplies
8.73%-10.92%
12/23/2022
3/1/2027-9/1/2028
2,574
2,574
2,574
Up Trucking Services, LLC (10)
Road & Rail
11.21%
3/23/2018
8/1/2024
208
209
208
See notes to consolidated financial statements.
(1)
115
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2023
(in thousands, except share/unit amounts)
Description
Industry
Interest
Rate
Acquisition
Date
Maturity
Date
Par Amount
Cost
Fair
Value
Equipment Financing (continued)
Waste Pro of Florida, Inc. & Waste
Pro USA, Inc. (10)
Commercial Services & Supplies
9.17%
4/18/2023
4/18/2028
$
8,915
$
9,057
$
8,915
Wind River Environmental, LLC (10)
Diversified Consumer Services
8.43-10.00%
7/31/2019
8/1/2024-10/5/2025
311
311
311
Womble Company, Inc. (10)
Energy Equipment & Services
9.11%
12/27/2019
1/1/2025
210
210
206
Worldwide Flight Services, Inc. (10)
Transportation Infrastructure
8.32-9.93%
9/23/2022
9/23/2027-8/16/2028
3,053
3,097
3,053
Zamborelli Enterprises Pacific
Southern Foundation (10)
Diversified Consumer Services
8.91%
12/7/2022
1/1/2027
566
570
566
Shares/Units
SLR Equipment Finance Equity
Interests (2)(9)(17)*
Multi-Sector Holdings
7/31/2017
200
145,000
120,820
Total Equipment Financing
$
282,078
$
256,819
Preferred Equity – 0.4%
SOINT, LLC (2)(3)(4)
Aerospace & Defense
5.00%
6/8/2012
6/30/2025
—
$
5,178
$
3,801
Description
Industry
Acquisition
Date
Shares/
Units
Cost
Fair
Value
Common Equity/Equity Interests/Warrants—62.5%
Assertio Holdings, Inc. (8)*
Pharmaceuticals
7/31/2023
12,510 $
51 $
13
aTyr Pharma, Inc. Warrants *
Pharmaceuticals
11/18/2016
2,932
36
—
Bayside Parent, LLC (27)*
Health Care Providers & Services
5/31/2023
6,526
11,411
3,815
CardioFocus, Inc. Warrants *
Health Care Equipment & Supplies
3/31/2017
90
51
—
Centrexion Therapeutics, Inc. Warrants *
Pharmaceuticals
6/28/2019
289,102
136
45
Conventus Orthopaedics, Inc. Warrants *
Health Care Equipment & Supplies
6/15/2016
157,500
65
—
Delphinus Medical Technologies, Inc. Warrants *
Health Care Equipment & Supplies
8/18/2017
444,388
74
80
Essence Group Holdings Corporation
(Lumeris) Warrants *
Health Care Technology
3/22/2017
260,000
129
327
KBH Topco LLC (Kingsbridge) (2)(5)(18).
Multi-Sector Holdings
11/3/2020
73,500,000
136,596
142,000
Meditrina, Inc. Warrants *
Health Care Equipment & Supplies
12/20/2022
29,366
23
19
NSPC Holdings, LLC (National Spine) *
Health Care Providers & Services
2/13/2023
207,043
657
—
RD Holdco, Inc. (Rug Doctor) (2)*
Diversified Consumer Services
12/23/2013
231,177
15,683
—
RD Holdco, Inc. (Rug Doctor) Class B (2)*
Diversified Consumer Services
12/23/2013
522
5,216
—
Senseonics Holdings, Inc. (3)(8)*
Health Care Equipment & Supplies
7/25/2019
469,353
235
268
SLR-AMI Topco Blocker, LLC (15)(27)*
Internet & Catalog Retail
6/16/2023
—
24,085
15,867
SLR Business Credit (2)(3)(19)
Diversified Financial Services
4/1/2022
100
81,583
90,370
SLR Credit Solutions (2)(3)(20)
Diversified Financial Services
12/28/2012
280,303
280,737
284,000
See notes to consolidated financial statements.
(1)
(11)
116
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2023
(in thousands, except share/unit amounts)
Description
Industry
Acquisition
Date
Shares/
Units
Cost
Fair
Value
Common Equity/Equity Interests/Warrants (continued)
SLR Healthcare ABL (2)(3)(21)
Diversified Financial Services
4/1/2022
32,839 $
34,335 $
35,850
SLR Senior Lending Program LLC (2)(3)(25)
Asset Management
12/1/2022
—
42,875
43,899
Vapotherm, Inc. Warrants*
Health Care Equipment & Supplies
2/18/2022
78,287
319
3
Venus Concept Ltd. Warrants* (f/k/a
Restoration Robotics)
Health Care Equipment & Supplies
5/10/2018
2,230
152
—
Vertos Medical, Inc. Warrants*
Health Care Equipment & Supplies
6/14/2023
161,761
51
51
Total Common Equity/Equity Interests/Warrants
$
634,500 $
616,607
Total Investments (6) — 218.4%
$
2,190,397 $
2,154,766
Description
Industry
Acquisition
Date
Maturity
Date
Par Amount
Cost
Fair Value
Cash Equivalents —33.7%
U.S. Treasury Bill (5.33% yield)
Government
12/29/2023
2/27/2024
$
335,000 $
332,290 $
332,290
Total Investments & Cash Equivalents — 252.1%
$
2,522,687 $
2,487,056
Liabilities in Excess of Other Assets — (152.1%)
(1,500,417 )
Net Assets — 100.0%
$
986,639
(1)Floating rate debt investments typically bear interest at a rate determined by reference to the Secured Overnight Financing Rate (“SOFR” or “S”) or the prime index rate (“PRIME” or “P”), and which typically reset
monthly, quarterly or semi-annually. For each debt investment, we have provided the current rate of interest, or in the case of leases the current implied yield, in effect as of December 31, 2023.
(2)Denotes investments in which we are deemed to exercise a controlling influence over the management or policies of a company, as defined in the Investment Company Act of 1940, as amended (the “1940 Act”), due to
beneficially owning, either directly or through one or more controlled companies, more than 25% of the outstanding voting securities of the investment. Transactions during the year ended December 31, 2023 in these
controlled investments are as follows:
Name of Issuer
Fair Value at
December 31,
2022
Gross
Additions
Gross
Reductions
Realized
Loss
Change in
Unrealized
Gain
(Loss)
Fair Value at
December 31,
2023
Interest/
Dividend/
Other
Income
Equipment Operating Leases, LLC
$
3,741
$
—
$
(456 )
$
—
$
11 $
3,296 $
304
Kingsbridge Holdings, LLC
80,000
16,000
—
—
(96 )
96,000
10,320
KBH Topco, LLC (Kingsbridge)
148,444
—
—
—
(6,444 )
142,000
13,125
Loyer Capital LLC
7,361
—
—
—
—
7,361
755
RD Holdco, Inc. (Rug Doctor,
common equity)
—
—
—
—
—
—
—
RD Holdco, Inc. (Rug Doctor, class B)
—
—
—
—
—
—
—
RD Holdco, Inc. (Rug Doctor, warrants)
—
—
—
(381 )
381
—
—
RD Holdco, Inc. (debt)
6,521
506
—
—
800
7,827
—
SLR Business Credit
89,370
—
—
—
1,000
90,370
7,000
See notes to consolidated financial statements.
117
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2023
(in thousands, except share/unit amounts)
Name of Issuer
Fair Value at
December 31,
2022
Gross
Additions
Gross
Reductions
Realized
Loss
Change in
Unrealized
Gain
(Loss)
Fair Value at
December 31,
2023
Interest/
Dividend/
Other
Income
SLR Credit Solutions
288,760
—
—
—
(4,760 )
284,000
20,000
SLR Equipment Finance (equity)
120,820
—
—
—
—
120,820
—
SLR Equipment Finance (debt)
5,000
3,850
(5,000 )
—
—
3,850
248
SLR Healthcare ABL
34,350
—
—
—
1,500
35,850
4,360
SLR Senior Lending Program LLC
9,426
33,375
—
—
1,098
43,899
1,474
SOINT, LLC
3,801
251
—
—
(251 )
3,801
251
$
797,594
$
53,982
$
(5,456 )
$
(381 )
$
(6,761 ) $
839,074 $
57,837
(1)Indicates assets that the Company believes may not represent “qualifying assets” under Section 55(a) of the 1940 Act. If the Company fails to invest a sufficient portion of its assets in qualifying assets, it could be
prevented from making follow-on investments in existing portfolio companies or could be required to dispose of investments at inappropriate times in order to comply with the 1940 Act. As of December 31, 2023, on a fair
value basis, non-qualifying assets in the Company’s portfolio represented 26.6% of the total assets of the Company.
(2)The Company’s investment in SOINT, LLC includes a one dollar investment in common shares.
(3)Kingsbridge Holdings, LLC is held through KBH Topco LLC, a Delaware corporation.
(4)Aggregate net unrealized appreciation for U.S. federal income tax purposes is $2,567; aggregate gross unrealized appreciation and depreciation for U.S. federal tax purposes is $97,678 and $95,111, respectively, based on
a tax cost of $2,152,199. Unless otherwise noted, all of the Company’s investments are pledged as collateral against the borrowings outstanding on the Credit Facility (as defined below) (see note 7 to the consolidated
financial statements). The Company generally acquires its investments in private transactions exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”). These investments are generally
subject to certain limitations on resale, and may be deemed to be “restricted securities” under the Securities Act. All investments are Level 3 unless otherwise indicated.
(5)Floating rate instruments accrue interest at a predetermined spread relative to an index, typically the SOFR or PRIME rate. These instruments are often subject to a SOFR or PRIME rate floor.
(6)Denotes a Level 1 investment.
(7)SLR Equipment Finance is held through NEFCORP LLC, a wholly-owned consolidated taxable subsidiary and NEFPASS LLC, a wholly-owned consolidated subsidiary.
(8)Indicates an investment that is wholly held by the Company through NEFPASS LLC.
(9)Interest is paid in kind (“PIK”).
(10)Denotes a subsidiary of SLR Equipment Finance.
(11)OmniGuide Holdings, Inc., Domain Surgical, Inc. and OmniGuide, Inc. are co-borrowers.
(12)Kaseya, Inc. may elect to defer up to 2.50% of the coupon as PIK.
(13)Through this entity and other intermediate entities, the Company owns approximately 7.3% of the underlying common units of ASC Holdco, LLC, a joint venture which owns certain assets of the former Amerimark
Interactive, LLC.
(14)Indicates an investment that is wholly or partially held by the Company through its wholly-owned financing subsidiary SUNS SPV LLC. Such investments are pledged as collateral under the Senior Secured Revolving
SPV Credit Facility (see note 7 to the consolidated financial statements) and are not generally available to creditors, if any, of the Company.
(15)See note 12 to the consolidated financial statements.
See notes to consolidated financial statements.
118
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2023
(in thousands, except share/unit amounts)
(16)See note 13 to the consolidated financial statements.
(17)See note 15 to the consolidated financial statements.
(18)See note 11 to the consolidated financial statements.
(19)See note 14 to the consolidated financial statements.
(20)BridgeBio Pharma, Inc. may elect to defer up to 3.00% of the coupon as PIK.
(21)The Company became an Affiliated Person to Bayside Opco, LLC and Bayside Parent, LLC on May 31, 2023 and to Amerimark Intermediate Holdings, LLC and SLR- AMI Topco Blocker, LLC on June 16, 2023.
(22)Vapotherm, Inc. may elect to defer up to 9.00% of the coupon as PIK.
(23)See note 17 to the consolidated financial statements.
(24)iCIMS, Inc. may elect to defer up to 3.875% of the coupon as PIK.
(25)Denotes investments in which we are an “Affiliated Person” but do not exercise a controlling influence, as defined in the 1940 Act, due to beneficially owning, either directly or through one or more controlled
companies, more than 5% but less than 25% of the outstanding voting securities of the investment. Transactions during the year ended December 31, 2023 (beginning with the date at which the Company became an
Affiliated Person) in these affiliated investments are as follows:
Name of Issuer
Fair Value at
Date of
Affiliation(23)
Gross
Additions
Gross
Reductions
Realized
Gain
(Loss)
Change in
Unrealized
Gain
(Loss)
Fair Value at
December 31,
2023
Interest
Income
Oldco AI, LLC (f/k/a AmeriMark)
$
—
$
1,270
$
(1,270 )
$
—
$
— $
— $
194
Oldco AI, LLC (f/k/a AmeriMark)
9,371
—
(17,070)a
—
7,699
—
—
Bayside Opco, LLC
846
21
(867 )
—
—
—
44
Bayside Opco, LLC
18,224
1,191
—
—
—
19,415
1,399
Bayside Parent, LLC (loan)
4,773
380
—
—
—
5,153
447
Bayside Parent, LLC (equity)
4,681
—
—
—
(866 )
3,815
—
SLR-AMI Topco Blocker, LLC
7,014
17,070
a
—
—
(8,217 )
15,867
—
$
44,909
$
19,932
$
(19,207 )
$
—
$
(1,384 ) $
44,250 $
2,084
a Includes contribution of basis from Oldco AI, LLC to SLR-AMI Topco Blocker, LLC.
* Non-income producing security.
** Investment is on non-accrual status.
See notes to consolidated financial statements.
119
Table of Contents
SLR INVESTMENT CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2023
Industry Classification
Percentage of Total
Investments (at fair
value) as of
December 31, 2023
Diversified Financial Services (includes SLR Credit Solutions, SLR Business Credit and SLR
Healthcare ABL)
21.9 %
Multi-Sector Holdings (includes Kingsbridge Holdings, LLC, SLR Equipment Finance,
Equipment Operating Leases, LLC and Loyer Capital LLC)
17.3 %
Health Care Providers & Services
13.2 %
Health Care Equipment & Supplies
7.6%
Pharmaceuticals
5.7%
Biotechnology
3.6%
Software
3.5%
Insurance
2.9%
Diversified Consumer Services
2.3%
Commercial Services & Supplies
2.2%
Asset Management
2.1%
Capital Markets
2.0%
Media
1.7%
Thrifts & Mortgage Finance
1.4%
Personal Products
1.3%
Packaged Foods & Meats
1.2%
Auto Parts & Equipment
1.2%
Road & Rail
1.1%
Life Sciences Tools & Services
1.1%
Internet Software & Services
0.9%
Internet & Catalog Retail
0.7%
Transportation Infrastructure
0.7%
Communications Equipment
0.7%
Health Care Technology
0.5%
Trading Companies & Distributors
0.5%
Hotels, Restaurants & Leisure
0.3%
Aerospace & Defense
0.3%
Oil, Gas & Consumable Fuels.
0.3%
Footwear
0.2%
Auto Components
0.2%
IT Services
0.2%
Food Products
0.2%
Machinery
0.2%
Airlines
0.2%
Distributors
0.1%
Metals & Mining
0.1%
Leisure Equipment & Products
0.1%
Specialty Retail
0.1%
Food & Staples Retailing
0.1%
Construction & Engineering
0.1%
Consumer Finance
0.0%
Energy Equipment & Services
0.0%
Water Utilities
0.0%
Total Investments
100.0%
See notes to consolidated financial statements.
120
Table of Contents
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024
(in thousands, except share amounts)
Note 1. Organization
SLR Investment Corp. (the “Company”, “SLRC”, “we”, “us” or “our”), a Maryland corporation formed in November 2007, is a closed-end, externally managed, non-diversified management investment company
that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). Furthermore, as the Company is an investment company, it continues
to apply the guidance in FASB Accounting Standards Codification (“ASC”) Topic 946. In addition, for U.S. federal income tax purposes, the Company has elected to be treated, and intends to qualify annually, as a
regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).
On February 9, 2010, the Company priced its initial public offering, selling 5.68 million shares of common stock, including the underwriters’ over-allotment, at a price of $18.50 per share. Concurrent with this
offering, the Company’s senior management purchased an additional 600,000 shares through a private placement, also at $18.50 per share.
The Company’s investment objective is to maximize both current income and capital appreciation through debt and equity investments. The Company directly and indirectly invests primarily in leveraged middle
market companies in the form of senior secured loans, financing leases and to a lesser extent, unsecured loans and equity securities. From time to time, we may also invest in public companies that are thinly traded.
On April 1, 2022, we acquired SLR Senior Investment Corp., a Maryland corporation (“SUNS”), pursuant to that certain Agreement and Plan of Merger (the “Merger Agreement”), dated as of December 1, 2021,
by and among us, SUNS, Solstice Merger Sub, Inc., a Maryland corporation and our wholly-owned subsidiary (“Merger Sub”), and, solely for the limited purposes set forth therein, SLR Capital Partners, LLC (the
“Investment Adviser”). Pursuant to the Merger Agreement, Merger Sub merged with and into SUNS, with SUNS continuing as the surviving company and as SUNS’s wholly-owned subsidiary (the “Merger”) and,
immediately thereafter, SUNS merged with and into us, with us continuing as the surviving company (together with the Merger, the “Mergers”). In accordance with the terms of the Merger Agreement, at the effective time of
the Merger, each outstanding share of SUNS’s common stock was converted into the right to receive 0.7796 shares of our common stock (with SUNS’s stockholders receiving cash in lieu of fractional shares of our common
stock). As a result of the Mergers, we issued an aggregate of 12,511,825 shares of our common stock to former SUNS stockholders.
Note 2. Significant Accounting Policies
The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in conformity with U.S. generally accepted accounting principles (“GAAP”), and include the accounts of
the Company and certain wholly-owned subsidiaries. The consolidated financial statements reflect all adjustments and reclassifications which, in the opinion of management, are necessary for the fair presentation of the
results of the operations and financial condition for the periods presented. All significant intercompany balances and transactions have been eliminated. Certain prior period amounts may have been reclassified to conform to
the current period presentation.
The preparation of consolidated financial statements in conformity with GAAP and pursuant to the requirements for reporting on Form 10-K and Regulation S-X, as appropriate, also requires management to make
estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reported periods. Changes in the
economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ materially.
In the opinion of management, all adjustments, which are of a normal recurring nature, considered necessary for the fair presentation of financial statements, have been included.
The significant accounting policies consistently followed by the Company are:
(a)Investment transactions are accounted for on the trade date.
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2024
(in thousands, except share and per share amounts)
121
Table of Contents
(b)Under procedures established by the board of directors (the “Board”), we value investments, including certain senior secured debt, subordinated debt and other debt securities with maturities greater than 60
days, for which market quotations are readily available and deemed to represent fair value under GAAP, at such market quotations (unless they are deemed not to represent fair value). A market quotation is readily
available for a security only when that quotation is a quoted price (unadjusted) in active markets for identical investments that the Company can access at the measurement date, provided that a quotation will not be
readily available if it is not reliable. If the Company anticipates using a market quotation for a security, it will also monitor for circumstances that may necessitate the use of fair value, such as significant events that
may cause concern over the reliability of a market quotation. We attempt to obtain market quotations from at least two brokers or dealers (if available, otherwise from a principal market maker or a primary market
dealer or other independent pricing service). We utilize mid-market pricing as a practical expedient for fair value unless a different point within the range is more representative. If and when market quotations are
deemed not to represent fair value, we may utilize independent third-party valuation firms to assist us in determining the fair value of material assets. Accordingly, such investments go through our multi-step
valuation process as described below. In each such case, independent valuation firms, that may from time to time be engaged by the Board, consider observable market inputs together with significant unobservable
inputs in arriving at their valuation recommendations. Debt investments with maturities of 60 days or less shall each be valued at cost plus accreted discount, or minus amortized premium, which is expected to
approximate fair value, unless such valuation, in the judgment of the Investment Adviser, does not represent fair value, in which case such investments shall be valued at fair value as determined in good faith by or
under the direction of the Board. Investments that are not publicly traded or whose market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of the
Board. Such determination of fair values involves subjective judgments and estimates.
With respect to investments for which market quotations are not readily available or when such market quotations are deemed not to represent fair value under GAAP, the Board has approved a multi-step
valuation process each quarter, as described below:
(1)our quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals of the Investment Adviser responsible for the portfolio
investment;
(2)preliminary valuation conclusions are then documented and discussed with senior management of the Investment Adviser;
(3)independent valuation firms engaged by the Board conduct independent appraisals and review the Investment Adviser’s preliminary valuations and make their own independent assessment
for all material assets;
(4)the audit committee of the Board reviews the preliminary valuation of the Investment Adviser and that of the independent valuation firm and responds to the valuation recommendation of the
independent valuation firm, if any, to reflect any comments; and
(5)the Board discusses valuations and determines the fair value of each investment in our portfolio in good faith based on the input of the Investment Adviser, the respective independent
valuation firm, if any, and the audit committee.
The valuation principles set forth above may be modified from time to time, in whole or in part, as determined by the Board in its sole discretion. The Board will also (1) periodically assess and
manage valuation risks; (2) establish and apply fair value methodologies; (3) test fair value methodologies; (4) oversee and evaluate third-party pricing services, as applicable; (5) oversee the reporting
required by Rule 2a-5 under the 1940 Act; and (6) maintain recordkeeping requirements under Rule 2a-5.
Investments in all asset classes are valued utilizing a market approach, an income approach, or both approaches, as appropriate. However, in accordance with ASC 820-10, certain investments that
qualify as investment companies in accordance with ASC 946 may be valued using net asset value as a practical expedient for fair value. The market approach uses prices and other relevant
information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation approaches to convert future amounts
(for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following
these approaches, the types of factors that we may take into account in fair value pricing our investments include, as relevant: available current market data, including relevant and applicable market
trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, the nature and realizable value of any collateral, the portfolio company’s
ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2024
(in thousands, except share and per share amounts)
122
Table of Contents
business, comparisons of financial ratios of peer companies that are public, M&A comparables, our principal market (as the reporting entity) and enterprise values, among other factors. When
available, broker quotations and/or quotations provided by pricing services are considered as an input in the valuation process. For the fiscal year ended December 31, 2024, there was no change to the
Company’s valuation approaches or techniques and the nature of the related inputs considered in the valuation process.
ASC Topic 820 classifies the inputs used to measure these fair values into the following hierarchy:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities, accessible by the Company at the measurement date.
Level 2: Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or other observable inputs other
than quoted prices.
Level 3: Unobservable inputs for the asset or liability.
In all cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level of input that is significant to the fair value
measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each investment. The exercise of
judgment is based in part on our knowledge of the asset class and our prior experience.
(c)Gains or losses on investments are calculated by using the specific identification method.
(d)The Company records dividend income and interest, adjusted for amortization of premium and accretion of discount, on an accrual basis. Loan origination fees, original issue discount, and market discounts are
capitalized and we amortize such amounts into income using the effective interest method. Upon the prepayment of a loan, any unamortized loan origination fees are recorded as interest income. We record call
premiums received on loans repaid as interest income when we receive such amounts. Capital structuring fees, amendment fees, consent fees, and any other non-recurring fee income as well as a management fee
and other fee income for services rendered, if any, are recorded as other income when earned.
(e)The Company intends to comply with the applicable provisions of the Code pertaining to RICs to make distributions of taxable income sufficient to relieve it of substantially all U.S. federal income taxes. The
Company, at its discretion, may carry forward taxable income in excess of calendar year distributions and pay a 4% excise tax on this income. The Company will accrue excise tax on such estimated excess taxable
income as appropriate.
(f)Book and tax basis differences relating to stockholder distributions and other permanent book and tax differences are typically reclassified among the Company’s capital accounts. In addition, the character of
income and gains to be distributed is determined in accordance with income tax regulations that may differ from GAAP; accordingly, at December 31, 2024, $324 was reclassified on our balance sheet between
accumulated distributable net loss and paid-in capital in excess of par. Total earnings and net asset value are not affected.
(g)Distributions to common stockholders are recorded as of the record date. The amount to be paid out as a distribution is determined by the Board. Net realized capital gains, if any, are generally distributed or
deemed distributed at least annually.
(h)In accordance with Regulation S-X and ASC Topic 810—Consolidation, the Company consolidates its interest in controlled investment company subsidiaries, financing subsidiaries and certain wholly-owned
holding companies that serve to facilitate investment in portfolio companies. In addition, the Company may also consolidate any controlled operating companies substantially all of whose business consists of
providing services to the Company.
(i)The accounting records of the Company are maintained in U.S. dollars. Any assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the rate of exchange of such
currencies against U.S. dollars on the date of valuation. The Company will not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations would be included with the net unrealized gain or loss from investments. The Company’s investments in foreign securities, if any, may
involve certain risks, including without limitation: foreign exchange restrictions, expropriation, taxation or other political, social or economic risks, all of which could affect the market and/or credit risk of the
investment. In addition, changes in the relationship of foreign currencies to the U.S. dollar can significantly affect the value of these investments in terms of U.S. dollars and therefore the earnings of the Company.
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2024
(in thousands, except share and per share amounts)
123
Table of Contents
(j)In accordance with ASC 835-30, the Company reports origination and other expenses related to certain debt issuances as a direct deduction from the carrying amount of the debt liability. Applicable expenses are
deferred and amortized using either the effective interest method or the straight-line method over the stated life. The straight-line method may be used on revolving facilities and/or when it approximates the
effective yield method.
(k)The Company may enter into forward exchange contracts in order to hedge against foreign currency risk. These contracts are marked-to-market by recognizing the difference between the contract exchange rate
and the current market rate as unrealized appreciation or depreciation. Realized gains or losses are recognized when contracts are settled.
(l)The Company records expenses related to shelf registration statements and applicable equity offering costs as prepaid assets. These expenses are typically charged as a reduction of capital upon the sale of shares
or expensed, in accordance with ASC 946-20-25.
(m)Investments that are expected to pay regularly scheduled interest in cash are generally placed on non-accrual status when principal or interest cash payments are past due 30 days or more (90 days or more for
equipment financing) and/or when it is no longer probable that principal or interest cash payments will be collected. Such non-accrual investments are restored to accrual status if past due principal and interest are
paid in cash and, in management’s judgment, are likely to continue timely payment of their remaining principal and interest obligations. Cash interest payments received on such investments may be recognized as
income or applied to principal depending on management’s judgment.
(n)The Company defines cash equivalents as securities that are readily convertible into known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes
in interest rates. Generally, only securities with a maturity of three months or less would qualify, with limited exceptions. The Company believes that certain U.S. Treasury bills, repurchase agreements and other
high-quality, short-term debt securities would qualify as cash equivalents.
Recent Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which enhances disclosure requirements about
significant segment expenses that are regularly provided to the chief operating decision maker (the “CODM”). ASU 2023-07, among other things, (i) requires a single segment public entity to provide all of the disclosures as
required by ASC 280, (ii) requires a public entity to disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment
performance and deciding how to allocate resources and (iii) provides the ability for a public entity to elect more than one performance measure. ASU 2023-07 is effective for the fiscal years beginning after December 15,
2023, and interim periods beginning with the first quarter ended March 31, 2025. Early adoption is permitted and retrospective adoption is required for all prior periods presented. The Company has adopted ASU 2023-07
effective December 31, 2024 and concluded that the application of this guidance did not have any material impact on its consolidated financial statements. See Note 19 for more information on the effects of the adoption of
ASU 2023-07.
The Company’s management does not believe that any recently issued, but not yet effective, accounting standards, if
currently adopted, would have a material effect on the accompanying consolidated financial statements.
Note 3. Agreements
The Company has entered into the Third Amended and Restated Investment Advisory and Management Agreement (the “Advisory Agreement”) with the Investment Adviser, under which the Investment Adviser
manages the day-to-day operations of, and provides investment advisory services to, the Company. For providing these services, the Investment Adviser receives a fee from the Company, consisting of two components—a
base management fee and a performance-based incentive fee. On April 1, 2022, in connection with the consummation of the Mergers, the Company entered into a letter agreement (the “Letter Agreement”) pursuant to which
the Investment Adviser voluntarily agreed to a permanent 25 basis point reduction of the annual base management fee rate payable by the Company to the Investment Adviser pursuant to the Advisory Agreement. Following
the Letter Agreement, the base management fee is determined by taking the average value of the Company’s gross assets at the end of the two most recently completed calendar quarters calculated at an annual rate of 1.50%
on gross assets up to 200% of the Company’s total net assets as of the immediately preceding quarter end and 1.00% on gross assets that exceed 200% of the Company’s total net assets as of the immediately preceding
quarter end. For purposes of computing the base management fee, gross assets exclude temporary assets
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2024
(in thousands, except share and per share amounts)
124
Table of Contents
acquired at the end of each fiscal quarter for purposes of preserving investment flexibility in the next fiscal quarter. Temporary assets include, but are not limited to, U.S. Treasury bills, other short-term U.S. government or
government agency securities, repurchase agreements or cash borrowings.
The performance-based incentive fee has two parts, as follows: one part is calculated and payable quarterly in arrears based on the Company’s pre-incentive fee net investment income for the immediately
preceding calendar quarter. For this purpose, pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees (other than fees for providing managerial
assistance), such as commitment, origination, structuring, diligence and consulting fees or other fees that we receive from portfolio companies) accrued during the calendar quarter, minus the Company’s operating expenses
for the quarter (including the base management fee, any expenses payable under the Administration Agreement, and any interest expense and distributions paid on any issued and outstanding preferred stock, but excluding
the performance-based incentive fee). Pre-incentive fee net investment income does not include any realized capital gains or losses, or unrealized capital appreciation or depreciation. Pre-incentive fee net investment
income, expressed as a rate of return on the value of the Company’s net assets at the end of the immediately preceding calendar quarter, is compared to the hurdle rate of 1.75% per quarter (7% annualized). The Company
pays the Investment Adviser a performance-based incentive fee with respect to the Company’s pre-incentive fee net investment income in each calendar quarter as follows: (1) no performance-based incentive fee in any
calendar quarter in which the Company’s pre-incentive fee net investment income does not exceed the hurdle rate; (2) 100% of the Company’s pre-incentive fee net investment income with respect to that portion of such pre-
incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 2.1875% in any calendar quarter; and (3) 20% of the amount of the Company’s pre-incentive fee net investment income, if any, that
exceeds 2.1875% in any calendar quarter. These calculations are appropriately pro-rated for any period of less than three months.
The second part of the performance-based incentive fee is determined and payable in arrears as of the end of each calendar year (or upon termination of the Advisory Agreement, as of the termination date), and will
equal 20% of the Company’s cumulative realized capital gains less cumulative realized capital losses, unrealized capital depreciation (unrealized depreciation on a gross investment-by-investment basis at the end of each
calendar year) and all net capital gains upon which prior performance-based capital gains incentive fee payments were previously made to the Investment Adviser. For financial statement purposes, the second part of the
performance-based incentive fee is accrued based upon 20% of cumulative net realized gains and net unrealized capital appreciation. No accrual was required for the fiscal years ended December 31, 2024, 2023 and 2022.
For the fiscal years ended December 31, 2024, 2023 and 2022, the Company recognized $31,389, $31,661 and $29,982, respectively, in base management fees and $24,039, $22,898 and $15,097, respectively, in
performance-based incentive fees. For the fiscal years ended December 31, 2024, 2023 and 2022, $153, $500 and $1,527, respectively, of such performance-based incentive fees were waived. The Investment Adviser has
agreed to waive incentive fees resulting from income earned due to the accretion of purchase discount allocated to investments acquired as a result of the Mergers. Fees waived pursuant to the above are not subject to
recoupment by the Investment Adviser.
The Company has also entered into an Administration Agreement with SLR Capital Management, LLC (the “Administrator”) under which the Administrator provides administrative services to the Company. For
providing these services, facilities and personnel, the Company reimburses the Administrator for the Company’s allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations
under the Administration Agreement, including rent. The Administrator will also provide, on the Company’s behalf, managerial assistance to those portfolio companies to which the Company is required to provide such
assistance. The Company typically reimburses the Administrator on a quarterly basis.
For the fiscal years ended December 31, 2024, 2023 and 2022, the Company recognized expenses under the Administration Agreement of $5,520, $5,899 and $5,401, respectively. No managerial assistance fees
were accrued or collected for the fiscal years ended December 31, 2024, 2023 and 2022.
Note 4. Net Asset Value Per Share
At December 31, 2024, the Company’s total net assets and net asset value per share were $992,926 and $18.20, respectively. This compares to total net assets and net asset value per share at December 31, 2023 of
$986,639 and $18.09, respectively.
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2024
(in thousands, except share and per share amounts)
125
Table of Contents
Note 5. Earnings Per Share
The following table sets forth the computation of basic and diluted net increase in net assets per share resulting from operations, pursuant to ASC 260-10, for the years ended December 31, 2024, 2023 and 2022:
Year Ended
December 31, 2024
Year Ended
December 31, 2023
Year Ended
December 31, 2022
Earnings per share (basic & diluted)
Numerator—net increase in net assets resulting from
operations:
$
95,757 $
76,388 $
18,342
Denominator—weighted average shares:
54,554,634
54,554,638
51,680,522
Earnings per share:
$
1.76 $
1.40 $
0.35
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2024
(in thousands, except share and per share amounts)
126
Table of Contents
Note 6. Fair Value
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. GAAP establishes a framework
for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The hierarchy prioritizes the inputs to valuations used to measure fair value into three levels. The level in the fair
value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows:
Level 1. Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company has the ability to access.
Level 2. Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the
asset or liability. Level 2 inputs include the following:
a)Quoted prices for similar assets or liabilities in active markets;
b)Quoted prices for identical or similar assets or liabilities in non-active markets;
c)Pricing models whose inputs are observable for substantially the full term of the asset or liability; and
d)Pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full term of the asset or liability.
Level 3. Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs
reflect management’s and, if applicable, an independent third-party valuation firm’s own assumptions about the assumptions a market participant would use in pricing the asset or liability.
When the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the
fair value measurement in its entirety. For example, a Level 3 fair value measurement may include inputs that are observable (Levels 1 and 2) and unobservable (Level 3).
Gains and losses for assets and liabilities categorized within the Level 3 table below may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level
3).
A review of fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification for certain financial assets or liabilities. Such
reclassifications involving Level 3 assets and liabilities are reported as transfers in/out of Level 3 as of the end of the quarter in which the reclassifications occur. Within the fair value hierarchy tables below, cash and cash
equivalents are excluded but could be classified as Level 1.
The following tables present the balances of assets and liabilities measured at fair value on a recurring basis, as of December 31, 2024 and December 31, 2023:
Fair Value Measurements
As of December 31, 2024
Level 1
Level 2
Level 3
Measured at
Net Asset Value*
Total
Assets:
Senior Secured Loans
$
— $
— $
1,117,118 $
— $
1,117,118
Equipment Financing
—
—
181,016
—
181,016
Preferred Equity
—
—
31,682
—
31,682
Common Equity/Equity Interests/Warrants
257
—
626,470
49,091
675,818
Total Investments
$
257 $
— $
1,956,286 $
49,091 $
2,005,634
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2024
(in thousands, except share and per share amounts)
127
Table of Contents
Fair Value Measurements
As of December 31, 2023
Level 1
Level 2
Level 3
Measured at
Net Asset Value*
Total
Assets:
Senior Secured Loans
$
— $
— $
1,277,539 $
— $
1,277,539
Equipment Financing
—
—
256,819
—
256,819
Preferred Equity
—
—
3,801
—
3,801
Common Equity/Equity Interests/Warrants
281
—
572,427
43,899
616,607
Total Investments
$
281 $
— $
2,110,586 $
43,899 $
2,154,766
* In accordance with ASC 820-10, certain investments that are measured using the net asset value per share (or its equivalent) as a practical expedient for fair value have not been classified in the fair value hierarchy. The
fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Consolidated Statements of Assets and Liabilities. The portfolio investment in this
category is SLR Senior Lending Program LLC (“SSLP”). See Note 18 for more information on this investment, including its investment strategy and the Company’s unfunded equity commitment to SSLP. This investment
is not redeemable by the Company absent an election by the members of the entity to liquidate all investments and distribute the proceeds to the members.
The following table provides a summary of the changes in fair value of Level 3 assets for the year ended December 31, 2024, as well as the portion of gains or losses included in income attributable to unrealized
gains or losses related to those assets still held at December 31, 2024:
Fair Value Measurements Using Level 3 Inputs
Senior Secured
Loans
Equipment
Financing
Preferred Equity
Common Equity/
Equity
Interests/
Warrants
Total
Fair value, December 31, 2023
$
1,277,539 $
256,819 $
3,801 $
572,427 $
2,110,586
Total gains or losses included in earnings:
Net realized loss
(1,400)
—
—
(668 )
(2,068)
Net change in unrealized gain (loss)
(3,598)
(12,646 )
49
17,726
1,531
Purchase of investment securities*
411,598
2,852
27,832
37,434
479,716
Proceeds from dispositions of investment securities
(567,021)
(66,009 )
—
(449 )
(633,479)
Transfers in/out of Level 3
—
—
—
—
—
Fair value, December 31, 2024
$
1,117,118 $
181,016 $
31,682 $
626,470 $
1,956,286
Unrealized gains (losses) for the period relating to those
Level 3 assets that were still held by the Company at
the end of the period:
Net change in unrealized gain (loss)
$
1,533 $
(12,646 ) $
49 $
16,751 $
5,687
* Includes PIK capitalization and accretion of discount.
While the Company has not made an election to apply the fair value option of accounting to any of its current debt obligations, if the Company’s debt obligations were carried at fair value at December 31, 2024,
the fair value of the Credit Facility, SPV Credit Facility, 2025 Unsecured Notes, 2026 Unsecured Notes, 2027 Unsecured Notes, 2027 Series F Unsecured Notes and 2027 Series G Unsecured Notes would be $482,043,
$165,050, $84,575, $72,750, $46,875, $128,250 and $49,368, respectively.
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2024
(in thousands, except share and per share amounts)
128
Table of Contents
The following table provides a summary of the changes in fair value of Level 3 assets for the year ended December 31, 2023, as well as the portion of gains or losses included in income attributable to unrealized
gains or losses related to those assets still held at December 31, 2023:
Fair Value Measurements Using Level 3 Inputs
Senior Secured
Loans
Equipment
Financing
Preferred Equity
Common Equity/
Equity
Interests/
Warrants
Total
Fair value, December 31, 2022
$
1,245,414 $
265,952 $
3,801 $
561,600 $
2,076,767
Total gains or losses included in earnings:
Net realized loss
(26,108 )
—
—
(451 )
(26,559 )
Net change in unrealized gain (loss)
36,436
234
(251 )
(24,985 )
11,434
Purchase of investment securities*
729,964
35,585
251
36,314
802,114
Proceeds from dispositions of investment securities
(708,167)
(44,952 )
—
(51 )
(753,170)
Transfers in/out of Level 3
—
—
—
—
—
Fair value, December 31, 2023
$
1,277,539 $
256,819 $
3,801 $
572,427 $
2,110,586
Unrealized gains (losses) for the period relating to those Level 3
assets that were still held by the Company at the end
of the period:
Net change in unrealized gain (loss)
$
31,484 $
234 $
(251 ) $
(24,985 ) $
6,482
* Includes PIK capitalization and accretion of discount.
While the Company has not made an election to apply the fair value option of accounting to any of its current debt obligations, if the Company’s debt obligations were carried at fair value at December 31, 2023,
the fair value of the Credit Facility, SPV Credit Facility, 2024 Unsecured Notes, 2025 Unsecured Notes, 2026 Unsecured Notes, 2027 Unsecured Notes and 2027 Series F Unsecured Notes would be $507,000, $206,250,
$122,813, $82,663, $71,438, $45,500 and $124,875, respectively.
Quantitative Information about Level 3 Fair Value Measurements
The Company typically determines the fair value of its performing debt investments utilizing a yield analysis. In a yield analysis, a price is ascribed for each investment based upon an assessment of current and
expected market yields for similar investments and risk profiles. Additional consideration is given to current contractual interest rates, relative maturities and other key terms and risks associated with an investment. Among
other factors, a significant determinant of risk is the amount of leverage used by the portfolio company relative to the total enterprise value of the company, and the rights and remedies of our investment within each portfolio
company.
Significant unobservable quantitative inputs typically used in the fair value measurement of the Company’s Level 3 assets and liabilities primarily reflect current market yields, including indices, and readily
available quotes from brokers, dealers, and pricing services as indicated by comparable assets and liabilities, as well as enterprise values, returns on equity and earnings before income taxes, depreciation and amortization
(“EBITDA”) multiples of similar companies, and comparable market transactions for equity securities.
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2024
(in thousands, except share and per share amounts)
129
Table of Contents
Quantitative information about the Company’s Level 3 asset and liability fair value measurements as of December 31, 2024 is summarized in the table below:
Asset or
Liability
Fair Value at December 31,
2024
Principal Valuation
Technique/Methodology
Unobservable Input
Range (Weighted Average)
Senior Secured Loans
Asset
$
1,095,842
Income Approach
Market Yield
8.5% – 18.5% (11.8%)
Asset
$
21,276
Recovery Analysis
Recoverable Amount
N/A
Equipment Financing
Asset
$
73,416
Income Approach
Market Yield
8.5% –9.0% (9.0%)
$
107,600
Market Multiple
Comparable Multiple
1.2x-1.5x (1.5x)
Preferred Equity
Asset
$
29,182
Income Approach
Market Yield
9.0% –9.0% (9.0%)
$
2,500
Recovery Analysis
Recoverable Amount
N/A
Common Equity/Equity
Interests/Warrants
Asset
$
175,000
Market Multiple
Comparable Multiple
5.5x –12.3x (9.1x)
$
451,470
Market Approach
Return on Equity
7.8% –21.7% (11.3%)
(1)Includes $107,600 of investments valued using an implied multiple.
(2)Includes $293 of investments valued using a Black-Scholes model, $639 of investments using a transaction price, $2,040 of investments using a recovery analysis and $172,028 of investments valued using an EBITDA
multiple.
Quantitative information about the Company’s Level 3 asset and liability fair value measurements as of December 31, 2023 is summarized in the table below:
Asset or
Liability
Fair Value at December 31,
2023
Principal Valuation
Technique/Methodology
Unobservable Input
Range (Weighted Average)
Senior Secured Loans
Asset
$
1,269,712
Income Approach
Market Yield
10.0% – 45.5% (13.2%)
$
7,827
Recovery Analysis
Recoverable Amount
N/A
Equipment Financing
Asset
$
135,999
Income Approach
Market Yield
8.5% –9.3% (9.3%)
$
120,820
Market Multiple
Comparable Multiple
1.2x-1.5x (1.4x)
Preferred Equity
Asset
$
3,801
Income Approach
Market Yield
5.0% –5.0% (5.0%)
Common Equity/Equity
Interests/Warrants
Asset
$
162,207
Market Multiple
Comparable Multiple
5.5x –11.3x (9.5x)
$
410,220
Market Approach
Return on Equity
7.1% –34.8% (10.6%)
(1)Includes $120,820 of investments valued using an implied multiple.
(2)Includes $525 of investments valued using a Black-Scholes model and $161,682 of investments valued using an EBITDA multiple.
Significant increases or decreases in any of the above unobservable inputs in isolation, including unobservable inputs used in deriving bid-ask spreads, if applicable, could result in significantly lower or higher fair
value measurements for such assets and liabilities. Generally, an increase in market yields or decrease in EBITDA multiples may result in a decrease in the fair value of certain of the Company’s investments. Weighted
averages in the above tables are calculated based on fair value of the underlying assets.
(1)
(2)
(1)
(2)
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2024
(in thousands, except share and per share amounts)
130
Table of Contents
Note 7. Debt
Our debt obligations consisted of the following as of December 31, 2024 and December 31, 2023:
December 31, 2024
December 31, 2023
Facility
Face Amount
Carrying Value
Face Amount
Carrying Value
Credit Facility
$
482,043
$
474,715
$
507,000
$
503,358
SPV Credit Facility
165,050
163,335
206,250
205,357
2024 Unsecured Notes
—
—
125,000
124,711
2025 Unsecured Notes
85,000
84,956
85,000
84,781
2026 Unsecured Notes
75,000
74,741
75,000
74,616
2027 Unsecured Notes
50,000
49,979
50,000
49,966
2027 Series F Unsecured Notes
135,000
134,998
135,000
134,988
2027 Series G Unsecured Notes
49,000
48,970
—
—
$
1,041,093
$
1,031,694
$
1,183,250
$
1,177,777
(1)Carrying Value equals the Face Amount net of unamortized debt issuance costs of $7,328 and $3,642 as of December 31, 2024 and December 31, 2023, respectively.
(2)Carrying Value equals the Face Amount net of unamortized debt issuance costs/market discount of $1,715 and $893 as of December 31, 2024 and December 31, 2023, respectively.
(3)Carrying Value equals the Face Amount net of unamortized debt issuance costs of $289 as of December 31, 2023.
(4)Carrying Value equals the Face Amount net of unamortized market discount of $44 and $219 as of December 31, 2024 and December 31, 2023, respectively.
(5)Carrying Value equals the Face Amount net of unamortized debt issuance costs of $259 and $384 as of December 31, 2024 and December 31, 2023, respectively.
(6)Carrying Value equals the Face Amount net of unamortized debt issuance costs of $21 and $34 as of December 31, 2024 and December 31, 2023, respectively.
(7)Carrying Value equals the Face Amount net of unamortized debt issuance costs of $2 and $12 as of December 31, 2024 and December 31, 2023, respectively.
(8)Carrying Value equals the Face Amount net of unamortized debt issuance costs of $30 as of December 31, 2024.
Unsecured Notes
On December 16, 2024, the Company closed a private offering of $49,000 of the 2027 Series G Unsecured Notes with a fixed interest rate of 6.24% and a maturity date of December 16, 2027. Interest on the 2027
Series G Unsecured Notes is due semi-annually on June 16th and December 16th. The 2027 Series G Unsecured Notes were issued in a private placement only to qualified institutional buyers.
On April 1, 2022, the Company entered into an assumption agreement (the “Note Assumption Agreement”), effective as of the closing of the Mergers. The Note Assumption Agreement relates to the Company’s
assumption of $85,000 in aggregate principal amount of five-year, 3.90% senior unsecured notes, due March 31, 2025 (the “2025 Unsecured Notes”) and other obligations of SUNS under the Note Purchase Agreement,
dated as of March 31, 2020 (the “Note Purchase Agreement”), by and among SUNS and certain institutional investors. Interest on the 2025 Unsecured Notes is due semi-annually on March 31 and September 30. Pursuant to
the Note Assumption Agreement, the Company expressly assumed on behalf of SUNS the due and punctual payment of the principal of (and premium, if any) and interest on all the 2025 Unsecured Notes outstanding, and
the due and punctual performance and observance of every covenant and every condition of the Note Purchase Agreement, to be performed or observed by SUNS.
On January 6, 2022, the Company closed a private offering of $135,000 of the 2027 Series F Unsecured Notes with a fixed interest rate of 3.33% and a maturity date of January 6, 2027. Interest on the 2027 Series
F Unsecured Notes is due semi-annually on January 6 and July 6. The 2027 Series F Unsecured Notes were issued in a private placement only to qualified institutional buyers.
On September 14, 2021, the Company closed a private offering of $50,000 of the 2027 Unsecured Notes with a fixed interest rate of 2.95% and a maturity date of March 14, 2027. Interest on the 2027 Unsecured
Notes is due semi-annually on March 14 and September 14. The 2027 Unsecured Notes were issued in a private placement only to qualified institutional buyers.
(1)
(1)
(2)
(2)
(3)
(4)
(4)
(5)
(5)
(6)
(6)
(7)
(7)
(8)
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2024
(in thousands, except share and per share amounts)
131
Table of Contents
On December 18, 2019, the Company closed a private offering of $75,000 of the 2026 Unsecured Notes with a fixed interest rate of 4.375% and a maturity date of December 15, 2026. Interest on the 2026
Unsecured Notes is due semi-annually on June 15 and December 15. The 2026 Unsecured Notes were issued in a private placement only to qualified institutional buyers.
On December 18, 2019, the Company closed a private offering of $125,000 of the 2024 Unsecured Notes with a fixed interest rate of 4.20% and a maturity date of December 15, 2024. Interest on the 2024
Unsecured Notes was due semi-annually on June 15 and December 15. The 2024 Unsecured Notes were issued in a private placement only to qualified institutional buyers. The 2024 Unsecured notes were repaid in full at
maturity on December 15, 2024.
Revolving and Term Loan Facilities
On August 16, 2024, the Company closed on Amendment No. 3 to its August 28, 2019 senior secured credit agreement (the
“Credit Facility”). Following the amendment and several commitment increases in the fourth quarter of 2024, the Credit Facility is now composed of $695,000 of revolving credit and $140,000 of term loans. Borrowings
generally bear interest at a rate per annum equal to the base rate plus a range of 1.75%-2.00% or the alternate base rate plus 0.75%-1.00%. The Credit Facility has a 0% floor, matures in August 2029 and includes ratable
amortization in the final year. Subsequent to Amendment No. 4 on December 3, 2024, the Credit Facility may be increased up to $900,000 with additional new lenders or an increase in commitments from current lenders.
The Credit Facility contains certain customary affirmative and negative covenants and events of default. In addition, the Credit Facility contains certain financial covenants that, among other things, require the Company to
maintain a minimum stockholder’s equity and a minimum asset coverage ratio. At December 31, 2024, outstanding USD equivalent borrowings under the Credit Facility totaled $482,043, composed of $342,043 of revolving
credit and $140,000 of term loans.
On April 1, 2022, the Company entered into an assumption agreement (the “CF Assumption Agreement”), effective as of the closing of the Mergers. The CF Assumption Agreement relates to the Company’s
assumption of the Revolving Credit Facility, originally entered into on August 26, 2011 (as amended from time to time, the “SPV Credit Facility”), by and among SUNS SPV LLC (the “SUNS SPV”), a wholly-owned
subsidiary of SUNS, acting as borrower, Citibank, N.A., acting as administrative agent and collateral agent, and the other parties thereto. Currently, subsequent to an August 30, 2024 amendment, the commitment under the
SPV Credit Facility is $275,000. The stated interest rate on the SPV Credit Facility is SOFR plus 2.25%-2.75% with no SOFR floor requirement and the current final maturity date is August 30, 2028. The SPV Credit
Facility is secured by all of the assets held by SUNS SPV. Under the terms of the SPV Credit Facility and related transaction documents, the Company as successor to SUNS, and SUNS SPV, as applicable, have made
certain customary representations and warranties and are required to comply with various covenants, including leverage restrictions, reporting requirements and other customary requirements for similar credit facilities. The
SPV Credit Facility also includes usual and customary events of default for credit facilities of this nature. At December 31, 2024, outstanding USD equivalent borrowings under the SPV Credit Facility totaled $165,050.
Certain covenants on our issued debt may restrict our business activities, including limitations that could hinder our ability to finance additional loans and investments or to make the distributions required to
maintain our status as a RIC under Subchapter M of the Code.
The average annualized interest cost for all borrowings for the years ended December 31, 2024 and December 31, 2023 was 5.91% and 5.88%, respectively. These costs are exclusive of other credit facility
expenses such as unused fees, agency fees and other prepaid expenses related to establishing and/or amending the Credit Facility, the SPV Credit Facility, the 2023 Unsecured Notes, the 2024 Unsecured Notes, the 2025
Unsecured Notes, the 2026 Unsecured Notes, the 2027 Unsecured Notes, the 2027 Series F Unsecured Notes and the 2027 Series G Unsecured Notes (collectively the “Debt Instruments”), if any. The maximum amounts
borrowed on the Debt Instruments during the year ended December 31, 2024 and December 31, 2023 were $1,192,250 and $1,273,200, respectively.
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2024
(in thousands, except share and per share amounts)
132
Table of Contents
Note 8(a). Income Tax Information and Distributions to Stockholders
The tax character of distributions for the fiscal years ended December 31, 2024, 2023 and 2022 were as follows (1):
2024
2023
2022
Ordinary income
$
89,470
100.0% $
89,470
100.0% $
50,113
59.2 %
Capital gains
—
0.0%
—
0.0%
—
0.0%
Return of capital
—
0.0%
—
0.0%
27,099
32.0 %
Distributions recognized in subsequent year
—
0.0%
—
0.0%
7,481
8.8%
Total distributions
$
89,470
100.0% $
89,470
100.0% $
84,693
100.0%
As of December 31, 2024, 2023 and 2022, the total accumulated earnings (loss) on a tax basis were as follows (1):
2024
2023
2022
Undistributed ordinary income
$
7,159 $
1,793 $
—
Undistributed long-term net capital gains
—
—
—
Total undistributed net earnings
7,159
1,793
—
Post-October capital losses
—
—
—
Capital loss carryforward
(142,373)
(138,561)
(127,348)
Other book/tax temporary differences
2,363
2,364
(53,223 )
Net unrealized appreciation
7,625
2,567
17,187
Total tax accumulated loss
$
(125,226) $
(131,837) $
(163,384)
(1)Tax information for the fiscal years ended December 31, 2024, 2023 and 2022 are/were estimates and are not final until the Company files its tax returns, typically in September or October each year.
(2)Includes capital loss carryforward acquired from the Mergers which is subject to limitations under IRC Sections 381-384.
The Company recognizes in its consolidated financial statements the tax effect of a tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination.
To the best of our knowledge, we did not have any uncertain tax positions that met the recognition or measurement criteria of ASC 740-10-25 nor did we have any unrecognized tax benefits as of the periods presented
herein. Although we file federal and state tax returns, our major tax jurisdiction is federal. Our tax returns for each of our federal tax years since 2021 remain subject to examination by the Internal Revenue Service and the
state department of revenue. The capital loss carryforwards shown above do not expire.
Note 8(b). Other Tax Information (unaudited)
For the fiscal years ended December 31, 2024, 2023 and 2022, 12.65%, 0% and 0%, respectively of the ordinary distributions paid during the year were eligible for qualified dividend income treatment and the
dividends received deduction for corporate stockholders. For the fiscal years ended December 31, 2024, 2023, and 2022, 86.46%, 90.05% and 88.05%, respectively, of each of the ordinary distributions paid during the year
represented interest-related dividends. For the fiscal years ended December 31, 2024, 2023 and 2022, none of the distributions represented short-term capital gains dividends.
2
2
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2024
(in thousands, except share and per share amounts)
133
Table of Contents
Note 9. Financial Highlights
The following is a schedule of financial highlights for the respective years:
Year Ended December 31,
2024
Year ended December 31,
2023
Year ended December 31,
2022
Year Ended December 31,
2021
Year ended December 31,
2020
Per Share Data: (a)
Net asset value, beginning of year
$
18.09
$
18.33
$
19.93
$
20.16 $
21.44
Net investment income
1.76
1.69
1.48
1.44
1.40
Net realized and unrealized loss
(0.01)
(0.29)
(1.13)
*
(0.03)
(1.04)
Net increase in net assets resulting from operations
1.75
1.40
0.35
1.41
0.36
Issuance of common stock in connection with
the Mergers
—
—
(0.33)
—
—
Anti-dilution
—
—
0.02
—
—
Distributions to stockholders (see note 8(a)):
From distributable earnings
(1.64)
(1.64)
(1.12)
(0.98)
(1.15)
From return of capital
—
—
(0.52)
(0.66)
(0.49)
Net asset value, end of year
$
18.20
$
18.09
$
18.33
$
19.93 $
20.16
Per share market value, end of year
$
16.16
$
15.03
$
13.91
$
18.43 $
17.51
Total Return(b)
19.20%
19.42%
(16.09)%
14.66%
(5.72)%
Net assets, end of year
$
992,926
$
986,639
$
999,731
$
842,281 $
852,023
Shares outstanding, end of year
54,554,634
54,554,634
54,555,380
42,260,826
42,260,826
Ratios to average net assets:
Net investment income
9.72%
9.33%
7.76%
7.13%
6.93%
Operating expenses
6.52% **
6.56% **
5.60%
*
*
5.68%
4.14%
Interest and other credit facility expenses
7.21%
7.34%
4.68%
3.50%
3.18%
Total expenses
13.73% **
13.90% **
10.28%
*
*
9.18%
7.32%
Average debt outstanding
$
1,114,026
$
1,171,816
$
994,578
$
703,670 $
556,104
Portfolio turnover ratio
22.4%
35.1%
27.4%
29.9%
26.0%
(a)Calculated using the average shares outstanding method, except for the issuance of common stock in connection with the Mergers, which reflects the actual amount per share for the applicable period.
(b)Total return is based on the change in market price per share during the year and takes into account distributions, if any, reinvested in accordance with the dividend reinvestment plan. Total return does not include a sales
load.
* The amount shown may not correspond with the aggregate amount for the period as it includes the effect of the timing of the Mergers.
** The ratio of operating expenses to average net assets and the ratio of total expenses to average net assets is shown net of the performance-based incentive fee waiver (see note 3). For the years ended December 31, 2024,
December 31, 2023 and December 31, 2022, the ratios of operating expenses to average net assets would be 6.54%, 6.60% and 5.75%, respectively, and the ratios of total expenses to average net assets would be and
13.75%, 13.95% and 10.43%, respectively, without the performance-based incentive fee waiver.
Note 10. SLR Credit Solutions
On December 28, 2012, we acquired an equity interest in Crystal Capital Financial Holdings LLC (“Crystal Financial”) for $275,000 in cash. Crystal Financial owned approximately 98% of the outstanding
ownership interest in SLR Credit Solutions (“SLR Credit”), f/k/a Crystal Financial LLC. The remaining financial interest was held by various employees of SLR Credit, through their investment in Crystal Management LP.
SLR Credit had a diversified portfolio of 23 loans having a total par value of approximately $400,000 at November 30, 2012 and a $275,000 committed revolving credit facility. On July 28, 2016, the Company purchased
Crystal Management LP’s approximately 2% equity interest in SLR Credit for approximately $5,737. Upon the closing of this transaction, the Company holds 100% of the equity interest in SLR Credit. On September 30,
2016, Crystal Capital Financial Holdings LLC was dissolved. As of December 31, 2024, total commitments to the revolving credit facility were $300,000.
As of December 31, 2024, SLR Credit had 27 funded commitments to 22 different issuers with total funded loans of approximately $317,565 on total assets of $364,258. As of December 31, 2023, SLR Credit had
31 funded commitments to 26 different issuers with total funded loans of approximately $406,554 on total assets of $438,422. As of December 31, 2024 and December 31, 2023, the largest loan outstanding totaled $27,879
and $30,000, respectively. For the same periods, the average exposure per issuer was $14,435 and $15,637, respectively. SLR Credit’s credit facility, which is non-recourse to the Company, had
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2024
(in thousands, except share and per share amounts)
134
Table of Contents
approximately $149,997 and $218,878 of borrowings outstanding at December 31, 2024 and December 31, 2023, respectively. For the years ended December 31, 2024, 2023 and 2022, SLR Credit had net income of
$24,882, $6,476 and $7,521, respectively, on gross income of $55,247, $57,800 and $30,324, respectively. Due to timing and non-cash items, there may be material differences between GAAP net income and cash available
for distributions. SLR Credit’s consolidated financial statements for the fiscal years ended December 31, 2024 and December 31, 2023 are attached as an exhibit to this annual report on Form 10-K.
Note 11. SLR Equipment Finance
On July 31, 2017, we acquired a 100% equity interest in NEF Holdings, LLC, which conducts its business through its wholly-owned subsidiary Nations Equipment Finance, LLC. Effective February 25, 2021,
Nations Equipment Finance, LLC and its related companies are doing business as SLR Equipment Finance (“SLR Equipment”). SLR Equipment is an independent equipment finance company that provides senior secured
loans and leases primarily to U.S. based companies. We invested $209,866 in cash to effect the transaction, of which $145,000 was invested in the equity of SLR Equipment through our wholly-owned consolidated taxable
subsidiary NEFCORP LLC and our wholly-owned consolidated subsidiary NEFPASS LLC, and $64,866 was used to purchase certain leases and loans held by SLR Equipment through NEFPASS LLC. On January 31,
2024, SLR Equipment entered into a $225,000 senior secured credit facility with a maturity date of January 31, 2027. On March 1, 2024, the credit facility was expanded to $350,000 of commitments.
As of December 31, 2024, SLR Equipment had 398 funded equipment-backed leases and loans to 217 different customers with a total net investment in leases and loans of approximately $324,939 on total assets of
$366,258. As of December 31, 2023, SLR Equipment had 150 funded equipment-backed leases and loans to 62 different customers with a total net investment in leases and loans of approximately $203,674 on total assets of
$254,656. As of December 31, 2024 and December 31, 2023, the largest position outstanding totaled $17,883 and $17,943, respectively. For the same periods, the average exposure per customer was $1,497 and $3,285,
respectively. SLR Equipment’s credit facility, which is non-recourse to the Company, had approximately $260,974 and $137,178 of borrowings outstanding at December 31, 2024 and December 31, 2023, respectively. For
the years ended December 31, 2024, 2023 and 2022, SLR Equipment had net losses of $9,534, $6,385 and $2,867, respectively, on gross income of $22,000, $19,608 and $20,380, respectively. Due to timing and non-cash
items, there may be material differences between GAAP net income and cash available for distributions. SLR Equipment’s consolidated financial statements for the fiscal years ended December 31, 2024 and December 31,
2023 are attached as an exhibit to this annual report on Form 10-K.
Note 12. Kingsbridge Holdings, LLC
On November 3, 2020, the Company acquired 87.5% of the equity securities of Kingsbridge Holdings, LLC (“KBH”) through KBH Topco LLC (“KBHT”), a Delaware corporation. KBH is a residual focused
independent mid-ticket lessor of equipment primarily to U.S. large corporate companies. The Company invested $216,596 to effect the transaction, of which $136,596 was invested to acquire 87.5% of KBHT’s equity and
$80,000 in KBH’s debt. The existing management team of KBH committed to continuing to lead KBH after the transaction. Following the transaction, the Company owned 87.5% of KBHT equity and the KBH
management team owned the remaining 12.5% of KBHT’s equity. On March 13, 2024, as per the terms of the original purchase agreement, the Company acquired 3.125% of KBHT’s equity from the KBH management
team. Effective with this purchase, the Company owns 90.625% of KBHT’s equity and the KBH management team owns the remaining 9.375%.
As of December 31, 2024 and December 31, 2023, KBHT had total assets of $920,072 and $857,346, respectively. For the same periods, debt recourse to KBHT totaled $271,584 and $249,807, respectively, and
non-recourse debt totaled $421,587 and $367,082, respectively. None of the debt is recourse to the Company. For the years ended December 31, 2024, 2023 and 2022, KBHT had net income of $11,957, $9,065 and $13,287,
respectively, on gross income of $341,321, $327,363 and $298,760, respectively. Due to timing and non-cash items, there may be material differences between GAAP net income and cash available for distributions. As
such, and subject to fluctuations in KBHT’s funded commitments, the timing of originations, and the repayments of financings, the Company cannot guarantee that KBHT will be able to maintain consistent dividend
payments to us. KBHT’s consolidated financial statements for the fiscal years ended December 31, 2024 and December 31, 2023 are attached as an exhibit to this annual report on Form 10-K.
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2024
(in thousands, except share and per share amounts)
135
Table of Contents
Note 13. SLR Healthcare ABL
SUNS acquired an equity interest in SLR Healthcare ABL, f/k/a Gemino Healthcare Finance, LLC (“SLR Healthcare”), on September 30, 2013. SLR Healthcare is a commercial finance company that originates,
underwrites, and manages primarily secured, asset-based loans for small and mid-sized companies operating in the healthcare industry. SUNS’s initial investment in SLR Healthcare ABL was $32,839. The management
team of SLR Healthcare co-invested in the transaction and continues to lead SLR Healthcare. As of December 31, 2024, SLR Healthcare’s management team and the Company own approximately 7% and 93% of the equity
in SLR Healthcare, respectively. SLRC acquired SLR Healthcare in connection with the Mergers on April 1, 2022. Effective with an amendment dated September 19, 2024, SLR Healthcare has a $160,000 non-recourse
credit facility, which is expandable to $200,000 under its accordion facility. The maturity date of this facility is March 31, 2026.
SLR Healthcare currently manages a highly diverse portfolio of directly-originated and underwritten senior-secured commitments. As of December 31, 2024, the portfolio totaled approximately $288,250 of
commitments with a total net investment in loans of $130,207 on total assets of $138,494. As of December 31, 2023, the portfolio totaled approximately $255,000 of commitments with a total net investment in loans of
$111,264 on total assets of $118,563. At December 31, 2024, the portfolio consisted of 47 issuers with an average balance of approximately $2,770 versus 42 issuers with an average balance of approximately $2,649 at
December 31, 2023. All of the commitments in SLR Healthcare’s portfolio are floating-rate, senior-secured, cash-pay loans. SLR Healthcare’s credit facility, which is non-recourse to us, had approximately $99,600 and
$84,700 of borrowings outstanding at December 31, 2024 and December 31, 2023, respectively. For the years ended December 31, 2024, 2023 and 2022, SLR Healthcare had net income of $5,589, $5,458 and $3,475,
respectively, on gross income of $19,970, $17,886 and $11,593, respectively. Due to timing and non-cash items, there may be material differences between GAAP net income and cash available for distributions. SLR
Healthcare’s consolidated financial statements for the fiscal years ended December 31, 2024 and December 31, 2023 are attached as an exhibit to this annual report on Form 10-K.
Note 14. SLR Business Credit
SUNS acquired 100% of the equity interests of North Mill Capital LLC (“NMC”) on October 20, 2017. NMC is a leading asset-backed lending commercial finance company that provides senior secured asset-
backed financings to U.S. based small-to-medium-sized businesses primarily in the manufacturing, services and distribution industries. SUNS invested approximately $51,000 to effect the transaction. Subsequently, SUNS
contributed 1% of its equity interest in NMC to ESP SSC Corporation. Immediately thereafter, SUNS and ESP SSC Corporation contributed their equity interests to NorthMill LLC (“North Mill”). On May 1, 2018, North
Mill merged with and into NMC, with NMC being the surviving company. SUNS and ESP SSC Corporation then owned 99% and 1% of the equity interests of NMC, respectively. The management team of NMC continues
to lead NMC. On June 28, 2019, North Mill Holdco LLC (“NM Holdco”), a newly formed entity, and ESP SSC Corporation acquired 100% of Summit Financial Resources, a Salt Lake City-based provider of asset-backed
financing to small and medium-sized businesses. As part of this transaction, SUNS’s 99% interest in the equity of NMC was contributed to NM Holdco. This approximately $15,500 transaction was financed with borrowings
on NMC’s credit facility. Effective February 25, 2021, NMC and its related companies are doing business as SLR Business Credit. On June 3, 2021, NMC acquired 100% of Fast Pay Partners LLC, a Los Angeles-based
provider of asset-backed financing to digital media companies. The transaction purchase price of $66,671 was financed with equity from SUNS of $19,000 and borrowings on NMC’s credit facility of $47,671. SLRC
acquired SLR Business Credit in connection with the Mergers on April 1, 2022. On September 27, 2024, NMC acquired an asset-based factoring portfolio and operations from Webster Bank, N.A.’s Commercial Services
Division. The transaction purchase price of approximately $127,000 was funded with $30,000 of equity from the Company and the remaining $97,000 from borrowings on NMC’s credit facility.
SLR Business Credit currently manages a highly diverse portfolio of directly-originated and underwritten senior-secured commitments. As of December 31, 2024, the portfolio totaled approximately $857,953 of
commitments, of which $488,402 were funded, on total assets of $527,077. As of December 31, 2023, the portfolio totaled approximately $610,949 of commitments, of which $273,541 were funded, on total assets of
$315,335. At December 31, 2024, the portfolio consisted of 188 issuers with an average balance of approximately $2,598 versus 102 issuers with an average balance of approximately $2,681 at December 31, 2023. NMC
has a senior credit facility with a bank lending group for $325,307 which expires on November 13, 2025. Borrowings are secured by substantially all of NMC’s assets. NMC’s credit facility, which is non-recourse to us, had
approximately $231,034 and $222,917 of borrowings outstanding at December 31, 2024 and December 31, 2023, respectively. For the years ended December 31, 2024, 2023 and 2022, SLR Business Credit had net income
(loss) of $10,450, ($9,488), and $3,940, respectively, on gross income of $45,891, $38,143, and $29,433, respectively. Due to timing and non-cash items, there may be material differences between GAAP net income and
cash available for distributions. As such, and subject to fluctuations in SLR Business Credit’s funded commitments, the timing of originations, and the repayments of financings, the Company cannot guarantee that SLR
Business Credit will be able to
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2024
(in thousands, except share and per share amounts)
136
Table of Contents
maintain consistent dividend payments to us. SLR Business Credit’s consolidated financial statements for the fiscal years ended December 31, 2024 and December 31, 2023 are attached as an exhibit to this annual report on
Form 10-K.
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2024
(in thousands, except share and per share amounts)
137
Table of Contents
Note 15. Commitments and Contingencies
Off-Balance Sheet Arrangements
The Company had unfunded debt and equity commitments to various revolving and delayed-draw term loans as well as to SLR Credit and SLR Healthcare. The total amount of these unfunded commitments as of
December 31, 2024 and December 31, 2023 was $234,554 and $248,692, respectively, comprised of the following:
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2024
(in thousands, except share and per share amounts)
138
Table of Contents
December 31, 2024
December 31, 2023
SLR Credit Solutions*
$
44,263
$
44,263
Western Veterinary Partners LLC
18,245
—
Arcutis Biotherapeutics, Inc.
12,658
—
BDG Media, Inc.
11,751
10,146
Plastic Management, LLC
10,806
—
CVAUSA Management, LLC
10,164
10,164
SLR Healthcare ABL*
10,000
1,400
Pasadena Private Lending Inc.
8,369
—
SLR Business Credit*
8,000
—
One Touch Direct, LLC
7,970
4,085
The Townsend Company, LLC
7,923
3,330
United Digestive MSO Parent, LLC
7,496
3,909
DeepIntent, Inc.
7,254
3,933
WMD Funding LLC
7,243
—
Copper River Seafoods, Inc.
6,912
7,051
Ardelyx, Inc.
6,648
15,875
SPR Therapeutics, Inc.
6,083
—
SPAR Marketing Force, Inc.
5,449
8,339
33 Across Inc.
4,226
—
Quantcast Corporation
4,071
—
iCIMS, Inc.
3,530
9,858
Foundation Consumer Brands, LLC
3,009
3,009
SLR Equipment Finance*
3,000
2,150
Sightly Enterprises, Inc.
2,687
—
Erie Construction Mid-west, LLC
2,403
2,403
SLR Senior Lending Program LLC*
2,125
7,125
Bayside Opco, LLC
2,093
2,093
Kaseya, Inc.
1,917
3,768
SunMed Group Holdings, LLC
1,621
1,621
EyeSouth Eye Care Holdco LLC
1,279
983
RxSense Holdings LLC
1,250
1,250
Tilley Distribution, Inc.
1,158
1,158
Urology Management Holdings, Inc.
863
1,510
High Street Buyer, Inc.
631
631
CC SAG Holdings Corp. (Spectrum Automotive)
548
548
All States Ag Parts, LLC
331
321
TAUC Management, LLC
294
294
Shoes for Crews Global, LLC
284
—
Orthopedic Care Partners Management, LLC
—
20,770
Southern Orthodontic Partners Management, LLC
—
17,861
Retina Midco, Inc.
—
9,382
Alkeme Intermediary Holdings, LLC
—
8,531
Legacy Service Partners, LLC
—
5,368
Peter C. Foy & Associates Insurance Services, LLC
—
5,062
West-NR Parent, Inc.
—
5,043
Luxury Asset Capital, LLC
—
4,500
Vertos Medical, Inc.
—
3,325
AMF Levered II, LLC
—
3,177
UVP Management, LLC
—
2,869
Kid Distro Holdings, LLC
—
2,650
Ultimate Baked Goods Midco LLC
—
2,356
Basic Fun, Inc.
—
2,150
GSM Acquisition Corp
—
862
Medrina, LLC
—
826
Pinnacle Treatment Centers, Inc.
—
643
ENS Holdings III Corp, LLC
—
576
Crewline Buyer, Inc.
—
530
Exactcare Parent, Inc.
—
352
WCI-BXC Purchaser, LLC
—
332
Vessco Midco Holdings, LLC
—
310
Total Commitments
$
234,554
$
248,692
* The Company controls the funding of these commitments and may cancel them at its discretion.
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2024
(in thousands, except share and per share amounts)
139
Table of Contents
The credit agreements of the above loan commitments contain customary lending provisions and/or are subject to the respective portfolio company’s achievement of certain milestones that allow relief to the
Company from funding obligations for previously made commitments in instances where the underlying company experiences materially adverse events that affect the financial condition or business outlook for the
company. Since these commitments may expire without being drawn upon, unfunded commitments do not necessarily represent future cash requirements or future earning assets for the Company. As of December 31, 2024
and December 31, 2023, the Company had sufficient cash available and/or liquid securities available to fund its commitments and had reviewed them for any appropriate fair value adjustment. From time to time, the
Company may become a party to certain legal proceedings incidental to the normal course of its business. At December 31, 2024, management was not aware of any material pending or threatened litigation that would
require accounting recognition or financial statement disclosure.
Note 16. Capital Share Transactions
As of December 31, 2024 and December 31, 2023, 200,000,000 shares of $0.01 par value capital stock were authorized.
Transactions in capital stock were as follows:
Shares
Amount
For the year ended
December 31, 2024
For the year ended
December 31, 2023
For the year ended
December 31, 2024
For the year ended
December 31, 2023
Shares repurchased
—
(746)
$
—
$
(10)
Note 17. Stock Repurchase Program
On May 7, 2024, our Board authorized an extension of a program for the purpose of repurchasing up to $50,000 of our outstanding shares of common stock. Under the repurchase program, we may, but are not
obligated to, repurchase shares of our outstanding common stock in the open market from time to time provided that we comply with our code of ethics and the guidelines specified in Rule 10b-18 of the Securities Exchange
Act of 1934, as amended, including certain price, market volume and timing constraints. In addition, any repurchases will be conducted in accordance with the 1940 Act. Unless further amended or extended by our Board,
we expect the repurchase program to be in place until the earlier of May 7, 2025 or until $50,000 of our outstanding shares of common stock have been repurchased. The timing and number of additional shares to be
repurchased will depend on a number of factors, including market conditions. There are no assurances that we will engage in any repurchases beyond what is reported herein. There were no repurchases for the fiscal year
ended December 31, 2024. During the fiscal year ended December 31, 2023, the Company repurchased 746 shares at an average price of approximately $14.02 per share, inclusive of commissions. The total dollar amount of
shares repurchased for the fiscal year ended December 31, 2023 was $10.
Note 18. SLR Senior Lending Program LLC
On October 12, 2022, the Company entered into an amended and restated limited liability company agreement with Sunstone Senior Credit L.P. (the “Investor”) to create a joint venture vehicle, SLR Senior
Lending Program LLC. SSLP is expected to invest primarily in senior secured cash flow loans. The Company and the Investor each have made initial equity commitments of $50,000, resulting in a total equity commitment
of $100,000. Investment decisions and all material decisions in respect of SSLP must be approved by representatives of the Company and the Investor.
On December 1, 2022, SSLP commenced operations. On December 12, 2022, SSLP, as servicer, and SLR Senior Lending Program SPV LLC (“SSLP SPV”), a newly formed wholly owned subsidiary of SSLP, as
borrower, entered into a $100,000 senior secured revolving credit facility (the “SSLP Facility”) with Goldman Sachs Bank USA acting as administrative agent. On October 20, 2023, the SSLP Facility was expanded to
$150,000. Effective with an amendment on March 25, 2024, the SSLP Facility is scheduled to mature on December 12, 2028 and generally bears interest at a rate of SOFR plus 2.90%. SSLP and SSLP SPV, as applicable,
have made certain customary representations and warranties and are required to comply with various covenants, including leverage restrictions, reporting requirements and other customary requirements for similar credit
facilities. The SSLP Facility also includes usual and customary events of default for credit facilities of this nature. As of December 31, 2024 and December 31, 2023, borrowings outstanding on the SSLP Facility totaled
$96,600 and $106,900, respectively.
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2024
(in thousands, except share and per share amounts)
140
Table of Contents
As of December 31, 2024 and December 31, 2023, the Company and the Investor had contributed combined equity capital in the amount of $95,750 and $85,750, respectively. As of December 31, 2024 and
December 31, 2023, the Company and the Investor’s combined remaining commitments to SSLP totaled $4,250 and $14,250, respectively. The Company, along with the Investor, controls the funding of SSLP, and SSLP
may not call the unfunded commitments of the Company or the Investor without approval of both the Company and the Investor.
As of December 31, 2024 and December 31, 2023, SSLP had total assets of $197,461 and $195,868, respectively. For the same periods, SSLP’s portfolio consisted of floating rate senior secured loans to 32 and 32
different borrowers, respectively. For the years ended December 31, 2024 and December 31, 2023, SSLP invested $47,573 in 16 portfolio companies and $188,741 in 32 portfolio companies, respectively. For the same
periods, investments prepaid totaled $57,524 and $21,070, respectively.
SSLP Portfolio as of December 31, 2024
Description
Industry
Spread
Above
Index
Floor
Interest
Rate
Maturity
Date
Par
Amount
Cost
Fair
Value
Accession Risk Management Group, Inc.
Insurance
S+475
0.75%
9.08%
11/1/29
$
6,888
$
6,865
$
6,888
Aegis Toxicology Sciences Corporation (4)
Health Care Providers & Services
S+550
1.00%
10.28%
5/9/25
2,895
2,895
2,895
Alkeme Intermediary Holdings, LLC (4)
Insurance
S+575
1.00%
10.08%
10/28/26
5,984
5,861
5,984
All States Ag Parts, LLC (4)
Trading Companies & Distributors
S+600
1.00%
10.59%
9/1/26
2,111
2,111
2,111
BayMark Health Services, Inc. (4)
Health Care Providers & Services
S+500
1.00%
9.59%
6/11/27
3,992
3,992
3,992
CC SAG Holdings Corp. (4)
Diversified Consumer Services
S+525
0.75%
9.58%
6/29/28
8,877
8,877
8,877
Crewline Buyer, Inc.
IT Services
S+675
1.00%
11.11%
11/8/30
5,084
4,966
5,084
CVAUSA Management, LLC (4)
Health Care Providers & Services
S+650
1.00%
10.84%
5/22/29
5,357
5,220
5,357
Erie Construction Mid-west, LLC
Building Products
S+475
1.00%
10.09%
7/30/27
8,000
8,000
8,000
Exactcare Parent, Inc.
Health Care Providers & Services
S+550
1.00%
10.03%
11/5/29
3,203
3,125
3,203
Eyesouth Eye Care Holdco LLC (4)
Health Care Providers & Services
S+550
1.00%
10.15%
10/5/2029
2,646
2,596
2,646
Fertility (ITC) Investment Holdco, LLC (4)
Health Care Providers & Services
S+650
1.00%
11.74%
1/3/29
5,895
5,757
5,895
Foundation Consumer Brands, LLC (4)
Personal Products
S+625
1.00%
10.89%
2/12/27
8,102
8,102
8,102
High Street Buyer, Inc.
Insurance
S+525
0.75%
9.58%
4/16/28
7,527
7,527
7,527
iCIMS, Inc.(4)
Software
S+575
0.75%
10.38%
8/18/28
3,195
3,158
3,195
Kaseya, Inc.(4)
Software
S+550
0.75%
10.75%
6/23/29
9,127
9,127
9,127
Kid Distro Holdings, LLC
Software
S+475
1.00%
9.49%
10/1/29
8,848
8,848
8,848
Legacy Service Partners, LLC
Diversified Consumer Services
S+525
1.00%
9.73%
1/9/29
2,796
2,733
2,796
Maxor Acquisition, Inc.(4)
Health Care Providers & Services
S+600
1.00%
10.46%
3/1/29
6,058
5,906
6,058
Medrina, LLC
Health Care Providers & Services
S+600
1.00%
10.44%
10/20/29
2,386
2,333
2,386
ONS MSO, LLC(4)
Health Care Providers & Services
S+625
1.00%
10.84%
7/8/26
5,833
5,738
5,833
Plastic Management, LLC(4)
Health Care Providers & Services
S+500
1.00%
9.43%
8/18/27
5,579
5,453
5,579
Retina Midco, Inc.(4)
Health Care Providers & Services
S+575
1.00%
10.35%
1/31/26
9,918
9,793
10,116
RQM+ Corp.(4)
Life Sciences Tools & Services
S+675
1.00%
11.34%
8/12/29
5,895
5,895
5,659
RxSense Holdings LLC(4)
Diversified Consumer Services
S+500
1.00%
9.69%
3/13/26
8,875
8,875
8,875
SunMed Group Holdings, LLC(4)
Health Care Equipment & Supplies
S+550
0.75%
10.19%
6/16/28
8,856
8,856
8,856
The Townsend Company, LLC(4)
Commercial Services & Supplies
S+500
1.00%
9.36%
8/15/30
4,117
4,026
4,078
Tilley Distribution, Inc.(4)
Trading Companies & Distributors
S+600
1.00%
10.48%
12/31/26
5,607
5,607
5,495
United Digestive MSO Parent, LLC(4)
Health Care Providers & Services
S+575
1.00%
10.08%
3/30/29
3,433
3,346
3,433
Urology Management Holdings, Inc.(4)
Health Care Providers & Services
S+550
1.00%
9.83%
6/15/27
4,112
4,035
4,112
UVP Management, LLC(4)
Health Care Providers & Services
S+625
1.00%
10.73%
9/15/25
4,858
4,803
4,858
WCI-BXC Purchaser, LLC
Distributors
S+625
1.00%
10.78%
11/6/30
2,875
2,810
2,875
$
177,236
$
178,740
(1)Floating rate instruments accrue interest at a predetermined spread relative to an index, typically the SOFR. These instruments are typically subject to a SOFR floor.
(2)Floating rate debt investments typically bear interest at a rate determined by reference to the SOFR (“S”), and which typically reset monthly, quarterly or semi-annually. For each debt investment, we have provided the
current interest rate in effect as of December 31, 2024.
(3)Represents the fair value in accordance with ASC Topic 820. The determination of such fair value is not included in the Board’s valuation process described elsewhere herein.
(4)The Company also holds this security on its Consolidated Statements of Assets and Liabilities.
(1)
(2)
(3)
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2024
(in thousands, except share and per share amounts)
141
Table of Contents
SSLP Portfolio as of December 31, 2023
Description
Industry
Spread
Above
Index
Floor
Interest
Rate
Maturity
Date
Par
Amount
Cost
Fair
Value
Aegis Toxicology Sciences Corporation
Health Care Providers & Services
S+550
1.00 %
11.13 %
5/9/25
$
2,947
$
2,947
$
2,947
Alkeme Intermediary Holdings, LLC
Insurance
S+650
1.00 %
11.96 %
10/28/26
3,017
2,934
3,017
All States Ag Parts, LLC
Trading Companies & Distributors
S+600
1.00 %
11.61 %
9/1/26
2,133
2,133
2,133
Apex Service Partners, LLC
Diversified Consumer Services
S+700
1.00 %
11.87 %
10/24/30
4,905
4,784
4,783
Atria Wealth Solutions, Inc.
Diversified Financial Services
S+650
1.00 %
11.97 %
5/31/24
2,468
2,468
2,468
BayMark Health Services, Inc.
Health Care Providers & Services
S+500
1.00 %
10.61 %
6/11/27
4,033
4,033
4,033
CC SAG Holdings Corp.
Diversified Consumer Services
S+575
0.75 %
11.22 %
6/29/28
8,969
8,969
8,969
CVAUSA Management, LLC
Health Care Providers & Services
S+650
1.00 %
11.74 %
5/22/29
5,412
5,251
5,412
ENS Holdings III Corp. & ES Opco USA LLC
Trading Companies & Distributors
S+475
1.00 %
10.20 %
12/31/25
1,086
1,086
1,086
Erie Construction Mid-west, LLC
Building Products
S+475
1.00 %
10.20 %
7/30/27
8,457
8,457
8,457
Fertility (ITC) Investment Holdco, LLC
Health Care Providers & Services
S+650
1.00 %
11.97 %
1/3/29
5,955
5,791
5,955
Foundation Consumer Brands, LLC
Personal Products
S+625
1.00 %
11.79 %
2/12/27
8,641
8,641
8,641
GSM Acquisition Corp.
Leisure Equipment & Products
S+500
1.00 %
10.47 %
11/16/26
8,541
8,541
8,541
Higginbotham Insurance Agency, Inc.
Insurance
S+550
1.00 %
10.96 %
11/25/28
7,573
7,573
7,573
High Street Buyer, Inc.
Insurance
S+575
0.75 %
11.25 %
4/16/28
7,604
7,604
7,604
iCIMS, Inc.
Software
S+725
0.75 %
12.62 %
8/18/28
3,089
3,066
3,089
Kaseya, Inc.
Software
S+600
0.75 %
11.38 %
6/23/29
9,058
9,058
9,058
Kid Distro Holdings, LLC
Software
S+550
1.00 %
11.00 %
10/1/27
8,939
8,939
8,939
Maxor Acquisition, Inc.
Health Care Providers & Services
S+675
1.00 %
12.48 %
3/1/29
6,120
5,940
6,120
ONS MSO, LLC
Health Care Providers & Services
S+625
1.00 %
11.62 %
7/8/26
5,922
5,784
5,922
Pinnacle Treatment Centers, Inc.
Health Care Providers & Services
S+650
1.00 %
11.95 %
1/2/26
6,951
6,951
6,951
Plastics Management, LLC
Health Care Providers & Services
S+500
1.00 %
10.45 %
8/18/27
5,637
5,471
5,637
RQM+ Corp.
Life Sciences Tools & Services
S+575
1.00 %
11.36 %
8/12/26
5,955
5,955
5,955
RxSense Holdings LLC
Diversified Consumer Services
S+500
1.00 %
10.48 %
3/13/26
8,968
8,968
8,968
SunMed Group Holdings, LLC
Health Care Equipment & Supplies
S+550
0.75 %
10.96 %
6/16/28
8,948
8,948
8,948
The Townsend Company, LLC
Commercial Services & Supplies
S+625
1.00 %
11.61 %
8/15/29
3,642
3,555
3,642
Tilley Distribution, Inc.
Trading Companies & Distributors
S+600
1.00 %
11.50 %
12/31/26
5,850
5,850
5,850
Ultimate Baked Goods Midco LLC
Packaged Foods & Meats
S+625
1.00 %
11.71 %
8/13/27
8,954
8,954
8,865
United Digestive MSO Parent, LLC
Health Care Providers & Services
S+675
1.00 %
12.25 %
3/30/29
3,411
3,311
3,411
Urology Management Holdings, Inc.
Health Care Providers & Services
S+650
1.00 %
11.93 %
6/15/26
3,179
3,102
3,155
Vessco Midco Holdings, LLC
Water Utilities
S+450
1.00 %
9.96 %
11/2/26
4,304
4,304
4,304
West-NR Parent, Inc.
Insurance
S+625
1.00 %
11.70 %
12/27/27
6,822
6,691
6,822
$
186,059
$
187,255
(1)Floating rate instruments accrue interest at a predetermined spread relative to an index, typically the LIBOR or SOFR. These instruments are typically subject to a LIBOR or SOFR floor.
(2)Floating rate debt investments typically bear interest at a rate determined by reference to either the LIBOR (“L”) or SOFR (“S”), and which typically reset monthly, quarterly or semi-annually. For each debt investment,
we have provided the current interest rate in effect as of December 31, 2023.
(3)Represents the fair value in accordance with ASC Topic 820. The determination of such fair value is not included in the Board’s valuation process described elsewhere herein.
(4)The Company also holds this security on its Consolidated Statements of Assets and Liabilities.
Below is certain summarized financial information for SSLP as of December 31, 2024 and December 31, 2023 and for the years ended December 31, 2024 and December 31, 2023:
December 31, 2024
December 31, 2023
Selected Balance Sheet Information for SSLP:
Investments at fair value (cost $177,236 and $186,059, respectively)
$
178,740 $
187,255
Cash and other assets
18,721
8,613
Total assets
$
197,461 $
195,868
Debt outstanding ($96,600 and $106,900 face amounts, respectively, reported net of unamortized
debt issuance costs of $1,572 and $1,697, respectively)
$
95,028 $
105,203
Distributions payable
3,381
1,900
Interest payable and other credit facility related expenses
472
551
Accrued expenses and other payables
398
416
Total liabilities
$
99,279 $
108,070
Members’ equity
$
98,182 $
87,798
Total liabilities and members’ equity
$
197,461 $
195,868
(1)
(2)
(3)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
SLR INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2024
(in thousands, except share and per share amounts)
142
Table of Contents
Year Ended December 31,
2024
Year Ended December 31,
2023
Selected Income Statement Information for SSLP:
Interest income
$
24,330 $
10,209
Service fees*
$
512 $
224
Interest and other credit facility expenses
10,916
6,517
Other general and administrative expenses
157
195
Total expenses
$
11,585 $
6,936
Net investment income
$
12,745 $
3,273
Realized gain on investments
320
30
Net change in unrealized gain on investments
308
1,166
Net realized and unrealized gain on investments
628
1,196
Net income
$
13,373 $
4,469
* Service fees are included within the Company’s Consolidated Statements of Operations as other income.
Note 19. Segment Reporting
The Company operates as a single reporting segment and derives its revenue from providing comprehensive financing solutions primarily to middle market borrowers in the United States through direct cash flow
lending or specialty finance instruments. The Company has identified its co-CEOs as the CODM. The CODM reviews all significant segment expenses on the Consolidated Statements of Operations and uses net investment
income to evaluate the performance of the Company and to determine distributions. Additionally, the CODM uses net asset value per share (see Note 4) to determine capital adequacy of the Company. All metrics are used to
ultimately allocate resources to the Company as needed.
The accounting policies used to measure the revenue and expenses of the segment are the same as those described in Note 2.
Note 20. Subsequent Events
The Company has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date the consolidated financial statements were issued.
On February 18, 2025, the Company closed a private offering of $50,000 of unsecured notes due 2028 (the “2028 Unsecured Notes”) with a fixed interest rate of 6.14% and a maturity date of February 18, 2028.
Interest on the 2028 Unsecured Notes is due semi-annually on February 18th and August 18th. The 2028 Unsecured Notes were issued in a private placement only to qualified institutional buyers.
On February 25, 2025, the Board declared a quarterly distribution of $0.41 per share payable on March 28, 2025 to holders of record as of March 14, 2025.
143
Table of Contents
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
As of December 31, 2024 (the end of the period covered by this report), we, including our Co-Chief Executive Officers and Chief Financial Officer, evaluated the effectiveness of the design and operation of our
disclosure controls and procedures (as defined in Rule 13a-15(e) of the 1934 Act). Based on that evaluation, our management, including the Co-Chief Executive Officers and Chief Financial Officer, concluded that, as of
December 31, 2024, our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in our periodic SEC filings is recorded, processed, summarized and
reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Co-Chief Executive Officers and Chief Financial
Officer, as appropriate, to allow timely decisions regarding required disclosure. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of such
possible controls and procedures.
(b) Management’s Report on Internal Control Over Financial Reporting
Management’s Report on Internal Control Over Financial Reporting, which appears in Item 8 of this annual report on Form 10-K, is incorporated by reference herein.
(c) Attestation Report of the Independent Registered Public Accounting Firm
Our independent registered public accounting firm, KPMG LLP, has issued an attestation report on the Company’s internal control over financial reporting, which is set forth above under the heading “Report of
Independent Registered Public Accounting Firm” in Item 8.
(d) Changes in Internal Controls Over Financial Reporting
Management has not identified any change in the Company’s internal control over financial reporting that occurred during the fourth fiscal quarter of 2024 that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial reporting.
Item 9B. Other Information
Rule 10b5-1 Trading Plans
During the fiscal quarter ended December 31, 2024, none of our directors or officers (as defined in Rule 16a-1(f) under the 1934 Act) adopted or terminated any contract, instruction or written plan for the purchase
or sale of our securities to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the 1934 Act or any “non-Rule 10b5-1 trading arrangement” as defined in Item 408(c) of Regulation S-K.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not Applicable.
144
Table of Contents
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Information about Directors
Certain information with respect to each of the current directors is set forth below, including their names, ages, a brief description of their recent business experience, including present occupations and
employment, certain directorships that each person holds, 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 that such individual should serve as a director of the Company, in light of the Company’s business and structure. There were no legal proceedings of the type described in Item 401(f) of Regulation S-K in the past
10 years against any of the directors or officers of the Company and none are currently pending. There is no arrangement or understanding between any of the Company’s directors or officers pursuant to which they were
selected as directors or officers and the Company or any other person or entity.
Mr. Gross is an “interested person” of the Company as defined in the 1940 Act due to his position as Co-Chief Executive Officer and President of the Company and a managing member of SLR Capital Partners,
LLC, the Company’s investment adviser. Mr. Spohler is an “interested person” of the Company as defined in the 1940 Act due to his position as Co-Chief Executive Officer and Chief Operating Officer of the Company and
a managing member of SLR Capital Partners, the Company’s investment adviser. Each of Ms. Roberts, Mr. Wachter, Mr. Hochberg and Mr. Potter is not an “interested person” of the Company as defined in the 1940 Act.
Name, Address and
Age(1)
Position(s)
Held with
Company
Terms of Office
and Length of
Time Served
Principal Occupation(s) During
Past 5 Years
Number of
Portfolios in Fund
Complex Overseen
by Director(2)
Other Directorships
Held by Director or
Nominee for Director
During Past 5 Years
That Are Not Part of
the Fund Complex
Interested Director
Michael S. Gross,
63
Chairman of the Board of
Directors, Co-Chief
Executive Officer and
President.
Class III Director since 2007; Term
expires 2027.
Co-Chief Executive Officer of SLR Investment Corp.
and SCP Private Credit Income BDC LLC since June
2019, of SLR HC BDC LLC since September 2020
and of SLR Private Credit BDC II LLC since April
2022, and President of SLR Investment Corp. since
2007, of SCP Private Credit Income BDC LLC since
2018, of SLR HC BDC LLC since 2020 and of SLR
Private Credit BDC II LLC since 2022; Sole Chief
Executive Officer of SLR Investment Corp. (February
2007-June 2019), and of SCP Private Credit Income
BDC LLC (June 2018- June 2019). Previously, Co-
Chief Executive Officer and President of SLR Senior
Investment Corp.
4
Chairman of the board of directors of Global Ship
Lease Inc. Previously Chairman of the board of
directors of SLR Senior Investment Corp., where
he served from 2010 to April 2022.
145
Table of Contents
Mr. Gross’ intimate knowledge of the business and operations of SLR Capital Partners, extensive familiarity with the financial industry and the investment management process in particular, and experience as a
director of other public and private companies not only gives the board of directors valuable insight but also positions him well to continue to serve as the Chairman of our board of directors.
Name, Address
and Age(1)
Position(s) Held
with Company
Terms of Office
and Length of
Time Served
Principal Occupation(s) During
Past 5 Years
Number of
Portfolios in Fund
Complex Overseen
by Director(2)
Other Directorships
Held by Director or
Nominee for
Director During
Past 5 Years That
Are Not Part of the
Fund Complex
Interested Director
Bruce Spohler,
64
Co-Chief Executive Officer,
Chief Operating Officer and
Director
Class II Director since 2009; Term
expires 2026.
Co-Chief Executive Officer of SLR Investment Corp.
and SCP Private Credit Income BDC LLC since June
2019, of SLR HC BDC LLC since September 2020
and of SLR Private Credit BDC II LLC since April
2022; Chief Operating Officer of SLR Investment
Corp. since February 2007, of SCP Private Credit
Income BDC LLC since June 2018, of SLR HC BDC
LLC since September 2020 and of SLR Private Credit
BDC II LLC since April 2022.
4
Previously a member of the board of directors
of SLR Senior Investment Corp., where he
served from 2010 to April 2022.
Mr. Spohler’s depth of experience in managerial positions in investment management, leveraged finance and financial services, as well as his intimate knowledge of the Company’s business and operations, gives
the board of directors valuable industry-specific knowledge and experience on these and other matters.
Name, Address
and Age(1)
Position(s) Held
with Company
Terms of Office
and Length of
Time Served
Principal Occupation(s) During
Past 5 Years
Number of
Portfolios in Fund
Complex Overseen
by Director(2)
Other Directorships
Held by Director or
Nominee for Director
During Past 5 Years
That Are Not Part of the
Fund Complex
Independent Director
Steven Hochberg, 63
Director
Class II Director since 2007; Term
expires 2026.
Operating Partner of Deerfield Management, a
healthcare investment firm, since 2022. Partner of
Deerfield Management from 2013 to 2021. Co-
Founder and Manager of Ascent Biomedical Ventures,
a venture capital firm focused on early-stage
investment and development of biomedical companies,
since 2004. Co-Founder and Co-General Partner of
Triatomic Capital, a technology focused venture
capital firm, since 2022.
4
Since 2011, Mr. Hochberg had been the
Chairman of the Board of Continuum Health
Partners until its merger with Mount Sinai in
2013, where he is a Vice Chairman of Mount
Sinai Health System, a non-profit healthcare
integrated delivery system in New York City.
Director of a number of private healthcare
companies and the Cardiovascular Research
Foundation, an organization focused on
advancing new technologies and education in
the field of cardiovascular medicine. Previously
a member of the board of directors of SLR
Senior Investment Corp., where he served from
2011 to April 2022.
146
Table of Contents
Mr. Hochberg’s varied experience in investing in medical technology companies provides the board of directors with particular knowledge of this field, and his role as chairman of other companies’ boards of
directors brings the perspective of a knowledgeable corporate leader.
Name, Address
and Age(1)
Position(s) Held
with Company
Terms of Office
and Length of
Time Served
Principal Occupation(s)
During Past 5 Years
Number of
Portfolios in Fund
Complex Overseen
by Director(2)
Other Directorships
Held by Director or
Nominee for Director
During Past 5 Years
That Are Not Part of
the Fund Complex
Independent Director
Leonard A. Potter, 63
Director
Class III Director since 2009; Term
expires 2027.
President and Chief Investment Officer of Wildcat
Capital Management, LLC since 2011; Senior
Managing Director of Vida Ventures I and II, each a
biotech venture fund, since 2017; Managing Director of
Soros Private Equity at Soros Fund Management LLC
from 2002 to 2009.
4
Director of Hilton Grand Vacations Inc. since
2017, of SuRo Capital Corp. since 2011, and
of several private companies. Previously a
member of the board of directors of SLR
Senior Investment Corp., where he served from
2011 to April 2022.
Mr. Potter’s experience practicing as a corporate lawyer provides valuable insight to the board of directors on regulatory and risk management issues. In addition, his tenure in private equity and other investments
and service as a director of both public and private companies provide industry-specific knowledge and experience to the board of directors.
Name, Address
and Age(1)
Position(s)
Held with
Company
Terms of
Office and
Length of
Time Served
Principal
Occupation(s) During
Past 5 Years
Number of
Portfolios in Fund
Complex Overseen
by Director(2)
Other Directorships
Held by Director or
Nominee for
Director During
Past 5 Years That
Are Not Part of the
Fund Complex
Independent Director
David S. Wachter, 61
Director
Class I Director since 2007; Term
expires 2025.
Founding Partner and Managing Partner of W Capital
Partners, a private equity fund manager and wholly
owned subsidiary of AXA Investment Managers, since
2001.
4
Previously a member of the board of directors
of SLR Senior Investment Corp., where he
served from 2011 to April 2022.
Mr. Wachter’s extensive knowledge of private equity and investment banking provides the board of directors with the valuable insight of an experienced financial manager.
Name, Address
and Age(1)
Position(s)
Held with
Company
Terms of
Office and
Length of
Time Served
Principal
Occupation(s) During
Past 5 Years
Number of
Portfolios in Fund
Complex Overseen
by Director
Other Directorships
Held by Director or
Nominee for
Director During
Past 5 Years That
Are Not Part of the
Fund Complex
Independent Director
Andrea C. Roberts, 68
Director
Class I Director since 2023; Term
expires 2025.
Co-Founder and Managing Director of Genesis Capital
Corporation, an investment banking firm, since 1994;
President and sole owner of Orbis Associates, Inc., a
consulting firm providing consulting services to
Genesis Capital Corporation on an exclusive basis,
since 1994.
1
Director of Trinity Episcopal School from 2019
to 2022.
Ms. Roberts’ extensive knowledge of investment banking and asset-based financing provides the board of directors with the valuable insight of an experienced financial manager.
147
Table of Contents
(1)The business address of our directors is c/o SLR Investment Corp., 500 Park Avenue, New York, New York 10022.
(2)The Company is part of a “Fund Complex,” as that term is defined in Schedule 14A and Regulation 14A under the 1934 Act. Messrs. Gross, Spohler, Hochberg, Potter and Wachter each also have served as directors of
SCP Private Credit Income BDC LLC, SLR HC BDC LLC and SLR Private Credit BDC II LLC since 2018, 2020 and 2022, respectively, which are investment companies that have each elected to be regulated BDCs and
are part of the Fund Complex. Mr. Gross has served as Chairman of SCP Private Credit Income BDC LLC, SLR HC BDC LLC and SLR Private Credit BDC II LLC since 2018, 2020 and 2022, respectively. Mr. Potter also
serves as a director of SuRo Capital Corp., which is a closed-end management investment company that has elected to be regulated as a BDC.
Information about Executive Officers Who Are Not Directors
The following information, as of December 31, 2024, pertains to our executive officers who are not directors of the Company.
Name, Address, and Age
Position(s) Held with
Company
Terms of Office and Length of Time Served
Number of
Portfolios in
Fund
Complex
Overseen by
Officer
Principal Occupation(s) During Past 5 Years
Shiraz Y. Kajee, 45
Chief Financial Officer and Treasurer
Since April 2023 (indefinite terms)
4
Chief Financial Officer and Treasurer of the Company, SCP Private Credit Income BDC LLC, SLR
HC BDC LLC and SLR Private Credit BDC II LLC since April 2023 and Secretary of such entities
from April 2023 to November 2023. From December 2015 through March 2023, Mr. Kajee served
as a Managing Director at New Mountain Capital, L.L.C., a private equity firm, which included
serving as Chief Financial Officer and Treasurer of New Mountain Finance Corporation since 2015,
of NMF SLF I, Inc. since 2019, of New Mountain Guardian III BDC, L.L.C. since 2019 and of
New Mountain Guardian IV BDC, L.L.C. since 2022.
Guy Talarico, 69
Chief Compliance Officer and
Secretary
Chief Compliance Officer since July 2008;
Secretary since November 2023 (indefinite terms)
4
Chief Compliance Officer of the Company since July 2008, of SCP Private Credit Income BDC
LLC since June 2018, of SLR HC BDC LLC since September 2020, and of SLR Private Credit
BDC II LLC since April 2022. Secretary of the Company, SCP Private Credit Income BDC LLC,
SLR HC BDC LLC and SLR Private Credit BDC II LLC since November 2023; Mr. Talarico
currently serves as Chief Compliance Officer, since 2008, and General Counsel, since May 2023, of
SLR Capital Partners, LLC. In addition, Mr. Talarico previously served as the Chief Compliance
Officer of SLR Senior Investment Corp. from December 2010 until April 2022. Mr. Talarico
previously served as managing director of ACA Group, LLC (successor to Foreside Consulting
Services LLC, and ultimate successor to Alaric Compliance Services, LLC, which he founded in
December 2005) until May 2023.
(1)The business address of the executive officers is c/o SLR Investment Corp., 500 Park Avenue, New York, New York 10022.
Our common stock is listed on the NASDAQ Global Select Market under the symbol “SLRC.”
Audit Committee
The Audit Committee operates pursuant to a charter approved by our board of directors, a copy of which is available on our website at http://www.slrinvestmentcorp.com. The charter sets forth the responsibilities
of the Audit Committee. The Audit Committee’s responsibilities include selecting the independent registered public accounting firm for the Company, reviewing with such independent registered public accounting firm the
planning, scope and results of their audit of the Company’s financial statements, pre-approving the fees for services performed, reviewing with the independent registered public accounting firm the adequacy of internal
control systems, reviewing the Company’s annual financial statements and periodic filings and receiving the Company’s audit reports and financial statements. The Audit Committee also establishes guidelines and makes
recommendations to our board of directors regarding the valuation of our investments. The Audit Committee is responsible for aiding our board of directors in determining the fair value of debt and equity securities that are
not publicly traded or for which current market values are not readily available. The board of directors and Audit Committee utilize the services of nationally recognized third-party valuation firms to help determine the fair
value of these securities. The Audit Committee is currently composed of Messrs. Hochberg, Wachter and Potter and Ms. Roberts, all of whom are considered independent under the rules of the NASDAQ Stock Market and
are not
(1)
148
Table of Contents
“interested persons” of the Company as that term is defined in Section 2(a)(19) of the 1940 Act. Mr. Hochberg serves as Chairman of the Audit Committee. Our board of directors has determined that Mr. Hochberg is an
“audit committee financial expert” as that term is defined under Item 407 of Regulation S-K, as promulgated under the 1934 Act. Mr. Hochberg meets the current independence and experience requirements of Rule 10A-3
of the 1934 Act.
Communication with the Board of Directors
Stockholders with questions about the Company are encouraged to contact the Company’s investor relations department. However, if stockholders believe that their questions have not been addressed, they may
communicate with the Company’s board of directors by sending their communications to SLR Investment Corp., c/o Guy Talarico, Secretary, 500 Park Avenue, New York, New York 10022. All stockholder
communications received in this manner will be delivered to one or more members of the board of directors.
Code of Ethics
The Company has adopted a code of ethics that applies to, among others, its senior officers, including its Co-Chief Executive Officers and its Chief Financial Officer, as well as every officer, director and
employee of the Company. The Company’s code of ethics can be accessed via its website at http://www.slrinvestmentcorp.com. The Company intends to disclose amendments to or waivers from a required provision of the
code of ethics on Form 8-K.
Insider Trading Policy
The Company has adopted a joint code of ethics and insider trading policy in conjunction with the Investment Adviser and each of SCP Private Credit Income BDC LLC, SLR HC BDC LLC and SLR Private
Credit BDC II LLC (collectively, the “SLR BDCs”) that the Company believes is reasonably designed to promote compliance with applicable insider trading laws, rules and regulations. The joint code of ethics and insider
trading policy governs the purchase, sale and/or other dispositions of the securities of the Investment Adviser, the Company and the SLR BDCs and applies to (i) any partner, member, officer or director of the Investment
Adviser, the Company and the SLR BDCs, or other person occupying a similar status or performing similar function; (ii) any employee of the Investment Adviser, the Company and the SLR BDCs; (iii) any U.S. consultant
who has been contracted by the Investment Adviser, the Company and the SLR BDCs for more than ninety (90) days; and (iv) any other person who provides advice on behalf of the Investment Adviser, the Company and
the SLR BDCs and is subject to the respective entity’s supervision and control.
Nomination of Directors
There have been no material changes to the procedures by which stockholders may recommend nominees to our Board since the filing of our Proxy Statement for our 2024 Annual Meeting of Stockholders.
Delinquent Section 16(a) Reports
Pursuant to Section 16(a) of the 1934 Act, the Company’s directors and other executive officers, and any persons holding more than 10% of its common stock, are required to report their beneficial ownership and
any changes therein to the SEC and the Company. Specific due dates for those reports have been established, and the Company is required to report any failure to file such reports by those due dates. Based on the Company’s
review of Forms 3, 4 and 5 filed by such persons and information provided by the Company’s directors and other executive officers, the Company believes that during the fiscal year ended December 31, 2024, all Section
16(a) filing requirements applicable to such persons were met in a timely manner with the exception of one Form 4 filing for Andrea Roberts relating to an acquisition.
Item 11. Executive Compensation
Compensation of Executive Officers
None of our officers receives direct compensation from the Company. As a result, we do not engage any compensation consultants. Mr. Gross, our Co-Chief Executive Officer and President, and Mr. Spohler, our
Co-Chief Executive Officer and Chief Operating Officer, through their ownership interest in SLR Capital Partners, our investment adviser, are entitled to a portion of any profits earned by SLR Capital Partners, which
includes any fees payable by us to SLR Capital Partners under the terms of the Advisory Agreement, less expenses incurred by SLR Capital Partners in performing its services under the Advisory Agreement.
149
Table of Contents
Messrs. Gross and Spohler do not receive any additional compensation from SLR Capital Partners in connection with the management of our portfolio.
Mr. Kajee, our Chief Financial Officer and Treasurer, and Mr. Talarico, our Chief Compliance Officer and Secretary, are paid by the Investment Adviser, subject to reimbursement by us of an allocable portion of
such compensation for services rendered by such persons to the Company.
Compensation of Directors
The following table sets forth the compensation of the Company’s directors, for the year ended December 31, 2024.
Name
Fees Earned
or Paid in
Cash
Stock
Awards
All Other
Compensation
Total Compensation
from the Company
Total Compensation
from the Fund
Complex
Interested Directors
Michael S. Gross
—
—
—
—
—
Bruce Spohler
—
—
—
—
—
Independent Directors
Steven Hochberg
$
127,000
—
— $
127,000 $
202,000
David S. Wachter
$
122,000
—
— $
122,000 $
197,000
Leonard A. Potter
$
122,000
—
— $
122,000 $
197,000
Andrea C. Roberts
$
119,500
—
— $
119,500 $
119,500
(1)For a discussion of the independent directors’ compensation, see below.
(2)We do not maintain a stock or option plan, non-equity incentive plan or pension plan for our directors or officers. As a result, the Company has not historically, and does not expect to, directly grant equity awards to its
directors or officers. Our independent directors have the option to receive all or a portion of the directors’ fees to which they would otherwise be entitled in the form of shares of our common stock issued at a price per share
equal to the greater of our then current net asset value per share or the market price at the time of payment. No shares were issued to any of our independent directors in lieu of cash during 2024.
Our independent directors’ annual fee is $100,000. The independent directors also receive $2,500 ($1,500 if participating telephonically) plus reimbursement of reasonable out-of-pocket expenses incurred in
connection with attending each board meeting and $1,000 plus reimbursement of reasonable out-of-pocket expenses incurred in connection with each committee meeting attended. In addition, the Chairman of the Audit
Committee receives an annual fee of $7,500, the Chairman of the Nominating and Corporate Governance Committee receives an annual fee of $2,500 and the Chairman of the Compensation Committee receives an annual
fee of $2,500. Further, we purchase directors’ and officers’ liability insurance on behalf of our directors and officers. No compensation was paid to directors who are interested persons of the Company as defined in the 1940
Act.
Compensation Committee
The Compensation Committee operates pursuant to a charter approved by our board of directors, a copy of which is available on our website at http://www.slrinvestmentcorp.com. The charter sets forth the
responsibilities of the Compensation Committee. The Compensation Committee is responsible for reviewing and recommending for approval to our board of directors the Advisory Agreement and the Administration
Agreement. In addition, although we do not directly compensate our executive officers currently, to the extent that we do so in the future, the Compensation Committee would also be responsible for reviewing and
evaluating their compensation and making recommendations to the board of directors regarding their compensation. Lastly, the Compensation Committee would produce a report on our executive compensation practices and
policies for inclusion in our proxy statement if required by applicable proxy rules and regulations and, if applicable, make recommendations to the board of directors with matters related to compensation generally. The
Compensation Committee has the authority to engage compensation consultants and to delegate their duties and responsibilities to a member or to a subcommittee of the Compensation Committee. The members of the
Compensation Committee are Messrs. Hochberg, Wachter and Potter and Ms. Roberts, all of whom are considered independent under the rules of the NASDAQ Stock Market and are not “interested persons” of the
Company as that term is defined in Section 2(a)(19) of the 1940 Act. Mr. Potter serves as Chairman of the Compensation Committee.
(1)
(2)
150
Table of Contents
Compensation Committee Interlocks and Insider Participation
During fiscal year 2024, none of the Company’s executive officers served on the board of directors (or a compensation committee thereof or other board committee performing equivalent functions) of any entities
that had one or more executive officers serve on the Compensation Committee of the Company or on the Board of Directors of the Company. No member of the Compensation Committee had any relationship requiring
disclosure under any paragraph of Item 404 of Regulation S-K.
Compensation Committee Report
Currently, none of our executive officers are compensated by the Company, and as such the Company is not required to produce a report on executive officer compensation for inclusion in our annual report on
Form 10-K.
Clawback Policy
While the Company, as an externally-managed business development company under the 1940 Act, currently neither pays nor has any plans to pay or otherwise award incentive-based compensation to its
executive officers, the Board adopted our Clawback Policy, effective November 6, 2023 (the “Clawback Policy”), in accordance with Rule 10D-1 of the 1934 Act and Nasdaq listing standards. The Clawback Policy applies
to current and former covered executive officers of the Company and is administered by the Compensation Committee. In the event the Company is required to prepare an accounting restatement to correct material
noncompliance with any financial reporting requirement under U.S. federal securities laws, including restatements that correct an error in previously issued financial statements that is material to the previously issued
financial statements or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period, it is the Company’s policy to recover erroneously awarded
incentive-based compensation, if any, received by its executive officers. The recovery of such compensation applies regardless of whether an executive officer engaged in misconduct or otherwise caused or contributed to
the requirement for a restatement.
During the fiscal year ended December 31, 2024 and continuing through the date of this annual report on Form 10-K, we were not required to prepare an accounting restatement that required recovery of
erroneously awarded compensation under the Clawback Policy nor was there an outstanding balance as of December 31, 2024 of erroneously awarded compensation to be recovered under the Clawback Policy from a prior
restatement.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth, as of February 21, 2025, the beneficial ownership of each current director, the nominees for directors, the Company’s executive officers, each person known to us to beneficially own
5% or more of the outstanding shares of our 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. Ownership information for those persons who beneficially own
5% or more of our shares of common stock is based upon reports filed by such persons with the SEC and other information obtained from such persons, if available.
151
Table of Contents
Unless otherwise indicated, the Company believes that each beneficial owner set forth in the table has voting and investment power and has the same address as the Company. Our address is 500 Park Avenue,
New York, New York 10022.
Name and Address of Beneficial Owner
Number of
Shares
Owned
Beneficially(1)
Percentage
of Class(2)
Interested Directors
Michael S. Gross(3)(4)
4,032,649
7.4%
Bruce Spohler(3)
3,719,009
6.8%
Independent Directors
Steven Hochberg
2,742
*
Leonard A. Potter
14,872
*
David S. Wachter
53,494
*
Andrea C. Roberts
25,000
*
Executive Officers
Shiraz Y. Kajee(5)
7,500
*
Guy Talarico
31,899
*
All executive officers and directors as a group (8 persons)
4,686,516
8.6%
Thornburg Investment Management Inc.(6)
4,372,550
8.0%
* Represents less than one percent.
(1)Beneficial ownership has been determined in accordance with Rule 13d-3 under the 1934 Act. Assumes no other purchases or sales of our common stock since the most recently available SEC filings. This assumption has
been made under the rules and regulations of the SEC and does not reflect any knowledge that we have with respect to the present intent of the beneficial owners of our common stock listed in this table.
(2)Based on a total of 54,554,634 shares of the Company’s common stock issued and outstanding as of February 21, 2025.
(3)Includes 1,285,013 shares held by Solar Capital Investors, LLC, 715,000 shares held by Solar Capital Investors II, LLC, 355,107 shares held by Solar Senior Capital Investors, LLC and 77 shares held by SLR Capital
Management, LLC, a portion of each which may be deemed to be indirectly beneficially owned by Michael S. Gross, by Bruce Spohler and a grantor retained annuity trust (“GRAT”) setup by and for Mr. Gross by virtue of
their collective ownership interest therein. Also includes 845,452 shares held by Solar Capital Partners Employee Stock Plan LLC, which is controlled by SLR Capital Partners, LLC. Mr. Gross and Mr. Spohler may be
deemed to beneficially own a portion of the shares held by Solar Capital Partners Employee Stock Plan LLC by virtue of their collective ownership interest in SLR Capital Partners, LLC. Each of Mr. Gross and Mr. Spohler
disclaim beneficial ownership of any shares of our common stock directly held by Solar Capital Partners Employee Stock Plan LLC, Solar Capital Investors, LLC, Solar Capital Investors II, LLC, Solar Senior Capital
Investors, LLC and SLR Capital Management, LLC, except to the extent of their respective pecuniary interest therein. Also includes 199,466 shares held in a trust of which Bruce Spohler became co-trustee in which he and
certain members of his immediate family are beneficiaries (the “Spohler Trust”) and 243,021 shares held by a limited liability company in which he owns a pro rata interest (the “Spohler LLC”). Mr. Spohler disclaims
beneficial ownership of the shares in the Spohler Trust and the Spohler LLC.
(4)Includes 152,166 shares directly held by Michael S. Gross’ profit sharing plan (the “Profit Sharing Plan”). Mr. Gross may be deemed to directly beneficially own these shares as the sole participant in the Profit Sharing
Plan. Also includes 117,617 shares held by certain trusts for the benefit of family members for which Mr. Gross serves as trustee (the “Family Trusts”). The total includes 334,428 shares held by the GRAT. Mr. Gross may
be deemed to directly beneficially own these shares by virtue of his control with respect to the Family Trusts, and disclaims beneficial ownership of the securities held by the Family Trusts except to the extent of his
pecuniary interest therein.
(5)On March 13, 2024, Solar Capital Partners Employee Stock Plan LLC granted 11,564.5701 restricted stock units ("RSUs") to Mr. Kajee. Shares of the common stock of the Company underlying the RSUs are scheduled
to vest in installments of 50% on the latter of March 1, 2026 and the date of the opening of the trading window and 50% on the latter of March 1, 2027 and the date of the opening of the trading window. Upon settlement, the
RSUs will become payable on a one-for-one basis in shares of the Company's common stock or the cash value thereof at the election of the Solar Capital Partners Employee Stock Plan, LLC administrators.
(6)Based upon information contained in the Schedule 13G filed February 6, 2025 by Thornburg Investment Management, Inc. Such securities are held by certain investment vehicles controlled and/or managed by
Thornburg Investment Management, Inc. or its affiliates. The address for Thornburg Investment Management, Inc. is 2300 North Ridgetop Road, Santa Fe, New Mexico 87506.
152
Table of Contents
Set forth below is the dollar range of equity securities beneficially owned by each of our directors as of February 21, 2025. The Company is part of a “Fund Complex,” as that term is defined in Schedule 14A and
Regulation 14A under the 1934 Act. For purposes of this Annual Report on Form 10-K, the term Fund Complex includes the Company, SCP Private Credit Income BDC LLC, SLR HC BDC LLC and SLR Private Credit
BDC II LLC.
Name of Director
Dollar Range
of Equity
Securities
Beneficially
Owned in the
Company(1)(2)
Dollar Range
of Equity
Securities
Beneficially
Owned in the Fund
Complex(1)(2)(3)
Interested Directors
Michael S. Gross
Over $ 100,000
Over $ 100,000
Bruce Spohler
Over $ 100,000
Over $ 100,000
Independent Directors
Steven Hochberg
$10,001- $50,000
$10,001- $50,000
Leonard A. Potter
Over $ 100,000
Over $ 100,000
David S. Wachter
Over $ 100,000
Over $ 100,000
Andrea C. Roberts
Over $ 100,000
Over $ 100,000
(1)The dollar ranges are: None, $1-$10,000, $10,001-$50,000, $50,001-$100,000, or Over $100,000.
(2)The dollar range of equity securities beneficially owned in us is based on the closing price for our common stock of $17.65 on February 21, 2025 on the NASDAQ Global Select Market. Beneficial ownership has been
determined in accordance with Rule 16a-1(a)(2) of the 1934 Act.
(3)The dollar range of equity securities in the Fund Complex beneficially owned by directors of the Company, if applicable, is the total dollar range of equity securities in the Company beneficially owned by the directors, as
no director has beneficial ownership of SCP Private Credit Income BDC LLC, SLR HC BDC LLC or SLR Private Credit BDC II LLC.
Item 13. Certain Relationships and Related Transactions, and Director Independence
We have entered into the Advisory Agreement with SLR Capital Partners. Mr. Gross, our Chairman, Co-Chief Executive Officer and President, and Mr. Spohler, our Co-Chief Executive Officer, Chief Operating
Officer and board member, are managing members and senior investment professionals of, and have financial and controlling interests in, SLR Capital Partners. In addition, Mr. Kajee, our Chief Financial Officer and
Treasurer, serves as the Chief Financial Officer for SLR Capital Partners, and Mr. Talarico, our Chief Compliance Officer and Secretary, serves as General Counsel and Chief Compliance Officer for SLR Capital Partners.
SLR Capital Partners and its affiliates may also manage other funds in the future that may have investment mandates that are similar, in whole and in part, with ours. For example, SLR Capital Partners presently
serves as investment adviser to private funds and managed accounts as well as to SCP Private Credit Income BDC LLC, an unlisted BDC, which focuses on investing primarily in senior secured loans, including non-
traditional asset-based loans and first lien loans, SLR HC BDC LLC, an unlisted BDC whose principal focus is to invest directly and indirectly in senior secured loans and other debt instruments typically to middle market
companies within the healthcare industry, and SLR Private Credit BDC II LLC, an unlisted BDC whose principal focus is to investment in first lien senior secured floating rate loans primarily to upper middle market
leveraged companies with EBITDA between approximately $25 million and $250 million that have significant free cash flow and are in non-cyclical industries in which the Investment Adviser has significant experience. In
addition, Michael S. Gross, our Chairman and Co-Chief Executive Officer, Bruce Spohler, our Co-Chief Executive Officer and Chief Operating Officer, Shiraz Y. Kajee, our Chief Financial Officer and Treasurer, and Guy
F. Talarico, our Chief Compliance Officer and Secretary, serve in similar capacities for SCP Private Credit Income BDC LLC, SLR HC BDC LLC and SLR Private Credit BDC II LLC.
SLR Capital Partners and certain investment advisory affiliates may determine that an investment is appropriate for us and for one or more of those other funds. In such event, depending on the availability of such
investment and other appropriate factors, SLR Capital Partners or its affiliates may determine that we should invest side-by-side with one or more other funds. Any such investments will be made only to the extent permitted
by applicable law and interpretive positions of the SEC and its staff, and consistent with SLR Capital Partners’ allocation procedures.
Related party transactions may occur among us, SLR Senior Lending Program LLC, SLR Senior Lending Program SPV LLC, SLR Credit, Equipment Operating Leases LLC, KBH, Loyer Capital LLC, SLR
Business Credit, SLR Healthcare and SLR Equipment. These transactions may occur in the normal course of business. No administrative or other fees are paid to the Investment Adviser by SLR Senior Lending Program
LLC, SLR Senior Lending Program SPV LLC, SLR Credit, Equipment Operating Leases LLC, KBH, Loyer Capital LLC, SLR Business Credit, SLR Healthcare or SLR Equipment.
153
Table of Contents
In addition, we have adopted a formal code of ethics that governs the conduct of our officers and directors. Our officers and directors also remain subject to the duties imposed by both the 1940 Act and the
Maryland General Corporation Law.
Regulatory restrictions limit our ability to invest in any portfolio company in which any affiliate currently has an investment. The Company obtained the Exemptive Order from the SEC on June 13, 2017. The
Exemptive Order permits us to participate in negotiated co-investment transactions with certain affiliates, each of whose investment adviser is an investment adviser that controls, is controlled by or is under common control
with SLR Capital Partners and is registered as an investment adviser under the Advisers Act, in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory
requirements and other pertinent factors, and pursuant to the conditions to the Exemptive Order. We believe that it will be advantageous for us to co-invest with funds managed by SLR Capital Partners where such
investment is consistent with the investment objectives, investment positions, investment policies, investment strategy, investment restrictions, regulatory requirements and other pertinent factors applicable to us.
We have entered into a license agreement with SLR Capital Partners, pursuant to which SLR Capital Partners has agreed to grant us a non-exclusive, royalty-free license to use the names “SLR” and “SOLAR”. In
addition, pursuant to the terms of the Administration Agreement, SLR Capital Management provides us with the office facilities and administrative services necessary to conduct our day-to-day operations.
Board Consideration of the Advisory Agreement
Our board of directors, including a majority of the directors who are disinterested directors, most recently voted to approve the continuation of the Advisory Agreement at a virtual meeting held on August 5, 2024
in reliance on certain exemptive relief provided by the SEC, such approval being effective as of September 1, 2024 and extending the term of the Advisory Agreement to September 1, 2025, which was ratified at the next in-
person meeting of the board of directors on November 5, 2024. In its consideration of the approval of the Advisory Agreement, the board of directors focused on information it had received relating to, among other things:
•the nature, extent and quality of advisory services to be rendered by SLR Capital Partners, including information about the investment performance of the Company relative to its stated objectives and in
comparison to the performance of the Company’s peer group and relevant market indices, and concluded that such advisory and other services are satisfactory and the Company’s investment performance is
reasonable;
•the experience and qualifications of the personnel providing such advisory and other services, including information about the backgrounds of the investment personnel, the allocation of responsibilities among
such personnel and the process by which investment decisions are made, and concluded that the investment personnel of SLR Capital Partners have extensive experience and are well qualified to provide advisory
and other services to the Company;
•the current fee structure, the existence of any fee waivers, and the Company’s anticipated expense ratios in relation to those of other investment companies having comparable investment policies and limitations,
and concluded that the current fee structure is reasonable;
•the advisory fees charged by SLR Capital Partners to the Company, to SCP Private Credit Income BDC LLC, to SLR HC BDC LLC and to SLR Private Credit BDC II LLC, and comparative data regarding the
advisory fees charged by other investment advisers to BDCs with similar investment objectives, and concluded that the advisory fees charged by SLR Capital Partners to the Company are reasonable;
•the direct and indirect costs, including for personnel and office facilities, that are incurred by SLR Capital Partners and its affiliates in performing services for the Company and the basis of determining and
allocating these costs, and concluded that the direct and indirect costs, including the allocation of such costs, are reasonable;
•the total of all assets managed by SLR Capital Partners, as well as the total number of investment companies and other clients serviced by SLR Capital Partners, possible economies of scale arising from the
Company’s size and/or anticipated growth, and the extent to which such economies of scale are reflected in the advisory fees charged by SLR Capital Partners to the Company, and concluded that some economies
of scale may be possible in the future;
•other possible benefits to SLR Capital Partners and its affiliates arising from their relationships with the Company, and concluded that all such other benefits were not material to SLR Capital Partners and its
affiliates; and
•possible alternative fee structures or bases for determining fees, and the possibility of obtaining similar services from other third-party service providers, and concluded that the Company’s current fee structure
and bases for determining fees are satisfactory.
154
Table of Contents
Based on the information reviewed and the discussions detailed above, our board of directors, including a majority of the directors who are not “interested persons” as defined in the 1940 Act, concluded that the
fees payable to SLR Capital Partners pursuant to the Advisory Agreement, including the fee rates thereunder, are fair and reasonable in relation to the services to be provided and approved the Advisory Agreement as being
in the best interests of the Company and its stockholders. In view of the wide variety of material factors that our board of directors considered in connection with its evaluation of the Advisory Agreement, it is not practical
to quantify, rank or otherwise assign relative weights to the specific factors it considered in reaching its decision. Our board of directors did not undertake to make any specific determination as to whether any particular
factor, or any aspect of any particular factor, was favorable or unfavorable to the ultimate determination of our board of directors. Rather, our board of directors based its approval on the totality of information presented to,
and the investigation conducted by, it. In considering the factors discussed above, individual directors may have given different weights to different factors.
Director Independence
In accordance with rules of the NASDAQ Stock Market, our board of directors annually determines each director’s independence. We do not consider a director independent unless the board of directors has
determined that he or she has no material relationship with us. We monitor the relationships of our directors and officers through a questionnaire each director completes no less frequently than annually and updates
periodically as information provided in the most recent questionnaire changes.
Our governance guidelines require any director who has previously been determined to be independent to inform the Chairman of the board of directors, the Chairman of the Nominating and Corporate Governance
Committee and our Secretary of any change in circumstance that may cause his or her status as an independent director to change. The board of directors limits membership on the Audit Committee, the Nominating and
Corporate Governance Committee and the Compensation Committee to independent directors.
In order to evaluate the materiality of any such relationship, the board of directors 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 BDC shall be considered to be independent if he or she is not an “interested person” of such BDC, as defined in Section 2(a)(19) of the 1940 Act.
The board of directors has determined that each of the directors is independent and has no relationship with us, except as a director and stockholder, with the exception of Michael S. Gross, as a result of his
positions as the Co-Chief Executive Officer and President of the Company and a Managing Member of SLR Capital Partners, and Bruce Spohler, as a result of his positions as the Co-Chief Executive Officer and Chief
Operating Officer of the Company and a Managing Member of SLR Capital Partners.
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 SLR Capital shall indemnify the director who is a party to 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.
tem 14. Principal Accountant Fees and Services
KPMG LLP 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. For the years ended December 31,
2024 and December 31, 2023, the Company incurred the following fees for services provided by KPMG LLP, including expenses:
Table below in thousands
Fiscal Year Ended
December 31, 2024
Fiscal Year Ended
December 31, 2023
Audit Fees
$
870.0 $
803.0
Audit-Related Fees
—
—
Tax Fees
212.9
186.6
All Other Fees
—
—
Total Fees:
$
1,082.9 $
989.6
155
Table of Contents
Audit Fees: Audit fees consist of fees for professional services rendered for the audit of our year-end financial statements and quarterly reviews and services that are normally provided by KPMG LLP in
connection with statutory and regulatory filings.
Audit-Related Fees: Audit-related services consist of fees for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported
under “Audit Fees.” These services include attest services that are not required by statute or regulation and consultations concerning financial accounting and reporting standards.
Tax Services Fees: Tax services fees consist of fees for professional tax services. These services also include assistance regarding federal, state, and local tax compliance.
All Other Fees: Other fees would include fees for products and services other than the services reported above.
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 KPMG LLP, the Company’s independent registered public
accounting firm. The policy requires that the Audit Committee pre-approve the 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.
Any requests for audit, audit-related, tax and other services that have not received general pre-approval 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. During the fiscal year ended December 31, 2024, the Audit Committee pre-approved 100% of the
services described in this policy.
156
Table of Contents
PART IV
Item 15. Exhibit and Financial Statement Schedules
a. Documents Filed as Part of this Report
The following reports and consolidated financial statements are set forth in Item 8:
Page
Management’s Report on Internal Control Over Financial Reporting
95
Report of Independent Registered Public Accounting Firm
96
Consolidated Statements of Assets and Liabilities as of December 31, 2024 and 2023
98
Consolidated Statements of Operations for the years ended December 31, 2024, 2023 and 2022
99
Consolidated Statements of Changes in Net Assets for the years ended December 31, 2024, 2023 and 2022
100
Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023 and 2022
101
Consolidated Schedules of Investments as of December 31, 2024 and 2023
102
Notes to Consolidated Financial Statements
120
157
Table of Contents
b. Exhibits
The following exhibits are filed as part of this report or hereby incorporated by reference to exhibits previously filed with the SEC:
Exhibit
Number
Description
2.1
Agreement and Plan of Merger among SLR Investment Corp., SLR Senior Investment Corp., Solstice Merger Sub, Inc. and SLR Capital Partners, LLC (for the limited purposes set forth therein), dated as
of December 1, 2021(13)
3.1
Articles of Amendment and Restatement(1)
3.2
Articles of Amendment (12)
3.3
Second Amended and Restated Bylaws(13)
4.1
Form of Common Stock Certificate(2)
4.2
Indenture, dated as of November 16, 2012, between the Registrant and U.S. Bank National Association as trustee(5)
4.3
Description of Securities(15)
10.1
Dividend Reinvestment Plan(1)
10.2
Third Amended and Restated Investment Advisory and Management Agreement by and between the Registrant and SLR Capital Partners, LLC(8)
10.3
Form of Custodian Agreement(7)
10.4
Amended and Restated Administration Agreement by and between Registrant and SLR Capital Management, LLC(6)
10.5
Form of Indemnification Agreement by and between Registrant and each of its directors(1)
10.6
First Amended and Restated Trademark License Agreement by and between Registrant and SLR Capital Partners, LLC(12)
10.7
Form of Share Purchase Agreement by and between Registrant and SLR Capital Investors II, LLC(2)
10.8
Form of Registration Rights Agreement(3)
10.9
Form of Subscription Agreement(3)
10.10
Form of Note Purchase Agreement by and between the Registrant and the lenders party thereto(9)
10.11
Form of First Supplement to Note Purchase Agreement by and between the Registrant and the lenders party thereto(9)
10.12
Form of Second Supplement to Note Purchase Agreement by and between the Registrant and the lenders party thereto(9)
10.13
Form of Third Supplement to Note Purchase Agreement by and between the Registrant and the lenders party thereto(9)
10.14
Form of Fourth Supplement to Note Purchase Agreement*
10.15
Form of Fifth Supplement to Note Purchase Agreement(15)
10.16
Form of Contribution Agreement, dated as of August 26, 2011, by and between SUNS SPV LLC, as the contributee, and SLR Senior Investment Corp., as the contributor(4)
10.17
Form of Amended and Restated Credit and Security Agreement, dated as of August 30, 2024 (as amended October 18, 2024), by and among SUNS SPV LLC, as the borrower, SLR Investment Corp., as
servicer and equityholder, each of the lenders from time to time party thereto, Citibank, N.A., as the administrative agent and collateral agent, ING Capital LLC as joint lead arranger and Computershare
Trust Company, N.A., as collateral adminstrator and custodian*
10.18
Letter Agreement, dated as of April 1, 2022, between SLR Investment Corp. and SLR Capital Partners, LLC(16)
10.19
Credit Facility Assumption Agreement, dated as of April 1, 2022, by SLR Investment Corp.(16)
10.20
Assumption Agreement, dated as of April 1, 2022, made by SLR Investment Corp. for the benefit of the holders of Notes issued under the Note Purchase Agreement(16)
10.21
Note Purchase Agreement, dated as of March 31, 2020, between SLR Senior Investment Corp. and the purchasers party thereto(16)
10.22
Form of SLR Senior Lending Program LLC Amended and Restated Limited Liability Company Agreement, dated as of October 7, 2022, by and between SLR Investment Corp. and Sunstone Senior
Credit L.P. (17)
10.23
Form of Sixth Supplement to Note Purchase Agreement*
158
Table of Contents
Exhibit
Number
Description
10.24
Amendment No. 4 to Senior Secured Credit Agreement dated as of August 28, 2019 (as amended December 28, 2021, March 11, 2022, August 16, 2024 and December 3, 2024) by and among SLR
Investment Corp., Citibank, N.A., as Administrative Agent, the lenders party thereto, JPMorgan Chase Bank, N.A., as syndication agent, and Citibank, N.A., J.P. Morgan Securities LLC, and Sumitomo
Mitsui Banking Corporation as Joint Lead Bookrunners and Joint Lead Arrangers*
10.25
Form of Seventh Supplement to Note Purchase Agreement*
14.2
Code of Business Conduct(18)
19.1
Joint Code of Ethics and Insider Trading Policy(18)
21.1
Subsidiaries of SLR Investment Corp.*
23.1
Consent of Independent Registered Public Accounting Firm*
23.2
Consent of Independent Auditor*
23.3
Consent of Independent Auditor*
23.4
Consent of Independent Auditor*
23.5
Consent of Independent Auditor*
23.6
Consent of Independent Auditor*
31.1
Certification of Co-Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.*
31.2
Certification of Co-Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.*
31.3
Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.*
32.1
Certification of Co-Chief Executive Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.*
32.2
Certification of Co-Chief Executive Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.*
32.3
Certification of Chief Financial Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.*
97.1
Clawback Policy(19)
99.1
Crystal Financial LLC dba SLR Credit Solutions (A Delaware Limited Liability Company) Consolidated Financial Statements years ended December 31, 2024 and 2023*
99.2
NEF Holdings, LLC and Subsidiaries (A Limited Liability Company) Consolidated Financial Statements for the years ended December 31, 2024 and December 31, 2023*
99.3
KBH Topco, LLC Consolidated Financial Statements for the years ended December 31, 2024 and December 31, 2023*
99.4
Gemino Healthcare Finance, LLC d/b/a SLR Healthcare ABL Consolidated Financial Statements years ended December 31, 2024 and 2023*
99.5
North Mill Holdco LLC and Subsidiaries (A Delaware Limited Liability Company) Consolidated Financial Statements years ended December 31, 2024 and 2023*
99.6
Report of Independent Registered Public Accounting Firm*
101.INS
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document*
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document*
101.SCH
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents*
104
Cover Page Interactive Data File – The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
(1)Previously filed in connection with SLR Investment Corp.’s registration statement on Form N-2 Pre-Effective Amendment No. 7 (File No. 333-148734) filed on January 7, 2010.
(2)Previously filed in connection with SLR Investment Corp.’s registration statement on Form N-2 (File No 333-148734) filed on February 9, 2010.
159
Table of Contents
(3)Previously filed in connection with SLR Investment Corp.’s report on Form 8-K filed on November 29, 2010.
(4)Previously filed in connection with SLR Senior Investment Corp.’s report on Form 8-K (File No. 814-00849) filed on August 31, 2011.
(5)Previously filed in connection with SLR Investment Corp.’s registration statement on Form N-2 Post-Effective Amendment No. 6 (File No. 333-172968) filed on November 16, 2012.
(6)Previously filed in connection with SLR Investment Corp.’s registration statement on Form N-2 Post-Effective Amendment No. 10 (File No. 333-172968) filed on November 12, 2013.
(7)Previously filed in connection with SLR Investment Corp.’s report on Form 10-K filed on February 25, 2014.
(8)Previously filed in connection with SLR Investment Corp.’s report on Form 10-Q filed on August 6, 2018.
(9)Previously filed in connection with SLR Investment Corp.’s report on Form 10-K filed on February 20, 2020.
(10)Previously filed in connection with SLR Senior Investment Corp.’s report on Form 10-Q (File No. 814-00849) filed on May 7, 2020.
(11)Previously filed in connection with SLR Investment Corp.’s report on Form 10-K filed on February 24, 2021.
(12)Previously filed in connection with SLR Investment Corp.’s report on Form 8-K filed on February 25, 2021.
(13)Previously filed in connection with SLR Investment Corp.’s report on Form 8-K filed on December 1, 2021.
(14)Previously filed in connection with SLR Investment Corp.’s report on Form 8-K filed on January 12, 2022.
(15)Previously filed in connection with SLR Investment Corp.’s report on Form 10-K filed on March 1, 2022.
(16)Previously filed in connection with SLR Investment Corp.’s report on Form 8-K filed on April 1, 2022.
(17)Previously filed in connection with SLR Investment Corp.’s report on Form 8-K filed on October 12, 2022.
(18)Previously filed in connection with SLR Investment Corp.’s report on Form 10-Q filed on November 6, 2024.
(19)Previously filed in connection with SLR Investment Corp.’s report on Form 10-K filed on February 27, 2024.
* Filed herewith.
c. Consolidated Financial Statement Schedules
Separate Financial Statements of Subsidiaries Not Consolidated:
Consolidated Financial Statements for Crystal Financial LLC’s (A Delaware Limited Liability Company) years ended December 31, 2024 and December 31, 2023 are attached as Exhibit 99.1 hereto.
Consolidated Financial Statements for NEF Holdings, LLC’s (A Delaware Limited Liability Company) years ended December 31, 2024 and December 31, 2023 are attached as Exhibit 99.2 hereto.
Consolidated Financial Statements for KBH Topco LLC’s years ended December 31, 2024 and December 31, 2023 are attached as Exhibit 99.3 hereto.
Consolidated Financial Statements for Gemino Healthcare Finance, LLC year ended December 31, 2024 and December 31, 2023 are attached as Exhibit 99.4 hereto.
Consolidated Financial Statements for North Mill Holdco LLC and Subsidiaries year ended December 31, 2024 and December 31, 2023 are attached as Exhibit 99.5 hereto.
Item 16. Form 10-K Summary
None.
160
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SLR INVESTMENT CORP.
By:
/S/ MICHAEL S. GROSS
/S/ BRUCE J. SPOHLER
Michael S. Gross
Co-Chief Executive Officer, President, Chairman of the Board and Director
Date: February 25, 2025
Bruce J. Spohler
Co-Chief Executive Officer, Chief Operating Officer and Director
Date: February 25, 2025
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacity and on the dates indicated.
Date
Signature
Title
February 25, 2025
/S/ MICHAEL S. GROSS
Co-Chief Executive Officer, President, Chairman of the Board and Director (Principal Executive Officer)
Michael S. Gross
February 25, 2025
/S/ BRUCE J. SPOHLER
Co-Chief Executive Officer, Chief Operating Officer and Director (Principal Executive Officer)
Bruce J. Spohler
February 25, 2025
/S/ STEVEN HOCHBERG
Director
Steven Hochberg
February 25, 2025
/S/ DAVID S. WACHTER
Director
David S. Wachter
February 25, 2025
/S/ LEONARD A. POTTER
Director
Leonard A. Potter
February 25, 2025
/S/ ANDREA C. ROBERTS
Director
Andrea C. Roberts
February 25, 2025
/S/ SHIRAZ Y. KAJEE
Chief Financial Officer (Principal Financial Officer)
Shiraz Y. Kajee
SLR INVESTMENT CORP.
(f/k/a Solar Capital Ltd.) 500 Park Avenue,
3rd Floor New York, New York 10022
as of September 14, 2021
To the Series 2016E Additional Purchasers named in
Schedule A hereto
Ladies and Gentlemen:
This Fourth Supplement to Note Purchase Agreement (the “Supplement”) is among SLR Investment Corp. (f/k/a Solar Capital Ltd.), a
Maryland corporation (the “Company”), and the institutional investors named on Schedule A attached hereto (the “Series 2016E Additional
Purchasers”).
Reference is hereby made to that certain Note Purchase Agreement dated as of November 8, 2016 (the “Note Purchase Agreement”)
among the Company and the Purchasers listed on Schedule A thereto. All capitalized terms not otherwise defined herein shall have the same meanings as
specified in the Note Purchase Agreement. Reference is further made to Section 4.18 of the Note Purchase Agreement which requires that, prior to the
delivery of any Additional Notes, the Company and each Additional Purchaser shall execute and deliver a Supplement.
The Company hereby agrees with the Series 2016E Additional Purchasers as follows:
1.The Company has authorized the issue and sale of $50,000,000 aggregate principal amount of its 2.95% Series 2016E, Senior Notes, due
March 14, 2027 (the “Series 2016E Notes”). The Series 2016E Notes, together with the Series 2016A Notes issued pursuant to the Note Purchase
Agreement, the Series 2016B Notes issued pursuant to the First Supplement to Note Purchase Agreement dated as of February 15, 2017, the Series
2016C Notes issued pursuant to the Second Supplement to Note Purchase Agreement dated as of December 28, 2017, the Series 2016D Notes issued
pursuant to the Third Supplement to Note Purchase Agreement dated as of December 18, 2019 and each series of Additional Notes which may from time
to time hereafter be issued pursuant to the provisions of Section 2.4 of the Note Purchase Agreement, are collectively referred to as the “Notes” (such
term shall also include any such notes issued in substitution therefor pursuant to Section 13 of the Note Purchase Agreement). The Series 2016E Notes
shall be substantially in the form set out in Exhibit 1 hereto with such changes therefrom, if any, as may be approved by the Series 2016E Additional
Purchasers and the Company.
2016E Fourth Supplement and Note (SLR) (3).docx 4358354
2
2.Subject to the terms and conditions hereof and as set forth in the Note Purchase Agreement and on the basis of the representations and
warranties hereinafter set forth, the Company agrees to issue and sell to each Series 2016E Additional Purchaser, and each Series 2016E Additional
Purchaser agrees to purchase from the Company, Series 2016E Notes in the principal amount set forth opposite such Series 2016E Additional
Purchaser’s name on Schedule A hereto at a price of 100% of the principal amount thereof on the closing date hereinafter mentioned.
3.The sale and purchase of the Series 2016E Notes to be purchased by each Series 2016E Additional Purchaser shall occur at the offices of
Chapman and Cutler LLP, 111 West Monroe Street, Chicago, Illinois 60603, at 8:00 A.M. Chicago time, at a closing (the “Series 2016E Closing”) on
September 14, 2021. At the Series 2016E Closing, the Company will deliver to each Series 2016E Additional Purchaser the Series 2016E Notes of the
tranche to be purchased by such Purchaser in the form of a single Series 2016E Note (or such greater number of Series 2016E Notes in denominations of
at least $100,000 as such Series 2016E Additional Purchaser may request) dated the date of the Series 2016E Closing and registered in such Series
2016E Additional Purchaser’s name (or in the name of such Series 2016E Additional Purchaser’s nominee), against delivery by such Series 2016E
Additional Purchaser to the Company or its order of immediately available funds in the amount of the purchase price therefor by wire transfer of
immediately available funds for the account of the Company to account number [Redacted]. If, at the Series 2016E Closing, the Company shall fail to
tender such Series 2016E Notes to any Series 2016E Additional Purchaser as provided above in this Section 3, or any of the conditions specified in
Section 4 shall not have been fulfilled to any Series 2016E Additional Purchaser’s satisfaction, such Series 2016E Additional Purchaser shall, at such
Series 2016E Additional Purchaser’s election, be relieved of all further obligations under this Agreement, without thereby waiving any rights such Series
2016E Additional Purchaser may have by reason of such failure or such nonfulfillment.
4.The obligation of each Series 2016E Additional Purchaser to purchase and pay for the Series 2016E Notes to be sold to such Series
2016E Additional Purchaser at the Series 2016E Closing is subject to the fulfillment to such Series 2016E Additional Purchaser’s satisfaction, prior to
the Series 2016E Closing, of the conditions set forth in Section 4 of the Note Purchase Agreement with respect to the Series 2016E Notes to be
purchased at the Series 2016E Closing as if each reference to “2016A Notes” or “Notes,” “Closing” and “Purchaser” set forth therein was modified to
refer the “Series 2016E Notes,” the “Series 2016E Closing” and the “Series 2016E Additional Purchaser” (each as defined in this Supplement) and to the
following additional conditions:
(a)Each of the representations and warranties of the Company set forth in Exhibit A hereto shall be correct as of the date of
the Series 2016E Closing (except for representations and warranties which apply to a specific earlier date which shall be true as of such
earlier date) and the Company shall have delivered to each Series 2016E Additional Purchaser an Officer’s Certificate, dated the date of the
Series 2016E Closing certifying that such condition has been fulfilled.
3
(b)Contemporaneously with the Series 2016E Closing, the Company shall sell to each Series 2016E Additional Purchaser,
and each Series 2016E Additional Purchaser shall purchase, the Series 2016E Notes to be purchased by such Series 2016E Additional
Purchaser at the Series 2016E Closing as specified in Schedule A hereto.
(c)Contemporaneously with the Series 2016E Closing, the Company shall provide to each Series 2016E Additional
Purchaser:
(i)a copy of each of the Subsidiary Guarantees delivered by NEFCORP, LLC and NEFPASS, LLC,
respectively;
(ii)a certificate signed by an authorized responsible officer of such Subsidiary Guarantors dated the date of the
Series 2016E Closing certifying that the representations and warranties of each Subsidiary Guarantor made at the time of the
execution and delivery of its Subsidiary Guarantee are true and correct as of the date of the Series 2016E Closing;
(iii)a certificate of its Secretary or Assistant Secretary dated the date of the Series 2016E Closing certifying as to
the due organization, continuing existence and good standing of such Subsidiary and the due authorization by all requisite action
on the part of such Subsidiary of the execution and delivery of such Subsidiary Guaranty and the performance by such Subsidiary
of its obligations thereunder; and
(iv)a reliance letter of counsel dated the date of the Series 2016E Closing permitting reliance by the Series
2016E Additional Purchasers on the opinions of Latham & Watkins LLP delivered in accordance with Section 9.7(b)(iv) of the
Note Purchase Agreement at the time of the execution and delivery of each Subsidiary Guarantee.
5.[Reserved]
6.(a) Each Series 2016E Additional Purchaser severally represents and warrants that the representations and warranties set forth in Section
6.1(a), (b), (c), (e) and (f) and in Section 6.2 of the Note Purchase Agreement are true and correct on the date hereof with respect to the purchase of the
Series 2016E Notes by such Series 2016E Additional Purchaser as if each reference to “2016A Notes” or “Notes,” “Closing” and “Purchaser” set forth
therein was modified to refer the “Series 2016E Notes,” the “Series 2016E Closing” and the “Series 2016E Additional Purchaser” and each reference to
“this Agreement” therein was modified to refer to the Note Purchase Agreement as supplemented by this Supplement.
(b) Each Series 2016E Additional Purchaser for itself represents that it is either (i) an Institutional Accredited Investor acting for its own
account or as a fiduciary or agent for others (which others are also Institutional Accredited Investors) or (ii) a “qualified institutional buyer” as defined
under Rule 144A acting for its own account or as a fiduciary or agent for others (which others are also “qualified institutional buyers”).
4
7.The Company and each Series 2016E Additional Purchaser agree to be bound by and comply with the terms and provisions of the Note
Purchase Agreement as fully and completely as if such Series 2016E Additional Purchaser were an original signatory to the Note Purchase Agreement.
8.This Supplement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the
State of New York, excluding choice-of-law principles of the law of such State that would permit the application of the laws of a jurisdiction other than
such State.
9.The Company covenants and agrees with the holders of the Series 2016E Notes that the definitions of “Canada Blocked Person” and
“Canadian Economic Sanctions Laws” shall be amended and restated in their entirety to read as follows:
“Canada Blocked Person” means (i) a “terrorist group” as defined for the purposes of Part II.1 of the Criminal Code (Canada), as amended
or (ii) a Person identified in or pursuant to (w) Part II.1 of the Criminal Code (Canada), as amended or (x) the Proceeds of Crime (Money
Laundering) and Terrorist Finance Act, as amended or (y) the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law),
as amended or (z) regulations or orders promulgated pursuant to the Special Economic Measures Act (Canada), as amended, the United
Nations Act (Canada), as amended, or the Freezing Assets of Corrupt Foreign Officials Act (Canada), as amended, in any case pursuant to
this clause (ii) as a Person in respect of whose property or benefit a holder of Notes would be prohibited from entering into or facilitating a
related financial transaction.
“Canadian Economic Sanctions Laws” means those laws, including enabling legislation, orders-in-council or other regulations administered
and enforced by Canada or a political subdivision of Canada pursuant to which economic sanctions have been imposed on any Person, entity,
organization, country or regime, including Part II.1 of the Criminal Code (Canada), as amended, the Special Economic Measures Act
(Canada), as amended, the Proceeds of Crime (Money Laundering) and Terrorist Finance Act, as amended, the Justice for Victims of
Corrupt Foreign Officials Act (Sergei Magnitsky Law), as amended, the United Nations Act (Canada), as amended, the Export and Import
Permits Act (Canada), as amended, and the Freezing Assets of Corrupt Foreign Officials Act (Canada), as amended, and including all
regulations promulgated under any of the foregoing, or any other similar sanctions program or action.
10.The Company covenants and agrees with the holders of the Series 2016E Notes that, notwithstanding Section 9.12 of the Note Purchase
Agreement, the Company shall not be required to deliver to the 2016E Additional Purchasers in the manner provided in Section 18 of the Note Purchase
Agreement evidence in form and substance satisfactory to the 2016E Additional Purchasers that the Series 2016E Notes have been rated Investment
Grade or better by either Fitch, S&P or another NRSRO, until 60 days after the 2016E Closing.
11.Pursuant to Section 18(c) of the Note Purchase Agreement and Section 14(a) of each Subsidiary Guarantee, notices and
communications to (i) the Company provided for under
5
the Note Purchase Agreement and (ii) each Guarantor under the Subsidiary Guarantees, should be sent to the address below:
SLR Investment Corp.
500 Park Avenue, 3rd Floor New York,
New York 10022
Attention: Chief Financial Officer
The execution hereof shall constitute a contract between the Company and the Series 2016E Additional Purchasers for the uses and
purposes hereinabove set forth, and this agreement may be executed in any number of counterparts, each executed counterpart constituting an original
but all together only one agreement. Each counterpart may consist of a number of copies hereof, each signed by less than all, but together signed by all,
of the parties hereto. The parties agree to electronic contracting and signatures with respect to this agreement and the other Note Documents (other than
the Notes). Delivery of an electronic signature to, or a signed copy of, this agreement and such other Note Documents (other than the Notes) by email or
other electronic transmission shall be fully binding on the parties to the same extent as the delivery of the signed originals and shall be admissible into
evidence for all purposes.
DocuSign Envelope ID: E8DB06C6-7892-4C0F-970F-389BF333717D
SLR Investment Corp. Fourth Supplement
SLR INVESTMENT CORP. (F/K/A SOLAR CAPITAL LTD.)
By Name:
Title:
7
The foregoing is hereby agreed to as of the
date thereof.
8
[PURCHASER]
By:
By:
Name:
Title:
SUPPLEMENTAL REPRESENTATIONS
Section 5. Representations and Warranties of the Company
Section 5.1. Organization; Power and Authority. Each of the Company and its Subsidiaries is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted and, except
where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, is qualified to do
business in, and is in good standing in, every jurisdiction where such qualification is required of the Company or such Subsidiary, as applicable.
Section 5.2. Authorization, Etc. The Transactions are within the Company’s corporate powers and have been duly authorized by all necessary
corporate action and, if required, by all necessary shareholder action. The Note Purchase Agreement and the Fourth Supplement have been duly executed
and delivered by the Company and the Note Purchase Agreement as supplemented by the Fourth Supplement constitutes, and each of the other Note
Documents to which it is a party when executed and delivered will constitute, a legal, valid and binding obligation of the Company, enforceable in
accordance with its terms, except as such enforceability may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar laws of
general applicability affecting the enforcement of creditors’ rights and (b) the application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
Section 5.3. Disclosure. The Company has disclosed to the Series 2016E Additional Purchasers all agreements, instruments and corporate,
limited liability company or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect. None of the reports, financial statements, certificates or other information
furnished by or on behalf of the Company to the Series 2016E Additional Purchasers in connection with the negotiation of the Note Purchase Agreement,
the Fourth Supplement and the other Note Documents or delivered hereunder or thereunder (as modified or supplemented by other information so
furnished) when taken together with the Company’s public filings contains any material misstatement of fact therein (or omits to state any material fact
necessary to make the statements therein not misleading), in the light of the circumstances under which they were made; provided that, with respect to
projected financial information, the Company represents only that such information was prepared in good faith based upon assumptions believed to be
reasonable at the time.
Since the date of the most recent Applicable Financial Statements, there has not been any event, development or circumstance that has had
or could reasonably be expected to have a material adverse effect on (i) the business, Portfolio Investments and other assets, liabilities and financial
condition of the Company and its Subsidiaries taken as a whole (excluding in any case a decline in the net asset value of the Company or a change in
general market conditions or
Exhibit A
(to Supplement)
2
values of the Company’s or any of its Subsidiaries’ Portfolio Investments), or (ii) the validity or enforceability of any of the Note Documents or the
rights or remedies of the Purchasers and the holders of the Notes thereunder.
Section 5.4. Organization and Ownership of Shares of Subsidiaries. (a) Schedule 5.4 contains (except as noted therein) complete and correct
lists (i) of the Company’s Subsidiaries, showing, as to each Subsidiary, the correct name thereof, the jurisdiction of its organization, and the percentage of
shares of each class of its capital stock or similar equity interests outstanding owned by the Company and each other Subsidiary (other than any tax
blocker or investment held by such tax blocker), and (ii) of the Company’s directors and senior officers.
(b)All of the outstanding shares of capital stock or similar equity interests of each Subsidiary shown in Schedule 5.4 as being owned by the
Company and its Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by the Company or another Subsidiary free and
clear of any Lien (except Permitted Liens, Liens created pursuant to the Security Documents or as otherwise disclosed in Schedule 5.4).
(c)Each Subsidiary identified in Schedule 5.4 is a corporation or other legal entity duly organized, validly existing and, where legally
applicable, in good standing under the laws of its jurisdiction of organization, and is duly qualified as a foreign corporation or other legal entity and,
where legally applicable, is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which
the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Each such Subsidiary has the corporate or other power and authority to own or hold under lease the properties it purports to own or hold under lease and
to transact the business it transacts and proposes to transact.
(d)No Subsidiary is a party to, or otherwise subject to any legal, regulatory, contractual or other restriction (other than the Note Purchase
Agreement, the Fourth Supplement, the Senior Secured Credit Agreement, the agreements listed on Schedule 5.4 and customary limitations imposed by
corporate law or similar statutes) restricting the ability of such Subsidiary to pay dividends out of profits or make any other similar distributions of profits
to the Company or any of its Subsidiaries that owns outstanding shares of capital stock or similar equity interests of such Subsidiary.
Section 5.5. Financial Statements; Material Liabilities. The Company has heretofore delivered to each Purchaser the audited consolidated
statement of assets and liabilities (or balance sheet) and statements of operations, changes in net assets and cash flows of the Company and its
Subsidiaries as of and for the fiscal year ending on December 31, 2020; such financial statements present fairly, in all material respects, the consolidated
financial position and results of operations and cash flows of the Company and its Subsidiaries as of such date in accordance with GAAP. The Company
and its Subsidiaries do not have any Material liabilities that are not disclosed on such financial statements.
Section 5.6. Compliance with Laws. Each of the Company and its Subsidiaries is in compliance with all laws, regulations and orders of any
Governmental Authority applicable to it
3
or its property and all indentures, agreements and other instruments binding upon it or its property, except where the failure to do so, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is subject to any
contract or other arrangement, the performance of which by the Company or any such Subsidiary could reasonably be expected to result in a Material
Adverse Effect.
Section 5.7. Governmental Authorizations, Compliance with Laws, Other Instruments, Etc. The Transactions (a) do not require any consent or
approval of, registration or filing with, or any other action by, any Governmental Authority, except for such as have been or will be obtained or made and
are in full force and effect and are described in Schedule 5.7, (b) will not violate any applicable law or regulation or the limited liability company
operating agreement, charter, by-laws or other organizational documents of the Company or any of its Subsidiaries or any order of any Governmental
Authority, (c) will not violate or result in a default in any material respect under any indenture, agreement or other instrument binding upon the Company
or any of its Subsidiaries or assets, or give rise to a right thereunder to require any payment to be made by any such Person, and (d) will not result in the
creation or imposition of any Lien on any asset of the Company or any of its Subsidiaries.
Section 5.8. Litigation; Observance of Agreements, Statutes and Orders. (a) There are no actions, suits, investigations or proceedings by or
before any arbitrator or Governmental Authority now pending against or, to the knowledge of the Company, threatened against or affecting the Company
or any of its Subsidiaries (i) as to which there is a reasonable possibility of an adverse determination and that if adversely determined could reasonably be
expected, individually or in the aggregate, to result in a Material Adverse Effect or (ii) that involve the Note Purchase Agreement, the Fourth
Supplement, the Note Purchase Agreement as supplemented by the Fourth Supplement or the Transactions.
(b) Neither the Company nor any Subsidiary is in default under any term of any agreement or instrument to which it is a party or by which it
is bound, or any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority or is in violation of any applicable law, ordinance,
rule or regulation of any Governmental Authority, which default or violation, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
Section 5.9. Taxes. Each of the Company and its Subsidiaries has timely filed or caused to be filed all material Tax returns and reports
required to have been filed and has paid or caused to be paid all material Taxes required to have been paid by it, except (a) Taxes that are being contested
in good faith by appropriate proceedings and for which such Person has set aside on its books adequate reserves or (b) to the extent that the failure to do
so could not reasonably be expected to result in a Material Adverse Effect. The charges, accruals and reserves on the books of the Company and its
Subsidiaries in respect of Federal, state or other taxes for all fiscal periods are adequate in all material respects.
Section 5.10. Title to Property; Leases. Each of the Company and the other Obligors has good title to, or valid leasehold interests in, all its real
and personal property material to its
4
business, except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their
intended purposes.
Section 5.11. Licenses, Permits, Etc. Each of the Company and its Subsidiaries owns, or is licensed to use, all trademarks, tradenames,
copyrights, patents and other intellectual property material to its business, and the use thereof by the Company and its Subsidiaries does not infringe upon
the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a
Material Adverse Effect.
Section 5.12. ERISA. (a) The execution and delivery of the Note Purchase Agreement or the Fourth Supplement and the issuance and sale of the
Series 2016E Notes under the Note Purchase Agreement as supplemented by the Fourth Supplement will not involve any transaction that is subject to the
prohibitions of section 406 of ERISA or in connection with which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The
representation by the Company in the first sentence of this Section 5.12(a) is made in reliance upon and subject to the accuracy of such Purchaser’s
representation in Section 6.2 as to the sources of the funds used to pay the purchase price of the Series 2016E Notes to be purchased by such Purchaser.
(b) No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect.
Section 5.13. Private Offering by the Company. Neither the Company nor anyone acting on its behalf has offered the Series 2016E Notes or any
similar Securities for sale to, or solicited any offer to buy any of the same from, or otherwise approached or negotiated in respect thereof with, any Person
other than the Series 2016E Additional Purchasers, each of which has been offered the Series 2016E Notes at a private sale for investment. Neither the
Company nor anyone acting on its behalf has taken, or will take, any action that would subject the issuance or sale of the Series 2016E Notes to the
registration requirements of Section 5 of the Securities Act or to the registration requirements of any Securities or blue sky laws of any applicable
jurisdiction.
Section 5.14. Use of Proceeds; Margin Regulations. The Company will apply the proceeds of the sale of the Series 2016E Notes for refinancing
of existing debt and general corporate purposes and in compliance with all laws referenced in Section 5.16. Neither the Company nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose, whether immediate, incidental
or ultimate, of buying or carrying Margin Stock, and no part of the proceeds of the sale of the Series 2016E Notes hereunder will be used to buy or carry
any Margin Stock, or to extend credit to others for the purpose of buying or carrying Margin Stock. After application of the proceeds of the sale of the
Series 2016E Notes, not more than 25% of the value (as determined by any reasonable method) of the assets of the Company subject to any provision of
the Note Purchase Agreement under which the sale, pledge or disposition of assets is restricted will consist of Margin Stock.
Section 5.15. Existing Indebtedness; Future Liens. (a) Part A of Schedule 5.15 is a complete and correct list of each note, bond, certificate,
credit agreement, loan agreement,
5
indenture, note purchase agreement, guarantee, letter of credit or other arrangement providing for or otherwise relating to any Indebtedness or any
extension of credit (or commitment for any extension of credit) to, or guarantee by, the Company or any of its Subsidiaries outstanding on the date of the
Series 2016E Closing, and the aggregate principal or face amount outstanding or that is, or may become, outstanding, the interest rate, collateral and
related guaranties under each such arrangement is correctly described in Part A of Schedule 5.15.
(b)Part B of Schedule 5.15 is a complete and correct list of each Lien securing Indebtedness of any Person outstanding or consented to on
the date of the Series 2016E Closing covering any property of the Company or any Subsidiary Guarantor, and the aggregate Indebtedness secured (or that
may be secured) by each such Lien and the property covered by each such Lien is correctly described in Part B of Schedule 5.15.
(c)Neither the Company nor any Subsidiary is a party to, or otherwise subject to any provision contained in, any instrument evidencing
Indebtedness of the Company or such Subsidiary, any agreement relating thereto or any other agreement (including, but not limited to, its charter or other
organizational document) which limits the amount of, or otherwise imposes restrictions on the incurring of, Indebtedness of the Company, except for the
Senior Secured Credit Agreement (and the other documents related thereto) and except as specifically indicated in Schedule 5.15.
Section 5.16. Foreign Assets Control Regulations, Etc. (a) Neither the Company nor any Affiliated Entity is (i) a Person whose name appears on
the list of Specially Designated Nationals and Blocked Persons published by the Office of Foreign Assets Control, United States Department of the
Treasury (“OFAC”) (an “OFAC Listed Person”), (ii) an agent, department, or instrumentality of, or is otherwise beneficially owned by, controlled by or
acting on behalf of, directly or indirectly, (x) any OFAC Listed Person or (y) any Person, entity, organization, foreign country or regime that is subject to
any OFAC Sanctions Program, or (iii) otherwise blocked, subject to sanctions under or engaged in any activity in violation of other United States
economic sanctions, including but not limited to, the Trading with the Enemy Act, the International Emergency Economic Powers Act, the
Comprehensive Iran Sanctions, Accountability and Divestment Act (“CISADA”) or any similar law or regulation with respect to Iran or any other
country, the Sudan Accountability and Divestment Act, any OFAC Sanctions Program, or any economic sanctions regulations administered and enforced
by the United States or any enabling legislation or executive order relating to any of the foregoing (collectively, “U.S. Economic Sanctions”) (each
OFAC Listed Person and each other Person, entity, organization and government of a country described in clause (i), clause (ii) or clause (iii), a “Blocked
Person”). Neither the Company nor any Affiliated Entity has been notified that its name appears or may in the future appear on a state list of Persons that
engage in investment or other commercial activities in Iran or any other country that is subject to U.S. Economic Sanctions.
(b)No part of the proceeds from the sale of the Series 2016E Notes hereunder constitutes or will constitute funds obtained on behalf of any
Blocked Person or Canada Blocked Person or will otherwise be used by the Company or any Controlled Entity, directly or indirectly,
(i) in connection with any investment in, or any transactions or dealings with, any Blocked
6
Person or Canada Blocked Person, or (ii) otherwise in violation of U.S. Economic Sanctions or Canadian Economic Sanctions.
(c)Neither the Company nor any Affiliated Entity (i) has been found in violation of, charged with, or convicted of, money laundering, drug
trafficking, terrorist-related activities or other money laundering predicate crimes under the Currency and Foreign Transactions Reporting Act of 1970
(otherwise known as the Bank Secrecy Act), the USA PATRIOT Act, any similar provisions of the Criminal Code (Canada), any U.S. Economic
Sanctions, any Canadian Economic Sanctions or any other United States or Canadian law or regulation governing such activities (collectively, “Anti-
Money Laundering Laws”) or any U.S. Economic Sanctions violations or violations of Canadian Economic Sanctions Laws, (ii) to the Company’s actual
knowledge after making due inquiry, is under investigation by any governmental authority for possible violation of Anti-Money Laundering Laws or any
U.S. Economic Sanctions violations or violations of Canadian Economic Sanctions Laws, (iii) has been assessed civil penalties under any Anti-Money
Laundering Laws or any U.S. Economic Sanctions or Canadian Economic Sanctions Laws, or (iv) has had any of its funds seized or forfeited in an action
under any Anti-Money Laundering Laws. The Company has established procedures and controls which it reasonably believes are adequate (and
otherwise comply with applicable law) to ensure that the Company and each Controlled Entity is and will continue to be in compliance with all applicable
current and future Anti-Money Laundering Laws and U.S. Economic Sanctions and Canadian Economic Sanctions Laws.
(d)(1) Neither the Company nor any Affiliated Entity (i) has been charged with, or convicted of bribery or any other anti-corruption related
activity under any applicable law or regulation in a U.S. or any non-U.S. country or jurisdiction, including but not limited to, the
U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act 2010 and any similar provisions of the Criminal Code (Canada) (collectively, “Anti-
Corruption Laws”) in the past five years, (ii) to the Company’s actual knowledge after making due inquiry, is under investigation by any U.S. or non-
U.S. Governmental Authority for possible violation of Anti-Corruption Laws, (iii) has been assessed civil or criminal penalties under any Anti-Corruption
Laws in the past five years or
(iv) has been or is the target of sanctions imposed by the United Nations, Canada or the European Union;
(2)To the Company’s actual knowledge after making due inquiry, neither the Company nor any Affiliated Entity has, within the last five
years, directly or indirectly offered, promised, given, paid or authorized the offer, promise, giving or payment of anything of value to a Governmental
Official or a commercial counterparty for the purposes of: (i) influencing any act, decision or failure to act by such Governmental Official in his or her
official capacity or such commercial counterparty, (ii) inducing a Governmental Official to do or omit to do any act in violation of the Governmental
Official’s lawful duty, or (iii) inducing a Governmental Official or a commercial counterparty to use his or her influence with a government or
instrumentality to affect any act or decision of such government or entity; in each case in order to improperly obtain, retain or direct business or to
otherwise secure an improper advantage in violation of any applicable law or regulation or which would cause any holder to be in violation of any Anti-
Corruption Laws; and
7
(3)No part of the proceeds from the sale of the Series 2016E Notes hereunder will be used, directly or indirectly, for any improper
payments, including bribes, to any Governmental Official or commercial counterparty in order to improperly obtain, retain or direct business or obtain
any improper advantage. The Company has established procedures and controls which it reasonably believes are adequate (and otherwise comply with
applicable law) to ensure that the Company and each Affiliated Entity is and will continue to be in compliance with the Anti-Corruption Laws.
(e)Neither the Company nor any Affiliated Entity is (i) a Canada Blocked Person,
(ii) an agent, department, or instrumentality of, or is otherwise controlled by or knowingly acting on behalf of, directly or indirectly, any such Person, or
(iii) otherwise blocked, subject to sanctions under or engaged in any activity in violation of any Canadian Economic Sanctions Laws. Neither the
Company nor any Affiliated Entity has been notified by a governmental authority in Canada that its name appears or has been proposed for inclusion on a
list of Persons maintained by a governmental authority in Canada that engage in investment or other commercial activities in any country that is subject
to Canadian Economic Sanctions Laws. Neither the Company nor any Affiliated Entity knowingly engages in any dealings or transactions with any
Canada Blocked Person.
Section 5.17. Status under Certain Statutes. (a) The Company is a company that has elected to be regulated as a “business development
company” within the meaning of the Investment Company Act and qualifies as a RIC.
(b)The business and other activities of the Company and its Subsidiaries, including the issuance of the Series 2016E Notes under the Note
Purchase Agreement as supplemented by the Fourth Supplement, the application of the proceeds and repayment thereof by the Company and the
consummation of the Transactions contemplated by the Note Documents do not result in a violation or breach in any material respect of the applicable
provisions of the Investment Company Act or any rules, regulations or orders issued by the SEC thereunder.
(c)The Company is in compliance with its Investment Policies, except to the extent that the failure to so comply could not reasonably be
expected to result in a Material Adverse Effect.
Section 5.18. Series 2016E Notes Rank Pari Passu. The obligations of the Company under the Note Purchase Agreement as supplemented by
the Fourth Supplement and the Series 2016E Notes rank at least pari passu in right of payment with all other Senior Unsecured Indebtedness (actual or
contingent) of the Company, including, without limitation, the Series 2016A Notes, the Series 2016B Notes, the Series 2016C Notes and all other Senior
Unsecured Indebtedness of the Company described in Schedule 5.15 hereto.
Section 5.19. Investments. Set forth in Schedule 5.19 is a complete and correct list of all Investments (other than Investments of the types
referred to in clauses (b), (c) and (d) of Section 10.4) held by the Company or any Subsidiary Guarantor in any Person on the date of the Series 2016E
Closing and, for each such Investment, (x) the identity of the Person or Persons holding such Investment and (y) the nature of such Investment. Except
as disclosed in
Schedule 5.19, as of the date of the Series 2016E Closing each of the Company and the Subsidiary Guarantors owns, free and clear of all Liens (other
than Permitted Liens or Liens created pursuant to the Security Documents), all such Investments.
Section 5.20. Affiliate Agreements. As of the date of the Series 2016E Closing, the Company has heretofore delivered (to the extent not
otherwise publicly filed with the SEC) to each of the Purchasers true and complete copies of each of the Affiliate Agreements (including schedules and
exhibits thereto, and any amendments, supplements or waivers executed and delivered thereunder). As of the date of the Series 2016E Closing, each of
the Affiliate Agreements is in full force and effect.
[FORM OF SERIES 2016E NOTE]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), OR THE SECURITIES LAWS OF ANY JURISDICTION. SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
ASSIGNED, ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT (I) PURSUANT TO A REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES
THAT IS EFFECTIVE UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS, OR (II) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE ACT OR
APPLICABLE STATE SECURITIES LAW,
INCLUDING, WITHOUT LIMITATION, PURSUANT TO RULE 144 OR RULE 144A, PROVIDED THAT
AN OPINION OF COUNSEL (WHICH MAY BE INTERNAL COUNSEL) SHALL BE FURNISHED TO THE COMPANY (IF REASONABLY REQUESTED BY THE COMPANY), IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE ACT AND/OR
APPLICABLE STATE SECURITIES LAW.
SLR Investment Corp. (f/k/a Solar Capital Ltd.) 2.95% Series 2016E, Senior Note, due
March 14, 2027
No. [ ] [Date]
$[ ] PPN 83413U C*9
FOR VALUE RECEIVED, the undersigned, SLR INVESTMENT CORP. (F/K/A SOLAR CAPITAL
LTD.) (herein called the “Company”), a corporation organized and existing under the laws of the State of Maryland, hereby promises to pay to [ ], or
registered assigns, the principal sum of [ ] DOLLARS (or so much thereof as shall not have been prepaid) on March 14, 2027, with interest (computed on
the basis of a 360-day year of twelve 30-day months) on the unpaid balance hereof at the rate of (a) 2.95% per annum from the date hereof, payable
semiannually, on the 14th day of March and September in each year, commencing March 14, 2022, and on the Maturity Date until the principal hereof
shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment of interest and, during the continuance of an Event
of Default, on such unpaid balance and on any overdue payment of any Make-Whole Amount, at a rate per annum from time to time equal to the Default
Rate (as defined in the hereinafter defined Note Purchase Agreement).
Payments of principal of, interest on and any Make-Whole Amount with respect to this Note are to be made in lawful money of the United
States of America at the principal office of Goldman Sachs Bank USA in New York, New York or at such other place as the Company shall have
designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the “Notes”) issued pursuant to the Fourth Supplement to the Note Purchase
Agreement, dated as of September 14, 2021 (as from time to time amended, supplemented or modified, the “Note Purchase Agreement”),
Exhibit 1
(to Supplement)
2
among the Company and the respective Purchasers named therein and Additional Purchasers of Notes from time to time issued pursuant to any
Supplement to the Note Purchase Agreement. This Note and the holder hereof are entitled equally and ratably with the holders of all other Notes of all
series from time to time outstanding under the Note Purchase Agreement to all the benefits provided for thereby or referred to therein. Each holder of this
Note will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase
Agreement, (ii) made the representations and agreements set forth in Sections 6.2 and 6.1(b), (d) and (f) of the Note Purchase Agreement and (iii)
agreed that any transfer or other disposition of this Note is otherwise subject to the terms and conditions contained in the Note Purchase Agreement.
Unless otherwise indicated, capitalized terms used in this Note shall have the respective meanings ascribed to such terms in the Note Purchase
Agreement.
This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer,
duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized
in writing, a new Note of the same Series and tranche for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to
due presentment for registration of transfer, the Company may treat the Person in whose name this Note is registered as the owner hereof for the purpose
of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.
This Note and the holder hereof are entitled equally and ratably with the holders of all of the Notes, the Series 2016A Notes, the Series
2016B Notes, the Series 2016C Notes, the Series 2016D Notes and any Additional Notes issued and outstanding from time to time to the rights and
benefits provided pursuant to the terms and provision of the Subsidiary Guarantee (as such term is defined in the Note Purchase Agreement). Reference
is hereby made to the foregoing for a statement of the nature and extent of the benefits for the Notes afforded thereby and the rights of the holders of the
Notes.
This Note is subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note
Purchase Agreement, but not otherwise.
If an Event of Default occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the
manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Note Purchase Agreement.
3
This Note shall be construed and enforced in accordance with, and the rights of the Company and the holder of this Note shall be
governed by, the law of the State of New York, excluding choice-of-law principles of the law of such State that would permit application of the
laws of a jurisdiction other than such State.
SLR Investment Corp. (f/k/a Solar Capital Ltd.)
By Name: Title:
EXECUTION VERSION
Conformed through Amendment No. 1 dated October 18, 2024
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT
Dated as of August 30, 2024
among
SUNS SPV LLC,
as Borrower,
SLR INVESTMENT CORP.,
as Servicer and as Equityholder,
THE LENDERS FROM TIME TO TIME PARTIES HERETO,
CITIBANK, N.A.,
as Administrative Agent and as Collateral Agent,
ING CAPITAL LLC,
as Joint Lead Arranger
and
COMPUTERSHARE TRUST COMPANY, NATIONAL ASSOCIATION,
as Collateral Administrator and Custodian
-i-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION; COMPUTATIONS
ion 1.01 Definitions
1
ion 1.02 Rules of Construction
65
ion 1.03 Computation of Time Periods
66
ion 1.04 Collateral Value Calculation Procedures
66
ARTICLE II
ADVANCES
ion 2.01 Revolving Credit Facility; Approval Requests
68
ion 2.02 Making of the Advances
70
ion 2.03 Evidence of Indebtedness; Notes
71
ion 2.04 Payment of Amounts
72
ion 2.05 Prepayment of Advances
72
ion 2.06 Changes of Commitments
75
ion 2.07 Maximum Lawful Rate
76
ion 2.08 Several Obligations
76
ion 2.09 Increased Costs
76
ion 2.11 Illegality; Inability to Determine Rates
78
ion 2.12 Fees
79
ion 2.13 Rescission or Return of Payment
79
ion 2.14 Default Interest
79
ion 2.15 Payments Generally
79
ion 2.16 Defaulting Lenders
81
ion 2.17 Right of Setoff
82
ion 2.18 Lending Offices; Changes Thereto
82
ion 2.19 Recourse Against Certain Parties
83
ion 2.20 Replacement of Lenders.
84
ion 2.21 Contractual Currency
85
ARTICLE III
CONDITIONS PRECEDENT
ion 3.01 Conditions Precedent to A&R Effective Date
86
ion 3.02 Conditions Precedent to Subsequent Advances
87
-ii-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
ion 4.01 Representations and Warranties of the Borrower
88
ion 4.02 Additional Representations and Warranties of the Borrower
93
ion 4.03 Representations and Warranties of the Equityholder and the Servicer
95
ion 4.04 Representations and Warranties of the Custodian and the Collateral Administrator.
97
ARTICLE V
COVENANTS
ion 5.01 Affirmative Covenants of the Borrower.
98
ion 5.02 Negative Covenants of the Borrower
105
ion 5.03 Affirmative Covenants of the Equityholder and the Servicer
109
ion 5.04 Negative Covenant of the Equityholder and the Servicer
111
ion 5.05 Certain Undertakings Relating to Separateness
111
ARTICLE VI
EVENTS OF DEFAULT
ion 6.01 Events of Default
111
ion 6.02 Remedies
114
ion 6.03 Power of Attorney
114
ion 6.04 Sales
115
ARTICLE VII
PLEDGE OF COLLATERAL;
RIGHTS OF THE COLLATERAL AGENT
ion 7.01 Grant of Security
117
ion 7.02 Release of Security Interest
118
ion 7.03 Rights and Remedies
119
ion 7.04 Remedies Cumulative
120
ion 7.05 Related Documents
120
ion 7.06 Borrower Remains Liable
120
ion 7.07 Protection of Collateral
121
-iii-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
ARTICLE VIII
ACCOUNTS, ACCOUNTINGS AND RELEASES
ion 8.01 Collection of Money
122
ion 8.02 Collection Account
122
ion 8.03 The Payment Account
123
ion 8.04 The Custodian Account
123
ion 8.05 The Unfunded Reserve Account; Fundings
124
ion 8.06 Account Control Agreement
124
ion 8.07 Funds in Covered Accounts; Reports by Collateral Agent
124
ion 8.08 Accountings
125
ion 8.09 Release of Collateral
126
ion 8.10 Reports by Independent Accountants
127
ARTICLE IX
APPLICATION OF FUNDS
ion 9.01 Disbursements of Funds from Collection Account
129
ARTICLE X
SALE OF COLLATERAL LOANS;
PURCHASE OF ADDITIONAL COLLATERAL LOANS
ion 10.01 Sales of Collateral Loans
133
ion 10.02 Purchase of Additional Collateral Loans
135
ion 10.03 Substitution and Transfer of Loans
136
ion 10.04 Limitations on Sales and Substitutions
137
ion 10.05 Conditions Applicable to All Sale and Purchase Transactions
138
ion 10.06 Additional Equity Contributions
138
ion 10.07 Transfer of Warranty Collateral Loans
138
ARTICLE XI
THE AGENTS
ion 11.01 Authorization and Action
139
ion 11.02 Delegation of Duties
143
ion 11.03 Agents’ Reliance, Etc.
143
ion 11.04 Indemnification
145
ion 11.05 Successor Agents
146
ion 11.06 Merger, Conversion, Consolidation or Succession to Business of Agents
147
ion 11.07 Erroneous Payments
147
-iv-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
ARTICLE XII
MISCELLANEOUS
ion 12.01 No Waiver; Modifications in Writing
148
ion 12.02 Notices, Etc.
151
ion 12.03 Taxes
153
ion 12.04 Costs and Expenses; Indemnification
157
ion 12.05 Execution in Counterparts
158
ion 12.06 Assignability
159
ion 12.07 Governing Law
162
ion 12.08 Severability of Provisions
162
ion 12.09 Confidentiality
162
ion 12.10 Merger
164
ion 12.11 Survival
164
ion 12.12 Submission to Jurisdiction; Waivers; Etc.
164
ion 12.13 IMPORTANT WAIVERS
165
ion 12.14 PATRIOT Act Notice
166
ion 12.15 Legal Holidays
167
ion 12.16 Non‑Petition
167
ion 12.17 Waiver of Setoff
167
ion 12.18 Recognition of the U.S. Special Resolution Regimes
167
ion 12.19 Acknowledgement and Consent to Bail-In of EEA Financial Institutions
168
ion 12.20 Amendment and Restatement
169
ARTICLE XIII
THE CUSTODIAN
ion 13.01 Appointment of Custodian
169
ion 13.02 Duties of Custodian
169
ion 13.03 Delivery of Collateral Loans to Custodian
170
ion 13.04 Release of Documents/Control By Agents
171
ion 13.05 Records
171
ion 13.06 Reporting
171
ion 13.07 Certain General Terms
171
ion 13.08 Compensation and Reimbursement of Custodian
173
ion 13.09 Responsibility of Custodian
173
ion 13.10 Resignation and Removal; Appointment of Successor
177
ion 13.11 Acceptance and Appointment by Successor
178
ion 13.12 Merger, Conversion, Consolidation or Succession to Business of Custodian
178
-v-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
ARTICLE XIV
THE SERVICER
ion 14.01 Designation of the Servicer
178
ion 14.02 Duties of the Servicer
179
ion 14.03 Authorization of the Servicer
180
ion 14.04 Separateness Provisions of the Borrower
181
ion 14.05 Compensation
181
ion 14.06 Expenses; Indemnification
181
ion 14.07 The Servicer Not to Resign; Assignment
182
ion 14.08 Appointment of Successor Servicer
182
ARTICLE XV
THE COLLATERAL ADMINISTRATOR
ion 15.01 Designation of Collateral Administrator
183
ion 15.02 Certain Duties and Powers
184
ion 15.03 Certain Rights of Collateral Administrator
187
ion 15.04 Compensation and Reimbursement of Collateral Administrator
189
ion 15.05 Resignation and Removal; Appointment of Successor
190
ion 15.06 Acceptance and Appointment by Successor
191
ion 15.07 Merger, Conversion, Consolidation or Succession to Business of Collateral Administrator
191
ion 15.08 Certain Duties of Collateral Administrator Related to Delayed Payment of Proceeds
191
-vi-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
SCHEDULES
Schedule 1 Initial Commitments and Percentages
Schedule 2 Contents of Monthly Report
Schedule 3 Contents of Payment Date Report
Schedule 4 GICS Industry Classifications
Schedule 5 Notice Information
Schedule 6 Authorized Persons
Schedule 7 Diversity Score Calculations
Schedule 8 Loan Tape Information
Schedule 9 Credit and Collection Policy
Schedule 10 Approved Valuation Firms
EXHIBITS
Exhibit A Form of Approval Request
Exhibit B Form of Notice of Borrowing (with attached form of Borrowing Base
Calculation Statement)
Exhibit C Form of Notice of Prepayment
Exhibit D Form of Assignment and Acceptance
Exhibit E Form of Note
Exhibit F Form of Tax Compliance Certificates
Exhibit G Form of Request for Release and Receipt
Exhibit H Form of Monthly Report
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT
AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT, dated as of August 30, 2024, by and among SUNS SPV LLC, a Delaware
limited liability company, as borrower (the “Borrower”), SLR INVESTMENT CORP., as Servicer (in such capacity, the “Servicer”) and as Equityholder (in such capacity, the
“Equityholder”), the LENDERS from time to time party hereto, the CONDUIT LENDERS from time to time party hereto, CITIBANK, N.A. (“Citibank”), as administrative agent
for the Secured Parties (as hereinafter defined) (in such capacity, the “Administrative Agent”) and as collateral agent for the Secured Parties (in such capacity, the “Collateral
Agent”), ING CAPITAL LLC, as Joint Lead Arranger (in such capacity, the “Joint Lead Arranger”) and COMPUTERSHARE TRUST COMPANY, NATIONAL ASSOCIATION,
as collateral administrator (in such capacity, the “Collateral Administrator”) and as custodian (in such capacity, the “Custodian”).
W I T N E S S E T H:
WHEREAS, the Borrower, the Administrative Agent, the Servicer, SLR Investment Corp., as transferor, each of the conduit lenders from time to time party
thereto, each of the liquidity banks from time to time party thereto, each of the lender agents from time to time party thereto, each of the institutional lenders from time to time party
thereto, Computershare Trust Company, National Association (as successor in interest to Wells Fargo Bank, N.A.), as account bank, as backup servicer and as collateral custodian,
and Citibank, N.A., as collateral agent are party to that certain Loan and Servicing Agreement, dated as of August 26, 2011 (as amended from time to time, the “Existing
Agreement”) pursuant to which the conduit lenders, liquidity banks and institutional lenders party thereto agreed, on the terms and conditions set forth therein, to provide a secured
revolving credit facility to provide Advances (as defined in the Existing Agreement) under the Revolving Notes (as defined in the Existing Agreement) to the Borrower from time to
time in the amounts and in accordance with the terms set forth in the Existing Agreement; and
WHEREAS, the parties to the Existing Agreement desire to amend and restate the Existing Agreement pursuant to the terms hereof.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained, the parties agree that the Existing Agreement is
amended and restated in its entirety as follows:
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION; COMPUTATIONS
Section 1.01 Definitions
As used in this Agreement, the following terms shall have the meanings indicated:
“A&R Effective Date” means August 30, 2024.
-2-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
“Account Control Agreement” means the Amended and Restated Account Control Agreement, dated as of the A&R Effective Date, by and among the
Borrower, the Collateral Agent and U.S. Bank National Association, as the Securities Intermediary, as the same may be amended, modified, waived, supplemented or restated from
time to time.
“Accredited Investor” has the meaning assigned to such term in Section 12.06(e).
“Acquisition Date” means, for any Collateral Loan, the date on which such Collateral Loan is committed to be acquired by the Borrower.
“Additional Amounts” has the meaning assigned to such term in Section 12.03(a).
“Administrative Agent” has the meaning assigned to such term in the introduction to this Agreement.
“Administrative Expense Cap” means, for any Payment Date, an amount equal (when taken together with any Administrative Expenses paid during the
period since the preceding Payment Date) to $175,000 per annum, pro‑rated for the related Interest Accrual Period on the basis of a 360‑day year and the actual number of days
elapsed; provided, that if the aggregate amount of Administrative Expenses paid on the three immediately preceding Payment Dates and during the periods preceding each such
Payment Date is less than the stated Administrative Expense Cap (without regard to any excess applied in accordance with this proviso) in the aggregate for such three preceding
Payment Dates, then the excess may be applied to the Administrative Expense Cap with respect to the then-current Payment Date.
“Administrative Expenses” means the reasonable and documented fees and expenses (including indemnities and fees and expenses of counsel, agents and
experts) and other amounts of the Borrower due or accrued with respect to any Payment Date and payable in the following order:
(a) first, pro rata to the Collateral Administrator, the Collateral Agent, the Securities Intermediary and the Custodian, the Collateral Administration and
Agency Fee, and any other expenses, amounts and indemnities payable to the Collateral Administrator, the Collateral Agent, the Securities Intermediary or the Custodian, as
applicable, pursuant to the terms hereof and any other Facility Documents;
(b) second, to the Servicer for expenses incurred by the Servicer in connection with the services provided under this Agreement, excluding any Servicing
Fee; and
(c) third, on a pro rata basis, to:
(i) the Independent Accountants, agents (other than the Servicer) and counsel of the Borrower for fees and expenses related to the Collateral
and the Facility Documents;
(ii) any other Person (other than the Agents or the Lenders) in respect of any other fees or expenses permitted under or incurred pursuant to or
in connection with the Facility Documents; and
-3-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(iii) indemnification obligations owing by the Borrower to the Borrower’s Independent Directors under its Constituent Documents;
provided that, for the avoidance of doubt, (1) amounts that are expressly payable to any Person under the Priority of Payments in respect of an amount that is
stated to be payable as an amount other than as Administrative Expenses shall not constitute Administrative Expenses and (2) expenses paid for on the A&R Effective Date shall not
constitute Administrative Expenses.
“Advance Rate” means, as of any date of determination, the lower of (i) the Maximum Advance Rate and (ii) the Weighted Average Advance Rate.
“Advances” has the meaning assigned to such term in Section 2.01(c).
“Advances Outstanding” means, as of any date of determination, the aggregate principal amount in Dollars or the equivalent in Dollars, as determined by the
Administrative Agent using the Applicable Conversion Rate, of all Advances outstanding on such date, after giving effect to all repayments of Advances made on or prior to such
date and any new Advances made on such date; provided, that for purposes of the determination of Interest and in connection with any reduction pursuant to Section 2.06(b) or any
payments made in accordance with Section 9.01(a), “Advances Outstanding” shall refer only to Advances outstanding in the applicable Eligible Currency.
“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affected Person” means (a) the Administrative Agent, each Lender Group Agent, each Lender and each of their respective Affiliates (b) any Liquidity Bank
and (c) any assignee or participant of any Lender (unless the benefit of any particular provision hereof to any such Affected Person is otherwise expressly excluded herein).
“Affiliate” or “Affiliated” means, with respect to a Person, (a) any other Person who, directly or indirectly, including through one or more intermediaries, is
in Control of, or Controlled by, or is under common Control with, such Person or (b) any other Person who is a director, executive officer, managing member or general partner of (i)
such Person or (ii) any such other Person described in clause (a) above; provided that a Person shall not be deemed to be an “Affiliate” of an Obligor solely because it is under the
common ownership or Control of the same financial sponsor or affiliate thereof as such Obligor (except if any such Person or Obligor provides collateral for, guarantees or otherwise
supports the obligations of the other such Person or Obligor).
“Agent Fee Letter” means that certain fee letter, dated as of August 26, 2011, between the Administrative Agent and the Borrower, setting forth certain fees
payable by the Borrower to the Administrative Agent and the Lenders in connection with the transactions contemplated by this Agreement, as such letter may be amended, modified,
supplemented, restated or replaced from time to time.
“Agents” means, collectively, the Administrative Agent and the Collateral Agent.
-4-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
“Aggregate Funded Spread” means, as of any date, the sum (for all Eligible Collateral Loans) of, in the case of each Eligible Collateral Loan that bears
interest at a spread over an index, (i) the stated interest rate spread (including, without duplication, any credit spread adjustment to such spread in accordance with the Underlying
Loan Agreement) over such index multiplied by (ii) the Principal Balance of such Eligible Collateral Loan; provided that, with respect to any Floor Obligation, the stated interest rate
spread (including, without duplication, any credit spread adjustment to such spread in accordance with the Underlying Loan Agreement) on such Eligible Collateral Loan over such
index shall be deemed to be equal to the sum of (x) the stated interest rate spread (including, without duplication, any credit spread adjustment to such spread in accordance with the
Underlying Loan Agreement) over such index and (y) the excess, if any, of the specified “floor” rate relating to such Collateral Loan over the Applicable Reference Rate as in effect.
“Aggregate Outstanding Loan Balance” means, when used with respect to all or a portion of the Collateral Loans, the sum of the Outstanding Loan Balances
of all or of such portion of such Collateral Loans.
“Aggregate Principal Balance” means, when used with respect to all or a portion of the Collateral Loans, the sum of the Principal Balances of all or of such
portion of such Collateral Loans (other than Ineligible Collateral Loans).
“Aggregate Unfunded Spread” means, as of any date, the sum of the products obtained by multiplying (a) for each Delayed Drawdown Collateral Loan and
Revolving Collateral Loan, the related commitment fee or other analogous fees (expressed at a per annum rate) then in effect for such Delayed Drawdown Collateral Loan or
Revolving Collateral Loan as of such date and (b) the unfunded commitments of each such Delayed Drawdown Collateral Loan and Revolving Collateral Loan as of such date.
“Agreement” means this Credit and Security Agreement.
“Amortization Period” means the period beginning on the Commitment Termination Date and ending on the date on which all Obligations are Paid in Full.
“Anti-Corruption Laws” means (a) the U.S. Foreign Corrupt Practices Act of 1977, as amended; (b) the U.K. Bribery Act 2010, as amended; and (c) any
other anti-bribery or anti-corruption laws, regulations or ordinances in any jurisdiction in which the Borrower or any of its Subsidiaries is located or doing business.
“Anti-Money Laundering Laws” means Applicable Law in any jurisdiction in which the Borrower or any of its Subsidiaries are located or doing business
that relates to money laundering or terrorism financing, any predicate crime to money laundering, or any financial record keeping and reporting requirements related thereto.
“Applicable Conversion Rate” means, with respect to any amount denominated and payable in an Eligible Currency (other than Dollars) on any date of
determination (x) for an actual currency exchange, the applicable currency‑Dollar spot rate obtained by the Servicer through customary banking channels or (y) for all other
purposes, the applicable currency‑Dollar spot rate that appeared on the Bloomberg screen for such currency (i) if such date is a Determination Date,
-5-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
at the end of such day if such day is a Business Day or if such date is not a Business Day, the end of the immediately preceding Business Day or (ii) otherwise, at the end of the
second Business Day immediately preceding such date.
“Applicable Law” means any Law of any Governmental Authority, including all federal and state banking or securities laws, to which the Person in question
is subject or by which it or any of its assets or properties are bound.
“Applicable Margin” has the meaning assigned to such term in the Lender Fee Letter.
“Applicable Reference Rate” means, collectively or individually, Term SOFR or Daily Compounded CORRA.
“Appraised Value” means, with respect to any Asset Based Loan, the appraised value of the underlying collateral securing such Collateral Loan as
determined by an Approved Valuation Firm.
“Approval Request” has the meaning assigned to such term in Section 2.01(a).
“Approved Affiliate Servicer” means an Affiliate of the Servicer that the Equityholder certifies to the Administrative Agent (x) has the ability to
professionally and competently perform duties similar to those imposed on the Servicer hereunder, (y) is legally qualified and has the capacity to act as servicer hereunder and (z)
has adequate capital to fulfill such role and its other organizational purposes.
“Approved Valuation Firm” means (A) with respect to the calculation of Appraised Value or the equivalent with respect to any Asset Based Loan, each of:
(i) the firms set forth on Schedule 10 and (ii) any other nationally recognized accounting firm or valuation firm approved by the Administrative Agent in its reasonable discretion
(not to be unreasonably withheld) and (B) otherwise, each of: (i) Houlihan Lokey Howard & Zukin, (ii) Lincoln International LLC (f/k/a Lincoln Partners LLC), (iii) Duff & Phelps
Corp., (iv) Valuation Research Corporation, (v) FTI Consulting, Inc., (vi) Murray Devine, and (vii) any other nationally recognized accounting firm or valuation firm approved by
the Administrative Agent in its reasonable discretion (not to be unreasonably withheld).
“Asset Advance Rate” means, as of any date of determination with respect to each Eligible Collateral Loan, the Asset Advance Rate notified by the
Administrative Agent to the Borrower, which shall be based on the lowest applicable indicative levels for the type of such Eligible Collateral Loan set forth below (which Asset
Advance Rate may be reduced by the Administrative Agent in its sole discretion with respect to any Consent Collateral Loan):
Asset Type
Advance Rate
First Lien Loans w/ EBITDA greater than $50 million
70.00%
First Lien Loans w/ EBITDA less than or equal to $50 million
67.50%
Healthcare Loans
60.00%
Asset Based Loans
60.00%
-6-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
First Lien Last Out Loans
50.00%
Deemed Second Lien Loans
45.00%
Second Lien Loans
40.00%
“Asset Based Loan” means any Collateral Loan where (i) the underwriting of such Collateral Loan was based primarily on the Appraised Value of the assets
securing such Collateral Loan (and such Appraised Value shall be updated no less than annually) and (ii) advances with respect to such Collateral Loan are governed by a borrowing
base relating to certain assets securing such Collateral Loan.
“Asset Value” means, with respect to each Collateral Loan, as of any date of determination and expressed as a percentage of the Principal Balance of such
Collateral Loan, (A) prior to the occurrence of an Asset Value Adjustment Event, (1) initially, its Original Asset Value, (2) afterwards, its Updated Asset Value, as quarterly
adjusted, and (B) following the occurrence of an Asset Value Adjustment Event, the value (expressed as a percentage of its Principal Balance) of such Collateral Loan established by
the Administrative Agent from time to time in its commercially reasonable discretion (and the Administrative Agent shall promptly notify the Servicer of any change to Asset Value
it may establish from time to time); provided, that:
(a) after the occurrence of an Asset Value Adjustment Event set forth in clause (b) or (n) (solely with respect to clause (a)(i) of Material Modification) of the
definition thereof, zero (unless otherwise expressly determined by the Administrative Agent in its commercially reasonable discretion);
(b) except with respect to a Collateral Loan described in clause (a) above, the Asset Value of any Priced Loan shall not equal less than any Observable
Market Price (if then available) issued after the occurrence of the related Asset Value Adjustment Event; and
(c) except with respect to a Collateral Loan described in clauses (a) or (b) above, in the event the Borrower disagrees with the Administrative Agent’s
determination of the Asset Value and no Observable Market Price is otherwise available, the Borrower may (at its expense) retain any Approved Valuation Firm to value such
Collateral Loan, and if the value determined by such Approved Valuation Firm is greater than the Administrative Agent’s determination of the Asset Value, such Approved
Valuation Firm’s valuation shall become the Asset Value hereunder; provided that until the completion of such valuation process, the Asset Value of such Collateral Loan shall be
the value assigned by the Administrative Agent; provided, that, in no event shall any Asset Value exceed 100%; provided, further, that any Asset Value determined to be equal to or
greater than 97% shall be deemed to have an Asset Value equal to 100%;
(d) except with respect to a Collateral Loan with a Senior Net Leverage Ratio of less than 5.75 to 1.00, the Asset Value of such Collateral Loan may be
established by any Lender or the Joint Lead Arranger from time to time in its commercially reasonable discretion and the Lender shall promptly notify the Administrative Agent,
Servicer and each other Lender of any Asset Value it may establish; provided that the aggregate reduction in the Borrowing Base resulting from all such revisions and exclusions in
any fiscal quarter shall not exceed 10%; and
-7-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(e) following receipt of notice of an Asset Value Adjustment Event or approval thereof, any Lender (each such Lender, a “Dissenting Lender”) may request
the Servicer to solicit a determination by a Valuation Firm selected by the Servicer of such Collateral Loan; provided that the right to make such request of the Servicer may not be
exercised by the Lenders more than five (5) times in any 12-month period. If the selected Valuation Firm’s calculation of such valuation is lower than the revised value assigned by
the Administrative Agent to such Collateral Loan, such calculation shall supersede the revised value assigned by the Administrative Agent until such time as a further revised value
is assigned to such Collateral Obligation.
After an Asset Value Adjustment Event with respect to a Collateral Loan, to the extent the circumstances giving rise to such Asset Value Adjustment Event
have been remedied or are no longer in existence, then the Borrower (or the Servicer on its behalf) shall have the right to require the Administrative Agent to re‑determine the Asset
Value of any such Collateral Loan.
“Asset Value Adjustment Event” means, with respect to any Collateral Loan, each occurrence of one or more of the following:
(a) a payment default (i) with respect to such Collateral Loan (after giving effect to any applicable grace period) or (ii) under any other debt obligation of
such Obligor which is senior or pari passu in right of payment to such Collateral Loan (after giving effect to any applicable grace period);
(b) an Insolvency Event with respect to any related Obligor (without giving effect to any grace period set forth in such definition);
(c) other than with respect to an Asset Based Loan or a Healthcare Loan, the Senior Net Leverage Ratio of the related Obligor for any Relevant Test Period
has increased by 0.50x or more above the Senior Net Leverage Ratio of such Obligor on the related Acquisition Date;
(d) other than with respect to an Asset Based Loan or a Healthcare Loan, the Cash Interest Coverage Ratio of the related Obligor for any Relevant Test
Period is (i)(x) less than 1.75x and (y) less than or equal to 85% of the Cash Interest Coverage Ratio of such Obligor on the related Acquisition Date or (ii) less than 1.50x;
(e) other than with respect to an Asset Based Loan or a Healthcare Loan, the trailing twelve-month EBITDA of the related Obligor for any Relevant Test
Period has decreased by 20.0% or more below such EBITDA on the related Acquisition Date;
(f) if such Collateral Loan has a Moody’s Rating and/or an S&P Rating, its (i) Moody’s Rating is downgraded to “B3” or below or (ii) S&P Rating is
downgraded to “B-” or below, or in any case, such rating has been withdrawn;
(g) if such Collateral Loan is a Priced Loan, the bid price as reported by the relevant nationally recognized pricing services decreases by 7.5% or more below
its Observable Market Price on the related Acquisition Date;
-8-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(h) if such Collateral Loan is an Asset Based Loan, the related Obligor exceeds the maximum borrowing base of such Collateral Loan by more than 5.00%
and such breach is not cured within five (5) business days;
(i) if such Collateral Loan is an Asset Based Loan, the borrower (i) fails to retain an Approved Valuation Firm to re-calculate the Appraised Value of any
such Collateral Loan that is secured by intellectual property, equipment or real property at least once every twelve (12) months that such Collateral Loan is in the Collateral, (ii)
changes the Approved Valuation Firm with respect to such Collateral Loan or (iii) changes the valuation method for calculating the Appraised Value of any such Collateral Loan, in
each case without the written approval of Administrative Agent;
(j) if such Collateral Loan is an Asset Based Loan, its debt service coverage ratio (to the extent reported to the lenders under the related Underlying Loan
Agreement) declines below 1.10x;
(k) if such Collateral Loan is a Healthcare Loan, (i) the actual liquidity of the related Obligor as of any date of determination for the applicable liquidity
Maintenance Covenant (as calculated in accordance with the Underlying Loan Agreement for such Collateral Loan) is equal to or less than 1.05x of the applicable liquidity
Maintenance Covenant threshold for such Collateral Loan, (ii) the trailing twelve-month revenue of the related Obligor as of any date of determination has declined by 10% or more
from the Acquisition Date or (iii) the occurrence of any other event (including any event modifying clauses (i) or (ii) above) specified by the Administrative Agent to the Servicer in
writing as a part of the Administrative Agent’s approval of such Collateral Loan;
(l) any failure of the related Obligor to deliver any quarterly or annual financial statements required to be delivered to the Borrower or the Servicer no less
frequently than quarterly and, in the case of audited financial statements, within one hundred twenty (120) days of the end of each fiscal year of the related obligor, subject to any
applicable grace period therein;
(m) an event of default occurs (after giving effect to any grace period) with respect to any financial covenant with respect such Collateral Loan and the
related Obligor with respect to such Collateral Loan has commenced formal restructuring or workout negotiations; or
(n) a Material Modification.
“Assignment and Acceptance” means an Assignment and Acceptance in substantially the form of Exhibit D hereto, entered into by a Lender, an assignee, the
Administrative Agent and, if applicable, the Borrower.
“Authorized Person(s)” has the meaning assigned to such term in Section 13.07(d)(i).
“Available Tenor” means, as of any date of determination and with respect to any then-current Benchmark for any currency, as applicable, (x) if any then-
current Benchmark is a term rate, any tenor for such Benchmark that is or may be used for determining the length of an
-9-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Interest Accrual Period or (y) otherwise, any payment period for interest calculated with reference to such Benchmark, as applicable, pursuant to this Agreement as of such date.
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an
Affected Financial Institution.
“Bail-In Legislation” means, (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament
and of the Council of the European Union, the implementing law, regulation, rule or requirement for such EEA Member Country from time to time which is described in the EU
Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act of 2009 (as amended from time to time) and any other law,
regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other
than through liquidation, administration or other insolvency proceedings).
“Bankruptcy Code” means the United States Bankruptcy Code.
“Base Rate” means, on any date, the greater of (x) 0.00% and (y) a fluctuating interest rate per annum equal to the highest of (a) the Prime Rate, (b) the
Federal Funds Rate plus 1.50% or (c) the applicable Benchmark for a three‑month period plus 1.00%. The Base Rate is a reference rate and does not necessarily represent the lowest
or best rate actually charged to any customer of any Agent or any Lender.
“Benchmark” means, initially, with respect to any Eligible Currency, the Applicable Reference Rate; provided that if a replacement of an initial or
subsequent Benchmark has occurred pursuant to Section 12.01(c), then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement
has replaced such prior benchmark rate. Any reference to “Benchmark” shall include, as applicable, the published component used in the calculation thereof.
“Benchmark Replacement” means, for any Available Tenor, the sum of (a) the alternate benchmark rate and (b) an adjustment (which may be a positive or
negative value or zero), in each case, that has been selected by the Administrative Agent and the Borrower as the replacement for such Available Tenor of such Benchmark giving
due consideration to any evolving or then-prevailing market convention, including any applicable recommendations made by the Relevant Governmental Body, for syndicated credit
facilities at such time denominated in the applicable currency; provided that, if any Benchmark Replacement would be less than the Floor, the Benchmark Replacement will be
deemed to be the Floor for the purposes of this Agreement and the other Facility Documents.
“Benchmark Replacement Date” means the earlier to occur of the following events with respect to a then-current Benchmark:
(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of
information referenced
-10-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
therein and (b) the date on which the administrator of such Benchmark permanently or indefinitely ceases to provide such Benchmark; or
(2) in the case of clause (3) of the definition of “Benchmark Transition Event”, the first date on which such Benchmark (or the published component used in
the calculation thereof) has been determined and announced by or on behalf of the administrator of such Benchmark (or such component thereof) or the regulatory supervisor for the
administrator of such Benchmark (or such component thereof) to be non-representative or non-compliant with or non-aligned with the International Organization of Securities
Commissions (IOSCO) Principles for Financial Benchmarks; provided that such non-representativeness, non-compliance or non-alignment will be determined by reference to the
most recent statement or publication referenced in such clause (3) and even if any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such
date.
“Benchmark Transition Event” means, with respect to any then-current Benchmark, the occurrence of one or more of the following events, as determined by
the Administrative Agent in consultation with the Borrower:
(1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the
calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or
indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or
such component thereof);
(2) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used
in the calculation thereof), the Relevant Governmental Body, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution
authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the
administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available
Tenors of such Benchmark (or such component thereof) permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator
that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or
(3) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the
calculation thereof) or the regulatory supervisor for the administrator of such Benchmark (or such component thereof) announcing that all Available Tenors of such Benchmark (or
such component thereof) are not, or as of a specified future date will not be, representative or in compliance with or aligned with the International Organization of Securities
Commissions (IOSCO) Principles for Financial Benchmarks.
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or
publication of information
-11-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Start Date” means, in the case of a Benchmark Transition Event with respect to any then-current Benchmark, the earlier of (a) the
applicable Benchmark Replacement Date and (b) if such Benchmark Transition Event is a public statement or publication of information of a prospective event, the 90th day prior to
the expected date of such event as of such public statement or publication of information (or if the expected date of such prospective event is fewer than ninety (90) days after such
statement or publication, the date of such statement or publication).
“Benchmark Unavailability Period” means, with respect to any then-current Benchmark, the period (if any) (a) beginning at the time that a Benchmark
Replacement Date has occurred if, at such time, no Benchmark Replacement has replaced such Benchmark for all purposes hereunder and under any Facility Document in
accordance with Section 12.01(c) and (b) ending at the time that a Benchmark Replacement has replaced such Benchmark for all purposes hereunder and under any Facility
Document in accordance with Section 12.01(c).
“Beneficial Ownership Certification” means a certification regarding beneficial ownership required by the Beneficial Ownership Regulation, which
certification shall be substantially similar in form and substance to the form of Certification Regarding Beneficial Owners of Legal Entity Customers published jointly, in May 2018,
by the Loan Syndications and Trading Association and Securities Industry and Financial Markets Association.
“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.
“BHC Act Affiliate” has the meaning assigned to the term “affiliate” in, and shall be interpreted in accordance with, 12 U.S.C. § 1841(k).
“Blended Rate” has the meaning assigned to such term in the Lender Fee Letter.
“Block Notice” has the meaning assigned to such term in Section 13.04(b).
“Borrower” has the meaning assigned to such term in the introduction to this Agreement.
“Borrower Information” has the meaning assigned to such term in Section 12.09.
“Borrowing” has the meaning assigned to such term in Section 2.01(c).
“Borrowing Base” means, collectively, the Borrowing Base (Aggregate) and the Borrowing Base (CAD).
“Borrowing Base (Aggregate)” means, on any date of determination, an amount calculated in Dollars (and converted to Dollars, if necessary, by the Servicer
using the Applicable Conversion Rate) equal to the least of:
-12-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(a) (i) the Facility Amount minus (ii) the Unfunded Exposure Amount (net of the aggregate amount on deposit in the Unfunded Reserve Account), in each
case, as of such date;
(b) (i)(A) the Aggregate Outstanding Loan Balance of all Eligible Collateral Loans minus the Excess Concentration Amount multiplied by (B) the Advance
Rate, plus (ii) the Principal Proceeds and Eligible Investments made with Principal Proceeds on deposit in the Collection Account, minus (iii) the Unfunded Reserve
Required Amount (net of the aggregate amount on deposit in the Unfunded Reserve Account), in each case, as of such date; and
(c) (i) the Aggregate Outstanding Loan Balance of all Eligible Collateral Loans minus the Excess Concentration Amount minus (ii) the Minimum Equity
Amount, plus (iii) the amount of Principal Proceeds and Eligible Investments made with Principal Proceeds on deposit in the Collection Account, minus (iv) the
Unfunded Reserve Required Amount (net of the aggregate amount on deposit in the Unfunded Reserve Account), in each case, as of such date.
“Borrowing Base (CAD)” means, on any date of determination, an amount equal to (i) the sum of the products, for each Eligible Collateral Loan
denominated in CAD (including any such Eligible Collateral Loans to be funded or acquired by Borrower on such date of determination) of (A) its Principal Balance multiplied by
(B) its Asset Advance Rate, plus (ii) the Principal Proceeds and Eligible Investments made with Principal Proceeds denominated in CAD on deposit in the Collection Account.
“Borrowing Base Calculation Statement” means a statement in substantially the form attached to the form of Notice of Borrowing attached hereto as Exhibit
B, as such form of Borrowing Base Calculation Statement may be modified by the Administrative Agent with the consent of the Servicer from time to time to the extent such form
does not, in the good faith opinion of the Administrative Agent, accurately reflect the calculation of the Borrowing Base Test required hereunder.
“Borrowing Base Deficiency” means a condition occurring on any day on which the Borrowing Base Test is not satisfied.
“Borrowing Base Test” means a test that will be satisfied at any time if (i) Advances Outstanding are less than or equal to the Borrowing Base (Aggregate) at
such time and (ii) the aggregate principal balance (in CAD) of all CAD Advances outstanding hereunder are less than the Borrowing Base (CAD).
“Borrowing Date” means the date of a Borrowing.
“Business Day” means any day of the year except a Saturday, Sunday or other day on which commercial banks in New York City or the city in which the
Corporate Trust Office is located are authorized or required by law to close; provided that when used in connection with any interest rate setting as to an Advance determined by
reference to the Applicable Reference Rate, any fundings, disbursements, settlements and payments in respect of any such Advance, or any other dealings to be carried out pursuant
to this Agreement in respect of any such Advance (or any
-13-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Advance determined by reference to the Base Rate as to which such Base Rate is determined by reference to the applicable Benchmark), the term “Business Day” shall exclude (x)
in the case of Dollars, any day other than a U.S. Government Securities Business Day or (y) in the case of any other Eligible Currency, any day on which banks are not open for
dealings in deposits in the applicable Eligible Currency in the applicable interbank market.
“CAD” means the lawful currency for the time being of Canada.
“Canadian Relevant Governmental Body” means the Bank of Canada, or a committee officially endorsed or convened by the Bank of Canada, or any
successor thereto.
“Cash” means cash or legal currency in any Eligible Currency immediately available on the day in question.
“Cash Interest Coverage Ratio” means, with respect to any Collateral Loan for any Relevant Test Period, either (a) the meaning of “Cash Interest Coverage
Ratio” or comparable term set forth in the Related Documents for such Collateral Loan, or (b) in the case of any Collateral Loan with respect to which the Related Documents do not
include a definition of “Cash Interest Coverage Ratio” or comparable term, the ratio obtained by dividing (i) EBITDA by (ii) Cash Interest Expense of the related Obligor for the
Relevant Test Period, as calculated by the Servicer in accordance with the Servicing Standard using information from and calculations consistent with the relevant compliance
statements and financial reporting packages provided by the relevant Obligor as per the requirements of the Related Documents.
“Cash Interest Expense” means, with respect to any Obligor for any period, the amount which, in conformity with GAAP, would be set forth opposite the
caption “interest expense” or any like caption reflected on the most recent financial statements delivered by such Obligor to the Borrower for such period, but excluding any non-
cash item to the extent included under such caption.
“Certificated Security” has the meaning specified in Section 8‑102(a)(4) of the UCC.
“Commercial Paper Rate” for Advances means, with respect to each Conduit Lender for any day during any Interest Accrual Period, the per annum rate
equivalent to the weighted average of the per annum rates paid or payable by such Conduit Lender from time to time as interest on or otherwise (by means of interest rate hedges or
otherwise) that are allocated on a fair and equitable basis, in whole or in part, by their respective Lender Agent (on behalf of such Conduit Lender), which rates shall reflect and give
effect to (in each case, to the extent such costs are allocated, in whole or in part, to such Conduit Lender by the related Lender Agent (on behalf of such Conduit Lender) (a) the
commissions of placement agents and dealers in respect of such Conduit Lender, (b) all reasonable costs and expenses of any issuing and paying agent or other person responsible
for the administration of such Conduit Lender’s commercial paper programs in connection with the preparation, completion, issuance, delivery or payment of such commercial
paper, and (c) any other costs, fees and expenses associated with the funding or maintenance of the applicable tranche by such Conduit Lender, including any liquidity support,
credit enhancement, government sponsored funding programs (including the Federal Reserve
-14-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Bank’s Commercial Paper Funding Facility), or any other borrowings by such Conduit Lender including, without limitation, borrowings to fund small or odd dollar amounts that are
not easily accommodated in the commercial paper market; provided, however, that if any component of such rate is a discount rate, in calculating the CP Cost of Funds Rate, the
respective Lender Agent for such Conduit Lender shall for such component use the rate resulting from converting such discount rate to an interest bearing equivalent rate per annum.
“Committed Lender” means each Person listed on Schedule 1 hereto and any other Person that shall have become a party hereto in accordance with the
terms hereof pursuant to an Assignment and Acceptance, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Acceptance.
“Conduit Advance Termination Date” means, with respect to a Conduit Lender, the date that such Conduit Lender has elected, in its sole discretion, to
permanently cease funding Advances hereunder (as evidenced on such Conduit Lender’s invoice to the Borrower for the services provided by such Conduit Lender hereunder).
“Conduit Lender” means any Person that shall become a party to this Agreement in the capacity as a “Conduit Lender” (as noted on the applicable signature
page) and any assignee of any of the foregoing also designated as a “Conduit Lender” (as noted on the applicable signature page).
“Conduit Trustee” means, with respect to any Conduit Lender, a trustee or collateral agent for the benefit of the holders of the commercial paper or other
senior indebtedness of such Conduit Lender appointed pursuant to such Conduit Lender’s program documents.
“CORRA” means the Canadian Overnight Repo Rate Average administered and published by the Bank of Canada (or any successor administrator).
“Change in Law” means the occurrence, after the A&R Effective Date (or, with respect to any Lender not a party hereto on the date hereof, after the date
such Lender becomes a party hereto), of any of the following: (a) the adoption of any law, rule or regulation, (b) any change in any law, rule or regulation or in the interpretation or
application thereof by any Governmental Authority or (c) compliance by any Lender (or, for purposes of Section 2.09(b), by any lending office of such Lender or by such Lender’s
holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority; provided that, notwithstanding anything
herein to the contrary, (x) the Dodd‑Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines, requirements or directives thereunder or issued in
connection therewith or in implementation thereof and (y) all requests, rules, guidelines, requirements or directives promulgated by the Bank for International Settlements, the Basel
Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case
be deemed to be a “Change in Law” regardless of the date enacted, adopted or issued.
“Change of Control” means, at any time, the occurrence of any of the following events:
-15-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(a) the adoption by the board of directors of the Servicer of a plan or proposal for the liquidation or dissolution of the Servicer or the Equityholder;
(b) the failure by the Equityholder to (i) own 100% of the issued and outstanding equity interests in the Borrower, free and clear of any Lien other than
Permitted Liens or (ii) exercise all power to direct the management policies of the Borrower;
(c) the dissolution, termination or liquidation in whole or in part, transfer or other disposition, in each case, of all or substantially all of the assets of the
Borrower or the Equityholder; or
(d) the failure by the Servicer or an Approved Affiliate Servicer to perform its material obligations under this Agreement.
“Citibank” has the meaning assigned to such term in the introduction of this Agreement.
“Clearing Agency” means an organization registered as a “clearing agency” pursuant to Section 17A of the Exchange Act.
“Clearing Corporation” means each entity included within the meaning of “clearing corporation” under Section 8‑102(a)(5) of the UCC.
“Clearing Corporation Security” means securities which are in the custody of or maintained on the books of a Clearing Corporation or a nominee subject to
the control of a Clearing Corporation and, if they are Certificated Securities in registered form, properly endorsed to or registered in the name of the Clearing Corporation or such
nominee.
“Code” means the Internal Revenue Code of 1986.
“Collateral” has the meaning assigned to such term in Section 7.01(a).
“Collateral Administration and Agency Fee Letter” means the fee letter, dated as of the Original Closing Date, by and among the Servicer, the
Administrative Agent and Computershare Trust Company, National Association (as successor in interest to Wells Fargo Bank, N.A.), in its capacities as the backup servicer, the
account bank and the collateral custodian thereunder, as such letter may be amended, modified, supplemented, restated or replaced from time to time.
“Collateral Administration and Agency Fees” means the fees payable to the Collateral Administrator, the Custodian and the Securities Intermediary
pursuant to the Collateral Administration and Agency Fee Letter.
“Collateral Administrator” has the meaning assigned to such term in the introduction to this Agreement.
“Collateral Agent” has the meaning assigned to such term in the introduction to this Agreement.
-16-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
“Collateral Loan” means a commercial loan (or Participation Interest therein) owned or, as set forth in Section 1.04, committed to be acquired or funded, by
the Borrower.
“Collateral Loan Dividend” has the meaning assigned to that term in Section 10.01(d).
“Collateral Loan Dividend Certificate” has the meaning assigned to that term in Section 10.01(d).
“Collateral Loan Dividend Date” means any Business Day prior to the Commitment Termination Date identified by the Borrower in a written notice to the
Administrative Agent, Collateral Agent and Custodian of its intent to effect an Collateral Loan Dividend on a date at least twenty (20) days and not more than forty-five (45) days
following the delivery date of such written notice, in accordance with Section 10.01(d).
“Collateral Quality Test” means a test that is satisfied if, as of any date of determination, in the aggregate, the Eligible Collateral Loans owned (or, in
relation to a proposed purchase of an Eligible Collateral Loan, both owned and proposed to be owned) by the Borrower satisfy each of the tests set forth below, calculated, in each
case, in accordance with Section 1.04:
(a) the Minimum Weighted Average Spread Test;
(b) the Maximum Weighted Average Life Test;
(c) the Minimum Diversity Score Test; and
(d) the Minimum Obligor Diversity Test.
“Collection Account” has the meaning assigned to such term in Section 8.02.
“Collection Period” means, with respect to any Payment Date, the period from but excluding the Determination Date immediately preceding the previous
Payment Date to and including the Determination Date immediately preceding the current Payment Date (or, in the case of the final Payment Date, to and including such Payment
Date).
“Collections” means all cash collections, distributions, payments or other amounts received, or to be received, by the Borrower from any Person in respect of
any Collateral Loan constituting Collateral, including all principal, interest, fees, distributions, recoveries and redemption and withdrawal proceeds payable to the Borrower under or
in connection with any such Collateral Loans and all Proceeds from any sale or disposition of any such Collateral Loans, but excluding (a) any amounts received by the Borrower
from an Obligor or any other party obligated to make payments in respect of such Collateral Loan following the sale of a Collateral Loan by the Borrower that the Borrower is
required to pay to the purchaser of such Collateral Loan so long as such amounts are not included in the net proceeds reported to be received by the Borrower from such sale, (b) any
amounts in respect of indemnities received by the Borrower but owing to parties other than the Borrower in accordance with the Related Documents for any Collateral Loan and (c)
any Excluded Amounts.
-17-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
“Commitment” means, as to each Lender, the obligation of such Lender to make, on and subject to the terms and conditions hereof, Advances to the
Borrower pursuant to Section 2.01(c) in an aggregate principal amount at any one time outstanding for such Lender up to but not exceeding the amount set forth opposite the name
of such Lender on Schedule 1 or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Commitment, as applicable, as such amount may be
reduced from time to time pursuant to Section 2.06 or increased or reduced from time to time pursuant to assignments effected in accordance with Section 12.06(a).
“Commitment Termination Date” means the last day of the Reinvestment Period; provided that, if the Commitment Termination Date would otherwise not
be a Business Day, then the Commitment Termination Date shall be the immediately succeeding Business Day.
“Concentration Denominator” means the Aggregate Outstanding Loan Balance of the Eligible Collateral Loans owned (and, solely in relation to a proposed
acquisition of an Eligible Collateral Loan, proposed to be owned) by the Borrower in each case in accordance with the procedures set forth in Section 1.04.
“Concentration Limitations” means, as of any date of determination, the following limitations calculated as a percentage of the Concentration Denominator:
(a) the Aggregate Outstanding Loan Balance of all Eligible Collateral Loans with Obligors:
(i) in the Industry Classification with the highest Aggregate Outstanding Loan Balance shall not exceed (i) if such Eligible Collateral
Loans are in a healthcare industry (as determined by the Servicer, with the approval of the Administrative Agent in its sole discretion), 32.50% of the
Concentration Denominator or (ii) otherwise, 20.00% of the Concentration Denominator; and
(ii) in any Industry Classification (other than the industries considered under clause (i) above) shall not exceed 15.00% of the
Concentration Denominator;
(b) the Aggregate Outstanding Loan Balance of all Eligible Collateral Loans for a single Obligor shall not exceed (x) in the case of Health Care Loans and
Asset Based Loans, 5.00% of the Concentration Denominator for each such Obligor and (y) in the case of all other Loans, 6.00% of the Concentration Denominator for
each such Obligor; provided, that the Aggregate Outstanding Loan Balance of all Eligible Collateral Loans for (x) up to one (1) Obligor may constitute up to the lesser
of (i) 10.00% of the Concentration Denominator and (ii) $75,000,000 and (y) up to five (5) additional Obligors may constitute up to 8.00% of the Concentration
Denominator for each such Obligor;
(c) the Aggregate Outstanding Loan Balance of all Eligible Collateral Loans (other than Healthcare Loans) for which the EBITDA of the related Obligor is
less than $25,000,000 shall not exceed 5.00% of the Concentration Denominator;
(d) the Aggregate Outstanding Loan Balance of all Eligible Collateral Loans that are First Lien Last Out Loans or Second Lien Loans shall not exceed (x)
including
-18-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Deemed Second Lien Loans, 17.50% of the Concentration Denominator and (y) excluding Deemed Second Lien Loans, 5.00% of the Concentration Denominator;
(e) the Aggregate Outstanding Loan Balance of all Eligible Collateral Loans that do not provide for scheduled payments of interest in cash on at least a
quarterly basis shall not exceed 5.00% of the Concentration Denominator;
(f) the Aggregate Outstanding Loan Balance of all Eligible Collateral Loans (other than Healthcare Loans and Asset Based Loans) for which the Senior Net
Leverage Ratio of the related Obligor is greater than 6.00 to 1.00 shall not exceed 22.5% of the Concentration Denominator;
(g) the Aggregate Outstanding Loan Balance of all Eligible Collateral Loans (other than Healthcare Loans and Asset Based Loans) for which the Total Net
Leverage Ratio of the related Obligor is greater than 7.25 to 1.00 shall not exceed 12.5% of the Concentration Denominator;
(h) the Aggregate Outstanding Loan Balance of all Eligible Collateral Loans that are Fixed Rate Obligations shall not exceed 5.00% of the Concentration
Denominator;
(i) the Aggregate Outstanding Loan Balance of all Eligible Collateral Loans that are Covenant Lite Loans shall not exceed 20.00% of the Concentration
Denominator, provided, that the Aggregate Outstanding Loan Balance of all Eligible Collateral Loans that are Covenant Lite Loans for which the EBITDA of the related
Obligor is less than $100,000,000 shall not exceed 12.50% of the Concentration Denominator;
(j) the Aggregate Outstanding Loan Balance of all Eligible Collateral Loans that are Healthcare Loans or Asset Based Loans shall not exceed 40.00% of the
Concentration Denominator; provided that (x) the Aggregate Outstanding Loan Balance of all Eligible Collateral Loans that are Healthcare Loans shall not exceed
25.00% of the Concentration Denominator and (y) the Aggregate Outstanding Loan Balance of all Eligible Collateral Loans that are Asset Based Loans shall not exceed
25.00% of the Concentration Denominator;
(k) [reserved];
(l) the Aggregate Outstanding Loan Balance of all Eligible Collateral Loans that are Current Pay Loans shall not exceed 5.00% of the Concentration
Denominator;
(m) the Aggregate Outstanding Loan Balance of all Eligible Collateral Loans that are denominated in an Eligible Currency other than Dollars shall not
exceed 10.00% of the Concentration Denominator;
(n) the Aggregate Outstanding Loan Balance of all Eligible Collateral Loans for which the related Obligor is organized outside of the United States or
Canada shall not exceed 10.00% of the Concentration Denominator;
-19-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(o) the Aggregate Outstanding Loan Balance of all Eligible Collateral Loans that are Delayed Drawdown Collateral Loans or Revolving Collateral Loans
shall not exceed 10.00% of the Concentration Denominator;
(p) the Aggregate Outstanding Loan Balance of all Eligible Collateral Loans that are PIK Loans shall not exceed 5.00% of the Concentration Denominator;
and
(q) the Aggregate Outstanding Loan Balance of all Eligible Collateral Loans that are Participation Interests (excluding, for one hundred twenty (120) days
after the Closing Date, Closing Date Participation Interests) shall not exceed 5.00% of the Concentration Denominator.
“Conforming Changes” means, with respect to the use or administration of any Benchmark or the use, administration, adoption or implementation of any
Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Base Rate,” the definition of “Business Day,” the definition of
“Interest Accrual Period,” the definition of “U.S. Government Securities Business Day,” the timing and frequency of determining rates and making payments of interest, timing of
borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of breakage provisions, the formula for
calculating any successor rates identified pursuant to the definition of “Benchmark Replacement” (including whether such formula shall be cumulative or non-cumulative), the
formula, methodology or convention for applying the successor Floor to the successor Benchmark Replacement and other technical, administrative or operational matters) that the
Administrative Agent, in consultation with the Servicer, decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the
administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of
such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of such Benchmark Replacement exists,
in such other manner of administration as the Administrative Agent, in consultation with the Servicer, decides is reasonably necessary in connection with the administration of this
Agreement and the other Facility Documents).
“Consent Collateral Loan” means a Collateral Loan that, on the related Acquisition Date, satisfies one or more of the following:
(a) has a Senior Net Leverage Ratio of greater than 6.25 to 1.00;
(b) if it is a Second Lien Loan, has a Total Net Leverage Ratio of greater than 6.75 to 1.00;
(c) is a Collateral Loan the primary Obligor of which has addbacks to its most-recently calculated EBITDA of greater than 20.0% of such EBITDA
(calculated prior to giving effect to any such add-backs); provided that such add-backs shall not include customary add-backs for (a) management fees, (b) transaction
advisory fees or other one-time transaction fees or costs with the contemplated transaction, (c) non-operator owner compensation and owner personal expenses
(excluding any incremental, ongoing costs
-20-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
associated with the continued involvement of non-operator owners), market compensation adjustments, stock based compensation and option or warrant exercise costs
(including, without limitation, fees, costs and expenses from related party transactions with above-market terms, but excluding any incremental, ongoing costs associated
with the continued involvement of non-operator owners), (d) non-recurring professional fees and one-time, non-recurring litigation settlement or judgment expenses, (e)
adjustments to include full year EBITDA of acquired companies in Obligor’s last twelve month EBITDA and prior acquisition transaction and integration costs, (f)
financing fees including prepayment penalties, and (g) full year impact of payroll cost savings or other permanent hard cost savings where the implementation occurred
prior to closing or at closing;
(d) has an LTV Ratio (as determined by the Servicer in accordance with the Servicing Standard) of greater than 65.0%;
(e) has a primary Obligor with a most recently calculated EBITDA of less than $20,000,000;
(f) is a PIK Loan;
(g) is an Asset Based Loan;
(h) is a Healthcare Loan; and
(i) has a Purchase Price of less than or equal to 90.0%.
“Constituent Documents” means, in respect of any Person, the trust agreement, certificate or articles of formation or organization, the limited liability
company agreement, operating agreement, partnership agreement, joint venture agreement or other applicable agreement of formation or organization (or equivalent or comparable
constituent documents) and other organizational documents and by‑laws and any certificate of trust, certificate of incorporation, certificate of formation, certificate of limited
partnership and other agreement or similar instrument filed or made in connection with its formation or organization, in each case, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
“Continued Errors” has the meaning assigned to such term in Section 14.08(c).
“Contractual Currency” has the meaning assigned to such term in Section 2.21.
“Contribution Agreement” means the Contribution Agreement, dated as of the Original Closing Date, by and between the Equityholder, as the contributor,
and the Borrower, as the contributee, as amended, modified, waived, supplemented, restated or replaced from time to time.
“Control” means (i) the direct or indirect possession of the power to direct or cause the direction of the management or policies of a Person whether through
ownership, by contract, arrangement or understanding, or otherwise or (ii) ownership of more than 20% of the equity securities of a Person. “Controlled” and “Controlling” have the
meaning correlative thereto.
-21-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
“Corporate Trust Office” means the applicable designated corporate trust office of the Collateral Administrator, the Securities Intermediary or the Custodian,
as applicable, specified on Schedule 5, or such other address within the United States as it may designate from time to time by notice to the Administrative Agent.
“Cost of Funds Rate” means, for any Interest Accrual Period and any Lender, the rate determined as set forth below:
(a) with respect to each Conduit Lender and each day of such Interest Accrual Period, such Conduit Lender’s Commercial Paper Rate; and
(b) with respect to each Committed Lender, the applicable Reference Rate.
“Covenant Lite Loan” means a First Lien Loan with respect to which the related Obligor is not subject to financial covenants (other than Incurrence
Covenants, if applicable); provided that a Collateral Loan shall not constitute a Covenant Lite Loan if (a) the Related Documents require the Obligor thereunder to comply with one
or more Maintenance Covenants (regardless of whether compliance with one or more Incurrence Covenants is otherwise required by the Related Documents) or (b) the Related
Documents contain a cross default or cross-acceleration provision to, or such Collateral Loan is pari passu with, another loan of such Obligor that requires the Obligor to comply
with one or more financial covenants or Maintenance Covenants.
“Covered Account” means each of the Collection Account, the Custodian Account, the Payment Account and the Unfunded Reserve Account.
“Covered Party” has the meaning assigned to such term in Section 12.18.
“Credit and Collection Policy” means the Credit and Collection Policy of the Servicer pursuant to which the Servicing Standard has been established and
attached hereto as Schedule 9.
“Current Pay Loan” means any Collateral Loan that would otherwise be a Defaulted Loan, but as to which:
(a) (i) no default has occurred and is continuing with respect to the payment of interest and any contractual principal (if any), (ii) all contractual payments
due at the relevant time of determination (including principal, interest and any other such payments) have been paid in cash and (iii) the Servicer reasonably expects that the
remaining scheduled interest and principal payments will be paid in cash on the scheduled payment dates thereof;
(b) such Collateral Loan has an Asset Value (expressed as a percentage of par) of no less than 80.00% of par; and
(c) if the Obligor in respect of such Collateral Loan is subject to a bankruptcy proceeding, (i) the related bankruptcy court has authorized all payments due
and payable on such Collateral Loan and (ii) all interest payments and scheduled distributions of principal authorized by such bankruptcy court have been paid by such Obligor in
respect of such Collateral Loan.
-22-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
“Custodian” has the meaning assigned to such term in the introduction to this Agreement.
“Custodian Account” has the meaning assigned to such term in Section 8.04.
“Daily Compounded CORRA” means, for any day, CORRA for the day that is five (5) Business Days prior to (i) if such day is a Business Day, such day or
(ii) if such day is not a Business Day, the Business Day immediately preceding such day, in each case, with interest accruing on a compounded daily basis, with the methodology
and conventions for this rate (which will include compounding in arrears with a lookback) being established by the Administrative Agent in accordance with the methodology and
conventions for this rate selected or recommended by the Canadian Relevant Governmental Body for determining compounded CORRA for business loans; provided that if the
Administrative Agent decides that any such convention is not administratively feasible for the Administrative Agent, then the Administrative Agent may establish another
convention in its reasonable discretion; and provided that if the administrator has not provided or published CORRA and a Benchmark Transition Event with respect to CORRA has
not occurred, then, in respect of any day for which CORRA is required, references to CORRA will be deemed to be references to the last provided or published CORRA. If Daily
Compounded CORRA is less than zero percent, Daily Compounded CORRA will be deemed to be zero percent for the purposes of this Agreement and the other Facility
Documents.
“Data File” has the meaning specified in Section 8.08(a).
“Data Site” means an electronic password protected data site maintained by the Borrower (or by the Servicer on behalf of the Borrower) at Merrill
Corporation, Intralinks, SyndTrak Online or any other similar electronic distribution system reasonably acceptable to the Administrative Agent.
“Deemed Second Lien Loan” means, for any First Lien Loan or First Lien Last Out Loan with a Senior Net Leverage Ratio of greater than 5.50 to 1.00 as of
the most recent Relevant Test Period, the portion of the Collateral Loan with a Senior Net Leverage Ratio in excess of 5.50 to 1.00.
“Default” means any event which, with the passage of time, the giving of notice, or both, would constitute an Event of Default.
“Default Rate” means a rate per annum equal to the rate of interest otherwise in effect pursuant to this Agreement (or, if no such rate is specified, the Base
Rate) plus 2.00% per annum; provided that such additional margin shall not be applied pursuant to this definition in any case where it has already been applied pursuant to the
definition of “Applicable Margin”.
“Defaulted Loan” means any Collateral Loan:
(a) with respect to which a default as to the payment of principal and/or interest has occurred and is continuing (giving effect to any grace or cure period
applicable thereto, but in no event exceeding five (5) Business Days);
-23-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(b) with respect to which a default as to the payment of principal and/or interest has occurred and is continuing with respect to another full recourse debt
obligation of the same Obligor secured by the same collateral and which is senior to or pari passu with in right of payment to such Collateral Loan (giving effect to any
grace or cure period applicable thereto, but in no event exceeding five (5) Business Days);
(c) with respect to which the Obligor thereunder has become subject to an Insolvency Event (without giving effect to any grace period set forth in such
definition);
(d) that has a published S&P Rating of “D” or below or “SD” or a Moody’s probability of default rating (as published by Moody’s) of “D” or “LD” or
previously had such ratings before they were withdrawn by S&P or Moody’s (in each case based on tranche rating and not corporate family rating);
(e) that is pari passu in right of payment as to the payment of principal and/or interest to another debt obligation of the same Obligor which has a published
S&P Rating of “SD” or “D” or lower or a Moody’s probability of default rating (as published by Moody’s) of “D” or “LD”; provided that both the Collateral Loan and
such other debt obligation are full recourse obligations of such Obligor;
(f) with respect to which a Responsible Officer of the Servicer has received written notice or has actual knowledge that a default has occurred under the
Related Documents and any applicable grace period has expired and the holders of such Collateral Loan have accelerated the repayment of such Collateral Loan (but
only until such acceleration has been rescinded) in the manner provided in the Related Documents;
(g) with respect to which the Servicer has, in its reasonable commercial judgment, otherwise declared such debt obligation to be a “Defaulted Loan”; or
(h) with respect to which there has been effected any distressed exchange or other distressed debt restructuring where the Obligor of such Collateral Loan
has offered the holder or holders thereof a new security or package of securities that, in the reasonable business judgment of the Servicer, amounts to a diminished
financial obligation.
“Defaulting Lender” means, at any time, any Lender that (a) has failed for two (2) or more Business Days after a Borrowing Date to fund its portion of an
Advance required pursuant to the terms of this Agreement (other than failures to fund as a result of a bona fide dispute as to whether the conditions to borrowing were satisfied on
the relevant Borrowing Date (which condition precedent, together with any applicable default, has been specifically identified to the Administrative Agent in writing or in any public
statement by such Lender)), (b) has notified the Borrower, the Servicer or the Administrative Agent in writing that it does not intend to comply with its funding obligations
hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund an Advance hereunder and states that such
position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically
identified in such writing or public statement) cannot be satisfied), (c) has failed, within two (2) Business Days after written request by the Administrative Agent or the Borrower, to
confirm in
-24-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting
Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower) or (d) has, or has a direct or indirect parent company that
has, (i) become the subject of a proceeding under the Bankruptcy Code or any other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium,
receivership, insolvency, reorganization or similar debtor relief laws of the United States or other applicable jurisdiction, (ii) had appointed for it a receiver, custodian, conservator,
trustee, administrator, assignee for the benefit of creditors or similar person charged with reorganization or liquidation of its business or assets, including the Federal Deposit
Insurance Corporation or any other state or federal regulatory authority acting in such a capacity or (iii) become the subject of any Undisclosed Administration; provided that a
Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a
Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from
the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or
agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) shall be
conclusive and binding absent manifest error.
“Delayed Drawdown Collateral Loan” means a Collateral Loan that (a) requires the Borrower to make one or more future advances to the Obligor under the
Related Documents, (b) specifies a maximum amount that can be borrowed on one or more fixed borrowing dates, and (c) does not permit the re‑borrowing of any amount
previously repaid by the Obligor thereunder; provided that any such Collateral Loan will be a Delayed Drawdown Collateral Loan only to the extent of unfunded commitments and
solely until all commitments by the Borrower to make advances on such Collateral Loan to the Obligor under the Related Documents expire or are terminated or are reduced to zero.
“Deliver” or “Delivered” or “Delivery” means the taking of the following steps:
(a) with respect to such of the Collateral as constitutes an instrument that does not constitute a Financial Asset forming the basis of a Security Entitlement
Delivered to the Custodian pursuant to the other clauses of this definition, causing the Custodian to take and continuously maintain possession of such instrument
indorsed to the Collateral Agent or in blank by an effective indorsement;
(b) with respect to such of the Collateral as constitutes a Certificated Security, (i) causing the delivery of such Certificated Security to the Custodian
registered in the name of the Custodian or its affiliated nominee or endorsed to the Custodian or its affiliated nominee or endorsed in blank, (ii) causing the Custodian to
continuously identify on its books and records that such Certificated Security is credited to the appropriate Covered Account and (iii) causing the Custodian to maintain
continuous possession of such Certificated Security;
-25-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(c) with respect to such of the Collateral as constitutes an Uncertificated Security, (i) causing the issuer of such Uncertificated Security to register the
Collateral Agent as the registered owner of such Uncertificated Security, (ii) causing the issuer of such Uncertificated Security to agree to comply with instructions of the
Collateral Agent without further consent of the Borrower, upon original issue or registration of transfer by the issuer of such Uncertificated Security or (iii)(A) causing
the issuer of such Uncertificated Security to register the Custodian as the registered owner of such Uncertificated Security and (B) causing the Custodian to continuously
identify on its books and records that such Uncertificated Security is credited to the appropriate Covered Account;
(d) with respect to such of the Collateral as constitutes a Security Entitlement, causing the Securities Intermediary to indicate by book entry that the
Financial Asset relating to such Security Entitlement has been credited to the appropriate Covered Account;
(e) with respect to such of the Collateral as constitutes a deposit account, causing such deposit account to be maintained in the name of the Collateral Agent
or causing the bank with which such deposit account is maintained to agree in writing with the parties hereto that (i) such bank shall comply with instructions originated
by the Collateral Agent directing disposition of the funds in the deposit account without further consent of any other Person, (ii) such bank will not agree with any
Person other than the Collateral Agent to comply with instructions originated by any Person other than the Collateral Agent or the Borrower (or the Servicer on its
behalf), (iii) such deposit account and the funds on deposit therein shall not be subject to any Lien or right of set‑off in favor of such bank or anyone claiming through it
(other than the Collateral Agent) other than as permitted by the Account Control Agreement, (iv) such agreement shall be governed by the laws of the State of New
York, and (v) with respect to such bank, the State of New York shall be the “bank’s jurisdiction” for purposes of Article 9 of the UCC;
(f) with respect to such of the Collateral as constitutes an account or a general intangible or is not otherwise described in the foregoing clauses (a) through
(e), causing to be filed with the Secretary of State of the State of Delaware a properly completed UCC financing statement that names the Borrower as debtor and the
Collateral Agent as secured party and that describes such Collateral (including as “all assets” or similar, and which financing statement may have been previously filed)
or any equivalent filing in any applicable jurisdiction; or
(g) in the case of each of clauses (a) through (f) above, such additional or alternative procedures as may hereafter become necessary or desirable to perfect
the security interest granted to the Collateral Agent hereunder in such items of the Collateral, consistent with Applicable Law.
The Servicer on behalf of the Borrower shall obtain any and all consents required by the Related Documents to permit any Collateral Loan to be pledged in
favor of the Collateral Agent hereunder (except to the extent that the requirement for such consent is rendered ineffective under Section 9-406 or 9-408 of the UCC).
-26-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
“Determination Date” means, with respect to any Payment Date, the last day of the calendar month immediately preceding such Payment Date.
“DIP Loan” means a Collateral Loan made to a debtor‑in‑possession pursuant to Section 364 of the Bankruptcy Code having the priority allowed by either
Section 364(c) or 364(d) of the Bankruptcy Code and fully secured by senior liens on which the related Obligor is required to pay interest and/or principal on a current basis.
“Disqualified Institution” means, at the time of any relevant assignment pursuant to Section 12.06(a) or participation pursuant to Section 12.06(c), as
applicable, (a) any Person primarily engaged in the business of private investment management as a business development company, mezzanine fund, private debt fund, hedge fund
or private equity fund, which is in direct competition with the Borrower, the Servicer or the sub-advisor of the Servicer, or any Affiliate thereof that is an investment advisor, (b) any
Person controlled by, or controlling, or under common control with, or which is a sponsor of, a Person referred to in clause (a) above, or (c) any Person for which a Person referred
to in clause (a) or (b) above serves as an investment advisor with discretionary investment authority, in each case of clause (a) through (c), other than (i) an Affiliate of the related
assignor or seller of a participation, as applicable, (ii) a commercial bank, (iii) investment bank, and (iv) an insurance company.
“Disruption Event” means the occurrence of any of the following with respect to any Eligible Currency: (a) any Lender shall have notified the
Administrative Agent of the commercially reasonable determination by such Lender that it would be contrary to Law or to the directive of any Governmental Authority (whether or
not having the force of law) to obtain such Eligible Currency to fund any Advance, (b) the Administrative Agent shall have notified the Borrower and each Lender of the inability,
acting in a commercially reasonable manner, to determine the applicable Benchmark for Advances in such Eligible Currency, (c) the Required Lenders shall have notified the
Administrative Agent of the commercially reasonable determination by such Lenders that the rate at which deposits of such Eligible Currency are being offered to such Lenders
does not accurately reflect the cost to such Lenders of making, funding or maintaining any Advance in such Eligible Currency or (d) any Lender shall have notified the
Administrative Agent of the inability of such Lender, acting in a commercially reasonable manner, to obtain such Eligible Currency to make, fund or maintain any Advance in such
Eligible Currency.
“Diversity Score” means, as of any day, a single number that indicates Collateral Loan concentration in terms of both Obligor and industry concentration,
calculated as set forth in Schedule 7, as such diversity scores shall be updated at the mutual agreement of the Administrative Agent and the Borrower if Moody’s publishes revised
criteria.
“Document Checklist” means an electronic or hard copy list delivered by the Borrower (or the Servicer on its behalf) to the Custodian that identifies each of
the documents contained in each Loan File and whether such document is an original or a copy and whether a hard copy or electronic copy will be delivered to the Custodian related
to the Collateral Loan and includes the name of the Obligor with respect to such Collateral Loan, in each case as of the related date of Advance or acquisition by the Borrower.
“Dollars” and “$” mean lawful money of the United States of America.
-27-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
“Due Date” means each date on which any payment is due on a Collateral Loan in accordance with its terms.
“EBITDA” means, with respect to any Relevant Test Period (or other period set forth herein) and any Collateral Loan, the meaning of the term “Adjusted
EBITDA”, the term “EBITDA” or any comparable term in the Related Documents for such period (together with all add backs and exclusions as designated in such Underlying
Loan Agreement) and Collateral Loan (or, in the case of a Collateral Loan for which the Related Documents have not been executed, as set forth in the relevant marketing materials
or financial model in respect of such Collateral Loan, until the first testing period after the Related Documents have been executed), and in any case that the term “Adjusted
EBITDA”, the term “EBITDA” or such comparable term is not defined in such Related Document or marketing materials or financial model, an amount, for the principal Obligor
thereunder and any of its parents that are obligated as guarantor or co-borrower pursuant to the Related Documents and any of their respective Subsidiaries for such Collateral Loan
(determined in good faith by the Servicer in accordance with the Servicing Standard on a consolidated basis without duplication in accordance with GAAP (and also on a pro forma
basis as determined in good faith by the Servicer in accordance with the Servicing Standard in case of any acquisitions)) equal to earnings from continuing operations for such period
plus, in each case to the extent deducted in determining earnings from continuing operations for such period, interest expense, income taxes, depreciation and amortization for such
period, other non-cash charges and organization costs, extraordinary, one-time and/or non-recurring losses or charges and any other item the Servicer and the Administrative Agent
mutually deem to be appropriate; provided that with respect to any Obligor for which four full fiscal quarters of financial data are not available, EBITDA shall be determined for
such Obligor based on annualizing the financial data from the reporting periods actually available in a manner mutually acceptable to the Borrower and the Administrative Agent.
“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision
of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any
financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated
supervision with its parent.
“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member
Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“Effective LTV” means, with respect to any Asset Based Loan as of any date of determination, the product of (i) the Principal Balance of such Collateral
Loan divided by (ii) the Appraised Value of such Collateral Loan as of such date of determination.
“Eligible Assignee” means any Affiliate of Citibank, any Conduit Lender administered by any Affiliate of Citibank, and any Liquidity Bank.
-28-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
“Eligible Collateral Loan” means a Collateral Loan that (A), if it is a Consent Collateral Loan acquired after the A&R Effective Date, has been approved by
the Administrative Agent, in its sole discretion, prior to the date on which the Borrower commits to acquire such Collateral, and (B) satisfies each of the following eligibility
requirements on any date of determination (unless (x) such Loan was eligible under the Existing Agreement and was not in compliance with one or more criteria below (but, for the
avoidance of doubt, solely with respect to such criteria) or (y) otherwise expressly waived by the Administrative Agent in its sole discretion):
(a) the acquisition of a Collateral Loan from the originator does not violate Applicable Law;
(b) the Collateral Loan has an original term to maturity of not greater than (i) if such Collateral Loan is a Healthcare Loan or an Asset Based Loan, five (5)
years, and (ii) in all other cases, seven (7) years;
(c) the Collateral Loan is either (i) a First Lien Loan, (ii) a First Lien Last Out Loan, (iii) an Asset Based Loan or (iv) a Second Lien Loan;
(d) as of the applicable Acquisition Date, if the Collateral Loan is a Healthcare Loan, the Servicer has confirmed (based on financial information provided
by the related Obligor) that, immediately prior to the Acquisition Date, the related Obligor maintains Unrestricted Cash and availability under its credit facilities
necessary to make payment on all of its Indebtedness over the next 12-Month period;
(e) if the Collateral Loan is a Healthcare Loan, (i) it is a First Lien Loan and (ii) the ratio of cash equity invested to total debt of the related Obligor is equal
to or greater than 3:00:1.00 at all times;
(f) the Obligor for such Collateral Loan is incorporated in the United States or Canada;
(g) unless the Collateral Loan is a Revolving Collateral Loan or a Delayed Drawdown Collateral Loan, it is not an obligation pursuant to which any future
advances or payments to the Obligor may be required to be made by the Borrower;
(h) as of the applicable Acquisition Date, the Collateral Loan has been originated or acquired by the Borrower in accordance with the Credit and Collection
Policy;
(i) as of the applicable Acquisition Date, the Collateral Loan has an Original Asset Value of not less than 90.00%;
(j) the Collateral Loan is denominated in an Eligible Currency and does not permit the currency to be changed or place of payment to be modified outside of
the United States;
-29-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(k) as of the applicable Acquisition Date, the Collateral Loan is not a Defaulted Loan;
(l) the Collateral Loan is either (i) a Fixed Rate Obligation (subject to the Concentration Limitations), or (ii) provides for scheduled payments of floating-
rate interest in cash on at least a semi-annual basis;
(m) the Collateral Loan is not a loan primarily for personal, family or household use;
(n) the Collateral Loan and related Underlying Loan Agreement and related documents are in full force and effect and free and clear of Liens (other than
Permitted Liens);
(o) the Collateral Loan and related Underlying Loan Agreement and related documents and Loan File is fully assignable or, if such assignment is subject to
the consent of the underlying Obligor or lender agent under the related Underlying Loan Agreement, the related Underlying Loan Agreement provides that such consent
to assignment shall not be unreasonably withheld; provided that all consents required to be obtained with respect to the Borrower’s purchase of such Collateral Loan shall
have obtained prior to the related Acquisition Date;
(p) the Underlying Loan Agreement qualifies as an “instrument” or a “payment intangible” under article 9 of the UCC;
(q) the Collateral Loan and obligations under the Underlying Loan Agreement are not subject to any litigation, dispute, refund, claims of rescission, setoff,
netting, counterclaim or defense;
(r) the payments under the Collateral Loan are not subject to withholding tax (unless grossed up);
(s) the Collateral Loan was not adversely selected by the originator or Servicer;
(t) the Collateral Loan is not secured by margin stock nor exchangeable for equity;
(u) the Collateral Loan is not a commercial real estate loan, construction loan or otherwise principally secured by real property;
(v) is not a Structured Finance Obligation, an unsecured loan, or a bridge loan;
(w) if the Collateral Loan is a PIK Loan, it provides for a current cash pay rate equal to or greater than the Benchmark plus 4.50% per annum;
(x) the Collateral Loan is not a letter of credit;
-30-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(y) the Borrower, the Servicer and the related Obligor treat the payment obligations under the Collateral Loan as indebtedness for tax purposes;
(z) the Equityholder, if applicable, records the Collateral Loan on its books and records as a “true contribution” and contributed and transferred to the
Borrower;
(aa) the related Loan File for the Collateral Loan is in the possession of the Document Custodian within five (5) Business Days of any related Borrowing
Date as to the Collateral Loan;
(bb) each of the Servicer and the Borrower has all necessary licenses and permits under Applicable Law, to purchase, own and service the Collateral Loan in
the state where the related Obligor is located;
(cc) does not contain confidentiality restrictions that would prohibit the Administrative Agent, the Collateral Agent or the Lenders from accessing or
receiving all material information with regards to such Collateral Loan (subject to customary confidentiality provisions);
(dd) except with respect to Healthcare Loans and Asset Based Loans, the EBITDA of the related Obligor of the Collateral Loan is greater than or equal to
(i) if such Collateral Loan is a Covenant Lite Loan, $50,000,000, and (ii) in all other cases, $10,000,000;
(ee) the Collateral Loan is not a DIP Loan; and
(ff) the Collateral Loan is not an MRR Loan.
“Eligible Currency” means Dollars and CAD.
“Eligible Investment Required Ratings” means, (a) with respect to any obligation or security, with respect to ratings assigned by Moody’s, “Aa2” or higher
or “P-1” for one month instruments, “Aa2” or higher and “P-1” for three month instruments, “Aa2” or higher and “P-1” for six month instruments and “Aa2” or higher and “P-1” for
instruments with a term in excess of six months and (b) with respect to rating assigned by S&P, “A-1” or “A-1+” for short term instruments and “AA” or higher for long term
instruments.
“Eligible Investments” means any Dollar‑denominated investment that, at the time it is Delivered, is Cash or one or more of the following obligations or
securities:
(a) direct obligations of, and obligations the timely payment of principal and interest on which is fully and expressly guaranteed by, the United States of
America or any agency or instrumentality of the United States of America the obligations of which are expressly backed by the full faith and credit of the United States
of America;
(b) demand and time deposits in, bank deposit products of, certificates of deposit of, trust accounts with, bankers’ acceptances payable within 183 days of
issuance by, or federal funds sold by any depository institution or trust company incorporated under
-31-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
the laws of the United States of America or any state thereof and subject to supervision and examination by federal and/or state banking authorities, so long as the
commercial paper and/or the debt obligations of such depository institution or trust company (or, in the case of the principal depository institution in a holding company
system, the commercial paper or debt obligations of such holding company) at the time of such investment or contractual commitment providing for such investment
have the Eligible Investment Required Ratings;
(c) non‑extendable commercial paper or other short‑term obligations with the Eligible Investment Required Ratings and that either bear interest or are sold
at a discount from the face amount thereof and have a maturity of not more than 183 days from their date of issuance; and
(d) money market funds that have, at all times, ratings in the highest credit rating category by Moody’s and S&P (based on tranche rating not corporate
family rating);
provided that none of the foregoing obligations or securities shall constitute Eligible Investments if (A) such obligation or security has an “f”, “r”, “p”, “pi”,
“q”, “sf” or “t” subscript assigned by S&P, (B) all, or substantially all, of the remaining amounts payable thereunder consist of interest and not principal payments, (C) such
obligation or security is subject to U.S. withholding or foreign withholding tax unless the issuer of the security is required to make “gross‑up” payments for the full amount of such
withholding tax, (D) such obligation or security is secured by real property, (E) such obligation or security is purchased at a price greater than 100% of the principal or face amount
thereof, (F) such obligation or security is subject of a tender offer, voluntary redemption, exchange offer, conversion or other similar action or (G) in the Servicer’s judgment in
accordance with the Servicing Standard, such obligation or security is subject to material non‑credit related risks. Any such investment may be made or acquired from or through the
Collateral Agent or any of its Affiliates, or any entity for whom the Collateral Agent or any of its Affiliates provides services (so long as such investment otherwise meets the
applicable requirements of the foregoing definition of Eligible Investment at the time of acquisition); provided, further, that (i) all rating requirements are based on the time of
purchase and (ii) Eligible Investments purchased with funds in the Collection Account shall be held until maturity and shall include only such investments which mature (or money
market mutual funds that may be liquidated without a loss) no later than the Business Day prior to the next Payment Date and (ii) no such Eligible Investment may be purchased at a
premium to its principal amount; provided, further, that an Eligible Investment must have a fixed principal amount due at maturity and, if rated by S&P, must not have an “r” suffix
attached to the rating. The Collateral Agent shall have no obligation to determine or oversee compliance with the foregoing requirements.
“Environmental Laws” means any and all foreign, federal, state, provincial and local laws, statutes, ordinances, rules, regulations, permits, licenses,
approvals, interpretations and orders of courts or any other Governmental Authority, relating to the protection of human health or the environment, including requirements pertaining
to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation, handling, reporting, licensing, permitting, investigation or remediation of Hazardous
Materials. Environmental Laws include the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. § 9601 et seq.), the Hazardous Material
Transportation Act (49 U.S.C. § 331 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Federal Water Pollution Control
-32-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Safe Drinking Water Act (42 U.S.C. §
300, et seq.), the Environmental Protection Agency’s regulations relating to underground storage tanks (40 C.F.R. Parts 280 and 281), and the Occupational Safety and Health Act
(29 U.S.C. § 651 et seq.), the Canadian Environmental Protection Act, 1999 (S.C. 1999, c. 33), and the Fisheries Act (R.S.C. 1985, c. F-14), and the rules and regulations
thereunder.
“Equity Cure Notice” has the meaning assigned to such term in Section 2.05(c)(ii).
“Equity Security” means any stock or similar security, certificate of interest or participation in any profit sharing agreement, reorganization certificate or
subscription, transferable share, voting trust certificate or certificate of deposit for an equity security, limited partnership or membership interest, interest in a joint venture, or
certificate of interest in a business trust; any security future on any such security; or any security convertible, with or without consideration into such a security, or carrying any
warrant (other than a detachable warrant) or right to subscribe to or purchase such a security; or any such warrant or right.
“Equityholder” means SLR Investment Corp.
“ERISA” means the Employee Retirement Income Security Act of 1974 and the regulations promulgated and rulings issued thereunder.
“ERISA Event” means (a) any “reportable event,” as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than
an event for which the thirty (30) day notice requirement is waived); (b) the failure with respect to any Plan to satisfy the “minimum funding standard” (as defined in Section 412 of
the Code or Section 302 of ERISA); (c) the filing pursuant to Section 412(c) of the Code or Section 302 of ERISA of an application for a waiver of the minimum funding standard
with respect to any Plan; (d) a determination that any Plan is, or is expected to be, in “at risk” status within the meaning of Section 430(i) of the Code or Section 303(i) of ERISA; (e)
the incurrence by the Borrower or any member of its ERISA Group of any liability under Title IV of ERISA with respect to the termination of any Plan; (f)(i) the receipt by the
Borrower or any member of its ERISA Group from the PBGC of a notice of determination that the PBGC intends to seek termination of any Plan or to have a trustee appointed for
any Plan under Section 4042 of ERISA, or (ii) the filing by the Borrower or any member of its ERISA Group of a notice of intent to terminate any Plan; (g) the incurrence by the
Borrower or any member of its ERISA Group of any liability (i) with respect to a Plan pursuant to Sections 4063 and 4064 of ERISA, (ii) with respect to a facility closing pursuant to
Section 4062(e) of ERISA, or (iii) with respect to the withdrawal or partial withdrawal from any Multiemployer Plan; (h) the receipt by the Borrower or any member of its ERISA
Group of any notice concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, in endangered status or critical status,
within the meaning of Section 432 of the Code or Section 305 of ERISA or is or is expected to be insolvent or terminated, within the meaning of Title IV of ERISA; or (i) the failure
of the Borrower or any member of its ERISA Group to make any required contribution to a Multiemployer Plan.
-33-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
“ERISA Group” means each controlled group of corporations or trades or businesses (whether or not incorporated) under common control that is treated as a
single employer under Section 414(b), (c), (m) or (o) of the Code with the Borrower.
“Errors” has the meaning assigned to such term in Section 14.08(c).
“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in
effect from time to time.
“Event of Default” has the meaning assigned to such term in Section 6.01.
“Excess Concentration Amount” means, at any time in respect of which any one or more of the Concentration Limitations are exceeded, the portions
(calculated without duplication) of each Collateral Loan that cause such Concentration Limitations to be exceeded, as calculated by the Servicer and certified to as required
hereunder.
“Exchange Act” means the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder, all as from time to time in effect, or any
successor law, rules or regulations, and any reference to any statutory or regulatory provision shall be deemed to be a reference to any successor statutory or regulatory provision.
“Excluded Amounts” means (i) any amount deposited into the Collection Account with respect to any Collateral Loan, which amount is attributable to the
reimbursement of payment by the Borrower not using Collections of any Tax, fee or other charge imposed by any Governmental Authority on such Collateral Loan or on any
Related Security, (ii) any interest or fees (including origination, agency, structuring, management or other up‑front fees) that are for the account of the applicable Person from whom
the Borrower purchased such Collateral Loan to the extent such amount is attributable to a time before the Acquisition Date thereof, (iii) any reimbursement of insurance premiums
not paid by the Borrower using Collections, (iv) any escrows relating to Taxes, insurance and other amounts in connection with Collateral Loan which are held in an escrow account
for the benefit of the Obligor and the secured party pursuant to escrow arrangements as Related Security under the Related Documents securing the obligations represented by such
Collateral Loan or (v) any amount deposited into the Collection Account in error (including any amounts relating to any portion of an asset sold by the Borrower in accordance with
this Agreement, in each case to the extent such amount is attributable to a time after the effectiveness of such sale).
“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Secured Party or required to be withheld or deducted from a payment to
a Secured Party (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes and branch profits Taxes, in each case, (i) imposed by the jurisdiction (or
any political subdivision thereof) under the laws of which such Secured Party is organized or in which its principal office is located, or in the case of any Lender, in which its
applicable lending office is located or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the
account of such Lender with respect to an applicable interest in a Commitment or an Advance pursuant to a Law in effect on the date on which (i) such Lender acquires such
-34-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
interest in such Commitment or Advance (other than pursuant to an assignment request by the Borrower under Section 2.20(a)) or (ii) such Lender designates a new lending office,
except in each case to the extent that, pursuant to Section 12.03, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender
became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Secured Party’s failure to comply with Section 12.03(f), and
(d) Taxes imposed by FATCA.
“Facility Amount” means during the Reinvestment Period, $275,000,000 (as such amount may be reduced from time to time pursuant to Section 2.06 or as
otherwise agreed to by the Borrower, the applicable Lenders, the Servicer and the Administrative Agent); provided, that following the Commitment Termination Date, the Facility
Amount will equal the Advances Outstanding as of the applicable date of determination.
“Facility Documents” means this Agreement, the Notes, the Account Control Agreement, the Contribution Agreement, the Agent Fee Letter, any Lender Fee
Letter, the Collateral Administration and Agency Fee Letter and any other security agreements and other instruments entered into or delivered by or on behalf of the Borrower in
favor of the Collateral Agent, the Administrative Agent or any Lender from time to time pursuant to this Agreement.
“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended versions of Sections 1471 through 1474 of the
Code that are substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered
into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rule, guidance notes, or practices adopted pursuant to any intergovernmental agreement,
treaty or convention among Governmental Authorities implementing any of the foregoing.
“Federal Funds Rate” means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it.
“Fee Basis Amount” means, for any Payment Date, the quotient of (a) the arithmetic mean of (i) the Aggregate Principal Balance of all Eligible Collateral
Loans plus (ii) the Principal Proceeds and Eligible Investments made with Principal Proceeds on deposit in the Collection Account, in each case, on the first day and on the last day
of the related Interest Accrual Period, divided by (b) the number of days during such Interest Accrual Period.
“Final Maturity Date” means the earliest to occur of (i) the date on which the Borrower (or the Servicer on its behalf) reduces the Facility Amount in full
pursuant to Section 2.06(b); (ii) the day that is two (2) years after the Commitment Termination Date; and (iii) the date on which the Administrative Agent provides notice of the
declaration of the Final Maturity Date after the occurrence and during the continuance of an Event of Default; provided, that, in the case
-35-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
of the foregoing clauses (i) and (ii), if such day is not a Business Day, then the Final Maturity Date shall be the next succeeding Business Day.
“Financial Asset” has the meaning specified in Section 8‑102(a)(9) of the UCC.
“First Lien Last Out Loan” means, as of any date of determination, any Collateral Loan that would constitute a First Lien Loan but that, at any time prior to
and/or after an event of default under the related Underlying Loan Agreement of such Eligible Collateral Loan, will be paid after one or more tranches of First Lien Loans issued by
the same Obligor have been paid in full in accordance with a specified waterfall or other priority of payments.
“First Lien Loan” means any Collateral Loan that (i) is secured by a valid and perfected first priority Lien on substantially all of the Obligor’s assets
constituting underlying assets for the Collateral Loan, subject to any “permitted liens” as defined in the applicable Underlying Loan Agreement for such Collateral Loan or such
comparable definition or provision if “permitted liens” is not defined therein (including, without limitation, priority Liens on certain current assets, including accounts receivable, to
secure working capital facilities set forth in “permitted liens” as defined in such Underlying Loan Agreement or such comparable definition or provision if “permitted liens” is not
defined therein), (ii) provides that the payment obligation of the Obligor on such Collateral Loan is either senior to, or pari passu with, all other Indebtedness of such Obligor, and
(iii) for which Liens on the assets constituting underlying assets securing any other outstanding Indebtedness of the Obligor (including Liens securing Second Lien Loans or Deemed
Second Lien Loans, but otherwise excluding “permitted liens” referred to above) is expressly subject to and contractually or structurally subordinate to the priority claim under the
Underlying Loan Agreement governing such Collateral Loan or the related documentation of the “first lien” lenders under such “First Lien Loan”; provided that, with respect to any
Asset Based Loan, no other obligations of such Obligor are senior to such Asset Based Loan.
“Fixed Rate Obligation” means any Collateral Loan that bears a fixed rate of interest.
“Floor” means 0.00%.
“Floor Obligation” means, as of any date:
(a) a Collateral Loan (i) for which the Related Documents provides for a SOFR (or any successor index therefor) option and that such rate is calculated as
the greater of a specified “floor” rate per annum and such rate for the applicable Interest Accrual Period and (ii) that, as of such date, bears interest based on such rate
option, but only if as of such date the applicable rate for the applicable Interest Accrual Period is less than such floor rate; and
(b) a Collateral Loan (i) for which the Related Documents provides for a base or prime rate option and such base or prime rate is calculated as the greater of
a specified “floor” rate per annum and the base or prime rate for the applicable Interest Accrual Period and (ii) that, as of such date, bears interest based on such base or
prime rate option, but only if as of such date the base or prime rate for the applicable Interest Accrual Period is less than such floor rate.
-36-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
“Fundamental Amendment” means any amendment, modification, waiver or supplement of or to this Agreement that would (as determined by the
Administrative Agent) (a) increase or extend the term of the Commitments or change the Final Maturity Date, (b) extend the date fixed for the payment of principal of or interest on
any Advance or any fee hereunder, (c) reduce the amount of any scheduled payment of principal or the amount of any other payment due to any Lender, (d) reduce the rate at which
interest is payable thereon or any fee is payable hereunder (other than any waiver or rescission of the Default Rate), (e) release any material portion of the Collateral, except in
connection with dispositions expressly permitted hereunder, (f) alter the terms of Section 9.01 or Section 12.01(b) or, for purposes of Sections 9.01 or 12.01(b), alter any defined
term or alter any other provision of this Agreement to the extent such alteration would alter the order of application of proceeds or the pro rata sharing of payments required thereby
or (g) modify the definitions of the terms “Required Lenders” or “Fundamental Amendment” or modify in any other manner the number or percentage of the Lenders required to
make any determinations or waive any rights hereunder or to modify any provision hereof.
“GAAP” means generally accepted accounting principles in effect from time to time in the United States or, with respect to an Obligor located outside the
United States, such other generally accepted accounting principles in effect from time to time in the jurisdiction of such Obligor.
“Governmental Authority” means any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, administrative tribunal, central bank, public office, court, arbitration or mediation panel, or other entity exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of government, including the SEC, the stock exchanges, any federal, state, territorial, county, municipal or other government or governmental
agency, arbitrator, board, body, branch, bureau, commission, court, department, instrumentality, master, mediator, panel, referee, system or other political unit or subdivision or
other entity of any of the foregoing, whether domestic or foreign (including any supra-national bodies such as the European Union or the European Central Bank).
“Governmental Authorizations” means all franchises, permits, licenses, approvals, consents and other authorizations of all Governmental Authorities.
“Governmental Filings” means all filings, including franchise and similar tax filings, and the payment of all fees, assessments, interests and penalties
associated with such filings with all Governmental Authorities.
“Hazardous Materials” means all materials subject to any Environmental Law, including materials listed in 49 C.F.R. § 172.101, materials defined as
hazardous pursuant to § 101(14) of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, flammable, explosive or radioactive materials, hazardous
or toxic wastes or substances, lead based materials, petroleum or petroleum distillates or asbestos or material containing asbestos, polychlorinated biphenyls, radon gas, urea
formaldehyde and any substances classified as being “in inventory”, “usable work in process” or similar classification that would, if classified as unusable, be included in the
foregoing definition.
-37-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
“Healthcare Loan” means a Collateral Loan that is a “venture” loan and whose principal underlying assets consist of an all asset lien (including accounts,
inventory and equipment, where applicable) (subject to any “permitted liens” as defined in the applicable Underlying Loan Agreement for such Collateral Loan or such comparable
definition or provision if “permitted liens” is not defined therein) but with at least a negative pledge on the intellectual property, of an Obligor that is in the startup, R&D or early-
stage commercial phase and whose principal business is in the bio-pharmaceutical, medical device, healthcare IT or healthcare services industries.
“Incurrence Covenant” means a covenant by any Obligor to comply with one or more financial covenants only upon the occurrence of certain actions of such
Obligor, including a debt issuance, dividend payment, share purchase, merger, acquisition or divestiture.
“Indebtedness” means, with respect to any Person at any date, (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of
property or services (other than current liabilities incurred in the ordinary course of business and payable in accordance with customary trade practices) or that is evidenced by a
note, bond, debenture or similar instrument or other evidence of indebtedness customary for indebtedness of that type, (b) all obligations of such Person under leases that have been
or should be, in accordance with GAAP, recorded as capital leases, (c) all obligations of such Person in respect of acceptances issued or created for the account of such Person, (d)
all liabilities secured by any Lien on any property owned by such Person even though such Person has not assumed or otherwise become liable for the payment thereof, (e) all
indebtedness, obligations or liabilities of that Person in respect of derivatives or hedges, and (f) all obligations under direct or indirect guaranties in respect of obligations (contingent
or otherwise) to purchase or otherwise acquire, or to otherwise assure a creditor against loss in respect of, indebtedness or obligations of others of the kind referred to in clauses (a)
through (e) above (in each case excluding any unfunded commitments of the Borrower with respect to any Delayed Drawdown Collateral Loan or any Revolving Collateral Loan).
“Indemnified Party” has the meaning assigned to such term in Section 12.04(b).
“Independent Accountants” has the meaning assigned to such term in Section 8.09(a).
“Independent Director” means a manager of the Borrower who, (a) is an employee of, or is a special purpose corporation which is an Affiliate of or is
operated by, employees of, or is otherwise provided by, any one of CT Corporation, Citadel SPV, Maples Fiduciary Services, Corporation Service Company, Puglisi & Associates,
National Registered Agents, Inc., Wilmington Trust Company, Lord Securities Corporation, The Corporation Trust Company, or an Affiliate thereof, or, if none of those companies
is then providing professional independent directors or managers, another nationally‑recognized company, in each case that is not an Affiliate of the Borrower and that provides
professional independent directors or managers and other corporate services in the ordinary course of its business; (b) in the case of any natural person, has prior experience as an
independent director for a corporation, or as an independent director or independent manager or independent trustee for a limited liability company or trust, whose organizational
documents required the unanimous consent of all independent directors (or independent managers or independent trustees) thereof before such corporation or limited liability
-38-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
company or trust could consent to the institution of bankruptcy or insolvency proceedings against it or could file a petition seeking relief under any applicable federal or state law
relating to bankruptcy; and (c) in the case of any natural person, is not, and has not been for a period of five (5) years prior to his or her appointment as an Independent Director, in
each case to the knowledge of the Borrower: (i) a director, manager, member, officer or partner, of (A) the Borrower, (B) the Servicer, (C) the Equityholder or (D) any Affiliate of
the Equityholder, the Borrower or the Servicer or (ii) a spouse, parent, sibling or child of any Person referred to in clause (i) above; provided, however, such Independent Director
may be an independent director, independent trustee or independent manager of one or more other special purpose entities affiliated with the Equityholder, the Borrower or the
Servicer or their respective Affiliates.
“Industry Classification” means the industry classification set forth in Schedule 4 that the Servicer, with the approval of the Administrative Agent in its sole
discretion, assigns such Collateral Loan based on the predominant end-user of the applicable Obligor’s product, as such industry classifications shall be updated by the Borrower
with the written consent of the Administrative Agent.
“Ineligible Collateral Loan” means, at any time, a loan or other obligation, or any portion thereof, that fails to satisfy any criteria of the definition of
“Eligible Collateral Loan”.
“Insolvency Event” means, with respect to a specified Person, (a) the filing of a decree or order for relief by a court having jurisdiction in the premises in
respect of such Person or any substantial part of its property in an involuntary case under the Bankruptcy Code or any other applicable insolvency Law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its property, or ordering the winding‑up or
liquidation of such Person’s affairs, and such decree or order shall remain unstayed and in effect for a period of sixty (60) consecutive days; or (b) the commencement by such
Person of a voluntary case under the Bankruptcy Code or any other applicable insolvency Law now or hereafter in effect, or the consent by such Person to the entry of an order for
relief in an involuntary case under any such Law, or the consent by such Person to the appointment of or taking possession by a receiver, an administrator, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its property, or the making by such Person of any general assignment for the benefit of
creditors, or the failure by such Person generally to pay its debts as such debts become due, or the taking of action by such Person in furtherance of any of the foregoing.
“Instrument” has the meaning specified in Section 9‑102(a)(47) of the UCC.
“Insurance Policy” means, with respect to any Collateral Loan, an insurance policy covering liability and physical damage to, or loss of, the underlying
assets.
“Insurance Proceeds” means any amounts received on or with respect to a Collateral Loan under any Insurance Policy or with respect to any condemnation
proceeding or award in lieu of condemnation, other than any such amount received which is required to be used to restore, improve or repair the related real estate or other assets or
required to be paid to the Obligor under the Underlying Loan Agreement.
-39-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
“Interest” means, for each day during an Interest Accrual Period and each Advance outstanding by a Lender on such day, the sum of the products (for each
day during such Interest Accrual Period) of:
D
D
P
IR
1
where:
IR = the Interest Rate for such Advance on such day;
P = the principal amount of such Advance on such day; and
D = (x) to the extent the Interest Rate is calculated based on the Base Rate, 365 days or 366 days, as applicable, (y) to the extent the Interest Rate is calculated
based on Daily Compounded CORRA, 365 days or (z) otherwise, 360 days.
“Interest Accrual Period” means with respect to any Payment Date, the period from but excluding the Determination Date prior to the preceding Payment
Date to and including the Determination Date prior to such Payment Date; provided, that the Interest Accrual Period with respect to the Payment Date occurring on October 10, 2024
shall mean the period from and including the A&R Effective Date to and including the Determination Date prior to such Payment Date; provided, further, that the final Interest
Accrual Period hereunder shall end on and include the day of the Payment in Full of the Advances hereunder.
“Interest Collection Account” has the meaning assigned to such term in Section 8.02(a).
“Interest Proceeds” means, with respect to any Collection Period or the related Determination Date, without duplication, the sum of:
(a) all payments of interest and other income received by the Borrower during such Collection Period on the Collateral Loans (including interest and other
income received on Ineligible Collateral Loans and the accrued interest received in connection with a sale of any such Collateral Loan during such Collection Period),
less any such amount that represents Principal Financed Accrued Interest;
(b) all principal and interest payments received by the Borrower during such Collection Period on Eligible Investments purchased with Interest Proceeds;
(c) all amendment and waiver fees, late payment fees, prepayment fees and all protection fees and other fees and commissions received by the Borrower
during such
-40-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Collection Period unless the Servicer has determined that such payments are to be treated as Principal Proceeds;
(d) commitment fees, facility fees, anniversary fees, ticking fees and other similar fees received by the Borrower during such Collection Period unless the
Servicer has determined that such payments are to be treated as Principal Proceeds; and
(e) all amounts received in respect of Equity Securities held by the Borrower in respect of any Obligor.
Any amounts received in respect of any Defaulted Loan will constitute Principal Proceeds (and not Interest Proceeds) until the aggregate of all Collections in
respect of such Defaulted Loan since it became a Defaulted Loan equals the outstanding principal balance of such Collateral Loan at the time it became a Defaulted Loan; thereafter,
any such amounts will constitute Interest Proceeds.
“Interest Rate” means, for each day during any Interest Accrual Period and for each Advance outstanding in any Eligible Currency, for each day during such
Interest Accrual Period, the Cost of Funds Rate for such Interest Accrual Period plus the Applicable Margin; provided that if a Disruption Event has occurred and is continuing with
respect to a particular Eligible Currency, then subject to Section 12.01(c), “Interest Rate” with respect to Advances denominated in the affected Eligible Currency means the Base
Rate (determined without giving effect to clause (c) of the definition thereof) plus the Applicable Margin.
“Investment Company Act” means the Investment Company Act of 1940 and the rules and regulations promulgated thereunder.
“IRS” means the United States Internal Revenue Service.
“Law” means any action, code, consent decree, constitution, decree, directive, enactment, finding, guideline, law, injunction, interpretation, judgment, order,
ordinance, policy statement, proclamation, promulgation, regulation, requirement, rule, rule of law, treaty, rule of public policy, settlement agreement, statute, or writ, of any
Governmental Authority, or any particular section, part or provision thereof.
“Lender” means each Conduit Lender, each Committed Lender and each Uncommitted Lender, as the context may require, listed on Schedule 1 hereto and
any other Person that shall have become a party hereto in accordance with the terms hereof pursuant to an Assignment and Acceptance, other than any such Person that ceases to be
a party hereto pursuant to an Assignment and Acceptance.
“Lender Fee Letter” means each fee letter among the Administrative Agent, the Lenders party thereto and the Borrower, setting forth certain fees payable by
the Borrower to one or more Lenders in connection with the transactions contemplated by this Agreement.
“Lender Group” means each Lender and related Agent from time to time party hereto.
-41-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
“Lender Group Agent” means, with respect to any Lender Group, its “Lender Group Agent” (or, if no Lender Group Agent is designated for any Lender
Group, the applicable Lender shall be its own Lender Group Agent).
“Liabilities” means all liabilities, obligations, losses, claims, damages, penalties, actions, judgments, suits, costs (including costs of enforcement of any
Facility Document), expenses (including reasonable and documented out‑of‑pocket attorneys’ fees and expenses) and disbursements of any kind or nature whatsoever, whether or
not brought by the Borrower, the Servicer, the Equityholder or any third party.
“Lien” means any mortgage, pledge, hypothecation, assignment, encumbrance, lien or security interest (statutory or other), or preference, priority or other
security agreement, charge or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any financing lease
having substantially the same economic effect as any of the foregoing, and the filing authorized by the Borrower of any financing statement under the UCC or comparable Law of
any jurisdiction); provided that “Lien” does not include (i) customary restrictions on assignments or transfers thereof on customary and market based terms pursuant to the Related
Documents relating to any Collateral Loan or (ii) in the case of any Equity Securities, customary drag-along, tag-along, right of first refusal and other similar rights in favor of other
equity holders of the same issuer.
“Liquidity Agreement” means with respect to any Liquidity Bank, any agreement entered into in connection with this Agreement pursuant to which a
Liquidity Bank agrees to make purchases from or advances to, or purchase assets from, any Conduit Lender in order to provide liquidity support for such Conduit Lender’s
Advances hereunder.
“Liquidity Bank” means, with respect to any Lender Group that includes a Conduit Lender, such Person or Persons who provide liquidity support to such
Conduit Lender pursuant to a Liquidity Agreement in connection with the issuance by such Conduit Lender of commercial paper or as may from time to time become a Liquidity
Bank hereunder.
“Loan File” means, with respect to each Collateral Loan delivered to the Custodian, each of the Required Loan Documents in original or copy, as identified
on the related Document Checklist and any other document delivered in connection therewith.
“LTV Ratio” means, with respect to any Collateral Loan, as of the related Acquisition Date, the ratio of the (i) outstanding Indebtedness of the relevant
Obligor to (ii) the collateral and enterprise value of such Obligor.
“Maintenance Covenant” means a covenant by any Obligor to comply with one or more financial covenants during each reporting period (but not more
frequently than quarterly), whether or not such Obligor has taken any specified action.
“Mandatory Amortization Advances Outstanding” means the Advances Outstanding as of the Commitment Termination Date.
“Mandatory Amortization Amount” means, with respect to the applicable Mandatory Amortization Dates set forth below and regardless of whether sufficient
funds are on
-42-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
deposit in the Collection Account in respect of such Mandatory Amortization Date, an amount equal to the product of (x) the percentage set forth below opposite such Mandatory
Amortization Date times (y) the Mandatory Amortization Advances Outstanding (for the avoidance of doubt, loan prepayments, amortization payments and loan sales count toward
the Mandatory Amortization Amount):
Mandatory Amortization Date
Percentage of Mandatory Amortization
Advances Outstanding to be Paid on
Relevant Mandatory Amortization Date
First Mandatory Amortization Date
25.00%
Each Mandatory Amortization Date thereafter
6.25%
“Mandatory Amortization Date” means every third Payment Date commencing with the first Payment Date to occur after the one‑year anniversary of the
Commitment Termination Date.
“Margin Stock” has the meaning assigned to such term in Regulation U.
“Material Adverse Effect” means, with respect to any event or circumstance, a material adverse effect on (a) the business, financial condition, operations,
performance or properties of the Equityholder or the Borrower, (b) the operations or the business of the Servicer in a manner that impairs the ability of the Servicer and its
employees to manage the Collateral Loans and the Borrower as contemplated by the Facility Documents (c) the validity, enforceability or collectability of this Agreement or any
other Facility Document or the validity, enforceability or collectability of the Collateral Loans generally or any material portion of the Collateral Loans, (d) the rights and remedies
of the Collateral Agent, the Collateral Administrator, the Custodian, the Administrative Agent, any Lender and the Secured Parties with respect to matters arising under this
Agreement or any other Facility Document, (e) the ability of each of the Borrower and the Servicer, to perform their respective obligations under this Agreement or any other
Facility Document, or (f) the status, existence, perfection, priority or enforceability of the Collateral Agent’s, the Administrative Agent’s or the other Secured Parties’ lien on the
Collateral.
“Material Modification” means, with respect to any Collateral Loan, any amendment, waiver, consent, forbearance or modification of, or supplement to, a
Related Document with respect thereto executed or effected after the related Acquisition Date, that (unless otherwise consented to by the Administrative Agent):
(a) (i) reduces, defers or forgives any principal amount due with respect to such Collateral Loan or provides for any such principal amount to be deferred
(other than any deferral already expressly permitted by the terms of the Related Documents as of the date such Collateral Loan was acquired), (ii) reduces, waives or
forgives any interest payment due with respect to such Collateral Loan, provides for any such interest to be deferred or
-43-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
capitalized and added to the principal amount of such Collateral Loan (other than (x) any deferral or capitalization or (y) any reduction related to positive performance
pursuant to a pricing grid, in each case already expressly permitted by the terms of the Related Documents as of the date such Collateral Loan was acquired), (iii)
reduces the rate of interest payable on such Collateral Loan or (iv) extends, delays or waives any scheduled principal installment or the stated maturity date of such
Collateral Loan;
(b) other than “permitted liens” (within the meaning of the applicable Underlying Loan Agreement), contractually or structurally subordinates such
Collateral Loan by operation of a priority of payments, turnover provisions, the transfer of assets in order to limit recourse to the related Obligor;
(c) substitutes, alters, releases or terminates all, substantially all or any material portion of the underlying assets securing such Collateral Loan;
(d) amends, waives, forbears, supplements or otherwise modifies (x) the meaning of “Senior Net Leverage Ratio,” “EBITDA,” “Permitted Lien,” “Total Net
Leverage Ratio,” or any respective comparable terms in the Related Documents for such Collateral Loan or (y) any term or provision of such Related Documents
referenced in or utilized in the calculation of any financial covenant, including “Senior Net Leverage Ratio,” “EBITDA,” or “Total Net Leverage Ratio” or, in each case,
any respective comparable terms for such Collateral Loan, in each case of clauses (x) and (y) above, in a manner that, in the commercially reasonable discretion of the
Administrative Agent, is materially adverse to the Secured Parties; or
(e) modifies any term or provision of the Related Documents that impacts the determination of any default or event of default with respect to such Collateral
Loan.
“Maximum Advance Rate” means, on any date of determination, (a) if the Diversity Score is less than 8, 55.00%, (b) if the Diversity Score is 8 or greater
and less than 12, 60.00%, (c) if the Diversity Score is 12 or greater and less than 15, 65.00% and (d) if the Diversity Score is 15 or greater, 70.00%.
“Maximum Weighted Average Life Test” means a test that will be satisfied on any date of determination if the Weighted Average Life of the Eligible
Collateral Loans as of such date is less than or equal to six (6) years.
“Measurement Date” means (a) the A&R Effective Date, (b) each Borrowing Date, (c) each Determination Date, (d) each Monthly Report Determination
Date, (e) the date on which a Collateral Loan is acquired or disposed of by the Borrower, (f) one Business Day after the date the Borrower (or the Servicer on its behalf) receives
notice that the Asset Value of any Collateral Loan is adjusted, (g) the Commitment Termination Date, and (h) any other dates reasonably requested by the Borrower or the
Administrative Agent with two (2) Business Days’ notice.
“Minimum Diversity Score Test” means a test that will be satisfied on any date of determination if the Diversity Score as of such date equals or exceeds 12.
-44-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
“Minimum Equity Amount” means, on any date of determination, an amount equal to the greater of (a) the Aggregate Outstanding Loan Balance of the
Eligible Collateral Loans of the four (4) largest Obligors (by Asset Value) and (b) 10.00% of the Facility Amount as of the A&R Effective Date.
“Minimum Liquidity” means, with respect to any Collateral Loan for any Relevant Test Period, the meaning of “Minimum Liquidity” or comparable term
set forth in the Related Documents for such Collateral Loan.
“Minimum Obligor Diversity Test” means a test that will be satisfied on any date of determination if the Eligible Collateral Loans represent obligations of
no less than twenty (20) unaffiliated Obligors.
“Minimum Weighted Average Spread Test” means a test that will be satisfied on any date of determination if the Weighted Average Spread (inclusive of any
index floors in respect of Floor Obligations that are Eligible Collateral Loans) equals or exceeds 4.50%.
“Money” has the meaning specified in Section 1‑201(24) of the UCC.
“Monthly Report” has the meaning specified in Section 8.08(a).
“Monthly Report Determination Date” has the meaning specified in Section 8.08(a).
“Moody’s” means Moody’s Investors Service, Inc., together with its successors.
“Moody’s Rating” means, with respect to any Collateral Loan, either (i) the public rating issued by Moody’s (based on tranche rating and not corporate
family rating) or (ii) any credit estimate issued by Moody’s received by the Borrower or the Servicer.
“MRR Loan” means a First Lien Loan that (i) is underwritten to recurring revenue, (ii) requires the related Obligor to comply with a financial covenant
related to recurring revenue, (iii) at the time of its origination, does not include and would not customarily be expected to include (as determined by the Servicer in accordance with
the Servicing Standard) a financial covenant based on “debt to EBITDA” or a similar multiple of debt to operating cash flow and (iv) is not subordinate to a working capital loan.
“Multiemployer Plan” means an employee pension benefit plan within the meaning of Section 4001 (a)(3) of ERISA that is sponsored by the Borrower or a
member of its ERISA Group or to which the Borrower or a member of its ERISA Group is obligated to make contributions or has any liability.
“Non‑Excluded Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of
the Borrower under any Facility Document and (b) to the extent not otherwise described in clause (a), Other Taxes.
“Non‑U.S. Lender” has the meaning assigned to such term in Section 12.03(f)(i)(B).
-45-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
“Note” means each promissory note, if any, issued by the Borrower to a Lender in accordance with the provisions of Section 2.03, substantially in the form
of Exhibit E hereto.
“Noteless Loan” means a Collateral Loan with respect to which (a) the related Underlying Loan Agreement does not require the Obligor to execute and
deliver an Underlying Note to evidence the indebtedness created under such Collateral Loan and (b) no Underlying Notes issued to the Borrower are outstanding with respect to the
portion of the Collateral Loan transferred to the Borrower.
“Notice of Borrowing” has the meaning assigned to such term in Section 2.02(a).
“Notice of Prepayment” has the meaning assigned to such term in Section 2.05(a).
“Obligations” means all Indebtedness and all other amounts owed, whether absolute, fixed or contingent, at any time or from time to time owing by the
Borrower to any Secured Party or any Affected Person solely to the extent arising under or in connection with this Agreement, the Notes or any other Facility Document, including
all amounts payable by the Borrower in respect of the Advances, with interest thereon, Administrative Expenses and all other amounts payable hereunder or thereunder by the
Borrower.
“Obligor” means, in respect of any Collateral Loan, any Person obligated to pay Collections in respect of such Collateral Loan, including any applicable
guarantors.
“Observable Market Price” means the most recent quoted bid-side price from MarkIt Partners or another independent nationally recognized loan pricing
service selected by the Administrative Agent and acceptable to the Servicer in its reasonable discretion.
“OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury.
“Opinion of Counsel” means a written opinion of counsel, which opinion and counsel are acceptable to the Administrative Agent in its sole discretion.
“Optional Sale” has the meaning assigned to that term in Section 10.01(e).
“Optional Sale Date” means any Business Day prior to the Commitment Termination Date identified by the Borrower in a written notice to the
Administrative Agent, Collateral Agent and Custodian of its intent to effect an Optional Sale on a date at least 20 days and not more than 45 days following the delivery date of such
written notice, all in accordance with Section 10.01(e).
“Original Asset Value” means, with respect to any Collateral Loan on any date of determination, (i) the Purchase Price of such Collateral Loan on the related
Acquisition Date multiplied by (ii) such Collateral Loan’s Principal Balance at such date of determination; provided that, (x) if the Purchase Price is in excess of 100%, it shall be
deemed to have been acquired at par and (y) the Original Asset Value of any Consent Collateral Loan shall be the amount determined by the Administrative Agent in its sole
discretion; provided, further, that, if a Collateral Loan (other than a Priced Loan) has an original issue discount of 3% of par or less or is otherwise
-46-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
acquired for a Purchase Price of 97% or greater (expressed as a percentage of par), it shall be deemed to have been acquired at par.
“Original Closing Date” means August 26, 2011.
“Other Connection Taxes” means, in the case of any Secured Party, any Taxes imposed by any jurisdiction by reason of such Secured Party having any
present or former connection with such jurisdiction (other than a connection arising from such Secured Party having executed, delivered, become a party to, performed its
obligations under, received any payment under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced its rights under this
Agreement, the Notes or any other Facility Document or sold or assigned an interest in any Collateral Loan or Facility Document).
“Other Taxes” has the meaning assigned to such term in Section 12.03(b).
“Outstanding Loan Balance” means for any Collateral Loan, for any date of determination, an amount equal to the Asset Value of such Collateral Loan at
such time multiplied by the Principal Balance of such Collateral Loan; provided that the parties hereby agree that the Outstanding Loan Balance of any Collateral Loan that is no
longer an Eligible Collateral Loan shall equal zero; provided, further, that if the Effective LTV of any Asset Based Loan exceeds (on any date of determination) the limit for the
applicable loan type set forth below, then the “Outstanding Loan Balance” of such Collateral Loan will be automatically (and without any action by the Administrative Agent)
reduced by the amount necessary to cause such Collateral Loan to comply with the applicable limit set forth below:
Asset Based Loan Type (by collateral source)
Effective LTV Limit
working capital Collateral Loans
90.00%
fixed assets Collateral Loans
85.00%
intellectual property Collateral Loans
60.00%
“Paid in Full” or “Payment in Full” means, with respect to any Obligations (a) the payment in full in cash of all such Obligations (other than contingent
indemnification and expense reimbursement obligations to the extent no claim giving rise thereto has been asserted) and (b) the termination or expiration of all of the Commitments.
“Participant” means any bank or other Person to whom a participation is sold as permitted by Section 12.06(c).
“Participant Register” has the meaning assigned to such term in Section 12.06(c)(ii).
“Participating Member State” means any member state of the European Union that adopts or has adopted the euro as its lawful currency in accordance with
legislation of the European Union relating to economic and monetary union.
“Participation Interest” means a participation interest in a loan, debt obligation or other obligation that satisfies each of the following criteria: (i) such loan
would constitute a Collateral Loan were it acquired directly, (ii) the seller of the participation is the lender on the
-47-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
loan, (iii) the aggregate participation in the loan does not exceed the principal amount or commitment of such loan, (iv) such participation does not grant, in the aggregate, to the
participant in such participation a greater interest than the seller holds in the loan or commitment that is the subject of the participation, (v) the entire purchase price for such
participation is paid in full at the time of its acquisition (or, in the case of a participation in a Revolving Collateral Loan or Delayed Drawdown Collateral Loan, at the time of the
funding of such loan), (vi) the participation provides the participant all of the economic benefit and risk of the whole or part of the loan or commitment that is the subject of the loan
participation, (vii) such participation shall be elevated to a full assignment within ninety (90) days of the sale of such participation and (viii) such participation is documented under a
Loan Syndications and Trading Association, Loan Market Association or similar agreement standard for loan participation transactions among institutional market participants. For
the avoidance of doubt, a Participation Interest shall not include a sub-participation interest in any loan.
“PATRIOT Act” means Title III of Pub. L. 107 56 (signed into Law on October 26, 2001).
“Payment” has the meaning specified in Section 11.07(a)(i).
“Payment Account” has the meaning assigned to such term in Section 8.03.
“Payment Date” means the 10th day of each calendar month, beginning in October 2024, and if such day is not a Business Day, the next succeeding
Business Day. The Final Maturity Date shall also be a Payment Date.
“Payment Date Report” has the meaning specified in Section 8.08(b).
“Payment Notice” has the meaning specified in Section 11.07(b)(i).
“PBGC” means the Pension Benefit Guaranty Corporation, or any successor agency or entity performing substantially the same functions.
“Percentage” of any Lender means, (a) with respect to any Lender party hereto on the A&R Effective Date, the percentage set forth opposite such Lender’s
name on Schedule 1, as such amount is reduced by any Assignment and Acceptance entered into by such Lender with an assignee or increased by any Assignment and Acceptance
entered into by such Lender with an assignor in accordance with the terms of this Agreement, or (b) with respect to a Lender that has become a party hereto pursuant to an
Assignment and Acceptance, the percentage set forth therein as such Lender’s Percentage, as such amount is reduced by an Assignment and Acceptance entered into between such
Lender and an assignee or increased by any Assignment and Acceptance entered into by such Lender with an assignor.
“Periodic Term SOFR Determination Day” has the meaning specified in the definition of “Term SOFR”.
“Permitted Liens” means any of the following as to which no enforcement, collection, execution, levy or foreclosure proceeding shall have been
commenced: (a) Liens created in favor of the Collateral Agent hereunder or under the other Facility Documents for the
-48-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
benefit of the Secured Parties; (b) Liens for Taxes if such Taxes shall not at the time be due and payable or if a Person shall currently be contesting the validity thereof in good faith
by appropriate proceedings and with respect to which reserves in accordance with GAAP have been provided on the books of such Person; (c) with respect to agented Collateral
Loans, security interests, liens and other encumbrances in favor of the lead agent, the collateral agent or the paying agent on behalf of all holders of Indebtedness of the related
Obligor under the related facility; (d) any security interests, liens and other rights or encumbrances granted under any governing documents or other agreement between or among or
binding upon the Borrower as the holder of equity in an Obligor; (e) Liens imposed by law, such as materialmen’s, warehousemen’s, mechanics’, carriers’, workmen’s and
repairmen’s Liens and other similar Liens, arising by operation of law in the ordinary course of business for sums that are not overdue or are being contested in good faith; (f) as to
Related Security, any Liens on the Related Security permitted pursuant to the applicable Related Documents or otherwise; (g) as to any Covered Account, customary Liens in favor
of the Securities Intermediary to the extent permitted in the Account Control Agreement and (h) precautionary Liens and filings of financing statements under the UCC, covering
assets sold or contributed by the Borrower to any Person not prohibited hereunder.
“Permitted Refinancing” means any refinancing transaction undertaken by the Equityholder or an Affiliate of the Equityholder that is secured, directly or
indirectly, by any Collateral Loan currently or formerly included in the Collateral or any portion thereof or any interest therein released from the Lien of this Agreement.
“Permitted RIC Distribution” means distributions on any Payment Date to the Equityholder (from the Collection Accounts or otherwise) to the extent
required to allow the Equityholder to make sufficient distributions to qualify as a regulated investment company, and to otherwise eliminate federal or state income or excise taxes
payable by the Equityholder in or with respect to any taxable year of the Equityholder (or any calendar year, as relevant); provided that the amount of any such payments made in or
with respect to any such taxable year (or calendar year, as relevant) of the Equityholder shall not exceed 115% of the amounts that the Borrower would have been required to
distribute to the Equityholder to: (i) allow the Borrower to satisfy the minimum distribution requirements that would be imposed by Section 852(a) of the Code (or any successor
thereto) to maintain its eligibility to be taxed as a regulated investment company for any such taxable year, (ii) reduce to zero for any such taxable year the Borrower’s liability for
federal income taxes imposed on (x) its investment company taxable income pursuant to Section 852(b)(1) of the Code (or any successor thereto) and (y) its net capital gain
pursuant to Section 852(b)(3) of the Code (or any successor thereto), and (iii) reduce to zero the Borrower’s liability for federal excise taxes for any such calendar year imposed
pursuant to Section 4982 of the Code (or any successor thereto), in the case of each of clause (i), (ii) or (iii) above, calculated assuming that the Borrower had qualified to be taxed as
a regulated investment company under the Code.
“Permitted Securitization” means a private or public term or conduit securitization transaction undertaken by the Equityholder, the Borrower or an Affiliate
of the Equityholder, that is secured, directly or indirectly, by any Collateral Loan currently or formerly included in the Collateral or any portion thereof or any interest therein
released from the Lien of this Agreement, including, without limitation, any collateralized loan obligation or collateralized debt obligation offering or other asset securitization.
-49-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
“Person” means an individual or a corporation (including a business trust), partnership, trust, incorporated or unincorporated association, joint stock
company, limited liability company, government (or an agency or political subdivision thereof) or other entity of any kind.
“PIK Loan” means a Collateral Loan that permits the Obligor thereon to defer or capitalize any portion of the accrued interest thereon.
“Plan” means an employee pension benefit plan (other than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the minimum
funding standards under Section 412 of the Code that is sponsored by the Borrower or a member of its ERISA Group or to which the Borrower or a member of its ERISA Group is
obligated to make contributions or has any liability.
“Potential Terminated Lender” has the meaning assigned to such term in Section 2.20(a).
“Predecessor Servicer Work Product” has the meaning assigned to such term in Section 14.08(c).
“Prepayment Fee” has the meaning assigned to such term in the Lender Fee Letter.
“Priced Loan” means any Collateral Loan with three or more observable bid quotations from a nationally recognized independent dealer in the related loan as
reported by an independent nationally recognized pricing service within five (5) Business Days following the acquisition of such Collateral Loan.
“Prime Rate” means the rate announced by Citibank from time to time as its prime rate in the United States, such rate to change as and when such designated
rate changes. The Prime Rate is not intended to be the lowest rate of interest charged by Citibank in connection with extensions of credit to debtors.
“Principal Balance” means, with respect to any loan, as of any date of determination, the outstanding principal amount of such loan, excluding any
capitalized interest; provided that, other than as expressly set forth herein, for all purposes of this Agreement and the other Facility Documents (other than in determining the Asset
Value or the Aggregate Principal Balance of any Collateral Loan for purposes of calculating each Borrowing Base or compliance with the Borrowing Base Test or the Effective
LTV), in determining the Principal Balance of any Delayed Drawdown Collateral Loan or Revolving Collateral Loan, any unfunded commitments in respect of such Delayed
Drawdown Collateral Loan or Revolving Collateral Loan shall be assumed to have been fully funded as of such date of determination.
“Principal Collection Account” has the meaning assigned to such term in Section 8.02(a).
“Principal Financed Accrued Interest” means, with respect to any Collateral Loan, the amount of Principal Proceeds, if any, applied towards the purchase of
accrued interest on such Collateral Loan; provided that Principal Financed Accrued Interest shall not include any accrued
-50-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
interest purchased with Interest Proceeds deemed to be Principal Proceeds as set forth in the definition of “Interest Proceeds;” provided, further, that once any Principal Financed
Accrued Interest is actually received by the Borrower, it shall no longer constitute Principal Financed Accrued Interest hereunder.
“Principal Proceeds” means, with respect to any Collection Period or the related Determination Date, all amounts received by the Borrower during such
Collection Period that do not constitute Interest Proceeds, including unapplied proceeds of the Advances and any amounts received by the Borrower as equity contributions (unless,
in the case of any such equity contribution, designated as Interest Proceeds by the Servicer pursuant to Section 10.06).
“Priority of Payments” has the meaning specified in Section 9.01(a).
“Private Authorizations” means all franchises, permits, licenses, approvals, consents and other authorizations of all Persons (other than Governmental
Authorities).
“Proceeds” has, with reference to any asset or property, the meaning assigned to it under Section 9‑102(a)(64) of the UCC and, in any event, shall include,
but not be limited to, any and all amounts from time to time paid or payable under or in connection with such asset or property.
“Proper Instructions” means instructions received by the Custodian, the Collateral Administrator or the Collateral Agent from the Borrower, or the Servicer
on behalf of the Borrower, in any of the following forms: (a) in writing signed by an Authorized Person (and delivered by hand, by mail, by overnight courier or by email); (b) by
electronic mail from an Authorized Person; (c) in tested communication; (d) in a communication utilizing access codes effected between electro mechanical or electronic devices; or
(e) such other means as may be agreed upon from time to time by the Custodian, the Collateral Administrator, the Administrative Agent or the Collateral Agent, as applicable, and
the party giving such instructions.
“Purchase Price” means, with respect to any Collateral Loan, the purchase price paid (expressed as a percentage of par) by the Borrower to purchase such
Collateral Loan.
“QFC” has the meaning assigned to the term “qualified financial contract” in, and interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).
“QFC Credit Support” has the meaning assigned to such term in Section 12.18.
“Qualified Institution” means a depository institution or trust company organized under the Laws of the United States of America or any one of the States
thereof or the District of Columbia (or any domestic branch of a foreign bank), (i) that has either (A) a long term issuer rating of “A-” or better by S&P and “A3” or better by
Moody’s or (B) a short term issuer rating or certificate of deposit rating of “A-1” or better by S&P or “P-1” by Moody’s, (ii) the parent corporation of which has either (A) a long
term issuer rating of “A-” or better by S&P and “A3” or better by Moody’s or (B) a short term issuer rating or certificate of deposit rating of “A-1” or better by S&P and “P-I” by
Moody’s (iii) is otherwise acceptable to the Administrative Agent.
“Qualified Purchaser” has the meaning assigned to such term in Section 12.06(e).
-51-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
“Register” has the meaning assigned to such term in Section 12.06(d).
“Regulation T”, “Regulation U” and “Regulation X” mean Regulation T, U and X, respectively, of the Board of Governors of the Federal Reserve System,
as in effect from time to time.
“Reinvestment Period” means, subject to the Lender Fee Letter, the period from and including the A&R Effective Date to and including the earliest of (a)
August 31, 2026 (unless extended with the consent of the Administrative Agent and each Lender); and (b) the Final Maturity Date (other than clause (ii) of the definition of Final
Maturity Date).
“Related Documents” means, with respect to any Collateral Loan, the Underlying Loan Agreement, any Underlying Note, and all other agreements or
documents evidencing, securing, governing or giving rise to such Collateral Loan.
“Related Committed Lender” means, with respect to any Uncommitted Lender, each Committed Lender in its Lender Group.
“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators,
managers, advisors and representatives of such Person and of such Person’s Affiliates.
“Related Property” means, with respect to a Collateral Loan, any property or other assets designated and pledged or mortgaged as collateral to secure
repayment of such Collateral Loan.
“Related Security” means, with respect to each Collateral Loan:
(a) any Related Property securing a Collateral Loan and all recoveries related thereto, all payments paid to the Borrower in respect thereof and all monies
due, to become due and paid to the Borrower in respect thereof accruing after the applicable Acquisition Date and all related liquidation proceeds;
(b) all Liens, guaranties, indemnities and warranties, insurance policies, financing statements and other agreements or arrangements of whatever character
from time to time supporting or securing payment of any such Indebtedness;
(c) all Collections with respect to such Collateral Loan and any of the foregoing;
(d) any guarantees or similar credit enhancement for an Obligor’s obligations under any Collateral Loan, all UCC financing statements or other filings
relating thereto, including all rights and remedies, if any, against any Related Security, including all amounts due and to become due to the Borrower thereunder and all
rights, remedies, powers, privileges and claims of the Borrower thereunder (whether arising pursuant to the terms of such agreement or otherwise available to the
Borrower at law or in equity);
-52-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(e) all records and Related Documents with respect to such Collateral Loan and any of the foregoing; and
(f) all recoveries and proceeds of the foregoing.
“Relevant Governmental Body” means (a) with respect to a Benchmark Replacement in respect of Dollars, the Board of Governors of the Federal Reserve
System or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the Federal Reserve
Bank of New York, or any successor thereto and (b) with respect to a Benchmark Replacement in respect of any other currency, (1) the central bank for the currency in which such
Benchmark Replacement is denominated or any central bank or other supervisor which is responsible for supervising either (A) such Benchmark Replacement or (B) the
administrator of such Benchmark Replacement or (2) any working group or committee officially endorsed or convened by (A) the central bank for the currency in which such
Benchmark Replacement is denominated, (B) any central bank or other supervisor that is responsible for supervising either (i) such Benchmark Replacement or (ii) the administrator
of such Benchmark Replacement, (C) a group of those central banks or other supervisors or (D) the Financial Stability Board or any part thereof.
“Relevant Test Period” means, with respect to any Collateral Loan, the relevant test period for the calculation of Senior Net Leverage Ratio, Total Net
Leverage Ratio, Cash Interest Coverage Ratio or EBITDA, as applicable, for such Collateral Loan in the applicable Underlying Loan Agreement or, if no such period is provided for
therein, for Obligors delivering monthly financial statements, each period of the last twelve consecutive reported calendar months, and for Obligors delivering quarterly financial
statements, each period of the last four consecutive reported fiscal quarters of the principal Obligor on such Collateral Loan; provided that, with respect to any Collateral Loan for
which the relevant test period is not provided for in the applicable Underlying Loan Agreement, if an Obligor is a newly‑formed entity as to which twelve consecutive calendar
months have not yet elapsed, “Relevant Test Period” shall initially include the period from the date of formation of such Obligor to the end of the twelfth calendar month or fourth
fiscal quarter (as the case may be) from the date of formation, and shall subsequently include each period of the last twelve consecutive reported calendar months or four consecutive
reported fiscal quarters (as the case may be) of such Obligor.
“Replacement Lender” has the meaning assigned to such term in Section 2.20(a).
“Request for Release and Receipt” means a form substantially in the form of Exhibit G completed and signed by the Borrower (or the Servicer on its behalf).
“Requested Amount” has the meaning assigned to such term in Section 2.02(b).
“Required Lenders” means, as of any date of determination, the Lenders whose aggregate principal amount of Advances Outstanding plus unused
Commitments exceed 66 2/3% of the aggregate amount of the Commitments (used and unused) or, if the Commitments have expired or been terminated or otherwise reduced to
zero, Lenders whose aggregate principal amount of Advances Outstanding exceed 66 2/3% of the aggregate principal amount of all Advances Outstanding; provided that if any
Lender shall be a Defaulting Lender at such time, then
-53-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
there shall be excluded from the determination of Required Lenders any Advances owing to such Defaulting Lender and such Defaulting Lender’s unfunded Commitments.
“Required Loan Documents” means, for each Collateral Loan (as identified on the related Document Checklist):
(a) an executed copy of the assignment from the prior owner to the Borrower, if applicable, for such Collateral Loan;
(b) unless such Collateral Loan is a Noteless Loan, the original executed Underlying Note (if any) or, in the case of a lost note, a copy of the executed
Underlying Note accompanied by an original executed affidavit and indemnity endorsed by the Borrower in blank (and an unbroken chain of endorsements from each
prior holder of such Underlying Note to the Borrower);
(c) an executed copy of the Underlying Loan Agreement, together with a copy of all material amendments and modifications thereto as of the related
Acquisition Date to the extent actually in the possession of the Servicer, and any other material agreement related to such Collateral Loan (as determined by the Servicer
in its reasonable discretion) to the extent reasonably requested by the Administrative Agent and actually in the possession of the Servicer;
(d) if applicable, the funding memo in respect of the Collateral Loan;
(e) for any Participation Interest, the related participation agreement between the participation seller and the Borrower; and
(f) a Document Checklist.
“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
“Responsible Officer” means (a) in the case of (i) a corporation or (ii) a partnership or limited liability company that, in each case, pursuant to its Constituent
Documents, has officers, any chief executive officer, president, executive vice president, treasurer, chief financial officer, secretary, or vice president, (b) without limitation of
clause (a), in the case of a corporation or a limited partnership, a Responsible Officer of the general partner, acting on behalf of such general partner in its capacity as general partner,
(c) without limitation of clause (a), in the case of a limited liability company that, pursuant to its Constituent Documents, does not have officers, any director or any manager or any
Responsible Officer of the sole member, administrative manager or managing member, acting on behalf of the sole member, administrative manager or managing member in its
capacity as sole member, administrative manager or managing member, (d) in the case of a trust, the Responsible Officer of the trustee, acting on behalf of such trustee in its capacity
as trustee, (e) an “authorized signatory” or “authorized officer” that has been so authorized pursuant to customary corporate proceedings, limited partnership proceedings, limited
liability company proceedings or trust proceedings, as the case may be, and that has responsibilities commensurate with the matter for which it is acting as a Responsible Officer, (f)
in the case of the Administrative Agent or the Collateral Agent, an officer of the Administrative Agent or the
-54-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Collateral Agent, as applicable, responsible for the administration of this Agreement, (g) in the case of a Lender, an “authorized signatory” or “authorized officer” of such Lender
that has been so authorized pursuant to customary corporate or similar proceedings and that has responsibilities commensurate with the matter for which such “authorized signatory”
or “authorized officer” is acting as a Responsible Officer on behalf of such Lender and (h) in the case of the Collateral Administrator, the Custodian or the Securities Intermediary,
any officer assigned to the applicable corporate trust or other group (or any successor thereof), as applicable, authorized to act for and on behalf of the Collateral Administrator,
Custodian or the Securities Intermediary, as applicable, including any vice president of the Collateral Administrator, the Custodian or the Securities Intermediary customarily
performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any matter is referred within such corporate trust
group (or any successor thereof), because of such person’s knowledge of and familiarity with the particular subject and, in each case, having direct responsibility for the
administration of this Agreement.
“Restricted Payment” means (i) any dividend or other distribution, direct or indirect, on account of any class of membership interests of the Borrower now or
hereafter outstanding, except a dividend or distribution paid solely in interests of that class of membership interests or in any junior class of membership interests of the Borrower;
(ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any class of membership interests of the Borrower now
or hereafter outstanding, and (iii) any payment made to redeem, purchase, repurchase or retire, or to obtain the surrender of any outstanding warrants, options or other rights to
acquire membership interests of the Borrower now or hereafter outstanding. For the avoidance of doubt, (x) payments and reimbursements due to the Servicer in accordance with
this Agreement or any other Facility Document do not constitute Restricted Payments and (y) Collateral Loan Dividends do not constitute Restricted Payments.
“Revolving Collateral Loan” means any Collateral Loan (other than a Delayed Drawdown Collateral Loan) that is a loan (including revolving loans,
including funded and unfunded portions of revolving credit lines and letter of credit facilities, unfunded commitments under specific facilities and other similar loans and
investments) that by its terms may require one or more future advances to be made to the related Obligor by the Borrower; provided that any such Collateral Loan will be a
Revolving Collateral Loan only until all commitments to make advances to the Obligor expire or are terminated or irrevocably reduced to zero.
“S&P” means S&P Global Ratings and any successor thereto.
“S&P Rating” means, with respect to any Collateral Loan, either (i) the public rating issued by S&P (based on tranche rating not corporate family rating) or
(ii) any credit estimate issued by S&P received by the Borrower or the Servicer.
“Sanctioned Country” means, at any time, a country or territory which is the subject or target of any Sanctions.
“Sanctioned Person” means at any time, (i) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC, the U.S. Department
of State, or by the United Nations Security Council, the European Union (including, any member state thereof),
-55-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Canada, the United Kingdom Switzerland, Denmark, Sweden or Norway, (ii) any Person that is operating, organized or resident in a Sanctioned Country or (iii) any Person
controlled by any such Person.
“Sanctions” means individually and collectively, respectively, any and all economic or financial sanctions, sectoral sanctions, secondary sanctions, trade
embargoes and anti-terrorism laws, including but not limited to those imposed, administered or enforced from time to time by: (a) the United States of America, including those
administered by OFAC, the U.S. Department of State, the U.S. Department of Commerce, or through any existing or future Executive Order; (b) the United Nations Security
Council; (c) the European Union (including any member state thereof); (d) the State Secretariat for Economic Affairs of Switzerland; (e) the United Kingdom; (f) the Government of
Canada; (g) the Government of Denmark; (h) the Government of Sweden; (i) the Government of Norway; or (j) to the extent that such bodies have jurisdiction over the Borrower or
the applicable Subsidiary or such economic or financial sanctions, sectoral sanctions, secondary sanctions, trade embargoes and anti-terrorism laws are binding on the Borrower or
the applicable Subsidiary, a body administering such economic or financial sanctions, sectoral sanctions, secondary sanctions, trade embargoes and anti-terrorism laws in any
jurisdiction in which the Borrower or any of its Subsidiaries is located or doing business.
“Scheduled Distribution” means, with respect to any Collateral Loan, for each Due Date, the scheduled payment of principal and/or interest and/or fees due
on such Due Date with respect to such Collateral Loan.
“SEC” means the Securities and Exchange Commission or any other Governmental Authority of the United States of America at the time administrating the
Securities Act, the Investment Company Act or the Exchange Act.
“Second Lien Loan” means any Collateral Loan that (i) is secured by a valid and perfected Lien on a substantial portion of the Obligor’s assets constituting
underlying assets for the Collateral Loan, subject only to (i) the prior lien provided to secure the obligations under a “first lien” loan pursuant to typical commercial terms, and any
other “permitted liens” as defined in the applicable Underlying Loan Agreement for such Collateral Loan or such comparable definition or provision if “permitted liens” is not
defined therein (including, without limitation, priority Liens on certain current assets, including accounts receivable, to secure working capital facilities), and (ii) provides that the
payment obligation of the Obligor on such Collateral Loan is “senior debt” and, except for the express priority provisions under the documentation of the “first lien” lenders, is
either senior to, or pari passu with, all other Indebtedness of such Obligor.
“Secured Parties” means the Administrative Agent, the Custodian, the Collateral Administrator, the Collateral Agent, the Securities Intermediary, the
Conduit Trustees, the Lender Group Agents and the Lenders.
“Secured Party Representative” has the meaning assigned to such term in Section 12.09.
“Securities Act” means the Securities Act of 1933 and the rules and regulations promulgated thereunder, all as from time to time in effect.
-56-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
“Securities Intermediary” means a Person satisfying Section 8-102(a)(14) of the UCC with respect to the Covered Accounts. Initially, the Securities
Intermediary shall be Computershare Trust Company, National Association, in its capacity as securities intermediary under the Account Control Agreement.
“Security Entitlement” has the meaning specified in Section 8‑102(a)(17) of the UCC.
“Senior Net Leverage Ratio” means, with respect to any Collateral Loan and the related Obligor for the Relevant Test Period, either (a) the meaning of
“Senior Net Leverage Ratio” or comparable term set forth in the Related Documents for such Collateral Loan, or (b) in the case of any Collateral Loan with respect to which the
Related Documents do not include a definition of “Senior Net Leverage Ratio” or comparable term, the ratio obtained by dividing (i) the Indebtedness for borrowed money
(including the full drawn but not the undrawn amount of any revolving and delayed draw indebtedness) of the related Obligor (other than indebtedness of such Obligor that is junior
in terms of payment or lien priority to the Collateral Loan of such Obligor held by the Borrower) as of such date, minus the Unrestricted Cash of such Obligor as of such date by (ii)
EBITDA of such Obligor for the Relevant Test Period, as calculated by the Servicer in accordance with the Servicing Standard in good faith using information from and calculations
consistent with the relevant compliance statements and financial reporting packages provided by the relevant Obligor as per the requirements of the related Underlying Loan
Agreement (or, in the case of a Collateral Loan for which the related Underlying Loan Agreement has not been executed, as set forth in the relevant marketing materials or financial
model in respect of such Collateral Loan).
“Senior Servicing Fee” means the fee to the Servicer for services rendered and performance of its obligations under this Agreement, in arrears on each
Payment Date (subject to availability of funds and the Priority of Payments), in an amount equal to 0.50% per annum of the Fee Basis Amount; measured as of the Determination
Date immediately preceding such Payment Date (calculated on the basis of a 360‑day year and the actual number of days elapsed).
“Servicer” has the meaning assigned to such term in Section 14.01(a).
“Servicer Termination Event” means the occurrence of any one or more of the following:
(a) any failure by the Servicer to make any payment, transfer or deposit into the Collection Account (including, without limitation, with respect to
bifurcation and remittance of Interest Proceeds and Principal Proceeds), as required by this Agreement or any Facility Document which continues unremedied for a
period of two (2) Business Days (unless such failure was due solely to an administrative error by the financial institution holding the Collection Account crediting any
such payment to the wrong account and the Servicer and such financial institution work diligently to resolve as promptly as possible and in any event within two (2)
Business Days after such error was discovered);
(b) any withdrawal by the Servicer from a Covered Account in contravention of or otherwise not in accordance with the terms of this Agreement;
-57-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(c) any failure on the part of the Servicer duly to (i) observe or perform in any material respect any other covenants or agreements of the Servicer set forth in
this Agreement or the other Facility Documents to which the Servicer is a party (including, without limitation, any delegation of the Servicer’s duties that is not
permitted by Section 6.01 of this Agreement) or (ii) comply in any material respect with the Credit and Collection Policy or Servicing Standard regarding the servicing
of the Collateral, and in each case the same continues unremedied for a period of thirty (30) days (if such failure can be remedied) after the earlier to occur of (x) the
date on which written notice of such misrepresentation or failure requiring the same to be remedied shall have been given to the Servicer by the Administrative Agent,
the Collateral Agent or the Borrower and (y) the date on which a Responsible Officer of the Servicer acquires knowledge thereof;
(d) the failure of the Servicer to make any payment when due (after giving effect to any related grace period) under one or more agreements for borrowed
money to which it is a party in an aggregate amount in excess of $25,000,000 (or the equivalent in Dollars, as determined by the Administrative Agent using the
Applicable Conversion Rate), individually or in the aggregate, or the occurrence of any event or condition that has resulted in the acceleration of such amount of recourse
debt whether or not waived;
(e) the Servicer shall have made payments of amounts in excess of $25,000,000 in the settlement of any litigation, claim or dispute (excluding payments
made from Insurance Proceeds); or
(f) the failure of the Servicer as of any date of determination to hold (i) Unrestricted Cash plus (ii) undrawn and available commitments (x) pursuant to
Indebtedness under credit facilities with lenders not Affiliates of the Servicer, (y) not in default, terminating, maturing or otherwise becoming discretionary, and (z)
available under the relevant borrowing base thereunder and otherwise subject only to typical and customary conditions precedent that the Servicer believes in good faith
are all satisfied or readily satisfied that are, in the aggregate, equal to or greater than the amount of principal payments due or to become due (whether scheduled, upon
maturity or otherwise) under Indebtedness of the Servicer in the next thirty (30) days of such date of determination;
(g) the effectuation of any change in the Credit and Collection Policy without the prior written consent of the Administrative Agent; provided that, so long
as prior written notice thereof is provided to the Administrative Agent, no consent shall be required from the Administrative Agent in connection with (i) any change
certified by the Servicer to the Administrative Agent as being not adverse to the interests of the Lender (except in an immaterial manner), or (ii) any change mandated by
Applicable Law or a Governmental Authority and, if requested by the Administrative Agent at the direction of the Required Lenders, as evidenced by an Opinion of
Counsel to that effect delivered to the Administrative Agent;
(h) an Insolvency Event shall occur with respect to the Servicer;
-58-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(i) SLR Investment Corp. shall assign its rights or obligations as “Servicer” hereunder to any Person, other than an Approved Affiliate Servicer, without the
prior written consent of the Administrative Agent (as required by Section 14.07(b));
(j) any failure by the Servicer to deliver (i) any required Monthly Report or Payment Date Report on or before the date occurring two (2) Business Days
after the date such report is required to be made or given, as the case may be or (ii) any other required reports hereunder on or before the date occurring ten (10)
Business Days after the date such report is required to be made or given, as the case may be, in each case under the terms of this Agreement;
(k) any representation, warranty or certification made by the Servicer in any Facility Document or in any certificate delivered pursuant to any Facility
Document shall prove to have been incorrect when made, which has a material adverse effect on the Administrative Agent or any of the Secured Parties and continues to
be unremedied for a period of thirty (30) days after the earlier to occur of (i) the date on which written notice of such incorrectness requiring the same to be remedied
shall have been given to the Servicer by the Administrative Agent, the Collateral Agent or the Borrower and (ii) the date on which a Responsible Officer of the Servicer
acquires knowledge thereof;
(l) any financial or other information reasonably requested by the Administrative Agent or the Collateral Agent is not provided as requested within a
reasonable amount of time following such request;
(m) the rendering against the Servicer of one or more final judgments, decrees or orders by a court or arbitrator of competent jurisdiction for the payment of
money in excess individually or in the aggregate of $25,000,000, and the continuance of such judgment, decree or order unsatisfied and in effect for any period of more
than sixty (60) consecutive days without a stay of execution;
(n) any event or series of events that would result in a “Change of Control”;
(o) the occurrence of an Event of Default (past any applicable notice or cure period provided in the definition thereof); or
(p) any other event which has caused a Material Adverse Effect on the assets, liabilities, financial condition, business or operations of the Servicer or the
ability of the Servicer to meet its obligations under the Facility Documents to which it is a party; and
(q) (l) SLR Investment Corp. permits Shareholders’ Equity (as reflected in its 10Q or 10K without any deductions) at the last day of any of its fiscal quarter
to be less than the greater of (i) 33% of the total assets of SLR Investment Corp. and its Subsidiaries as of the last day of such fiscal quarter (determined on a
consolidated basis, without duplication, in accordance with GAAP) and (ii) $600,000,000, plus 25% of the net proceeds of the sale of equity interests by SLR Investment
Corp. and its Subsidiaries after the Closing Date.
-59-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
“Servicing Fee” means the Senior Servicing Fee and the Subordinated Servicing Fee, collectively.
“Servicing Standard” means, with respect to any Collateral Loan included in the Collateral, to service and administer such Collateral Loan (on behalf of the
Borrower for the benefit of the Secured Parties) in accordance with Applicable Law and the Related Documents in good faith and with reasonable care using a degree of skill and
care no less than that exercised by institutional managers of national standing relating to assets of the nature and character of the Collateral Loans. To the extent not inconsistent with
the foregoing, the Servicer shall, in performing its duties under the Facility Documents, follow its customary standards, policies and procedures and exercise a degree of skill and
attention no less than that which it exercises with respect to comparable assets that it manages for itself and for other clients having similar investment objectives and restrictions.
“Shareholders’ Equity” means, at any date, the amount determined on a consolidated basis, without duplication, in accordance with GAAP, of shareholders’
equity or net assets, as applicable, for the Borrower and its Subsidiaries at such date.
“SOFR” means a rate equal to the secured overnight financing rate as administered by the SOFR Administrator.
“SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).
“Solvent” as to any Person means that such Person is not “insolvent” within the meaning of Section 101(32) of the Bankruptcy Code or Section 271 of the
New York Debtor and Creditor Law.
“Structured Finance Obligation” means any debt obligation owing by a special purpose finance vehicle that is secured directly and primarily by, primarily
referenced to, and/or primarily representing ownership of, a pool of receivables or a pool of other assets, including collateralized debt obligations, residential mortgage‑backed
securities, commercial mortgage‑backed securities, other asset‑backed securities, “future flow” receivable transactions and other similar obligations; provided that asset based
lending facilities, loans to financial service companies, factoring businesses, health care providers and other genuine operating businesses do not constitute Structured Finance
Obligations.
“Subordinated Servicing Fee” means the fee to the Servicer for services rendered and performance of its obligations under this Agreement, in arrears on each
Payment Date (subject to availability of funds and the Priority of Payments), in an amount equal to 0.50% per annum of the Fee Basis Amount; measured as of the Determination
Date immediately preceding such Payment Date (calculated on the basis of a 360-day year and the actual number of days elapsed).
“Subsidiary” means any Person with respect to which the Borrower or the Equityholder, as the case may be, owns, directly or indirectly, more than 50% of
the Equity Securities of such Person; provided that a Person whose Equity Securities were acquired by the Borrower or the Equityholder, as the case may be, in a workout or
restructuring of a Collateral Loan shall not be deemed to be a “Subsidiary” for purposes of this Agreement.
-60-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
“Successor Servicer” has the meaning assigned to such term in Section 14.08(a).
“Supported QFC” has the meaning assigned to such term in Section 12.18.
“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other
charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Term SOFR” means, for any calculation with respect to an Advance (other than an Advance bearing interest at the Base Rate), the Term SOFR Reference
Rate for a tenor of three months on the day (such day, the “Periodic Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to (a) with
respect to the Interest Accrual Period in which the applicable Borrowing Date occurs, such Borrowing Date, and (b) for each subsequent Interest Accrual Period, the first day of such
Interest Accrual Period, as such rate is published by the Term SOFR Administrator; provided, however, that if as of 5:00 p.m. (New York City time) on any Periodic Term SOFR
Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with
respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator
on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long
as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such Periodic Term SOFR
Determination Day; provided, further, that if Term SOFR determined as provided above (including pursuant to the proviso above) shall ever be less than the Floor, then Term SOFR
shall be deemed to be the Floor.
“Term SOFR Administrator” means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference
Rate selected by the Administrative Agent in its reasonable discretion).
“Term SOFR Reference Rate” means the forward-looking term rate based on SOFR.
“Terminated Lender” has the meaning assigned to such term in Section 2.20(b).
“Total Net Leverage Ratio” means, with respect to any Collateral Loan and the related Obligor for the Relevant Test Period, either (a) the meaning of “Total
Net Leverage Ratio” or comparable term set forth in the Related Documents for such Collateral Loan, or (b) in the case of any Collateral Loan with respect to which the Related
Documents do not include a definition of “Total Net Leverage Ratio” or comparable term, the ratio obtained by dividing (i) the total Indebtedness for borrowed money of the related
Obligor as of such date, minus the Unrestricted Cash of such Obligor as of such date by (ii) EBITDA of such Obligor for the Relevant Test Period, as calculated by the Servicer in
accordance with the Servicing Standard in good faith using information from and calculations consistent with the relevant compliance statements and financial reporting packages
provided by the relevant Obligor as per the requirements of the related Underlying Loan Agreement (or, in the case of a Collateral Loan for which the related Underlying
-61-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Loan Agreement has not been executed, as set forth in the relevant marketing materials or financial model in respect of such Collateral Loan).
“UCC” means the New York Uniform Commercial Code; provided that if, by reason of any mandatory provisions of Law, the perfection, the effect of
perfection or non‑perfection or priority of the security interests granted to the Collateral Agent pursuant to this Agreement are governed by the Uniform Commercial Code as in
effect in a jurisdiction of the United States of America other than the State of New York, then “UCC” means the Uniform Commercial Code as in effect from time to time in such
other jurisdiction for purposes of such perfection, effect of perfection or non‑perfection or priority.
“UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by
the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United
Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
“UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK
Financial Institution.
“Uncertificated Security” has the meaning specified in Section 8‑102(a)(18) of the UCC.
“Uncommitted Lender” means any Conduit Lender designated as an “Uncommitted Lender” for any Lender Group and any of its assignees.
“Underlying Loan Agreement” means, with respect to any Collateral Loan, the document or documents evidencing the commercial loan agreement or facility
pursuant to which such Collateral Loan is made.
“Underlying Note” means one or more promissory notes, if any, executed by an Obligor evidencing a Collateral Loan.
“Undisclosed Administration” means in relation to any Liquidity Bank or Lender, the appointment of an administrator, provisional liquidator, conservator,
receiver, trustee, custodian or other similar official by a supervisory authority or regulator under or based on the law in the country where such Lender is subject to home jurisdiction
supervision if applicable law requires that such appointment is not to be publicly disclosed.
“Undrawn Fee” has the meaning assigned to such term in the Lender Fee Letter.
“Unencumbered Liquidity” means the sum of (a) all cash or cash equivalents held by the Equityholder (to the extent available to be contributed to the
Borrower by the Equityholder without any third‑party consent), plus (b) committed, undrawn, and recallable equity capital of the Equityholder (other than in respect of any defaulted
investors), which is available to be contributed to the Borrower by the Equityholder without any third‑party consent, plus (c) all cash or cash equivalents held in the Collection
Account as Principal Proceeds (but excluded from the definition
-62-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
of Borrowing Base), plus (d) the aggregate value of other liquid assets satisfactory to the Required Lenders (as such values are set forth on the most recently delivered financial
statements of the Equityholder calculated in accordance with GAAP) plus (e) the aggregate principal amount eligible to be drawn by the Equityholder pursuant to any third party
leverage facility and contributed to the Borrower by the Equityholder plus (f) an amount equal to the difference between (i) the Borrowing Bases on such date, minus (ii) the
Advances Outstanding as of such date.
“Unfunded Exposure Amount” means on any date of determination, with respect to any Delayed Drawdown Collateral Loans and Revolving Collateral
Loans, the aggregate amount (without duplication) in each Eligible Currency of all (a) unfunded commitments and (b) all standby or contingent commitments of the Borrower
pursuant to such Collateral Loan.
“Unfunded Reserve Account” has the meaning specified in Section 8.04.
“Unfunded Reserve Account Shortfall” has the meaning specified in Section 2.01.
“Unfunded Reserve Required Amount” means an amount equal to the greater of (x) zero and (y) the aggregate sum of:
(a) with respect to each Delayed Drawdown Collateral Loan included in the Collateral:
(i) the aggregate sum of (i) the unfunded commitments of the Borrower in respect of all such Delayed Drawdown Collateral Loans (other
than Asset Based Loans) and (ii) in the case of Asset Based Loans, the borrowing base in respect of all such Delayed Drawdown Collateral Loans minus the
drawn amounts in respect of all such Delayed Drawdown Collateral Loans; minus
(ii) (A) the aggregate sum of (i) the unfunded commitments of the Borrower in respect of all such Delayed Drawdown Collateral Loans
(other than Asset Based Loans) and (ii) in the case of Asset Based Loans, the borrowing base in respect of all such Delayed Drawdown Collateral Loans
minus the drawn amounts in respect of all such Delayed Drawdown Collateral Loans times (B) the Asset Value of such Delayed Drawdown Collateral Loan
(expressed as percentage of par) times (C) the Asset Advance Rate then in effect for such Delayed Drawdown Collateral Loan; plus
(b) with respect to each Revolving Collateral Loan included in the Collateral:
(i) the aggregate sum of (i) the unfunded commitments of the Borrower in respect of all such Revolving Collateral Loans (other than
Asset Based Loans) and (ii) in the case of Asset Based Loans, the borrowing base in respect of all such Revolving Collateral Loans minus the drawn
amounts in respect of all such Revolving Collateral Loans; minus
(ii) (A) the aggregate sum of (i) the unfunded commitments of the Borrower in respect of all such Revolving Collateral Loans (other than
Asset Based Loans) and (ii) in the case of Asset Based Loans, the borrowing base in respect of
-63-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
all such Revolving Collateral Loans minus the drawn amounts in respect of all such Revolving Collateral Loans times (B) the Asset Value of such Revolving
Collateral Loan (expressed as percentage of par) times (C) the Asset Advance Rate then in effect for such Revolving Collateral Loan; minus
(c) 50.0% multiplied by the positive difference (if any) of (x) the total amount of uncalled capital of the Equityholder pursuant to its Constituent Documents
(other than in respect of defaulted investors) minus (y) the aggregate amount of drawn and outstanding principal amounts under the revolving subscription facilities of
the Equityholder as of such date of determination; provided, that the amount described in this clause (c) shall only be included in the calculation of “Unfunded Reserve
Required Amount” to the extent such amount is available to be contributed to the Borrower without restriction;
provided that after the Commitment Termination Date, the Unfunded Reserve Required Amount shall equal the Unfunded Exposure Amount.
“Unintended Recipient” has the meaning specified in Section 11.07(a)(i).
“Unrestricted Cash” means “Unrestricted Cash” or any comparable term in the Related Document for any Collateral Loan, and in any case that “Unrestricted
Cash” or such comparable term is not defined in such Related Documents, all cash available for use for general corporate purposes and not held in any reserve account or legally or
contractually restricted for any particular purposes or subject to any lien (other than blanket liens permitted under or granted in accordance with such Related Documents), as
reflected on the most recent financial statements of the related Obligor that have been delivered to the Borrower.
“Unused Amount” has the meaning assigned to such term in the Lender Fee Letter.
“Updated Asset Value” means, with respect to each Collateral Loan as of any date, the value (expressed as a percentage of the Principal Balance) of such
Collateral Loan reflected on the books and records of the Equityholder as adjusted pursuant to periodic valuations (to the extent applicable, as required by, and in accordance with,
the 1940 Act and any orders of the Securities and Exchange Commission issued to the Equityholder or any of the Equityholder’s Affiliates), to be determined by the members of the
Equityholder and reviewed by its auditors; provided that if the Equityholder does not report to the Servicer and the Administrative Agent the results of its updated valuation on any
Collateral Loan within forty-five (45) days of the end of each fiscal quarter of the Equityholder (or more frequently to the extent required under the 1940 Act), the “Updated Asset
Value” of such Collateral Loan shall be deemed to equal zero until the Equityholder provides such report; provided, in no event shall any Updated Asset Value exceed 100%;
provided, further, that any Collateral Loan that is determined to have an Updated Asset Value equal to or greater than 97% shall be deemed to have an Asset Value equal to 100%.
“U.S. Government Securities Business Day” means any day except for (a) a Saturday, (b) a Sunday or (c) a day on which the Securities Industry and
Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government
securities as indicated on the SIFMA website.
-64-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
“U.S. Special Resolution Regime” has the meaning assigned to such term in Section 12.18.
“U.S. Tax Compliance Certificate” has the meaning assigned to such term in Section 12.03(f)(i)(B)(3).
“Volcker Rule” means Section 13 of the U.S. Bank Holding Company Act of 1956, as amended, and the applicable rules and regulations thereunder.
“Warranty Collateral Loan” has the meaning assigned to such term in the Contribution Agreement.
“Weighted Average Advance Rate” means, as of any date of determination, an amount equal to (a) the aggregate sum of the products, for each Eligible
Collateral Loan, of (i) the Asset Advance Rate for such Eligible Collateral Loan as of such date and (ii) the Outstanding Loan Balance of such Eligible Collateral Loan (less the
portion, if any, of such Eligible Collateral Loan allocated by the Borrower to the Excess Concentration Amount) as of such date divided by (b)(i) the Aggregate Outstanding Loan
Balance of all Eligible Collateral Loans minus (ii) the Excess Concentration Amount.
“Weighted Average Life” means, as of any date of determination with respect to all Eligible Collateral Loans, the number of years following such date
obtained by:
(a) summing the products of: (i) the Average Life at such time of each Eligible Collateral Loan multiplied by (ii) the Principal Balance of such Eligible
Collateral Loan; and
(b) dividing such sum by the Aggregate Principal Balance of all Eligible Collateral Loans as of such date.
For the purposes of the foregoing, the “Average Life” is, on any date of determination with respect to any Eligible Collateral Loan, the quotient obtained by
dividing (x) the sum of the products of (A) the number of years (rounded to the nearest one hundredth thereof) from such date of determination to the stated maturity date of the
applicable Eligible Collateral Loan and (B) the respective amounts of principal of such Eligible Collateral Loan on such date by (y) the sum of all principal on such Eligible
Collateral Loan.
“Weighted Average Spread” means, as of any date, the number, expressed as a percentage, obtained by dividing:
(a) the amount equal to (i) the Aggregate Funded Spread with respect to all Eligible Collateral Loans plus (ii) the Aggregate Unfunded Spread, by
(b) the Aggregate Principal Balance of all Eligible Collateral Loans as of such date.
-65-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.
“Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA
Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU
Bail-In Legislation Schedule and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify
or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares,
securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any
obligation in respect of that liability or any of the powers under the Bail-In Legislation that are related to or ancillary to any of those powers.
Section 1.02 Rules of Construction
For all purposes of this Agreement and the other Facility Documents, except as otherwise expressly provided or unless the context otherwise requires, (a)
singular words shall connote the plural as well as the singular and vice versa (except as indicated), as may be appropriate, (b) the words “herein,” “hereof” and “hereunder” and
other words of similar import used in any Facility Document refer to such Facility Document as a whole and not to any particular article, schedule, section, paragraph, clause, exhibit
or other subdivision thereof, (c) the headings, subheadings and table of contents set forth in any Facility Document are solely for convenience of reference and shall not constitute a
part of such Facility Document nor shall they affect the meaning, construction or effect of any provision hereof, (d) references in any Facility Document to “include” or “including”
shall mean include or including, as applicable, without limiting the generality of any description preceding such term, and for purposes hereof the rule of ejusdem generis shall not
be applicable to limit a general statement, followed by or referable to an enumeration of specific matters, to matters similar to those specifically mentioned, (e) any definition of or
reference to any Facility Document, agreement, instrument or other document shall be construed as referring to such Facility Document, instrument or other document as from time
to time amended, restated, supplemented or otherwise modified (subject to any restrictions on such amendments, restatements, supplements or modifications set forth herein or any
other Facility Document), (f) any reference in any Facility Document, including the introduction and recitals to such Facility Document, to any Person shall be construed to include
such Person’s successors and assigns (subject to any restrictions set forth herein or in any other applicable agreement), (g) any reference to any Law or regulation herein shall refer to
such Law or regulation as amended, modified or supplemented from time to time, (h) unless otherwise specified herein, any use of “material” or “materially” or words of similar
meaning in this Agreement shall mean material, as determined by the Administrative Agent in its reasonable discretion (in, to the extent reasonably practicable, consultation with the
Servicer), (i) any use of “knowledge” or “actual knowledge” or words of similar meaning in this Agreement shall mean actual knowledge following reasonable inquiry, which, in the
case of the Servicer, shall be determined in accordance with the Servicer Standard; provided, that in the case of knowledge with respect to information provided by third parties
(including Obligors), the Servicer shall not be required to conduct any inquiry if such
-66-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
inquiry would not be required under the Servicer Standard, (j) an Event of Default shall be deemed to be continuing until it is waived in accordance with Section 12.01 or such Event
of Default has been remedied and has remained remedied for a period of five (5) consecutive Business Days; provided, however, that if the Obligations have been accelerated
following an Event of Default, no Event of Default will be considered to be capable of being remedied, and (k) any reference to “execute”, “executed”, “sign”, “signed”, “signature”
or any other like term hereunder shall include execution by electronic signature (including, with-out limitation, any .pdf file, .jpeg file, or any other electronic or image file, or any
“electronic signature” as defined under the U.S. Electronic Signatures in Global and National Commerce Act (“E-SIGN”) or the New York Electronic Signatures and Records Act
(“ESRA”), which includes any electronic signature provided using Orbit, Adobe Fill & Sign, Adobe Sign, DocuSign, or any other similar platform identified by the Borrower, the
Servicer, the Equityholder, the Administrative Agent or any Lender and reasonably available at no undue burden or expense to the Collateral Agent, the Custodian or the Collateral
Administrator), except to the extent the Collateral Agent, the Custodian or the Collateral Administrator requests otherwise. Any such electronic signatures shall be valid, effective
and legally binding as if such electronic signatures were handwritten signatures and shall be deemed to have been duly and validly delivered for all purposes hereunder.
Section 1.03 Computation of Time Periods
Unless otherwise stated in the applicable Facility Document, in the computation of a period of time from a specified date to a later specified date, the word
“from” means “from and including”, the word “through” means “to and including” and the words “to” and “until” both mean “to but excluding”. Periods of days referred to in any
Facility Document shall be counted in calendar days unless Business Days are expressly prescribed. Unless otherwise indicated herein, all references to time of day refer to Eastern
standard time or Eastern daylight saving time, as in effect in New York City on such day.
Section 1.04 Collateral Value Calculation Procedures
In connection with all calculations required to be made pursuant to this Agreement with respect to Scheduled Distributions on any Collateral Loan, or any
payments on any other assets included in the Collateral, with respect to the sale of and reinvestment in Collateral Loans, and with respect to the income that can be earned on
Scheduled Distributions on such Collateral Loans and on any other amounts that may be received for deposit in the Collection Account, the provisions set forth in this Section 1.04
shall be applied. The provisions of this Section 1.04 shall be applicable to any determination or calculation that is covered by this Section 1.04, whether or not reference is
specifically made to Section 1.04, unless some other method of calculation or determination is expressly specified in the particular provision.
(a) All calculations with respect to Scheduled Distributions on any Collateral Loan shall be made on the basis of information as to the terms of each such
Collateral Loan and upon reports of payments, if any, received on such Collateral Loan that are furnished by or on behalf of the Obligor of such Collateral Loan and, to the extent
they are not manifestly in error, such information or reports may be conclusively relied upon in making such calculations.
-67-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(b) For purposes of calculating the Borrowing Base Test, except as otherwise specified in the Borrowing Base Test, such calculations will not include (i)
scheduled interest and principal payments on Ineligible Collateral Loans unless or until such payments are actually made and (ii) ticking fees and other similar fees in respect of
Collateral Loans, unless or until such fees are actually paid.
(c) For each Collection Period and as of any date of determination, the Scheduled Distribution on any Collateral Loan (other than a Defaulted Loan or an
Ineligible Collateral Loan, which, except as otherwise provided herein, shall be assumed to have Scheduled Distributions of zero) shall be deemed to be the total amount of (i)
payments and collections to be received during such Collection Period in respect of such Collateral Loan, (ii) proceeds of the sale of such Collateral Loan received and, in the case of
sales which have not yet settled, to be received during such Collection Period that are not reinvested in additional Collateral Loans or retained in a Collection Account for subsequent
reinvestment pursuant to Article X, which proceeds, if received as scheduled, will be available in a Collection Account and available for distribution at the end of such Collection
Period and (iii) amounts referred to in clause (i) or (ii) above that were received in prior Collection Periods but were not disbursed on a previous Payment Date or retained in a
Collection Account for subsequent reinvestment pursuant to Article X.
(d) Except as otherwise expressly provided herein, each Scheduled Distribution receivable with respect to a Collateral Loan shall be assumed to be received
on the applicable Due Date.
(e) References in the Priority of Payments to calculations made on a “pro forma basis” shall mean such calculations after giving effect to all payments, in
accordance with the Priority of Payments, that precede (in priority of payment) or include the clause in which such calculation is made.
(f) For purposes of calculating all Concentration Limitations, in both the numerator and the denominator of any component of the Concentration Limitations,
Ineligible Collateral Loans will be treated as having a Principal Balance of zero.
(g) Except as otherwise provided herein, Ineligible Collateral Loans will (i) not be included in the calculation of the Collateral Quality Test, (ii) be treated as
having an Asset Value of zero and (iii) be excluded from the calculation of each Borrowing Base on and after the date such Collateral Loan constitutes an Ineligible Collateral Loan.
(h) For purposes of determining the Minimum Weighted Average Spread Test (and related computations of Aggregate Funded Spread), capitalized or
deferred interest (and any other interest that is not paid in cash) will be excluded.
(i) Portions of the same Collateral Loan acquired by the Borrower on different dates (excluding subsequent draws under Revolving Collateral Loans or
Delayed Drawdown Collateral Loans) will, for purposes of determining the Purchase Price of such Collateral Loan, be treated as separate acquisitions on separate dates (and not a
weighted average purchase price for any particular Collateral Loan).
-68-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(j) For purposes of calculating compliance with each of the Concentration Limitations all calculations will be rounded to the nearest 0.01%.
(k) For purposes of calculating compliance with the Borrowing Base Test, the Collateral Quality Test, or any Concentration Limitation under this Agreement
in connection with the acquisition or disposition of a Collateral Loan or Eligible Investment, the trade date with respect to any such Collateral Loan or Eligible Investment acquired
or disposed of or under consideration for acquisition or disposition shall be used to determine compliance with the Borrowing Base Test, the Collateral Quality Test or any
Concentration Limitation and whether such acquisition or disposition is permitted hereunder; provided that (i) for purposes of calculating compliance with the Borrowing Base Test,
the Collateral Quality Test or any Concentration Limitation, the calculation thereof shall assume (and give pro forma effect to) (x) the making of an Advance to the Borrower (based
on the Advance Rate applicable thereto) and any capital contribution to the Borrower by the Equityholder upon settlement of the acquisition of a Collateral Loan (based on the
applicable Purchase Price) and (y) the repayment of an Advance to the Borrower upon settlement of the disposition of a Collateral Loan (based on the sale price therefor) and (ii) for
purposes of calculating the Borrowing Base Test, the Collateral Quality Test, or any Concentration Limitation in connection with the making or repayment of any Advance, such
calculation shall be recalculated at the time such Advance is made or repaid after giving effect to the settlement of any Collateral Loan acquired or disposed of.
(l) At any time when any one or more of the Concentration Limitations are exceeded, the Borrower (or the Servicer acting on its behalf) shall select (from
among the Collateral Loans causing such Concentration Limitations to be exceeded) the Collateral Loans, or portions thereof, to be allocated to the Excess Concentration Amount,
and revise such allocations from time to time.
(m) To the extent of any ambiguity in the interpretation of any definition or term contained in this Agreement or to the extent more than one methodology
can be used to make any of the determinations or calculations set forth herein, the Collateral Administrator shall request direction from the Administrative Agent as to the
interpretation and/or methodology to be used, and the Collateral Administrator shall follow such direction, and together with the Custodian and the Securities Intermediary, shall be
entitled to conclusively rely thereon without any responsibility or liability therefor.
(n) Any direction required hereunder relating to the purchase, acquisition, sale, disposition, substitution or other transfer of the Collateral may be in the form
of a trade ticket, confirmation of trade, trade blotter or instruction to post or to commit to the trade from the Borrower on which the Collateral Agent and Collateral Administrator
may rely and shall be deemed to constitute a certification that such transaction is in compliance with and satisfies all applicable provisions and conditions hereunder.
(o) Any payments, fees or Advances herein denominated in an Eligible Currency shall be made with such Eligible Currency.
-69-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(p) Unless otherwise expressly provided for herein, all monetary calculations (other than for Dollars) under this Agreement shall be derived using the
Applicable Conversion Rate of such amount, as applicable.
ARTICLE II
ADVANCES
Section 2.01 Revolving Credit Facility; Approval Requests
(a) The Borrower, shall, on or prior to each proposed Acquisition Date of any Consent Collateral Loan, provide to the Administrative Agent (with a copy to
the Equityholder and Collateral Agent) a notice by electronic mail either in the form of Exhibit A hereto or containing the information set forth in Exhibit A hereto (together with
any attachments or responses required in connection therewith, an “Approval Request”).
(b) The Administrative Agent shall have the right to approve or reject any Approval Request in its sole discretion. The Administrative Agent shall also have
the right to request additional information regarding any proposed Collateral Loan. The Administrative Agent shall promptly after receipt by the Administrative Agent of all required
information and documentation notify the Servicer and the Borrower (with a copy to the Collateral Agent and the Collateral Administrator) in writing (including via electronic mail)
whether each Approval Request has been approved or rejected; provided that if the Administrative Agent shall fail to so notify the Servicer and the Borrower, the Administrative
Agent shall be deemed to have rejected such Approval Request. Any approval may be withdrawn at any time at least three (3) Business Days prior to the time at which the Borrower
actually becomes obligated to purchase or enter into documents governing such proposed Consent Collateral Loan by written notice (including via e‑mail) of such withdrawal from
the Administrative Agent to the Servicer. If the Borrower has not entered into a binding obligation to purchase such Consent Collateral Loan within thirty (30) Business Days of the
date of such approval or a material and adverse change occurs with respect to such Consent Collateral Loan or the related Obligor, then, except as provided in the next succeeding
sentence, the Borrower shall re-submit an Approval Request and shall not be authorized to purchase such proposed Consent Collateral Loan until the Administrative Agent approves
such updated Approval Request in its sole discretion. If the Administrative Agent has rejected an Approval Request, or withdrawn or withheld its approval of any such request, then
the Borrower shall not be authorized to purchase such proposed Consent Collateral Loan unless, in the case of a withdrawn approval (including any withdrawal or requirement to re-
submit an Approval Request pursuant to the immediately preceding sentence), the Administrative Agent has not withdrawn its approval at least three (3) Business Days prior to the
time at which the Borrower enters into a commitment to purchase such proposed Consent Collateral Loan.
(c) On the terms and subject to the conditions hereinafter set forth, including Article III, each Lender severally agrees to make loans to the Borrower (each,
an “Advance”) from time to time on any Business Day during the Reinvestment Period, on a pro rata basis in each case in an aggregate principal amount at any one time outstanding
up to but not exceeding (x) in the case of Advances, such Lender’s Commitment and (y) in the aggregate, such Lender’s Commitment and, as to all Lenders, in an aggregate
principal amount up to but not exceeding the
-70-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Borrowing Base (Aggregate) as then in effect. Each such borrowing of an Advance on any single day is referred to herein as a “Borrowing”.
(d) Notwithstanding anything to the contrary herein, no Conduit Lender shall have any obligation to fund any Advances in any Eligible Currency other than
Dollars.
Within such limits and subject to the other terms and conditions of this Agreement, the Borrower may borrow (and re‑borrow) Advances under this Section
2.01 and prepay Advances under Section 2.05.
Notwithstanding anything to the contrary herein, if, upon the occurrence of an Event of Default or on the Commitment Termination Date, the amount on
deposit in the Unfunded Reserve Account is less than the Unfunded Exposure Amount (such amount, the “Unfunded Reserve Account Shortfall”), the Borrower shall cause to be
deposited in the Unfunded Reserve Account an amount equal to the Unfunded Reserve Account Shortfall, which amount may include proceeds from Advances. Following receipt of
a Notice of Borrowing relating to the foregoing (which shall specify the account details of the Unfunded Reserve Account where the funds will be made available), each Lender
shall fund its pro rata portion of such Advances in accordance with Section 2.02(d), notwithstanding anything to the contrary herein (including, without limitation, the Borrower’s
failure to satisfy any of the conditions precedent set forth in Section 3.02); provided that no such Advance may cause the Advances Outstanding to exceed the Borrowing Base
(Aggregate).
Section 2.02 Making of the Advances
(a) If the Borrower desires to make a Borrowing under this Agreement it shall give the Administrative Agent and the Lenders (with a copy to the Collateral
Agent and the Collateral Administrator) a written notice (each, a “Notice of Borrowing”) for such Borrowing (which notice shall be irrevocable and effective upon receipt) not later
than (i) if the Advance is denominated in an Eligible Currency other than Dollars, 2:00 p.m. three (3) Business Days prior to the requested Borrowing Date and (ii) if the Advance is
denominated in Dollars, 2:00 p.m. on the Business Day prior to the requested Borrowing Date (or, in the case of same day funding, no later than 10:00 a.m. on the same Business
Day); provided that the Borrower shall not request same day funding more than once in any calendar month.
(b) Each Notice of Borrowing shall be substantially in the form of Exhibit B hereto, dated the date the request for the related Borrowing is being made,
signed by a Responsible Officer of the Borrower (or the Servicer on behalf of the Borrower), shall attach a Borrowing Base Calculation Statement, and shall otherwise be
appropriately completed. Such Notice of Borrowing shall specify the proposed Borrowing Date and the Eligible Currency. The proposed Borrowing Date specified in each Notice of
Borrowing shall be a Business Day falling on or prior to the Commitment Termination Date and, with respect to Borrowings in Dollars, the amount of the Borrowing requested in
such Notice of Borrowing (the “Requested Amount”) shall be equal to at least $500,000 or an integral multiple of $100,000 in excess thereof (or, if less, the remaining unfunded
Commitments hereunder or, in the case of Delayed Drawdown Collateral Loans or Revolving Collateral Loans, such lesser amount required to be funded by the Borrower in respect
-71-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
thereof); provided that, for the avoidance of doubt, in the case of a Borrowing in any Eligible Currency (other than Dollars), there is no required minimum amount or integral
multiple.
(c) The Administrative Agent shall notify each Lender of its receipt of such Notice of Borrowing by 5:00 p.m. on the day of receipt thereof (or, if such day is
not a Business Day, by 12:00 p.m. on the next succeeding Business Day); provided that, in the case of same day funding, the Administrative Agent shall notify each Lender of its
receipt of such Notice of Borrowing within two (2) hours of its receipt thereof.
(d) Each Lender shall, subject to Section 2.01(d) and Section 2.02(f), not later than 1:00 p.m. (or, if later, on a best efforts basis, within three (3) hours of its
receipt of the related Notice of Borrowing) on each Borrowing Date in respect of Advances, make its Percentage of the applicable Requested Amount available to the Administrative
Agent in immediately available funds by disbursing such funds to the account of the Administrative Agent in accordance with the wiring instruction set forth in the notification of
Notice of Borrowing delivered by the Administrative Agent to the Lenders pursuant to Section 2.02(a). Once each Lender has funded its Percentage of the applicable Requested
Amount, the Administrative Agent shall make the Requested Amount available to the Borrower by disbursing such funds to the applicable Collection Account.
(e) At no time will any Uncommitted Lender have any obligation to fund an Advance. At all times on and after the Conduit Advance Termination Date for a
Conduit Lender in a Lender Group, all Advances shall be made by the Committed Lenders in such Lender Group. At any time when any Uncommitted Lender has failed to or has
rejected a request to fund an Advance, the related Lender Agent shall so notify the Related Committed Lender or Liquidity Bank for such Uncommitted Lender and such Related
Committed Lender or Liquidity Bank, as applicable, shall fund such Advance. Notwithstanding anything contained in this Section 2.02(e) or elsewhere in this Agreement to the
contrary, no Committed Lender shall be obligated to provide its Lender Group Agent or the Borrower with funds in connection with an Advance in an amount that would result in
the portion of the Advances then funded by it exceeding its Commitment then in effect. The obligation of the Committed Lender in each Lender Group to remit any Advance shall be
several from that of the other Lenders, and the failure of any Committed Lender to so make such amount available to its Agent shall not relieve any other Committed Lender of its
obligation hereunder.
(f) Notwithstanding anything to the contrary herein, no Conduit Lender shall have any obligation to fund any Advance on the same day as the receipt by such
Conduit Lender of a Notice of Borrowing for such requested Advance.
Section 2.03 Evidence of Indebtedness; Notes
(a) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to it and resulting
from the Advances made by such Lender to the Borrower, from time to time, including the amounts of principal and interest thereon and paid to it, from time to time hereunder;
provided that the failure of any Lender to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Advances in
accordance with the terms of this Agreement. The Collateral
-72-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Agent shall be entitled to conclusively rely upon the information provided to it by the Administrative Agent with respect to the Advances Outstanding with respect to each Lender.
(b) Any Lender may request that its Advances to the Borrower be evidenced by a Note. In such event, the Borrower shall promptly prepare, execute and
deliver to such Lender a Note payable to such Lender and otherwise appropriately completed. Thereafter, the Advances of such Lender evidenced by such Note and interest thereon
shall at all times (including after any assignment pursuant to Section 12.06(a)) be represented by a Note payable to such Lender (or registered assigns pursuant to Section 12.06(a)),
except to the extent that such Lender (or assignee) subsequently returns any such Note for cancellation and requests that such Advances once again be evidenced as described in
clause (a) of this Section 2.03.
(c) If any Lender elects not to receive a Note, all references herein and the other Facility Documents to such Lender’s Note shall be deemed to mean the
Advances Outstanding with respect to such Lender. The parties hereto acknowledge and agree that the provisions herein and the other Facility Documents related to the Lenders
hereunder shall apply to each Lender regardless of whether such Lender has received a Note.
Section 2.04 Payment of Amounts
The Borrower shall pay principal and Interest on the Advances and the fees set forth in the Facility Documents to the Administrative Agent (for the account
of the Lenders on a pro rata basis) in accordance with the Priority of Payments as follows:
(a) 100% of the outstanding principal amount of each Advance, together with all accrued and unpaid Interest thereon, shall be payable on the Final Maturity
Date.
(b) Interest shall accrue at the Interest Rate on the unpaid principal amount of each Advance from the date of such Advance until such principal amount is
paid in full.
(c) The Administrative Agent shall determine the unpaid Interest, Undrawn Fees, and Prepayment Fees payable thereto prior to each Payment Date using the
applicable Interest Rate for the related Interest Accrual Period to be paid by the Borrower with respect to each Advance on each Payment Date for the related Interest Accrual Period
and shall advise each Lender and the Servicer thereof and shall send a consolidated invoice of all such Interest, Undrawn Fees, and Prepayment Fees to the Borrower (with copies to
the Collateral Administrator and the Collateral Agent) on the third (3rd) Business Day prior to such Payment Date. The Collateral Administrator shall have no duty to verify or
recalculate the amounts provided by the Administrative Agent pursuant to this Section 2.04 and is fully protected in relying on these amounts when preparing the Monthly Report or
Payment Date Report.
(d) Accrued Interest on each Advance shall be payable in arrears (i) on each Payment Date, and (ii) in connection with any prepayment in full of the
Advances pursuant to Section 2.05(a); provided that (x) with respect to any prepayment in full of the Advances Outstanding, accrued Interest on such amount through the date of
prepayment may be payable on such date or as otherwise agreed to between the Lenders and the Borrower and (y) with respect to any partial prepayment of the Advances
outstanding, accrued Interest on such amount through the
-73-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
date of prepayment shall be payable on the Payment Date following such prepayment. Accrued Undrawn Fees shall be payable in arrears on each Payment Date.
(e) The obligation of the Borrower to pay the Obligations, including the obligation of the Borrower to pay the Administrative Agent (for the account of the
Lenders on a pro rata basis) the outstanding principal amount of the Advances and accrued interest thereon, shall be absolute, unconditional and irrevocable, and shall be paid
strictly in accordance with the terms hereof (including Section 2.15), under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment which the
Borrower or any other Person may have or have had against any Secured Party or any other Person.
Section 2.05 Prepayment of Advances
(a) Optional Prepayments. The Borrower may, from time to time on any Business Day, voluntarily prepay Advances in whole or in part, without penalty or
premium; provided that the Borrower (or the Servicer on behalf of the Borrower) shall have delivered to the Collateral Agent and the Administrative Agent written notice of such
prepayment (such notice, a “Notice of Prepayment”) in the form of Exhibit C hereto not later than 3:00 p.m. one (1) Business Day (or such shorter period as the Administrative
Agent may agree in its reasonable discretion) prior to the date of such prepayment. The Administrative Agent shall promptly notify the Lenders of such Notice of Prepayment. Each
such Notice of Prepayment shall be irrevocable and effective upon receipt and shall be dated the date such notice is being given, signed by a Responsible Officer of the Borrower (or
the Servicer on behalf of the Borrower) and otherwise appropriately completed; provided that any such Notice of Prepayment may be conditioned upon the happening or occurrence
of a specified event, and thereafter revoked in the event that such specified event does not occur. Each prepayment by the Borrower of any Advance denominated in Dollars pursuant
to this Section 2.05(a) (other than a prepayment made in order to cure any non‑compliance with the Borrowing Base Test) shall in each case be in a principal amount of at least
$100,000 or, if less, the entire outstanding principal amount of the Advances Outstanding or, in the case of any prepayment of Advances with the proceeds of a prepayment or
repayment of principal of Collateral Loans, such lesser amount as is paid by the applicable Obligor in respect thereof. Each prepayment by the Borrower of an Advance denominated
in an Eligible Currency shall be made with such Eligible Currency. If a Notice of Prepayment is given by (or on behalf of) the Borrower, the Borrower shall make such prepayment
and the payment amount specified in such notice shall be due and payable on the date specified therein unless such notice is rescinded in accordance with this paragraph.
(b) Mandatory Prepayments. The Borrower shall prepay the Advances on each Payment Date in the manner and to the extent provided in the Priority of
Payments, including as applicable and without limitation, the outstanding Mandatory Amortization Amount, if any, applicable to each applicable Payment Date.
The Borrower shall provide to the Collateral Administrator, for inclusion in each Payment Date Report, notice of the aggregate amounts of Advances that are
to be prepaid on the related Payment Date in accordance with the Priority of Payments.
(c) Borrowing Base Deficiency Cures.
-74-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(i) In addition to any other obligation of the Borrower to cure any Borrowing Base Deficiency pursuant to the terms of this Agreement, if any
Borrowing Base Deficiency exists, then the Borrower may eliminate such Borrowing Base Deficiency in its entirety by effecting one or more (or any combination
thereof) of the following actions: (A) deposit into or credit to the Collection Account cash and Eligible Investments, (B) repay Advances (together with all accrued and
unpaid costs and expenses of the Agents, Custodian, Collateral Administrator, Securities Intermediary and the Lenders for which the Borrower has received a reasonably
detailed invoice prior to such date of repayment, in each case in respect of the amount so repaid), (C) sell Collateral Loans in accordance with Article X, (D) during the
Reinvestment Period, pledge additional Collateral Loans as Collateral and/or (E) deliver an Equity Cure Notice pursuant to Section 2.05(c)(ii) (and after delivery of such
Equity Cure Notice, the Borrower shall eliminate such Borrowing Base Deficiency in accordance with such Section 2.05(c)(ii)). For the avoidance of doubt, no
Prepayment Fee shall be required in connection with any prepayment of an Advance made to cure a Borrowing Base Deficiency.
(ii) The Borrower may cure a Borrowing Base Deficiency pursuant to Section 2.05(c)(i)(E) by delivering a notice to the Administrative Agent within
three (3) Business Days after such Borrowing Base Deficiency (such notice, an “Equity Cure Notice”) and subject to the following requirements:
(A) such Equity Cure Notice sets forth evidence reasonably satisfactory to the Administrative Agent that (1) the Equityholder has rights
pursuant to its Constituent Documents to call capital from its equityholders in an aggregate amount sufficient to cure such Borrowing Base Deficiency (in
combination with the other cures thereof permitted under Section 2.05(c)(i)), (2) the Equityholder has made a capital call on its equityholder(s) in an
aggregate amount sufficient to cure such Borrowing Base Deficiency (in combination with the other cures thereof permitted under Section 2.05(c)(i)) and (3)
the proceeds of such capital call will be contributed by the Equityholder to the Borrower;
(B) the amount necessary to cure such Borrowing Base Deficiency (in combination with the other cures thereof permitted under Section
2.05(c)(i)) is contributed from the Equityholder to the Borrower in immediately available funds, and such amount shall be applied by the Borrower to cure
such Borrowing Base Deficiency (in combination with the other cures thereof permitted under Section 2.05(c)(i)) within ten (10) Business Days of the date
such Equity Cure Notice is delivered to the Administrative Agent; and
(C) no more than two Equity Cure Notices has been delivered within the previous twelve (12) calendar months;
provided that no Equity Cure Notice may be delivered if, with respect to any prior capital call duly made by the Equityholder in accordance with the terms of its
constituent documents, the Equityholder shall have received by the applicable due date (after all applicable grace periods elapsed) less than 85% (measured as a
percentage of the aggregate amount of such capital call) of such capital call with no more than three (3) unaffiliated
-75-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
limited partners defaulting on such capital call; provided, further, that the Equityholder shall provide prompt written notice to the Administrative Agent of the
occurrence of the foregoing; provided, further, that if the Equityholder is unable to raise the required capital to cure any such event, the Equityholder shall not be
permitted to deliver any future Equity Cure Notices.
(iii) In connection with the proposed repayment of Advances or pledge of additional Collateral Loans as Collateral pursuant to Section 2.05(c)(i), the
Borrower (or the Servicer on its behalf) shall deliver in accordance with Section 2.05(a), (x) to the Administrative Agent (with a copy to the Collateral Agent, the
Collateral Administrator and the Custodian), notice of such repayment or pledge and a duly completed Borrowing Base Calculation Statement, updated to the date such
repayment or pledge is being made and giving pro forma effect to such repayment or pledge, and (y) to the Administrative Agent, if applicable, a description of any
Collateral Loans and each Obligor of such Collateral Loan to be pledged.
(iv) Until such time as any Borrowing Base Deficiency has been cured in full and no other Default or Event of Default has occurred and is continuing,
the Borrower shall not request the right to transfer (by sale, dividend, distribution or otherwise), and the Borrower shall not request that the Collateral Agent grant the
release of any Lien on, or the transfer of, any Collateral Loan from the Collateral, other than (i) any transfer that complies with Section 10.01(a) or (ii) in connection with
the settlement of purchases or sales of Collateral Loans committed to be acquired or sold by the Borrower prior to the occurrence of such Borrowing Base Deficiency
that have not yet settled.
(d) Additional Prepayment Provisions. Each prepayment pursuant to this Section 2.05 shall be subject to Section 2.04(d) and applied to the Advances in
accordance with the Lenders’ respective Percentages.
Section 2.06 Changes of Commitments
(a) Automatic Reduction and Termination. The Commitments of all Lenders shall be automatically reduced to zero at 5:00 p.m. on the Commitment
Termination Date.
(b) Optional Termination or Reductions. Prior to the Final Maturity Date, the Borrower shall have the right to terminate or reduce the unused amount of the
Facility Amount at any time or from time to time without any fee or penalty, except as specified in Section 2.12(b), upon not less than two (2) Business Days’ prior notice (or such
shorter period as the Administrative Agent may agree in its reasonable discretion) to the Administrative Agent, the Collateral Agent, the Lenders, the Collateral Administrator and
the Custodian of each such termination or reduction, which notice shall specify the effective date of such termination or reduction and the amount of any such reduction; provided
that any notice received after 3:00 p.m. shall be deemed to be received on the next Business Day; provided, further, that (i) the amount of any such reduction of the Facility Amount
shall be equal to at least $500,000 or an integral multiple of $10,000 in excess thereof or, if less, the remaining unused portion thereof (or, in the case of an Eligible Currency (other
than Dollars), no minimum amount or integral multiple), and (ii) no such reduction will reduce the Facility Amount below the sum of (x) the aggregate principal amount of
Advances
-76-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Outstanding at such time and (y) the Unfunded Reserve Required Amount. Such notice of termination or reduction shall be irrevocable (provided that any such notice may be
conditioned upon the happening or occurrence of a specified event, and thereafter revoked in the event that such specified event does not occur) and shall be effective only upon
receipt by the Administrative Agent, the Collateral Agent, the Lenders, the Collateral Administrator and the Custodian, and shall attach, in the case of a reduction of the
Commitments, a Borrowing Base Calculation Statement. Other than as permitted in Section 2.20(a) with respect to any Potential Terminated Lender, each reduction of Commitments
of the Lenders hereunder shall be applied pro rata to reduce the respective Commitments of each Lender.
(c) Effect of Termination or Reduction. The Commitments of the Lenders once terminated or reduced may not be reinstated. Each reduction of the Facility
Amount pursuant to this Section 2.06 shall be applied ratably among the Lenders in accordance with their respective Commitments.
Section 2.07 Maximum Lawful Rate
It is the intention of the parties hereto that the interest on the Advances shall not exceed the maximum rate permissible under Applicable Law. Accordingly,
anything herein or in any Note to the contrary notwithstanding, in the event any interest is charged to, collected from or received from or on behalf of the Borrower by the Lenders
pursuant hereto or thereto in excess of such maximum lawful rate, then the excess of such payment over that maximum shall be applied first to the payment of amounts then due and
owing by the Borrower to the Secured Parties under this Agreement (other than in respect of principal of and interest on the Advances) and then to the reduction of the outstanding
principal amount of the Advances Outstanding.
Section 2.08 Several Obligations
The failure of any Lender to make any Advance to be made by it on the date specified therefor shall not relieve any other Lender of its obligation to make its
Advance on such date. None of the Administrative Agent, the Collateral Agent, the Custodian, the Securities Intermediary or the Collateral Administrator, shall be responsible for
the failure of any Lender to make any Advance, and no Lender shall be responsible for the failure of any other Lender to make an Advance required to be made by such other
Lender.
Section 2.09 Increased Costs
(a) Increased Costs Generally. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, compulsory loan, insurance charge, special deposit or similar requirement against assets of, deposits
with or for account of, or credit extended by, any Affected Person (except any such reserve requirement reflected in the applicable Benchmark);
(ii) subject any Secured Party to any Taxes (other than (A) Non‑Excluded Taxes and (B) Excluded Taxes) on its loans, loan principal, letters of credit,
commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or
-77-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(iii) impose on any Affected Person or the applicable interbank market any other condition, cost or expense (other than Taxes), affecting this
Agreement or Advances made by such Affected Person by reference to the applicable Benchmark or any participation therein;
and the result of any of the foregoing shall be to increase the cost to any Affected Person of making, continuing, converting into or maintaining any Advance
(or of maintaining its obligation to make any Advance) or to increase the cost to, or to reduce the amount of any payment (whether of principal, interest, fees, compensation or
otherwise) or sum received or receivable by, such Affected Person hereunder (whether of principal, interest, fees, compensation or otherwise), then the Borrower will pay to such
Affected Person from time to time after receipt of a written demand by a Responsible Officer of such Affected Person in Dollars, such additional amount or amounts as will
compensate such Affected Person for such additional costs incurred or reduction suffered within ten (10) Business Days of receipt of such demand. If a Lender requests
compensation by the Borrower under this Section 2.09, the Borrower may, by notice to such Lender, suspend the obligation of such Lender to make or continue Advances by
reference to the applicable Benchmark, until the event or condition giving rise to such request ceases to be in effect (in which case (x) all Advances of such Lender shall be made or
continued by reference to the Base Rate and (y) such Lender shall have no obligation to make any Advances by reference to the applicable Benchmark); provided that such
suspension shall not affect the right of such Lender to receive the compensation required in accordance with this Agreement.
(b) Capital Requirements. If any Affected Person determines that any Change in Law regarding capital or liquidity requirements has or would have (but for
the operation of this Section 2.09) the effect of reducing the rate of return on such Affected Person’s capital or on the capital of such Affected Person’s holding company, if any, as a
consequence of this Agreement (or arising in connection herewith) or the Advances made by such Affected Person to a level below that which such Affected Person or such
Affected Person’s holding company could have achieved but for such Change in Law (taking into consideration such Affected Person’s policies and the policies of such Affected
Person’s holding company with respect to capital adequacy or liquidity coverage) by an amount deemed to be material by such Affected Person, then any such Affected Person shall
give the Borrower (and the Servicer) prompt notice thereof and from time to time after written demand by such Affected Person, the Borrower will pay to such Affected Person in
Dollars, such additional amount or amounts as will compensate such Affected Person or such Affected Person’s holding company for any such reduction suffered or charge imposed
on the Payment Date after the Borrower’s receipt of such demand.
(c) Calculation. In determining any amount provided for in this Section 2.09, the Affected Person may use any reasonable averaging and attribution methods.
The Administrative Agent, on behalf of any Affected Person making a claim under this Section 2.09, shall submit to the Borrower and the Servicer a certificate of a Responsible
Officer of the Affected Person setting forth in reasonable detail the basis for and the computations of such additional or increased costs, which certificate shall be conclusive absent
manifest error; provided that no Lender shall be requested to disclose confidential or price sensitive information or any other information, to the extent prohibited by Applicable
Law. The Borrower shall pay such amount shown as due on any such certificate on the next Payment Date after receipt thereof.
-78-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(d) Delay in Requests. Failure or delay on the part of any Affected Person to demand compensation pursuant to this Section 2.09 shall not constitute a waiver
of such Affected Person right to demand such compensation; provided that the Borrower shall not be required to compensate an Affected Person pursuant to this Section 2.09 for any
increased costs or reductions incurred more than six months prior to the date that such Affected Person notifies the Borrower and the Servicer of the Change in Law giving rise to
such increased costs or reductions and of such Affected Person’s intention to claim compensation therefor; provided, further, that, if the Change in Law giving rise to such increased
costs or reductions is retroactive, then the six‑month period referred to above shall be extended to include the period of retroactive effect thereof.
(e) Lending Office. Upon the occurrence of any event giving rise to the Borrower’s obligation to pay additional amounts to a Lender pursuant to clause (a) or
(b) of this Section 2.09, such Lender will, if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of such Lender) to designate a different
lending office if such designation would reduce or obviate the obligations of the Borrower to make future payments of such additional amounts; provided that such designation is
made on such terms that such Lender and its lending office suffer no material unreimbursed cost or material legal or regulatory disadvantage (as reasonably determined by such
Lender), with the object of avoiding future consequence of the event giving rise to the operation of any such provision.
Section 2.10 [Reserved].
Section 2.11 Illegality; Inability to Determine Rates
(a) Notwithstanding any other provision in this Agreement, in the event of a Disruption Event, the affected Lender shall promptly notify the Agents and the
Borrower thereof (or, if such Lender is a Conduit Lender, the related Lender Agent shall provide such notice to the Collateral Agent and the Borrower on behalf of such Conduit
Lender), and such Lender’s obligation to make or maintain Advances hereunder based on the applicable Benchmark shall be suspended until such time as such Lender may again
make and maintain Advances based on the applicable Benchmark.
(b) Upon the occurrence of any event giving rise to a Lender’s suspending its obligation to make or maintain Advances based on the applicable Benchmark
pursuant to Section 2.11(a), such Lender will, if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of such Lender) to designate a different
lending office if such designation would enable such Lender to again make and maintain Advances based on such Benchmark; provided that such designation is made on such terms
that such Lender and its lending office suffer no unreimbursed cost or material legal or regulatory disadvantage (as reasonably determined by such Lender), with the object of
avoiding future consequence of the event giving rise to the operation of any such provision.
(c) If, prior to the first day of any Interest Accrual Period or prior to the date of any Advance, as applicable, either (i) the Administrative Agent reasonably
determines that for any reason adequate and reasonable means do not exist for determining the applicable Benchmark, or (ii) the Required Lenders determine and notify the
Administrative Agent that such Benchmark with respect to such Advances does not adequately and fairly reflect the cost to such Lenders of
-79-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
funding such Advances, the Administrative Agent will promptly so notify the Borrower, the Collateral Agent and each Lender. Thereafter, the obligation of the Lenders to make or
maintain Advances based on such Benchmark shall be suspended until the Administrative Agent (upon the instruction of the Required Lenders) revokes such notice.
(d) Upon receipt of any notice described in Section 2.11(a) or (c), the Borrower may revoke any pending request for the making or continuation of an
Advance based on the Benchmark or, failing that, will be deemed to have converted such request into a request for an Advance based on the Base Rate. For the avoidance of doubt,
no Advances shall be required to be repaid as a result of any circumstance or determination made pursuant to this Section 2.11.
Section 2.12 Fees
(a) Undrawn Fee. On each Payment Date, the Borrower shall pay to the Administrative Agent (for the account of the Lenders on a pro rata basis) the
Undrawn Fee in the amount set forth in the Lender Fee Letter.
(b) Prepayment Fee. If, at any time prior to the two-year anniversary of the A&R Effective Date, the Facility Amount is reduced in whole or in part at the
option or election of the Borrower, the Borrower shall pay to the Administrative Agent (for the account of the Lenders on a pro rata basis), a prepayment fee in the amount set forth
in the Lender Fee Letter.
(c) Agent Fees. The Borrower agrees to pay to the Agents such fees as are mutually agreed to in writing from time to time by the Borrower and the Agents,
including the fees set forth in the Agent Fee Letter.
(d) Collateral Administrator, Custodian and Securities Intermediary Fees. The Borrower agrees to pay to the Collateral Administrator, the Custodian and the
Securities Intermediary such fees as are mutually agreed to in writing from time to time by the Borrower and the Collateral Administrator, the Custodian and the Securities
Intermediary, including the fees set forth in the Collateral Administration and Agency Fee Letter.
Section 2.13 Rescission or Return of Payment
The Borrower agrees that, if at any time (including after the occurrence of the Final Maturity Date) all or any part of any payment theretofore made by it to
any Secured Party or any designee of a Secured Party is or must be rescinded or returned for any reason whatsoever (including the insolvency, bankruptcy or reorganization of the
Borrower or any of its Affiliates), the obligation of the Borrower to make such payment to such Secured Party shall, for the purposes of this Agreement, to the extent that such
payment is or must be rescinded or returned, be deemed to have continued in existence and this Agreement and any other applicable Facility Document shall continue to be effective
or be reinstated, as the case may be, as to such obligations, all as though such payment had not been made.
Section 2.14 Default Interest
During the existence and continuance of an Event of Default, at the election of the Administrative Agent or Required Lenders (or, in the case of Section
6.01(h), automatically), all
-80-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Obligations (other than the Advances, where the default rate is reflected in the Applicable Margin) shall bear interest at the Default Rate until rescinded by the Administrative Agent
or the Required Lenders. Interest payable at the Default Rate shall be payable on each Payment Date in accordance with the Priority of Payments.
Section 2.15 Payments Generally
(a) All amounts owing and payable to any Secured Party, any Affected Person or any Indemnified Party, in respect of the Advances and other Obligations,
including the principal thereof, interest, fees, indemnities, expenses or other amounts payable under this Agreement or any other Facility Document, shall be paid on behalf and at
the direction of the Borrower (or the Servicer on behalf of the Borrower) by the Collateral Agent to the applicable recipient in an Eligible Currency in immediately available funds,
on each Payment Date in accordance with the Priority of Payments, and all without counterclaim, setoff, deduction, defense, abatement, suspension or deferment; provided that any
amounts payable to the Lenders under this Agreement or any other Facility Document shall be paid on behalf and at the direction of the Borrower (or the Servicer on behalf of the
Borrower) to the Administrative Agent for the account of the Lenders on a pro rata basis. Each Lender shall provide wire instructions to the Borrower and the Administrative
Agent. Other than with respect to payments on a Payment Date, payments must be received by the Administrative Agent on or prior to 3:00 p.m. on a Business Day to be remitted by
the Administrative Agent on such Business Day to the Lenders; provided that payments received by the Administrative Agent after 3:00 p.m. on a Business Day will be deemed to
have been paid on the next following Business Day. At no time will the Administrative Agent have any duty (express or implied) to fund (or front or advance) any amount owing by
the Borrower hereunder.
(b) Except as otherwise expressly provided herein, all computations of Interest, the Interest Rate, fees and other Obligations shall be made on the basis of a
year of 360 days for the actual number of days elapsed; provided that, for any Advances other than Advances funded by any Conduit Lender, all computations based on (x) Daily
Compounded CORRA shall be based on a year consisting of 365 days and (y) the Base Rate shall be based on a year consisting of 365 days or 366 days, as applicable. In computing
interest on any Advance, the date of the making of the Advance shall be included and the date of payment shall be excluded; provided that, if an Advance is repaid on the same day
on which it is made, one day’s Interest shall be paid on such Advance. All computations made by the Collateral Agent, the Collateral Administrator or the Administrative Agent
under this Agreement or any other Facility Document shall be conclusive absent manifest error.
(c) Eligible Currency.
(i) For purposes of Section 9.01(a), any amounts on deposit in the Collection Account denominated in any Eligible Currency shall be
applied on any Payment Date (i) first, to make payments in such Eligible Currency and (ii) second, to make payments in any other Eligible Currency (pro rata based on
available amounts from each other Eligible Currency), as converted by the Servicer using the Applicable Conversion Rate; provided, that such payments shall be subject
to availability of such funds pursuant to Section 9.01(a).
-81-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(ii) The Servicer shall instruct the Collateral Agent (who shall forward such instruction to the Securities Intermediary), no later than the
Determination Date immediately preceding each Payment Date, to convert amounts on deposit in the Collection Account into Dollars or any other Eligible Currency to
the extent necessary to make payments pursuant to Section 9.01(a), as applicable (as determined by the Servicer using the Applicable Conversion Rate).
(iii) Any Principal Proceeds on deposit in the Collection Account denominated in an Eligible Currency may be converted by the Servicer
into another Eligible Currency on any Business Day (other than a Payment Date) using the Applicable Conversion Rate so long as such conversion does not cause
Advances outstanding in any Eligible Currency to exceed the applicable Borrowing Base for such Eligible Currency immediately after giving effect thereto. The
Servicer shall provide no less than one (1) Business Day’s prior written notice to the Administrative Agent and the Collateral Agent of any such conversion.
Section 2.16 Defaulting Lenders
(a) Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as
that Lender is no longer a Defaulting Lender pursuant to Section 2.16(b), to the extent permitted by Applicable Law:
(i) Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this
Agreement shall be restricted as set forth in the definition of “Required Lenders” and Section 12.01.
(ii) Defaulting Lender Waterfall. Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of
such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article IX or otherwise) shall be applied at such time or times as may be determined by
the Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second, as the
Borrower may request (so long as no Event of Default has occurred and is continuing), to the funding of any Advance in respect of which such Defaulting Lender has
failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; third, if so determined by the Administrative Agent and the
Borrower, to be held in a deposit account and released pro rata in order to satisfy such Defaulting Lender’s potential future funding obligations with respect to Advances
under this Agreement; fourth, to the payment of any amounts owing to the Lenders as a result of any judgment of a court of competent jurisdiction obtained by any
Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; fifth, so long as no Event of Default has
occurred and is continuing, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the
Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; provided that if an Event of Default has
occurred and is continuing, such amounts shall be applied to reduce the outstanding Obligations in accordance with the Priority of Payments; and sixth, to such
Defaulting Lender or as otherwise directed by a
-82-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
court of competent jurisdiction; provided that if such payment is a payment of the principal amount of any Advances in respect of which such Defaulting Lender has not
fully funded its appropriate share, such payment shall be applied solely to pay the Advances of all non‑Defaulting Lenders on a pro rata basis prior to being applied to
the payment of any Advances of such Defaulting Lender until such time as all Advances are held by the Lenders pro rata in accordance with the Commitments
hereunder. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender
or to post cash collateral pursuant to this Section 2.16 shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.
(iii) Certain Fees. No Defaulting Lender shall be entitled to receive any fee payable under Section 2.12(a) for any period during which that Lender is a
Defaulting Lender and the Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to such Defaulting Lender.
(b) Defaulting Lender Cure. If the Borrower and the Administrative Agent agree in writing that a Lender is no longer a Defaulting Lender, the
Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein, that Lender will, to
the extent applicable, purchase at par that portion of outstanding Advances of the other Lenders or take such other actions as the Administrative Agent may determine to be
necessary to cause the Advances Outstanding to be held on a pro rata basis by the Lenders in accordance with their Percentages, whereupon such Lender will cease to be a
Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a
Defaulting Lender; provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will
constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.
Section 2.17 Right of Setoff
The Borrower agrees that, in addition to (and without limitation of) any right of set‑off that the Agents or any Lender may otherwise have, after the
occurrence and during the continuance of an Event of Default each of the Agents and the Lenders shall be entitled, at its option, to offset amounts owing by the Agents or such
Lender, as the case may be, to the Borrower, in Dollars or in any other currency (irrespective of the place of payment or booking office of the obligation and regardless of whether
such amounts are then due to the Borrower), against any amount payable by the Borrower to the Agents or such Lender, as the case may be, under this Agreement that is not paid
when due; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative
Agent for further application in accordance with the provisions of Section 2.16 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and
deemed held in trust for the benefit of the Administrative Agent and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Agents a statement describing in
reasonable detail the obligations owing to such Defaulting Lender as to which it exercised such right of setoff. For this purpose, any amount owing by the Agents or any Lender to
the Borrower may be converted
-83-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
by the Agents or such Lender, as the case may be, into the currency in which the amount payable by the Borrower to the Agents or such Lender, as the case may be, under this
Agreement is denominated at the rate of exchange at which the Agents or such Lender, as the case may be, would be able, acting in a reasonable manner and in good faith, to
purchase the relevant amount of such currency.
Section 2.18 Lending Offices; Changes Thereto
Each Lender may at any time or from time to time designate, by written notice to the Administrative Agent to the extent not already reflected on Schedule 1,
one or more domestic or foreign lending offices (which, for this purpose, may include branches or Affiliates of the respective Lender) for the various Advances made by such
Lender (including by designating a separate lending office (or Affiliate) to act as such); provided that, for designations made after the A&R Effective Date to the extent such
designation shall result in increased costs under Section 2.09 or additional amounts under Section 12.03 in excess of those which would be charged in the absence of the designation
of a different lending office (including a different Affiliate of the respective Lender), then the Borrower shall not be obligated to pay such excess increased costs or additional
amounts (although the Borrower, in accordance with and pursuant to the other provisions of this Agreement, shall be obligated to pay the costs or additional amounts which would
apply in the absence of such designation and any subsequent increased costs of the type described above resulting from changes in law after the date of the respective designation).
Each lending office and Affiliate of any Lender designated as provided above shall, for all purposes of this Agreement, be treated in the same manner as the respective Lender (and
shall be entitled to all indemnities and similar provisions in respect of its acting as such hereunder) and any designation of a lending office pursuant to this Section 2.18 shall not
affect the obligation of the Borrower to repay any Obligations in accordance with the terms of this Agreement.
Section 2.19 Recourse Against Certain Parties
Notwithstanding any other provision of this Agreement, the obligations of the Borrower under this Agreement are limited recourse obligations of the
Borrower (and not any of its Affiliates or any other party) payable solely from the Collateral in accordance with the Priority of Payments and, following realization of the Collateral,
and application of the proceeds thereof in accordance with the Priority of Payments and, subject to Section 2.13, all obligations of and any claims against the Borrower hereunder or
in connection herewith after such realization shall be extinguished and shall not thereafter revive. No recourse shall be had against any officer, director, employee, shareholder,
member, manager, agent, partner, principal or incorporator of the Borrower or their respective successors or assigns for any amounts payable under this Agreement. It is understood
that the foregoing provisions of this Section 2.19 shall not (i) prevent recourse to the Collateral for the sums due or to become due under any security, instrument or agreement which
is part of the Collateral or (ii) constitute a waiver, release or discharge of any Indebtedness or obligation evidenced by this Agreement until such Collateral has been realized. It is
further understood that the foregoing provisions of this Section 2.19 shall not limit the right of any Person to name the Borrower as a party defendant in any proceeding or in the
exercise of any other remedy under this Agreement, so long as no judgment in the nature of a deficiency judgment or seeking personal liability shall be asked for or (if obtained)
enforced against the Borrower.
-84-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Notwithstanding anything to the contrary in this Agreement or in any of the Facility Documents, the parties hereto acknowledge that the obligations of any
Conduit Lender arising hereunder are limited recourse obligations payable solely from the unsecured assets of such Conduit Lender subject to the immediately succeeding
paragraphs (the “Available Funds”) and, following the application of such Available Funds or the proceeds thereof, any claims of the parties hereto (and the obligations of such
Conduit Lender) shall be extinguished. No recourse shall be had for the payment of any amount owing under this Agreement against any officer, member, director, employee,
security holder or incorporator of any Conduit Lender or its successors or assigns, and no action may be brought against any officer, member, director, employee, security holder or
incorporator of any Conduit Lender personally. The parties hereto agree that they will not petition a court, or take any action or commence any proceedings, for the liquidation or the
winding-up of, or the appointment of an examiner to, any Conduit Lender, as provided in Section 12.16, or any other bankruptcy or insolvency proceedings with respect to such
Conduit Lender; provided that nothing in this sentence shall limit the right of any party hereto to file any claim or otherwise take any action with respect to any proceeding of the
type described in this sentence that was instituted against any Conduit Lender by any Person other than such party. The provisions of this paragraph shall survive the termination of
this Agreement.
Notwithstanding any provisions contained in this Agreement to the contrary, no Conduit Lender shall, nor shall any Conduit Lender be obligated to, pay any
amount pursuant to this Agreement unless (i) such Conduit Lender has received funds which may be used to make such payment and which funds are not required to repay its
commercial paper notes when due and (ii) after giving effect to such payment, either (x) such Conduit Lender could issue commercial paper notes to refinance all of its outstanding
commercial paper notes (assuming such outstanding commercial paper notes matured at such time) in accordance with the program documents governing its securitization program
or (y) all of such Conduit Lender’s commercial paper notes are paid in full. Any amount which any Conduit Lender does not pay pursuant to the operation of the preceding sentence
shall not constitute a claim (as defined in Section 101 of the United States Bankruptcy Code) against or obligation of such Conduit Lender for any such insufficiency unless and until
such Conduit Lender satisfies the provisions of clauses (i) and (ii) above. The provisions of this Section shall survive the termination of this Agreement.
Section 2.20 Replacement of Lenders.
(a) Notwithstanding anything to the contrary contained herein, in the event that (i) any Affected Person shall request reimbursement for amounts owing
pursuant to Section 2.09, (ii) the Borrower shall be required to reimburse any Affected Person for any Non-Excluded Taxes or pay any additional amounts to any Affected Person or
any Governmental Authority for the account of any Affected Person pursuant to Section 12.03, (iii) any Lender is a Defaulting Lender (any such Lender under clause (i), (ii) or (iii)
above that is not affiliated with the Administrative Agent, a “Potential Terminated Lender”), (iv) any Lender does not give or approve any consent, waiver or amendment that
requires the approval of all Lenders or all affected Lenders in accordance with the terms hereof and has been approved by the Required Lenders or (v) during the Reinvestment
Period, has become the subject of a Bail-In Action (such non-consenting Lender, also, a “Potential Terminated Lender”), the Borrower, at its sole expense and effort, shall be
permitted, upon written notice to the Administrative Agent and the Collateral Agent and such Potential Terminated Lender, to require such Potential Terminated Lender to (x) assign
and
-85-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 12.06), all of its interests, rights (other than its existing
rights to payments pursuant to Sections 2.09 and 12.03) and obligations under this Agreement and the related Facility Documents to an assignee permitted pursuant to Section 12.06
(a “Replacement Lender”) that shall assume such obligations (which assignee may be another Lender, if such Lender accepts such assignment) or (y) terminate all of its interests,
rights and obligations under this Agreement and the Facility Documents and reduce the aggregate Commitments outstanding; provided that:
(A) such Potential Terminated Lender shall have received payment of an amount equal to the outstanding principal of its Advances, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Facility Documents (including any amounts under Section
2.10 but subject to Section 2.17) from the Replacement Lender (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in
the case of all other amounts);
(B) in the case of any such assignment resulting from a claim for compensation under Section 2.09 or 12.03, such assignment will result in a
reduction in such compensation or payments thereafter;
(C) such assignment does not conflict with Applicable Laws; and
(D) in the case of an assignment based on clause (iv) above, the Replacement Lender shall have consented to the applicable amendment,
waiver or consent.
(b) Each Potential Terminated Lender hereby agrees to take all actions reasonably necessary, at the sole expense of the Borrower, to permit a Replacement
Lender to succeed to its rights and obligations hereunder. Upon the effectiveness of any such assignment to a Replacement Lender, (i) such Replacement Lender shall become a
“Lender” hereunder for all purposes of this Agreement and the other Facility Documents, (ii) the applicable Potential Terminated Lender shall have no further Commitment
hereunder (such Person, a “Terminated Lender”) and (iii) such Replacement Lender shall have a Commitment in the amount not less than the Terminated Lender’s Commitment
assumed by it.
(c) No Lender shall be required to make any assignment or delegation pursuant to Section 2.20(a) if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.
Section 2.21 Contractual Currency
To the fullest extent permitted by Applicable Law, if any judgment or order expressed in a currency other than the currency in which a payment is required
by this Agreement is to be made by the Borrower (the “Contractual Currency”) is rendered:
(a) for the payment of any amount owing in respect of this Agreement; or
-86-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(b) in respect of a judgment or order of another court for the payment of any amount described in the foregoing clause (a),
the recipient of such payment, after recovery in full of the aggregate amount to which the recipient of such payment is entitled pursuant to the judgment or
order, will be entitled to receive promptly from the Borrower the amount of any shortfall of the Contractual Currency received by the recipient of such payment as a consequence of
sums being paid in such other currency if such shortfall arises or results from any variation between the rate of exchange at which the Contractual Currency is converted into the
currency of the judgment or order for the purposes of such judgment or order and the rate of exchange at which the recipient of such payment is able, acting in a reasonable manner
and in good faith in converting the currency received into the Contractual Currency, to purchase the Contractual Currency with the amount of the currency of the judgment or order
actually received by the recipient of such payment. The term “rate of exchange” includes any premiums and costs of exchange payable in connection with the purchase of or
conversion into the Contractual Currency.
To the fullest extent permitted by Applicable Law, the obligations in this Section constitute separate and independent obligations from the other obligations
in this Agreement and any related document, will be enforceable as separate and independent causes of action, will apply notwithstanding any indulgence granted by the recipient of
such payment and will not be affected by judgment being obtained or claim or proof being made for any other sums payable in respect of this Agreement or any related document.
To the extent permitted by Applicable Law, the Borrower hereby waives the right to invoke any defense of payment impossibility.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.01 Conditions Precedent to A&R Effective Date
The occurrence of the A&R Effective Date shall be subject to the conditions precedent that the Administrative Agent shall have received on or before the
A&R Effective Date the following, each in form and substance reasonably satisfactory to the Administrative Agent, or, as applicable, the events set forth below shall have occurred
(or such applicable conditions precedent have been waived by the Administrative Agent):
(a) each of the Facility Documents (other than the Collateral Administration and Agency Fee Letter) duly executed and delivered by the parties thereto,
which shall each be in full force and effect;
(b) true and complete copies certified by a Responsible Officer of the Borrower of all Governmental Authorizations, Private Authorizations and
Governmental Filings, if any, required in connection with the transactions contemplated by this Agreement and the other Facility Documents;
(c) each of the representations and warranties of the Borrower, the Servicer and the Equityholder contained in the Facility Documents shall be true and
correct as of the A&R
-87-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Effective Date (except to the extent such representations and warranties expressly relate to any earlier date, in which case such representations and warranties shall be true and
correct as of such earlier date);
(d) one or more certificates of a Responsible Officer of each of the Borrower, the Equityholder and the Servicer certifying (i) as to its Constituent
Documents, (ii) as to its resolutions or other action of its general partner, board of directors or board of managers or members approving this Agreement and the other Facility
Documents to which it is a party and the transactions contemplated hereby and thereby, (iii) that each of such Person’s representations and warranties made by such Person in the
Facility Documents to which it is a party are true and correct as of the A&R Effective Date (except to the extent such representations and warranties expressly relate to any earlier
date, in which case such representations and warranties shall be true and correct as of such earlier date), (iv) that no Default or Event of Default has occurred and is continuing, and
(v) as to the incumbency and specimen signature of each of its Responsible Officers authorized to execute the Facility Documents to which it is a party;
(e) proper financing statements, in acceptable form for filing on the A&R Effective Date, under the UCC with the Secretary of State of the State of Delaware
and any other applicable filing office in any applicable jurisdiction that the Administrative Agent deems reasonably necessary or desirable in order to perfect the interests in the
Collateral contemplated by this Agreement and such further instruments and such further actions that the Administrative Agent deems reasonably necessary or desirable in order to
perfect the Collateral Agent’s first-priority security interest in the Collateral;
(f) legal opinions (addressed to each of the Secured Parties) of (i) counsel to the Borrower, the Servicer and the Equityholder, covering customary corporate
matters (including opinions regarding no conflict with covered Laws and non‑contravention with organizational documents and the status of the Borrower under the Investment
Company Act), substantive non-consolidation of the Borrower with the Equityholder, the true sale nature of any transfers to the Borrower of Collateral Loans from the Equityholder,
perfection of the Collateral Agent’s security interest in the Collateral and such other matters as the Administrative Agent and its counsel shall reasonably request and (ii) counsel to
the Collateral Administrator and the Custodian, covering corporate and enforceability matters, and such other matters as the Administrative Agent and its counsel shall reasonably
request;
(g) all of the Covered Accounts shall have been established and shall be subject to the Account Control Agreement;
(h) evidence reasonably satisfactory to it that (i) all fees (to the extent invoiced at least two (2) Business Days prior to the A&R Effective Date) and
expenses due and owing to the Administrative Agent on or prior to the A&R Effective Date have been received or will be received contemporaneously with the A&R Effective
Date; and (ii) the reasonable and documented fees and expenses of counsel to the Administrative Agent and the Lenders, and of counsel to the Custodian, the Securities
Intermediary and the Collateral Administrator in connection with the transactions contemplated hereby, shall have been paid by the Borrower.
Section 3.02 Conditions Precedent to Subsequent Advances
-88-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
The obligation of each Lender to make each Advance to be made by it on each Borrowing Date shall be subject to the fulfillment (or waiver by the Required
Lenders) of the following conditions; provided that the conditions described in clauses (c) and (d) (other than a Default or Event of Default described in Section 6.01(h)) below need
not be satisfied if the proceeds of the Borrowing are used to fund Delayed Drawdown Collateral Loans or Revolving Collateral Loans then owned by the Borrower or to fund the
Unfunded Reserve Account to the extent required under Section 8.04:
(a) the Lenders and the Administrative Agent shall have received a Notice of Borrowing with respect to such Advance (including the Borrowing Base
Calculation Statement attached thereto, all duly completed) delivered in accordance with Section 2.02;
(b) immediately after the making of such Advance on the applicable Borrowing Date, each Collateral Quality Test shall be satisfied (or, if any such
Collateral Quality Test was not satisfied immediately before the making of such Advance, such Collateral Quality Test is maintained or improved) (as demonstrated on the
Borrowing Base Calculation Statement attached to such Notice of Borrowing);
(c) each of the representations and warranties of the Borrower, the Servicer and the Equityholder contained in the Facility Documents shall be true and
correct in all material respects as of such Borrowing Date (except to the extent (x) such representations and warranties expressly relate to any earlier date, in which case such
representations and warranties shall be true and correct in all material respects as of such earlier date as if made on such date and (y) such representations and warranties are already
qualified as to materiality or similar, in which case such representations and warranties shall be true and correct in all respects);
(d) no Default or Event of Default shall have occurred and be continuing at the time of the making of such Advance or shall result upon the making of such
Advance;
(e) after the making of such Advance and the deposit of any portion thereof into the Unfunded Reserve Account, the amount on deposit therein is at least
equal to the Unfunded Reserve Required Amount;
(f) if the proceeds of the Advance will be used to acquire a Collateral Loan, such Advance shall be denominated in the same Eligible Currency as such
Collateral Loan;
(g) immediately after the making of such Advance on the applicable Borrowing Date, the Borrowing Base Test is satisfied; and
(h) if more than forty-five (45) days have elapsed since the A&R Effective Date (or such later date as agreed between the Borrower, each applicable Lender
and the Administrative Agent), the Borrower, each applicable Lender and the Administrative Agent shall have entered into a risk retention letter relating to the European Union and
the United Kingdom.
-89-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01 Representations and Warranties of the Borrower
The Borrower represents and warrants to each of the Secured Parties on and as of each Measurement Date (other than Measurement Dates specified in
clauses (c), (g) and (h) of the definition thereof) and each other date expressly provided under this Agreement or the other Facility Documents on which such representations and
warranties are required to be (or deemed to be) made, as follows:
(a) Due Organization; Power and Authority. The Borrower is a limited liability company, duly formed under the laws of its jurisdiction of formation, with
full power and authority to own and operate its assets and properties and to conduct the business in which it is now engaged and to execute and deliver and perform its obligations
under this Agreement and the other Facility Documents to which it is a party.
(b) Due Qualification and Good Standing. The Borrower is validly existing and in good standing under the Laws of its jurisdiction of formation. The
Borrower is duly qualified to do business and, to the extent applicable, is in good standing in each other jurisdiction in which the nature of its business, assets and properties,
including the performance of its obligations under this Agreement, the other Facility Documents to which it is a party and its Constituent Documents, requires such qualification,
except where the failure to be so qualified or in good standing would not reasonably be expected to have a Material Adverse Effect.
(c) Due Authorization; Execution and Delivery; Legal, Valid and Binding; Enforceability. The execution and delivery by the Borrower of, and the
performance of its obligations under the Facility Documents to which it is a party and the other instruments, certificates and agreements contemplated thereby are within its powers
and have been duly authorized by all requisite action by it and have been duly executed and delivered by it and constitute its legal, valid and binding obligations enforceable against
it in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws
affecting creditors’ rights generally or general principles of equity, regardless of whether considered in a proceeding in equity or at law.
(d) Non‑Contravention. None of the execution and delivery by the Borrower of this Agreement or the other Facility Documents to which it is a party, the
Borrowings or the pledge of the Collateral hereunder, the consummation of the transactions herein or therein contemplated, or compliance by it with the terms, conditions and
provisions hereof or thereof, will (i) conflict with, or result in a breach or violation of, or constitute a default under its Constituent Documents, (ii) conflict with or contravene (A)
any Applicable Law, (B) any material indenture, agreement or other contractual restriction binding on or affecting it or any of its assets, including any Related Document, or (C) any
order, writ, judgment, award, injunction or decree binding on or affecting it or any of its assets or properties or (iii) result in a breach or violation of, constitute a default under, or
permit the acceleration of any obligation or liability in, any material contractual obligation or
-90-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
any material agreement or document to which it is a party or by which it or any of its assets are bound (or to which any such obligation, agreement or document relates).
(e) Governmental Authorizations; Private Authorizations; Governmental Filings. The Borrower has obtained, maintained and kept in full force and effect all
Governmental Authorizations and Private Authorizations which are necessary for it to properly carry out its business, except where the failure to do so would not reasonably be
expected to have a Material Adverse Effect, and has made all material Governmental Filings necessary for the execution and delivery by it of the Facility Documents to which it is a
party, the Borrowings by the Borrower under this Agreement, the pledge of the Collateral by the Borrower under this Agreement and the performance by the Borrower of its
obligations under this Agreement and the other Facility Documents to which it is a party, other than such filings to be made in connection with the execution and delivery of the
Facility Documents, and no material Governmental Authorization, Private Authorization or Governmental Filing which has not been obtained or made is required to be obtained or
made by it in connection with the execution and delivery by it of any Facility Document to which it is a party, the Borrowings by the Borrower under this Agreement, the pledge of
the Collateral by the Borrower under this Agreement or the performance of its obligations under this Agreement and the other Facility Documents to which it is a party.
(f) Compliance with Agreements, Laws, Etc. The Borrower has duly observed and complied with all Applicable Laws, except where the failure to so observe
or comply would not reasonably be expected to have a Material Adverse Effect. The Borrower has preserved and kept in full force and effect its legal existence. The Borrower has
preserved and kept in full force and effect its rights, privileges, qualifications and franchises, except where the failure to do so would not reasonably be expected to result in a
Material Adverse Effect.
(g) Location. The Borrower’s office in which the Borrower maintains its corporate books and records is located at the address for notices to the Borrower as
set forth on Schedule 5 (as such location may change from time to time as notified to the Administrative Agent in accordance with Section 12.02).
(h) Investment Company Act. Neither the Borrower nor the pool of Collateral is required to register as an “investment company” under the Investment
Company Act. Each Advance hereunder and each Collateral Loan acquired by the Borrower is an “eligible asset” as defined under Rule 3a-7 under the Investment Company Act.
(i) Taxes. The Borrower has filed all U.S. federal income Tax returns and all other material Tax returns which are required to be filed by it, if any, and has
paid all U.S. federal income Taxes and all other material Taxes shown to be due and payable on such returns, if any, or pursuant to any assessment received by any such Person other
than any such taxes, assessments or charges that are being contested in good faith by appropriate proceedings and for which appropriate reserves in accordance with GAAP have
been established.
(j) Tax Status. For U.S. federal income tax purposes, the Borrower is disregarded as an entity separate from its sole owner for U.S. federal income tax
purposes, the Equityholder, within the meaning of Treasury Regulation Section 301.7701‑3. The Equityholder is a United States Person within the meaning of Section 7701(a)(30)
of the Code.
-91-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(k) ERISA. Except as would not constitute a Material Adverse Effect, neither (i) the Borrower nor (ii) any member of its ERISA Group has, or during the
past five (5) years had, any liability or obligation with respect to any Plan or Multiemployer Plan.
(l) Plan Assets. The assets of the Borrower are not and, during the term of this Agreement and any transaction hereunder, will not be treated as “plan assets”
for purposes of Section 3(42) of ERISA and the Collateral is not and, during the term of this Agreement and any transaction hereunder, will not be deemed to be “plan assets” for
purposes of Section 3(42) of ERISA. The Borrower has not taken, or omitted to take, any action which could result in any of the Collateral being treated as “plan assets” for
purposes of Section 3(42) of ERISA or, assuming that no portion of any Advance is funded with “plan assets” for purposes of Section 3(42) of ERISA, unless the applicable Lender
is relying on a statutory or administrative or individual exemption pursuant to Section 408 of ERISA, the occurrence of any Prohibited Transaction in connection with the
transactions contemplated hereunder.
(m) Solvency. After giving effect to each Advance hereunder, and the disbursement of the proceeds of such Advance, the Borrower is and will be Solvent.
(n) Material Adverse Effect. Since its date of formation, no event or condition has occurred with respect to the Borrower that constitutes a Material Adverse
Effect unless notified to (and waived by) the Administrative Agent.
(o) Special Purpose Provision. The Borrower has complied in all material respects with (i) its Constituent Documents and the activities described in Section
5.05 hereof and (ii) each of the representations and warranties contained in the Opinion of Counsel with respect to the substantive non-consolidation of the Borrower with the
Equityholder and the true contribution nature of any transfers to the Borrower of Collateral Loans from the Seller, delivered by Latham & Watkins LLP on the Original Closing
Date.
(p) Exchange Act Compliance; Regulations T, U and X; Margin Regulations. None of the transactions contemplated herein or in the other Facility
Documents (including, without limitation, the use of the proceeds from the transfer of the Collateral) will violate or result in a violation of Section 7 of the Exchange Act, or any
regulations issued pursuant thereto, including, without limitation, Regulations T, U and X of the Board of Governors of the Federal Reserve System. The Borrower does not own or
intend to carry or purchase, and no proceeds from the Advances will be used to carry or purchase, any “margin stock” within the meaning of Regulation U or to extend “purpose
credit” within the meaning of Regulation U.
(q) No Proceedings. There are no proceedings or investigations pending or, to the knowledge of any Responsible Officer of the Borrower, threatened against
it, before any Governmental Authority having jurisdiction over it or its properties (i) asserting the invalidity of any of the Facility Documents, (ii) seeking to prevent the making of
the Advances or the consummation of any of the transactions contemplated by the Facility Documents or (iii) seeking any determination or ruling that would reasonably be expected
to have a Material Adverse Effect.
(r) Bulk Sales. The grant of the security interest in the Collateral by the Borrower to the Collateral Agent, for the benefit of the Secured Parties, pursuant to
this
-92-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Agreement, and the execution, delivery and performance of this Agreement and the other Facility Documents, is in the ordinary course of business for the Borrower and is not
subject to the bulk transfer or any similar statutory provisions in effect in any applicable jurisdiction.
(s) Indebtedness. The Borrower has no Indebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation), other than (a)
Indebtedness incurred under the terms of the Facility Documents and (b) Indebtedness incurred pursuant to certain ordinary business expenses arising pursuant to the transactions
contemplated by this Agreement and the other Facility Documents.
(t) Collections. The Borrower acknowledges that (a) except in connection with a Participation Interest (to the extent permitted hereunder and only while
pending elevation to full assignment) all Obligors (and any related agents) have been directed to make all payments directly to the Collection Account and (b) all Collections
received by it or its Affiliates with respect to the Collateral pledged hereunder are held and shall be held in trust for the benefit of the Collateral Agent, on behalf of the Secured
Parties until deposited into the appropriate Collection Account in accordance with this Agreement.
(u) Sanctions; Anti-Corruption Laws; and Anti-Money Laundering Laws. Neither (i) the Borrower nor any of its Subsidiaries or any of their respective
directors, officers or employees, nor (ii) to the knowledge of the Borrower, any of their respective agents (other than an Agent) or any respective Subsidiary is a Sanctioned Person
or, to their knowledge, is under investigation for an alleged breach of Sanctions by a Governmental Authority that enforces Sanctions. The Borrower and its Subsidiaries are in
compliance with Anti-Corruption Laws and Anti-Money Laundering Laws. The Borrower will notify the Lenders and the Administrative Agent in writing not more than one (1)
Business Day after becoming aware of any breach of this Section 4.01(u).
(v) Environmental. With respect to each item of Related Security as of the date such Collateral Loan related to such Related Security was included in the
Collateral, to the actual knowledge of a Responsible Officer of the Borrower: (i) the related Obligor’s operations comply in all material respects with all applicable Environmental
Laws; and (ii) the related Obligor does not have any material contingent liability in connection with any release of any Hazardous Materials into the environment other than as
materially mitigated by remediation reserves, indemnities, guaranties, acceptance into state-sponsored cleanup funds or other sources. As of the applicable date such Collateral Loan
related to such Related Security was included in the Collateral, the Borrower has not received any written notice of, or inquiry from any Governmental Authority regarding, any
material violation, alleged material violation, material noncompliance, material liability or potential material liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the Related Security.
(w) No Fraud. To the actual knowledge of any Responsible Officer of the Borrower, each Collateral Loan was originated without any fraud or material
misrepresentation on the part of any party thereto.
(x) Broker/Dealer. The Borrower is not a broker/dealer or subject to the Securities Investor Protection Act of 1970.
-93-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(y) Ordinary Course. Each repayment of principal or interest in respect of the Advances under this Agreement shall be (x) in payment of a debt incurred by
the Borrower in the ordinary course of business or financial affairs of the Borrower and (y) made in the ordinary course of business or financial affairs of the Borrower.
(z) Beneficial Ownership Certification. As of the A&R Effective Date, to the extent required to be delivered pursuant to Section 3.01(m), the information
included in the Beneficial Ownership Certification is true and correct in all respects.
(aa) Volcker Rule. The transactions contemplated by this Agreement and the other Facility Documents do not result in the Lenders holding an “ownership
interest” in a “covered fund” for purposes of the Volcker Rule.
Section 4.02 Additional Representations and Warranties of the Borrower
The Borrower represents and warrants to each of the Secured Parties on and as of each Measurement Date (other than Measurement Dates specified in
clauses (c), (g) and (h) of the definition thereof) and each other date expressly provided under this Agreement or the other Facility Documents on which such representations and
warranties are required to be (or deemed to be) made, as follows:
(a) Information.
(i) Each Notice of Borrowing, each Monthly Report, each Borrowing Base Calculation Statement, Payment Date Report and all other written
information, reports, certificates and statements furnished by or on behalf of the Borrower to any Secured Party for purposes of or in connection with this Agreement, the
other Facility Documents or the transactions contemplated hereby or thereby, in each case, is true, complete and correct in all material respects as of the date such
information is stated or certified.
(ii) All Collateral Loans included as Eligible Collateral Loans in the most recent calculation of the Borrowing Base Test required to be determined
hereunder were Eligible Collateral Loans as of the date of such calculation and any other information contained in each Notice of Borrowing is an accurate and complete
listing of all the Collateral Loans contained in the Collateral as of the related date such Collateral Loan was included in the Collateral and the information contained
therein with respect to the identity of such item of Collateral and the amounts owing thereunder is true, complete and correct as of the related date such Collateral Loan
was included in the Collateral.
(b) Representations Relating to the Collateral.
(i) The Borrower owns and has good and marketable and the sole legal title to all Collateral Loans and other Collateral free and clear of any Lien claim
or encumbrance of any Person, other than Permitted Liens;
(ii) the Borrower has acquired its ownership in the Collateral Loans and other Collateral in good faith without notice of any adverse claim, other than
Permitted Liens;
-94-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(iii) other than Permitted Liens, the Borrower has not pledged, assigned or sold (except as otherwise permitted under the Facility Documents), granted a
security interest in, or otherwise conveyed (except as otherwise permitted under the Facility Documents) any of the Collateral;
(iv) the Borrower has full right to grant a security interest in and assign and pledge the Collateral to the Collateral Agent for the benefit of the Secured
Parties (and has duly authorized such grant by all necessary action and the execution, delivery and performance of this Agreement and the other Facility Documents to
which it is a party have been duly authorized by it by all necessary action);
(v) other than the security interest granted to the Collateral Agent for the benefit of the Secured Parties pursuant to this Agreement or as expressly
permitted hereunder, the Borrower has not pledged, assigned, sold, granted a security interest in, or otherwise conveyed any of the Collateral; the Borrower has not
authorized the filing of and is not aware of any financing statements or any equivalent filing in any applicable jurisdiction against the Borrower that include a description
of collateral covering the Collateral other than any financing statement or any equivalent filing in any applicable jurisdiction relating to the security interest granted to
the Collateral Agent hereunder, and the Borrower is not aware of any judgment, PBGC liens or Tax lien filings against the Borrower or any of its assets;
(vi) the Collateral constitutes Money, Cash, accounts (as defined in Section 9‑102(a)(2) of the UCC), Instruments, general intangibles (as defined in
Section 9‑102(a)(42) of the UCC), Uncertificated Securities, Certificated Securities, “securities accounts” under Section 8-501(a) of the UCC, “deposit accounts” (as
defined in Section 9-102 of the UCC) or security entitlements to financial assets resulting from the crediting of financial assets to a “securities account” (as defined in
Section 8-501(a) of the UCC) or supporting obligations;
(vii) all Covered Accounts constitute “securities accounts” under Section 8‑501(a) of the UCC or “deposit accounts” as defined in Section 9‑102 of the
UCC;
(viii) this Agreement creates a valid, continuing and, upon Delivery of Collateral, execution of the Account Control Agreement and filing of the
financing statements referenced in clause (xi) below, perfected security interest (as defined in Section 1‑201(35) of the UCC) in the Collateral in favor of the Collateral
Agent, for the benefit and security of the Secured Parties, which security interest is prior to all other Liens and claims (other than Permitted Liens) and is enforceable as
such against creditors of and purchasers from the Borrower, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar Laws affecting creditors’ rights generally or general principles of equity, regardless of whether considered in a proceeding in equity or at law;
(ix) the Borrower has received all consents and approvals required by the terms of the Related Documents in respect of such Collateral to the pledge
hereunder to the Collateral Agent of its interest and rights in such Collateral;
-95-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(x) with respect to the Collateral that constitutes Security Entitlements:
(A) all such Collateral has been and will have been credited to the applicable Covered Account;
(B) the Securities Intermediary for each Covered Account has agreed to treat all assets credited to the Covered Accounts as Financial Assets;
and
(C) (x) the Borrower has caused the filing of all appropriate financing statements in the proper filing office in the appropriate jurisdictions
under Applicable Law in order to perfect the security interest in the Collateral granted to the Collateral Agent, for the benefit and security of the Secured
Parties, hereunder (which the Borrower hereby agrees may be an “all asset” filing) and (y)(A) the Borrower has delivered to the Collateral Agent a fully
executed Account Control Agreement pursuant to which the Securities Intermediary has agreed to comply with all instructions originated by the Collateral
Agent relating to the Covered Accounts without further consent of the Borrower or (B) the Borrower has taken all steps necessary to cause the Securities
Intermediary to identify in its records the Collateral Agent as the Person having a Security Entitlement against the Securities Intermediary in each of the
Covered Accounts; and
(xi) with respect to Collateral that constitutes accounts or general intangibles, the Borrower has caused the filing of all appropriate financing statements
in the proper filing office in the appropriate jurisdictions under Applicable Law in order to perfect the security interest in the Collateral granted to the Collateral Agent,
for the benefit and security of the Secured Parties, hereunder.
(c) Value Given. The Borrower has acquired each Collateral Loan in the ordinary course of its business and has given fair consideration and reasonably
equivalent value to the seller of each Collateral Loan in exchange for the purchase or contribution of each such Collateral Loan. No such transfer has been made for or on account of
an antecedent debt owed by the Borrower to such seller and no such transfer is or may be voidable or subject to avoidance under any section of the Bankruptcy Code.
Section 4.03 Representations and Warranties of the Equityholder and the Servicer
The Servicer and the Equityholder, as applicable, each represents and warrants to each of the Secured Parties on and as of each Measurement Date (other
than Measurement Dates specified in clauses (c), (g) and (h) of the definition thereof) and as of each other date expressly provided under this Agreement or the other Facility
Documents on which such representations and warranties are required to be (or deemed to be) made, as follows:
(a) Due Organization. The Servicer is a corporation duly incorporated and validly existing under the laws of its jurisdiction of incorporation, with full power
and authority to own and operate its assets and properties, conduct the business in which it is now engaged and to execute and deliver and perform its obligations under this
Agreement and the other Facility Documents to which it is a party. The Equityholder is a corporation, duly incorporated and validly existing under the laws of its jurisdiction of
incorporation, with full power and authority to own
-96-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
and operate its assets and properties, conduct the business in which it is now engaged and to execute and deliver and perform its obligations under this Agreement and the other
Facility Documents to which it is a party.
(b) Due Qualification and Good Standing. Each of the Servicer and the Equityholder is in good standing in its jurisdiction incorporation. Each of the
Servicer and the Equityholder is duly qualified to do business and, to the extent applicable, is in good standing in each other jurisdiction in which the nature of its business, assets
and properties, including the performance of its obligations under this Agreement, the other Facility Documents to which it is a party and its Constituent Documents, requires such
qualification, except where the failure to be so qualified or in good standing would not reasonably be expected to have a Material Adverse Effect.
(c) Due Authorization; Execution and Delivery; Legal, Valid and Binding; Enforceability. The execution and delivery by it, and the performance of its
obligations under the Facility Documents to which it is a party and the other instruments, certificates and agreements contemplated thereby, are within its powers and have been duly
authorized by all requisite action by it and have been duly executed and delivered by it and constitute its legal, valid and binding obligations enforceable against it in accordance with
their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting creditors’ rights
generally or general principles of equity, regardless of whether considered in a proceeding in equity or at law.
(d) Non‑Contravention. None of the execution and delivery by it of this Agreement or the other Facility Documents to which it is a party, the consummation
of the transactions herein or therein contemplated, or compliance by it with the terms, conditions and provisions hereof or thereof, will (i) conflict with, or result in a breach or
violation of, or constitute a default under its Constituent Documents, (ii) conflict with or contravene (A) any Applicable Law, (B) any material indenture, agreement or other
contractual restriction binding on or affecting it or any of its assets, including any Related Document, or (C) any order, writ, judgment, award, injunction or decree binding on or
affecting it or any of its assets or properties or (iii) result in a breach or violation of, or constitute a default under, or permit the acceleration of any obligation or liability in any
contractual obligation or any agreement or document to which it is a party or by which it or any of its assets are bound (or to which any such obligation, agreement or document
relates), except in the case of clause (ii) or (iii) above, where such conflicts, breaches, violations or defaults would not reasonably be expected to have a Material Adverse Effect.
(e) Governmental Authorizations; Private Authorizations; Governmental Filings. It has obtained, maintained and kept in full force and effect all
Governmental Authorizations and Private Authorizations which are necessary for it to properly carry out its business, except where the failure to do so would not reasonably be
expected to have a Material Adverse Effect, and made all material Governmental Filings necessary for the execution and delivery by it of the Facility Documents to which it is a
party, other than financing statements and other perfection matters to be effected in connection with the execution and delivery of the Facility Documents, and the performance by it
of its obligations under this Agreement and the other Facility Documents to which it is a party, and no material Governmental Authorization, Private Authorization or Governmental
Filing which has not been obtained or made is required to be obtained or made by it in connection with the execution and delivery by it of any Facility
-97-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Document to which it is a party or the performance of its obligations under this Agreement and the other Facility Documents to which it is a party.
(f) Taxes. It has filed all U.S. federal income tax returns and all other material tax returns which are required to be filed by it, if any, and has paid all U.S.
federal income taxes and all other material taxes shown to be due and payable on such returns, if any, or pursuant to any assessment received by any such Person, other than any such
taxes, assessments or charges that are being contested in good faith by appropriate proceedings and for which appropriate reserves in accordance with GAAP have been established.
(g) Compliance with Laws, Etc. It has duly observed and complied with all Applicable Laws relating to the conduct of its business and its assets, except
where the failure to so observe or comply would not reasonably be expected to have a Material Adverse Effect. It has preserved and kept in full force and effect its legal existence. It
has preserved and kept in full force and effect its rights, privileges, qualifications and franchises, except where the failure to do so would not reasonably be expected to result in a
Material Adverse Effect.
(h) Eligibility. Each Collateral Loan included in a Monthly Report or a Borrowing Base Calculation Statement required to be delivered by it under this
Agreement as an Eligible Collateral Loan was, in fact, an Eligible Collateral Loan at such time.
(i) Sanctions; Anti-Corruption Laws; and Anti-Money Laundering Laws. Neither it nor, to its knowledge, any of its Affiliates is a Sanctioned Person or, to its
knowledge, is under investigation for an alleged breach of Sanctions by a Governmental Authority that enforces Sanctions. It is in compliance with Anti-Corruption Laws and Anti-
Money Laundering Laws.
(j) Asset Coverage and Other Leverage Limits. The Equityholder complies in all respects with applicable asset coverage and other leverage limits under the
Investment Company Act.
Section 4.04 Representations and Warranties of the Custodian and the Collateral Administrator.
Each of the Custodian and the Collateral Administrator represents and warrants in its individual capacity and as Custodian or Collateral Administrator, as
applicable, as follows (and any successor Custodian or Collateral Administrator appointed in accordance with this Agreement represents and warrants as follows in its individual
capacity and as Custodian or Collateral Administrator, as applicable):
(a) Organization and Corporate Power. It is a duly organized and validly existing national banking association in good standing under the Laws of the United
States. It has full power, authority and legal right to execute, deliver and perform its obligations as Custodian or Collateral Administrator, as applicable, under this Agreement.
(b) Due Authorization. The execution and delivery of this Agreement and the consummation of the transactions provided for herein have been duly
authorized by all necessary
-98-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
action on its part, either in its individual capacity or as Custodian or Collateral Administrator, as the case may be.
(c) No Conflict. The execution and delivery of this Agreement, the performance of the transactions contemplated hereby and the fulfillment of the terms
hereof will not conflict with, result in any breach of any of the material terms and provisions of or constitute (with or without notice or lapse of time or both) a default under any
indenture, contract, agreement, mortgage, deed of trust, or other instrument to which it is a party or by which it or any of its property is bound.
(d) No Violation. Its execution and delivery of this Agreement, its performance of the transactions contemplated hereby and the fulfillment of the terms
hereof will not conflict with or violate, in any material respect, any Applicable Law.
(e) All Consents Required. All approvals, authorizations, consents, orders or other actions of any Person or Governmental Authority applicable to the
Custodian or the Collateral Administrator required in connection with the execution and delivery of this Agreement, the performance by the Custodian or the Collateral
Administrator, as applicable, of the transactions contemplated hereby and the fulfillment by the Custodian or the Collateral Administrator, as applicable, of the terms hereof have
been obtained.
(f) Validity, etc. This Agreement constitutes the legal, valid and binding obligation of the Custodian or the Collateral Administrator, as applicable,
enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable insolvency, bankruptcy, reorganization, moratorium or other similar
Laws or general principles of equity (whether considered in a suit at law or in equity).
ARTICLE V
COVENANTS
Section 5.01 Affirmative Covenants of the Borrower.
The Borrower covenants and agrees that, until the Final Maturity Date (and thereafter until the date that all Obligations have been Paid in Full):
(a) Compliance with Agreements, Laws, Etc. It shall (i) duly observe and comply in all material respects with all Applicable Laws relative to the conduct of
its business or to its assets, (ii) preserve and keep in full force and effect its legal existence, (iii) preserve and keep in full force and effect its rights, privileges, qualifications and
franchises, except where the failure to do so would not reasonably be expected to result in a Material Adverse Effect, (iv) comply with the terms and conditions of each Facility
Document to which it is a party, its Constituent Documents and, except where the failure to do so would not reasonably be expected to result in a Material Adverse Effect, each
Related Document to which it is a party and (v) obtain, maintain and keep in full force and effect all Governmental Authorizations, Private Authorizations and Governmental Filings
which are necessary or appropriate to properly carry out its business
-99-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
and the transactions contemplated to be performed by it under the Facility Documents to which it is a party, its Constituent Documents and the Related Documents to which it is a
party.
(b) Enforcement.
(i) It shall not take any action that would release any Obligor from any of such Obligor’s covenants or obligations under any instrument or agreement
included in the Collateral, except in the case of (A) repayment of Collateral Loans, (B) subject to the terms of this Agreement, (1) amendments, consents, waivers and
other modifications of Collateral Loans in accordance with the Servicing Standard and (2) actions taken in connection with the work out or restructuring of any
Collateral Loan in accordance with the provisions hereof, and (C) other actions by the Servicer required hereby or otherwise to the extent not prohibited by, or in conflict
with, this Agreement.
(ii) It will not, without the prior written consent of the Administrative Agent and the Required Lenders, contract with other Persons (other than the
Servicer and the Collateral Administrator) for the performance of actions and obligations to be performed by the Borrower or the Servicer hereunder. Notwithstanding
any such arrangement, the Borrower shall remain primarily liable with respect to any such obligations. The Borrower will promptly perform, and use commercially
reasonable efforts to cause the Servicer to perform, all of their obligations and agreements contained in this Agreement or any other Facility Document to which such
Person is a party.
(c) Further Assurances. It shall promptly upon the reasonable request of the Required Lenders (through the Administrative Agent), at the Borrower’s
expense, execute and deliver such further instruments and take such further action in order to maintain and protect the Collateral Agent’s first‑priority perfected security interest in
the Collateral pledged by the Borrower for the benefit of the Secured Parties free and clear of any Liens (other than Permitted Liens). At the reasonable request of the Required
Lenders (through the Administrative Agent), the Borrower shall promptly take, at the Borrower’s expense, such further action in order to establish and protect the rights, interests
and remedies created or intended to be created under this Agreement in favor of the Secured Parties in the Collateral, including all actions which are necessary to (x) enable the
Secured Parties to enforce their rights and remedies under this Agreement and the other Facility Documents, and (y) effectuate the intent and purpose of, and to carry out the terms
of, the Facility Documents.
(d) Financial Statements; Other Information. It (or the Servicer on its behalf) shall provide to the Administrative Agent:
(i) within one hundred twenty (120) days (or such longer period permitted pursuant to any orders, declarations, laws, regulations or letters issued by the
SEC or any other government or regulatory authority) after the end of each fiscal year of the Equityholder (commencing with the fiscal year ending 2024), an annual
report of the Equityholder and its Subsidiaries, on a consolidated basis, containing an audited consolidated statement of assets and liabilities as of the end of such fiscal
year, and audited consolidated statements of operations, changes in net assets and cash flows, for the fiscal year then ended, prepared in accordance with GAAP, each
reported on by independent
-100-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
public accountants of recognized national standing (without a “going concern” or like qualification or exception and without any qualification or exception as to the
scope of such audit), to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the
Equityholder and its consolidated Subsidiaries on a consolidated basis;
(ii) within sixty (60) days (or such longer period permitted pursuant to any orders, declarations, laws, regulations or letters issued by the SEC or any
other government or regulatory authority) after the end of each of the first three quarters of each fiscal year of the Equityholder, an unaudited financial report of the
Equityholder and its Subsidiaries, on a consolidated basis, containing a consolidated statement of assets and liabilities, consolidated statements of operations, changes in
net assets, and cash flows, and a condensed schedule of investments regarding the Equityholder’s investments, in each case for the period then ended, all certified by one
of its senior financial officers as presenting fairly in all material respects the financial condition and results of operations of the Equityholder and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year‑end audit adjustments and the absence of footnotes;
(iii) within five (5) Business Days after a Responsible Officer of the Borrower obtains actual knowledge of the occurrence and continuance of any (A)
Default, or (B) Event of Default, a certificate of a Responsible Officer of the Borrower setting forth the details thereof and the action which the Borrower or the Servicer
is taking or proposes to take with respect thereto;
(iv) to the extent reasonably available (and, if requested by the Administrative Agent, the Borrower shall request such information and use
commercially reasonable efforts to obtain the same) to the Servicer (on behalf of the Borrower) pursuant to the Related Documents, on or prior to the related Acquisition
Date, audited financial statements of the related Obligor for the three (3) year period most recently ended prior to such Acquisition Date with respect to the related
Obligor;
(v) (A) copies of the underwriting and credit memos prepared by the Servicer with respect to such Collateral Loan on or prior to the related Acquisition
Date, and copies of any updates or amendments thereto, within ten (10) Business Days after such updates or amendments become available; (B) each quarterly and
annual financial reporting package received by the Borrower with respect to such Obligor and with respect to each Collateral Loan (including any financial statements,
management discussion and analysis, executed covenant compliance certificates and related covenant calculations with respect to such Obligor and with respect to each
Collateral Loan), which delivery shall be made within the longer of (x) twenty (20) Business Days after receipt by a Responsible Officer of the Borrower or the Servicer
(on behalf of the Borrower) as specified in the Related Documents or (y) six (6) Business Days after such quarterly and annual financial reporting package is finalized
and (C) the quarterly portfolio summary and quarterly internal valuations prepared by the Servicer with respect to each Collateral Loan and Obligor, which delivery shall
be made within thirty (30) days after the preparation thereof by the Servicer and which shall reflect the most current financial information received with respect to each
Collateral
-101-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Loan and Obligor at the time such portfolio summary or internal valuation is prepared (which shall include covenant and financial covenant testing as required pursuant
to the related Underlying Loan Agreements);
(vi) within five (5) Business Days after the related Acquisition Date, financial reporting packages with respect to each Obligor thereof including (A)
each Obligor’s (1) legal name and address, (2) jurisdiction, (3) audited financial statements delivered under clause (iv) above and unaudited interim financial statements
for the most recent fiscal year, (4) any internal credit memos produced by the Servicer and (5) company forecasts including plans related to capital expenditures, (B) to
the extent not otherwise included in clause (A) above, each Obligor’s (1) business model, company strategy and names of known peers and (2) debt maturity schedule
and any banking facility details with respect to other facilities and (C) to the extent available to the Servicer, such other information as any Lender may reasonably
require for regulatory purposes relating to the Collateral Loans or the transactions contemplated hereby and so notified in writing to the Borrower;
(vii) to the extent reasonably available to the Servicer (on behalf of the Borrower) pursuant to the Related Documents, copies of any material
amendment, restatement, supplement, waiver or other modification to the Related Documents of any Collateral Loan within ten (10) Business Days following the
effectiveness of such amendment, restatement, supplement, waiver or other modification;
(viii) together with each Monthly Report and Payment Date Report delivered in accordance with Section 8.08, a Borrowing Base Calculation
Statement;
(ix) such other information as any Lender may reasonably require for regulatory purposes relating to the Collateral Loans or the transactions
contemplated hereby and so notified in writing to the Borrower and the Servicer; provided that such information is in the possession of the Borrower or the Servicer, as
applicable, or reasonably obtainable thereby without undue burden or expense and not subject to any applicable confidentiality restrictions prohibiting such disclosure to
the Administrative Agent;
(x) promptly after written request therefor, such additional information regarding the Borrower’s financial position or business and the Collateral
(including reasonably detailed calculations of compliance or noncompliance with the Borrowing Base Test, the Collateral Quality Test or any Concentration Limitation)
as the Required Lenders (through the Administrative Agent) may reasonably request;
(xi) promptly after a Responsible Officer of the Borrower, the Equityholder, or the Servicer obtains actual knowledge thereof, notice of any material
action, suit, proceeding, dispute, offset, deduction, defense or counterclaim with respect to (x) the Borrower, the Equityholder, or the Servicer or (y) any Collateral that
(A) is asserted by an Obligor with respect to such Obligor’s obligations under any Related Document with respect to any Collateral (or portion thereof) or (B) could
reasonably be expected to have a Material Adverse Effect;
-102-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(xii) promptly after a Responsible Officer of the Borrower, the Equityholder, or the Servicer obtains actual knowledge thereof, notice of the occurrence
of any ERISA Event that would reasonably be expected to result in material liability to the Borrower, and, upon request of the Administrative Agent, copies of any
communications with all Governmental Authorities or any Multiemployer Plan with respect to such ERISA Event;
(xiii) promptly after a Responsible Officer of the Borrower, the Equityholder, or the Servicer obtains actual knowledge thereof, notice of any Asset
Value Adjustment Event;
(xiv) on each Business Day, a trade blotter, cash flow and position report of the Borrower; and
(xv) to the extent not filed publicly and on a quarterly basis, the Updated Asset Value for each Collateral Loan.
(e) Access to Records and Documents. It shall permit the Administrative Agent (or any Person designated by the Administrative Agent, subject to delivery of
standard confidentiality agreements) to, upon reasonable advance notice and during normal business hours, visit and inspect and make copies thereof at reasonable intervals (i) its
books, records and accounts relating to its business, financial condition, operations, assets and its performance under the Facility Documents and the Related Documents and to
discuss the foregoing with its and such Person’s officers, partners, employees and accountants, and (ii) all of its Related Documents, in each case as often as the Administrative
Agent may reasonably request; provided that so long as no Event of Default has occurred and is continuing, the Borrower shall be responsible for all costs and expenses for only one
such visit per fiscal year by the Administrative Agent or its designees; provided, further, that an officer or employee of the Borrower or the Servicer shall have the opportunity to be
present at any discussion between the Administrative Agent, any Lender or any other Person designated by the Administrative Agent, on the one hand, and the Borrower’s
accountants, on the other hand. The Administrative Agent shall provide two (2) Business Days’ prior notice to the Borrower and the Lenders of any such visit and any Lender shall
be permitted to accompany the Administrative Agent in such visit.
(f) Use of Proceeds. It shall use the proceeds of each Advance made hereunder solely:
(i) to fund or pay the purchase price of Eligible Collateral Loans or Eligible Investments owned or acquired by the Borrower in accordance with the
terms and conditions set forth herein;
(ii) to fund additional extensions of credit under Delayed Drawdown Collateral Loans and Revolving Collateral Loans held by the Borrower, in each
case in accordance with the terms of this Agreement;
(iii) to fund the Unfunded Reserve Account on or prior to the Commitment Termination Date to the extent the Unfunded Reserve Account is required
to be funded pursuant to Section 8.04 (and the Borrower shall submit a Notice of Borrowing for a Borrowing Date falling no more than five and no less than one
Business Day prior to the
-103-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Commitment Termination Date with a Requested Amount sufficient to fully fund the Unfunded Reserve Account to the extent required under Section 8.04);
(iv) to make Restricted Payments to the extent permitted by Section 5.02(q); and
(v) to pay fees and expenses in connection with this Agreement and the other Facility Documents in accordance with the terms thereof;
provided that, Advances denominated in an Eligible Currency (other than Dollars) shall only be used to fund or pay the purchase price of Eligible Collateral
Loans denominated in such Eligible Currency.
Without limiting the foregoing, it shall use the proceeds of each Advance in a manner that does not, directly or indirectly, violate any provision of its
Constituent Documents or any Applicable Law, including Regulation T, Regulation U and Regulation X. Further, the Borrower shall not use the proceeds of any Advance in a
manner that would cause such credit extension to become a “covered transaction” as defined in Section 23A of the Federal Reserve Act (12 U.S.C. § 371c) and Regulation W (12
C.F.R. Part 223), including any transaction where the proceeds of any Advance are used for the benefit of, or transferred to, a Person that the Borrower knows to be an “affiliate” (as
defined in Regulation W) of a Lender.
(g) Information and Reports. Each Notice of Borrowing, each Monthly Report, each Borrowing Base Calculation Statement, each Payment Date Report and
all other written information, reports, certificates and statements furnished by or on behalf of the Borrower to any Secured Party for purposes of or in connection with this
Agreement, the other Facility Documents or the transactions contemplated hereby or thereby shall be true, complete and correct in all material respects as of the date such
information is stated or certified and the delivery by or on behalf of the Borrower of any such Notice of Borrowing, Monthly Report, Payment Date Report, Borrowing Base
Calculation Statement or other written information, reports, certificates and statements shall be deemed to be a representation and warranty by the Borrower that such information is
true, complete and correct in all material respects as of the date such information is stated or certified.
(h) No Other Business. The Borrower shall not engage in any business or activity other than (i) borrowing Advances pursuant to this Agreement, funding,
acquiring, owning, holding, administering, selling, enforcing, lending, exchanging, redeeming, pledging, contracting for the management of and otherwise dealing with Collateral
Loans, Eligible Investments and the Collateral in connection therewith and entering into the Facility Documents, any applicable Related Documents and any other agreement
contemplated by this Agreement and (ii) other activities that are incidental to the activities specified in clause (i).
(i) Tax Matters.
(i) The Borrower and each Lender hereby agree to treat the Advances and any Notes as debt for U.S. federal income tax purposes and will take no
contrary position, unless otherwise required pursuant to a closing agreement with the IRS or a non-appealable judgment of a court of competent jurisdiction.
-104-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(ii) The Borrower shall pay and discharge when due all Taxes imposed on it or on its income or profits or any of its property, except for any Tax the
payment of which is being contested in good faith and by proper proceedings and against which adequate reserves are being maintained.
(iii) For U.S. federal income tax purposes, the Borrower shall (A) treat itself as a disregarded entity separate from its sole owner for U.S. federal income
tax purposes, the Equityholder, within the meaning of Treasury Regulation Section 301.7701‑3, and the Equityholder will remain as a United States Person within the
meaning of Section 7701(a)(30) of the Code and (B) the Borrower shall not make an election or permit any other action that would cause itself to be treated as other than
a disregarded entity for U.S. federal income tax purposes.
Notwithstanding any contrary agreement or understanding, the Equityholder, the Borrower, the Agents, the Collateral Administrator, the Custodian, the
Securities Intermediary and the Lenders (and each of their respective employees, representatives or other agents) may disclose to any and all Persons, without limitation of any kind,
the tax treatment and tax structure of the transactions contemplated by this Agreement and all materials of any kind (including opinions or other tax analyses) that are provided to
them relating to such tax treatment and tax structure. The foregoing provision shall apply from the beginning of discussions between the parties. For this purpose, the tax treatment
of a transaction is the purported or claimed U.S. tax treatment of the transaction under applicable U.S. federal, state or local Law, and the tax structure of a transaction is any fact that
may be relevant to understanding the purported or claimed U.S. tax treatment of the transaction under applicable U.S. federal, state or local Law.
(j) Collections. The Borrower (or the Servicer on its behalf) shall direct any agent or administrative agent for any Collateral Loan or in the case of the
Participation Interests (to the extent not elevated to a full assignment), the participation sellers, to remit all payments and collections with respect to such Collateral Loan and, if
applicable, to direct the Obligor or participation seller with respect to such Collateral Loan to remit all such payments and collections with respect to such Collateral Loan directly to
the Collection Account. The Borrower shall transfer, or cause to be transferred, all Collections to the appropriate Collection Account by the close of business on the Business Day
following the date such Collections are received by the Borrower, the Equityholder, the Servicer or any of their respective Affiliates.
(k) Priority of Payments. The Borrower shall instruct in writing (or cause the Servicer to instruct in writing) the Collateral Agent to apply all Interest
Proceeds and Principal Proceeds solely in accordance with the Priority of Payments and the other provisions of this Agreement.
(l) Acquisition of Collateral Loans from the Equityholder. Any acquisition of Collateral Loans by the Borrower from the Equityholder shall be effected
pursuant to the Contribution Agreement.
(m) Sanctions; Anti-Corruption Laws; and Anti-Money Laundering Laws. The Borrower shall comply with all applicable Sanctions, Anti-Corruption Laws
and Anti-Money Laundering Laws and shall maintain policies and procedures reasonably designed to ensure
-105-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
compliance therewith. The Borrower shall ensure that it does not use the proceeds of or fund the repayment of any Advance in violation of Sanctions, Anti-Corruption Laws or Anti-
Money Laundering Laws.
(n) Access to Data Site. The Borrower shall, or shall cause the Servicer to, (a) maintain the Data Site and (b) grant access to the Data Site to the
Administrative Agent, the Collateral Agent, the Custodian, the Collateral Administrator and each Lender or prospective Lender; provided that the Borrower shall not be required to
grant access to the Data Site to any Person that has not agreed to be bound by confidentiality requirements that are consistent with Section 12.09 or are otherwise satisfactory to the
Borrower and the Servicer. The Borrower shall, or shall cause the Servicer to, to the extent posting such information would not result in a breach by the Borrower or the Servicer of
its respective confidentiality obligations, post the Required Loan Documents and the information required to be delivered in accordance with Section 5.01(d)(v) for each Collateral
Loan to the Data Site.
(o) Delivery of Loan Files. The Borrower shall comply, or cause the Servicer on behalf of the Borrower to comply, with its obligations under Section 13.03.
(p) Beneficial Ownership Regulation. Promptly following any request therefor, if the Borrower qualifies as a “legal entity customer” under the Beneficial
Ownership Regulation, the Borrower shall deliver to the Administrative Agent information and documentation reasonably requested by the Administrative Agent or any Lender for
purposes of compliance with the Beneficial Ownership Regulation.
(q) Appraised Value. In connection with the acquisition of each Asset Based Loan and within the time periods set forth below, the Borrower or the Servicer
(on behalf of the Borrower) shall have retained or shall have caused the related Obligor to retain an Approved Valuation Firm to calculate the Appraised Value of (A) with respect to
any such Collateral Loan that has intellectual property, equipment or real property, as the case may be, in its borrowing base, the collateral securing such Collateral Loan within
twelve (12) months prior to the acquisition of such Collateral Loan by the Borrower and (B) otherwise, the collateral securing such Collateral Loan within six (6) months prior to the
acquisition of such Collateral Loan by the Borrower (in each case, subject to a forty-five (45) day grace period). The Servicer shall report the Approved Valuation Firm, appraisal
metric and Appraised Value for such Collateral Loan to the Administrative Agent (with a copy to each Lender) in the Notice of Borrowing related to such Collateral Loan.
Section 5.02 Negative Covenants of the Borrower
The Borrower covenants and agrees that, until the Final Maturity Date (and thereafter until the date that all Obligations have been Paid in Full):
(a) Restrictive Agreements. It shall not enter into or suffer to exist or permit to become effective any agreement that prohibits, limits or imposes any
condition upon its ability to create, incur, assume or suffer to exist any Lien (other than Permitted Liens) upon any of its property or revenues constituting Collateral, whether now
owned or hereafter acquired, to secure
-106-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
its obligations under the Facility Documents other than this Agreement and the other Facility Documents or to perform its obligations under the Facility Documents to which it is a
party.
(b) Liquidation; Merger; Sale of Collateral. It shall not consummate any plan of liquidation, dissolution, partial liquidation, merger or consolidation (or
suffer any liquidation, dissolution or partial liquidation) nor sell, transfer, exchange or otherwise dispose of any of its assets (other than dispositions permitted under this Agreement),
or enter into an agreement or commitment to do so or enter into or engage in any business with respect to any part of its assets, except as expressly permitted by this Agreement and
the other Facility Documents (including in connection with the Payment in Full of the Obligations).
(c) Amendments to Constituent Documents, Etc. Without the consent of the Administrative Agent, it shall not (i) amend or modify its Constituent
Documents, (ii) take any action inconsistent with its Constituent Documents and (iii) amend, modify or waive any non-ministerial term or provision in any Facility Document (other
than in accordance with any provision thereof requiring the consent of the Administrative Agent or all or a specified percentage of the Lenders).
(d) Liens. It shall not create, assume or suffer to exist any Lien on any of its assets now owned or hereafter acquired by it at any time, except for Permitted
Liens or as otherwise expressly permitted by this Agreement and the other Facility Documents.
(e) Margin Requirements; Covered Transactions. It shall not (i) extend credit to others for the purpose of buying or carrying any Margin Stock in such a
manner as to violate Regulation T or Regulation U or (ii) use all or any part of the proceeds of any Advance, whether directly or indirectly, and whether immediately, incidentally or
ultimately, for any purpose that violates the provisions of Regulation U or Regulation X.
(f) Changes to Filing Information. It shall not change its name or its jurisdiction of organization from that referred to in Section 4.01(a), unless it gives not
less than ten (10) days’ (or such shorter period as the Administrative Agent shall agree) prior written notice to the Administrative Agent and takes all actions that the Administrative
Agent or the Required Lenders (through the Administrative Agent) reasonably request and determine to be necessary to protect and perfect the Collateral Agent’s perfected security
interest in the Collateral.
(g) Transactions with Affiliates. It shall not sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its Affiliates, unless such transaction is upon terms no less favorable to the Borrower than it would obtain in a
comparable arm’s‑length transaction with a Person that is not an Affiliate (it being agreed that any purchase or sale at par shall be deemed to comply with this provision). The
foregoing covenant (i) shall not apply to the execution, delivery and performance of the Facility Documents or the Borrower’s Constituent Documents, (ii) shall not prohibit the
Borrower from making Restricted Payments permitted under Section 5.02(q) and (iii) shall not prohibit the Equityholder from transferring Collateral Loans, Cash or other assets to
the Borrower in whole or in part as a capital contribution to the Borrower.
-107-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(h) No Claims Against Advances. Subject to Applicable Law, it shall not claim any credit on, make any deduction from, or dispute the enforceability of
payment of the principal or interest payable (or any other amount) in respect of the Advances or assert any claim against any present or future Lender, by reason of the payment of
any Taxes levied or assessed upon any part of the Collateral.
(i) Indebtedness; Guarantees; Securities; Other Assets. It shall not incur or assume or guarantee any Indebtedness, obligations (including contingent
obligations) or other liabilities, or issue any additional securities, whether debt or equity, in each case other than (i) the Obligations pursuant to or as expressly permitted by this
Agreement and the other Facility Documents, (ii) pursuant to customary indemnification, expense reimbursement, funding obligations and similar provisions under the Related
Documents or (iii) the issuance of additional Capital Stock to the Equityholder. The Borrower shall not acquire any Collateral Loan or other property other than as expressly
permitted hereunder.
(j) Validity of this Agreement. It shall not (i) permit the validity or effectiveness of this Agreement or any grant of Collateral hereunder to be impaired, or
permit the Lien of this Agreement to be amended, hypothecated, subordinated, terminated or discharged, or permit any Person to be released from any covenant or obligation with
respect to this Agreement and (ii) except as permitted by this Agreement, take any action that would permit the Lien of this Agreement not to constitute a valid first‑priority
perfected security interest (subject to Permitted Liens) in the Collateral.
(k) Subsidiaries. It shall not have or permit the formation of any Subsidiaries; provided that this clause shall not apply to any Obligor that becomes a
Subsidiary of the Borrower in connection with a work-out or restructuring of a Collateral Loan or a bankruptcy of the related Obligor.
(l) Name. It shall not conduct business under any name other than its own.
(m) Employees. It shall not have any employees (other than any Responsible Officers and other officers and directors to the extent they are employees).
(n) ERISA. Except as would not constitute a Material Adverse Effect, the Borrower shall not establish or contribute to, or otherwise have any liability with
respect to, any Plan or Multiemployer Plan. Neither the Borrower’s underlying assets nor the Collateral shall constitute “plan assets” (within the meaning of Section 3(42) of
ERISA).
(o) Non‑Petition. The Borrower shall not be party to any agreements under which it has any material obligation or liability (direct or contingent) without
using commercially reasonable efforts to include customary “non‑petition” and “limited recourse” provisions therein (and shall not amend or eliminate such provisions in any
agreement to which it is party), except for loan agreements, related loan documents, bond indentures and related bond documents, any agreements related to the purchase and sale of
any Collateral Loan which contain customary (as determined by the Servicer) purchase or sale terms or which are documented using customary (as determined by the Servicer) loan
trading documentation, customary service contracts and engagement letters entered into in connection with the Collateral Loans and any agreement that
-108-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
does not impose a material obligation on the Borrower and that is of a type that customarily does not include “non‑petition” or “limited recourse” provisions.
(p) Certificated Securities. The Borrower shall not acquire or hold any Certificated Securities in bearer form (other than securities not required to be in
registered form under Section 163(f)(2)(A) of the Code) in a manner that does not satisfy the requirements of United States Treasury Regulations section 1.165‑12(c) (as determined
by the Servicer).
(q) Restricted Payments. The Borrower shall not make any Restricted Payment other than (i) with respect to amounts received by the Borrower in accordance
with Section 9.01 (in the case of Interest Proceeds and Principal Proceeds) or any other provision of this Agreement or the Facility Documents which expressly requires or permits
payments to be made to or amounts to be reimbursed to the Equityholder, (ii) amounts distributed by the Borrower in connection with the acquisition of Collateral Loans from the
Equityholder in accordance with Article X, (iii) using the proceeds of an Advance or any other amounts on deposit in the Collection Account, so long as any amounts that will
remain on deposit in the Collection Account, together with the excess, if any, of the Borrowing Base over the Advances Outstanding (after giving effect to such Advance and
Restricted Payment), will be sufficient to make all required payments pursuant to Section 9.01 on the next succeeding Payment Date and (iv) amounts distributed by the Borrower in
connection with a Permitted RIC Distribution.
(r) Amendments to Collateral Loans. The Borrower (and the Servicer on its behalf) shall not consent to any amendment or waiver of or supplement to any
Collateral Loan or any Related Document for any Collateral Loan (i) that would result in a Default or an Event of Default, (ii) after the occurrence and during the continuance of an
Event of Default or (iii) that would cause any Collateral Loan to become an Ineligible Collateral Loan. The Borrower (and the Servicer on its behalf) shall not consent to any
extension or postponement of the maturity date with respect to any Collateral Loan without the prior written consent of the Administrative Agent; provided that the prior written
consent of the Administrative Agent shall not be required if, after giving effect to such extension or postponement, the Maximum Weighted Average Life Test is satisfied.
(s) Obligor Payment Instructions. The Borrower shall not make any change, or permit the Servicer to make any change, in its instructions to Obligors, agent
banks or administrative agents on the Collateral Loans regarding payments to be made with respect to the Collateral Loans to the Collection Account, unless the Administrative
Agent has consented to such change. The Borrower further agrees that it shall (or it shall cause the Servicer to) provide prompt notice to the Administrative Agent of any misdirected
or errant payments made by any Obligor with respect to any Collateral Loan and direct such Obligor to make payments as required hereunder to the extent a Responsible Officer of
the Borrower or the Servicer, as applicable, has actual knowledge of such misdirected or errant payments.
(t) Sanctions; Anti-Corruption Laws; and Anti-Money Laundering Laws. It shall not (nor shall it permit any other Person directly or (to the knowledge of the
Borrower) indirectly Controlling the Borrower nor any Person directly or (to the knowledge of the Borrower) indirectly Controlled by the Borrower to) use the proceeds of any
Advance directly or, to the knowledge of the Borrower, indirectly in any way that would breach or contravene any Sanctions
-109-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
imposed by the United Nations, the European Union (including any member state thereof), the State Secretariat for Economic Affairs of Switzerland, OFAC, the United Kingdom,
the Government of Canada, the Hong Kong Monetary Authority, the Monetary Authority of Singapore or any other body notified in writing by the Administrative Agent (acting on
behalf of any Lender) to the Borrower from time to time, in each case if and to the extent that such bodies have jurisdiction over such Borrower or such Sanctions are binding on
such Borrower or, upon prior written notice to the Borrower from the Administrative Agent, such Sanctions are binding on any Lender and materially impact the ability of such
Lender to comply with its respective obligations under this Agreement. It shall not (nor shall it permit any other Person to) use the proceeds of any Advance directly or, to the
knowledge of the Borrower, indirectly in any way that would be in violation of any Anti-Corruption Laws or Anti-Money Laundering Laws. The Borrower shall not fund the
repayment of any Advance with proceeds derived from any transaction that would be prohibited by Sanctions or would be in violation of any Anti-Corruption Laws or Anti-Money
Laundering Laws.
Section 5.03 Affirmative Covenants of the Equityholder and the Servicer
The Servicer, on behalf of itself and the Equityholder, covenants and agrees that, until the Final Maturity Date (and thereafter until the date that all
Obligations have been Paid in Full):
(a) Compliance with Agreements, Laws, Etc. It shall (i) duly observe and comply in all material respects with all Applicable Laws relative to the conduct of
its business or to its assets, (ii) preserve and keep in full force and effect its legal existence, (iii) preserve and keep in full force and effect its rights, privileges, qualifications and
franchises, except where the failure to do so would not reasonably be expected to result in a Material Adverse Effect, (iv) comply with the terms and conditions of each Facility
Document to which it is a party, its Constituent Documents and each Related Document to which it is a party and (v) obtain, maintain and keep in full force and effect all
Governmental Authorizations, Private Authorizations and Governmental Filings which are necessary or appropriate to properly carry out (A) its business and (B) the transactions
contemplated to be performed by it under the Facility Documents to which it is a party, its Constituent Documents and the Related Documents to which it is a party, except, in the
case of clause (v)(A), where the failure to do so would not reasonably be expected to result in a Material Adverse Effect.
(b) Information and Reports.
(i) Each Notice of Borrowing, each Monthly Report, each Borrowing Base Calculation Statement, each Payment Date Report and, to the knowledge of
the Servicer, all other written information, reports, certificates and statements furnished by the Servicer to any Secured Party for purposes of or in connection with this
Agreement, the other Facility Documents or the transactions contemplated hereby or thereby shall be true, complete and correct in all material respects as of the date
such information is stated or certified.
(ii) The Servicer shall provide to the Administrative Agent or cause to be provided to the Administrative Agent (with enough additional copies for each
Lender) from
-110-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
time to time such additional information regarding the Collateral (including reasonably detailed calculations of the Borrowing Base Test and the Collateral Quality Test)
as the Required Lenders (through the Administrative Agent) may reasonably request in writing.
(iii) The Servicer shall provide to the Collateral Administrator any information that the Servicer is expressly required to provide to the Collateral
Administrator under this Agreement in connection with the Collateral Administrator’s preparation of each Monthly Report or Payment Date Report and, to the extent
reasonably available to the Servicer, any other information that the Collateral Administrator may reasonably require in connection with the Collateral Administrator’s
preparation of each Monthly Report or Payment Date Report.
(iv) The Servicer shall comply (or cause the Borrower to comply) with its obligations under Section 13.03.
(c) Notice of Default. Within three (3) Business Days after a Responsible Officer of the Servicer or the Equityholder obtains actual knowledge of the
occurrence and continuance of any (A) Default or (B) Event of Default, the Servicer shall deliver to the Administrative Agent (who shall provide notice to the Lenders of such
occurrence) a certificate of a Responsible Officer of the Servicer setting forth the details thereof and the action which the Servicer is taking or proposes to take with respect thereto;
provided that the Servicer shall not be obligated to deliver such certificate to the extent that a Responsible Officer of the Borrower delivers a certificate with respect to such Default
or Event of Default pursuant to Section 5.01(d)(iii).
(d) Access to Records and Documents. It shall permit the Administrative Agent (or, if Independent Accountants are not engaged by the Servicer or the
Borrower, a nationally recognized audit firm selected by the Administrative Agent with prior notice to the Borrower and subject to delivery of standard confidentiality agreements)
to, upon reasonable advance notice and during normal business hours, visit and inspect and make copies thereof at reasonable intervals (i) its books, records and accounts relating to
its business, financial condition, operations, assets and its performance under the Facility Documents and the Related Documents and to discuss the foregoing with its and such
Person’s officers, partners, employees and accountants, and (ii) all of its Related Documents, in each case as often as the Administrative Agent may reasonably request; provided
that so long as no Event of Default has occurred and is continuing in the applicable fiscal year, the Borrower shall be responsible for all costs and expenses for only one such visit
per fiscal year by the Administrative Agent or its respective designees up to an aggregate maximum of $50,000 in any one fiscal year; provided, further, that an officer or employee
of the Servicer shall have the opportunity to be present at any discussion between the Administrative Agent, any Lender or any other Person designated by the Administrative Agent,
on the one hand, and the Servicer’s accountants, on the other hand. The Administrative Agent shall provide two (2) Business Days’ prior notice to the Lenders of any such visit and
any Lender shall be permitted to accompany the Administrative Agent in such visit. Any such visit and inspection shall be made simultaneously with any visit and inspection
pursuant to Section 5.01(e).
(e) Notice of Material Modification. Within three (3) Business Days after a Responsible Officer of the Servicer obtains actual knowledge of the occurrence
of a Material
-111-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Modification, the Servicer shall deliver to the Administrative Agent (with a copy to the Collateral Administrator) a notice setting forth the details thereof and attaching a copy of the
related amendment or waiver.
(f) Collections. The Servicer shall direct any agent or administrative agent in respect of any Collateral Loan (or in connection with any Participation Interest
to the extent not elevated to full assignment, any participation seller) to remit all payments and collections with respect to such Collateral Loan and, if applicable, to direct the
Obligor with respect to such Collateral Loan to remit all such payments and collections with respect to such Collateral Loan directly to the Collection Account.
(g) Sanctions; Anti-Corruption Laws; and Anti-Money Laundering Laws. It shall comply with Sanctions, Anti-Corruption Laws and Anti-Money
Laundering Laws and shall maintain policies and procedures reasonably designed to ensure compliance therewith. It shall ensure that it does not cause the Borrower to use the
proceeds of or fund the repayment of any Advance in violation of Sanctions, Anti-Corruption Laws or Anti-Money Laundering Laws.
(h) Asset Coverage and Other Leverage Limits. The Equityholder will comply in all respects with applicable asset coverage and other leverage limits under
the Investment Company Act.
Section 5.04 Negative Covenant of the Equityholder and the Servicer
The Servicer, on behalf of itself and the Equityholder, covenants and agrees that, until the Final Maturity Date (and thereafter until the date that all
Obligations have been Paid in Full), it shall not enter into or suffer to exist or permit to become effective any agreement that prohibits, limits or imposes any condition upon its
ability to perform its obligations under the Facility Documents to which it is a party.
Section 5.05 Certain Undertakings Relating to Separateness
Without limiting any, and subject to all, other covenants of the Borrower, Servicer and Equityholder contained in this Agreement, the Borrower, the Servicer
(acting on behalf of or for the benefit of the Borrower), and the Equityholder (acting on behalf of the Borrower as the member of the Borrower) shall each comply, or cause the
Borrower to comply, as applicable, with Section 9(j) of the Borrower’s limited liability company agreement.
ARTICLE VI
EVENTS OF DEFAULT
Section 6.01 Events of Default
“Event of Default”, wherever used herein, means the occurrence of any one of the following events (whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of Law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any
administrative body or Governmental Authority):
-112-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(a) a default in the payment, when due and payable, of any Interest, Undrawn Fee or other Obligations not specified in clause (b) below and such default has
not been cured within two (2) Business Days; provided that, to the extent of any such default resulting solely from an administrative error or omission by the Administrative Agent,
the Collateral Agent, the Securities Intermediary or any paying agent, such default continues for a period of five (5) Business Days after the Administrative Agent, the Collateral
Agent or the Securities Intermediary receives written notice or a Responsible Officer of such party has actual knowledge of such administrative error or omission;
(b) (i) the Borrower fails to repay the Obligations (other than contingent indemnification and reimbursement obligations for which no claim has been
asserted) in full on the Final Maturity Date or (ii) the failure to make a payment in an amount necessary to satisfy the Mandatory Amortization Amount on the applicable Payment
Date;
(c) the Borrower or the pool of Collateral becomes, or becomes subject to regulation as, an “investment company” under Section 8 of the Investment
Company Act;
(d) a default in any respect in the performance, or breach in any respect, of any covenant or agreement of the Borrower, the Equityholder or the Servicer (as
applicable) under Section 5.01(a)(ii), 5.01(d)(i), (ii) or (iii) (in each case of Section 5.01(d), subject to a five (5) day grace period), 5.01(f), 5.01(h), 5.01(j), 5.01(p), 5.02 (other than
5.02(b) and (c)(i)), 5.03(a)(ii), or 5.03(f);
(e) except as otherwise provided in this Section 6.01, a default in any material respect in the performance, or breach in any material respect, of any covenant
or agreement of the Borrower or the Equityholder under this Agreement or the other Facility Documents to which it is a party, or the failure of any representation or warranty of the
Borrower or the Equityholder made in this Agreement or in any other Facility Document to be correct, in each case, in all material respects when the same shall have been made, and
the continuation of such default, breach or failure for a period of thirty (30) days after the earlier of (i) written notice to the Borrower, the Servicer and the Equityholder by the
Administrative Agent, and (ii) actual knowledge of a Responsible Officer of the Borrower, the Equityholder or the Servicer, as applicable; provided that the existence of a
Borrowing Base Deficiency shall be subject to clause (n) below;
(f) the rendering of one or more final judgments, decrees or orders against the Borrower or the Equityholder by a court or arbitrator of competent jurisdiction
for the payment of money in excess individually or in the aggregate of $1,000,000 (in the case of the Borrower) or $25,000,000 (in the case of the Equityholder) (in each case
exclusive of judgment amounts to the extent covered by applicable insurance), and the Borrower or the Equityholder, as applicable, shall not have either (x) satisfied, discharged or
provided for the discharge of any such judgment, decree or order in accordance with its terms or (y) perfected a timely appeal of such judgment, decree or order and caused the
execution of same to be stayed during the pendency of the appeal, in each case, within sixty (60) days from the date of entry thereof;
(g) the Borrower shall have made payments of amounts in excess of $1,000,000 in settlement of any litigation, claim or dispute (exclusive of settlement
amounts fully covered by insurance);
-113-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(h) an Insolvency Event relating to the Borrower or the Equityholder occurs;
(i) (i) any Facility Document or any material provision thereof shall (except in accordance with its terms) terminate, cease to be effective or cease to be
legally valid, binding and enforceable, (ii) the Borrower, the Equityholder, the Servicer or any Governmental Authority shall, directly or indirectly, contest in any manner the
effectiveness, validity, binding nature or enforceability of any Facility Document or any Lien purported to be created thereunder, or (iii) any Lien securing any obligation under any
Facility Document shall, in whole or in part, cease to be a first‑priority perfected security interest of the Collateral Agent, except as otherwise expressly permitted in accordance with
the applicable Facility Document;
(j) (i) the IRS shall file notice of a Lien pursuant to Section 6323 of the Code with regard to any asset of the Borrower, and such Lien shall not have been
released within five (5) Business Days or (ii) the PBGC shall file notice of a Lien pursuant to Section 4068 of ERISA with regard to any asset of the Borrower, and such Lien shall
not have been released within five (5) Business Days;
(k) a Change of Control occurs;
(l) a Servicer Termination Event occurs;
(m) (i) failure of the Borrower to maintain at least one (1) Independent Director (it being understood that the Borrower shall not be in violation of the
requirement to have at least one (1) Independent Director after the earlier of an Independent Director resigning or becoming deceased, incapacitated or disabled so long as a new
Independent Director is appointed within thirty (30) days after a Responsible Officer of the Borrower has actual knowledge or receives written notice thereof), (ii) the removal of any
Independent Director of the Borrower without “Cause” (as such term is defined in the organizational document of the Borrower) or without giving prior written notice to the
Administrative Agent, each as required in the organizational documents of the Borrower or (iii) the Borrower shall otherwise fail to qualify as a bankruptcy‑remote entity based upon
the criteria set forth in this Agreement, such that reputable counsel of national standing could no longer render a substantive nonconsolidation opinion with respect to the Borrower,
on the one hand, and the Equityholder and the Servicer, on the other hand (it being understood and agreed that no such nonconsolidation opinion need to be delivered to satisfy this
clause (m)(iii));
(n) a Borrowing Base Deficiency shall occur and be continuing for two (2) Business Days, or, if the Servicer has, within two (2) Business Days, provided
evidence satisfactory to the Administrative Agent, in its sole discretion that the Borrower will satisfy the Borrowing Base Test in its entirety by depositing cash in an Eligible
Currency into the Collection Account, within ten (10) Business Days; provided that, during the period of time that such event remains unremedied, any payments required to be
made by the Servicer on a Payment Date shall be made under Section 9.01(a)(iii);
(o) subject in each case to Section 9.01, the failure of the Borrower on any date to maintain an amount equal to the Unfunded Reserve Required Amount on
deposit in the Unfunded Reserve Account in accordance with this Agreement and, solely during the Reinvestment Period, such failure shall continue for fifteen (15) days;
-114-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(p) the failure of the Borrower or the Equityholder to make any payment when due (after giving effect to any related notice period or requirement or grace
period) under one or more agreements for borrowed money to which it is a party and the Indebtedness for borrowed money thereunder is in an amount in excess of $1,000,000 (in
the case of the Borrower) or $25,000,000 (in the case of the Equityholder), individually or in the aggregate, or the occurrence of any event or condition that has resulted in the
acceleration of such Indebtedness;
(q) the Equityholder shall fail to maintain Unencumbered Liquidity in an amount equal to 3.00% of the Facility Amount; or
(r) the Equityholder fails to maintain its status as a “business development company” under the Investment Company Act.
With respect to any notice that may be furnished by an Agent to the Borrower pursuant to Section 6.01(e), upon written request therefor to the applicable
Agent, the Required Lenders may direct such Agent to provide such notice to the Borrower. Such Agent shall promptly thereafter provide such notice to the Borrower.
Section 6.02 Remedies
(a) Upon the occurrence and during the continuance of any Event of Default, subject to Section 6.04(e) in addition to all rights and remedies specified in this
Agreement and the other Facility Documents, including (and subject to) Article VII, and the rights and remedies of a secured party under Applicable Law, including the UCC, the
Administrative Agent may, or shall, at the request of the Required Lenders, by notice to the Borrower (with a copy to the Collateral Agent), do any one or more of the following: (1)
declare the Commitments to be terminated forthwith, whereupon the Commitments shall forthwith terminate, (2) declare the Final Maturity Date to have occurred, and (3) declare
the principal of and the accrued interest on the Advances and all other amounts whatsoever payable by the Borrower hereunder to be forthwith due and payable, whereupon such
amounts shall be immediately due and payable without presentment, demand, protest or other formalities of any kind, all of which are hereby waived by the Borrower; provided that,
upon the occurrence of any Event of Default described in clause (h) of Section 6.01 with respect to the Borrower, the Commitments shall automatically terminate and the Advances
and all such other amounts shall automatically become due and payable, without any further action or notice by any party.
(b) Upon the occurrence and during the continuance of an Event of Default, subject to Section 6.04(e) the Administrative Agent may, or shall upon the
direction of the Required Lenders, exercise (or direct the Collateral Agent, as applicable, to exercise) any and all rights with respect to the Collateral, including: (u) the exercise of
the Servicer’s rights and obligations under the Facility Documents (including the right to direct the Servicer to exercise such rights), including its unilateral power to (A) consent to
modifications to Collateral Loans, (B) take any discretionary action with respect to Collateral Loans and (C) direct the sales and other dispositions of Collateral Loans; (v) the
termination of the Servicer’s rights to exercise any rights or take any action with respect to the Collateral; (w) the transfer of the Servicer’s rights and obligations under the Facility
Documents to a successor Servicer; (x) requiring the Servicer to obtain the consent of the Administrative Agent before agreeing to any modification of any
-115-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Collateral Loan, taking any discretionary action with respect to any Collateral Loan or causing the Borrower to sell or otherwise dispose of any Collateral Loan; (y) requiring the
Servicer to cause the Borrower to sell or otherwise dispose of any Collateral Loan as directed by the Administrative Agent pursuant to Section 7.03, and (z) with respect to any
specific Collateral Loan, to require the Servicer to take such discretionary action with respect to such Collateral Loan as directed by the Administrative Agent.
Section 6.03 Power of Attorney
(a) The Borrower hereby irrevocably appoints the Administrative Agent as its true and lawful attorney (with full power of substitution) in its name, place and
stead and at its expense, during the continuance of an Event of Default, in connection with the enforcement of the rights and remedies provided for (and subject to the terms and
conditions set forth) in this Agreement including without limitation the following powers: (i) to give any necessary receipts or acquittance for amounts collected or received
hereunder, (ii) to make all necessary transfers of the Collateral in connection with any such sale or other disposition made pursuant hereto, (iii) to execute and deliver for value all
necessary or appropriate bills of sale, assignments and other instruments in connection with any such sale or other disposition, the Borrower hereby ratifying and confirming all that
such attorney (or any substitute) shall lawfully do hereunder and pursuant hereto, (iv) to sign any agreements, orders or other documents in connection with or pursuant to any
Facility Document, (v) to give notice to the Obligors and related agents of the Collateral Agent’s interest in the Collateral and the obligation to make payments as directed by the
Administrative Agent, and (vi) to exercise directly the Servicer’s rights and obligations under this Agreement, including the exercise of rights set forth in Section 6.02(b), if and to
the extent that the Servicer has not complied with any direction given by the Administrative Agent in accordance with this Agreement within three (3) Business Days after the
Business Day on which such direction was given to the Servicer; provided that no such direction or lapse of time shall be required after the occurrence and during the continuance of
a Servicer Termination Event. Nevertheless, if so requested by the Administrative Agent, the Borrower shall ratify and confirm any such sale or other disposition by executing and
delivering to the Administrative Agent all proper bills of sale, assignments, releases and other instruments as may be designated in any such request.
(b) No person to whom this power of attorney is presented as authority for the Administrative Agent to take any action or actions contemplated by clause (a)
shall inquire into or seek confirmation from the Borrower as to the authority of the Administrative Agent to take any action described below, or as to the existence of or fulfillment of
any condition to the power of attorney described in clause (a), which is intended to grant to the Administrative Agent unconditionally the authority to take and perform the actions
contemplated herein, and to the extent permitted by Applicable Law, the Borrower irrevocably waives any right to commence any suit or action, in law or equity, against any person
or entity that acts in reliance upon or acknowledges the authority granted under this power of attorney. The power of attorney granted in clause (a) is coupled with an interest and
may not be revoked or canceled by the Borrower until all obligations of the Borrower under the Facility Documents have been Paid in Full and the Administrative Agent has
provided its written consent thereto.
-116-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(c) Notwithstanding anything to the contrary herein, the power of attorney granted pursuant to this Section 6.03 shall only be exercisable after the occurrence
and during the continuance of an Event of Default.
Section 6.04 Sales
(a) Each of the Borrower and the Servicer recognizes that an Agent may be unable to effect a public sale of any or all of the Collateral and may be compelled
to resort to one or more private sales thereof. Each of the Borrower and the Servicer acknowledges and agrees that any such private sale may result in prices and other terms less
favorable than if such sale were a public sale and, notwithstanding such circumstances, agree that any such private sale shall not be deemed to have been made in a commercially
unreasonable manner solely by virtue of being a private sale.
(b) Each of the Borrower and the Servicer further agrees that a breach of any of their covenants contained in this Section 6.04 will cause irreparable injury to
the Agents, that the Agents have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section 6.04 shall be
specifically enforceable against the Borrower and the Servicer, and each of the Borrower and the Servicer hereby waives and agrees not to assert any defenses against an action for
specific performance of such covenants except for a defense that there has been a Payment in Full.
(c) Pursuant to the UCC, each of the Borrower and the Servicer hereby specifically agrees (x) that it shall not raise any objection to a Secured Party’s
purchase of the Collateral (through bidding on the obligations or otherwise) and (y) that a foreclosure sale conducted in conformity with the principles set forth in various no action
letters promulgated by the SEC staff (1) shall be considered to be a “public” sale for purposes of the UCC and (2) shall be considered to be commercially reasonable notwithstanding
that a Secured Party purchases the Collateral at such a sale.
(d) Each of the Borrower and the Servicer agrees that the Servicer shall not have any general duty or obligation to make any effort to obtain or pay any
particular price for any Collateral sold by the Servicer pursuant to this Agreement. The Servicer may, at the direction of the Administrative Agent, among other things, accept the
first bid received, or decide to approach or not approach any potential purchasers. Each of the Borrower and the Servicer hereby agrees that the Servicer (at the direction of the
Administrative Agent) shall have the right to conduct, and shall not incur any liability as a result of, the sale of any Collateral, or any part thereof, at any sale conducted in a
commercially reasonable manner, it being agreed by the parties hereto that some or all of the Collateral is or may be of one or more types that threaten to decline speedily in value.
The Borrower and the Servicer hereby waive any claims against the Secured Parties arising by reason of the fact that the price at which any of the Collateral may have been sold at a
private sale was less than the price that might have been obtained at a public sale or was less than the aggregate amount of the Borrower’s obligations under this Agreement, even if
the Servicer accepts the first bid received and does not offer any Collateral to more than one bidder. Without in any way limiting the Servicer’s right to conduct a foreclosure sale in
any manner which is considered commercially reasonable, each of the Borrower and the Servicer hereby agrees that any foreclosure sale conducted in accordance with the following
provisions shall be considered a commercially
-117-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
reasonable sale, and each of the Borrower and the Servicer hereby irrevocably waives any right to contest any such sale conducted in accordance with the following provisions:
(i) the Servicer conducts such foreclosure sale in the State of New York;
(ii) such foreclosure sale is conducted in accordance with the Laws of the State of New York; and
(iii) not more than thirty (30) days before, and not less than ten (10) days in advance of such foreclosure sale, the Servicer notifies the Borrower at the
address set forth herein of the time and place of such foreclosure sale.
(e) Notwithstanding anything to the contrary herein or in any Facility Document, in connection with any liquidation or disposition of the Collateral, including
without limitation, upon the termination of the Commitments following the occurrence and during the continuation of an Event of Default, the Equityholder and/or any of its
Affiliates or managed funds shall have the right to purchase the Collateral subject to such liquidation or at a purchase price at least equal to the sum of the then accrued and
outstanding Obligations, as reasonably determined by the Administrative Agent. Any such party may exercise such right by delivering written notice to the Administrative Agent (an
“Exercise Notice”), which shall include a proposed purchase price and be delivered not later than two (2) Business Days after the date on which the Borrower receives notice from
the Administrative Agent of the occurrence of such Event of Default and termination of the Commitments, as applicable, and the intent of the Administrative Agent to liquidate or
dispose of the Collateral, and which Exercise Notice shall set forth evidence reasonably satisfactory to the Administrative Agent that the Equityholder or any such Affiliate or
managed fund has access to sufficient capital to consummate such purchase in accordance with this clause (e). Once an Exercise Notice is delivered to the Administrative Agent, the
delivering party (or its designated Affiliate or managed fund) shall be obligated, irrevocably and unconditionally, to purchase the Collateral, at the price referenced above, for
settlement within the normal settlement period for such Collateral. The cash purchase price must be received no later than five (5) Business Days following delivery of the Exercise
Notice. Neither the Collateral Agent, the Administrative Agent nor any Lender shall assert any right or remedy in respect of the Collateral, including any right described in Section
6.02(b) or Section 7.03, or cause the removal of the Servicer pursuant to Section 14.08, or cause the liquidation or disposition of the Collateral Loans to occur, in each case during
the time that the Equityholder, its Affiliates and managed funds are entitled to provide an Exercise Notice and purchase the Collateral pursuant to this Section 6.04(e).
ARTICLE VII
PLEDGE OF COLLATERAL;
RIGHTS OF THE COLLATERAL AGENT
Section 7.01 Grant of Security
(a) The Borrower hereby grants, pledges and collaterally assigns to the Collateral Agent, for the benefit of the Secured Parties, as collateral security for all
Obligations, a continuing security interest in, and a Lien upon, all of the Borrower’s right, title and interest in, to
-118-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
and under, the following property, in each case whether tangible or intangible, wheresoever located, and whether now owned by the Borrower or hereafter acquired and whether
now existing or hereafter coming into existence (all of the property described in this Section 7.01(a) being collectively referred to herein as the “Collateral”):
(i) all Collateral Loans and Related Documents, both now and hereafter owned, including all Collections and other Proceeds thereon or with respect
thereto;
(ii) each Covered Account and all Money and all investment property (including all securities, all security entitlements with respect to such Covered
Account and all financial assets carried in such Covered Account) from time to time on deposit in or credited to each Covered Account;
(iii) all interest, dividends, stock dividends, stock splits, distributions and other Money or property of any kind distributed in respect of the Collateral
Loans of the Borrower, which the Borrower is entitled to receive, including all Collections in respect of all Collateral Loans;
(iv) each Facility Document and all rights, remedies, powers, privileges and claims under or in respect thereto (whether arising pursuant to the terms
thereof or otherwise available to the Borrower at law or equity), including the right to enforce each such document and to give or withhold any and all consents, requests,
notices, directions, approvals, extensions or waivers under or with respect thereto, to the same extent as the Borrower could but for the assignment and security interest
granted to the Collateral Agent under this Agreement;
(v) all Cash or Money;
(vi) all accounts, chattel paper, deposit accounts, financial assets, general intangibles, instruments, investment property, letter‑of‑credit rights and other
supporting obligations relating to the foregoing (in each case as defined in the UCC);
(vii) all securities, loans and investments, and all other property of any type or nature in which the Borrower has an interest (including the equity
interests of each Subsidiary of the Borrower), and all property of the Borrower which is delivered to the Custodian by or on behalf of the Borrower (whether or not
constituting Collateral Loans or Eligible Investments);
(viii) all Liens, Related Security, property, guaranties, supporting obligations, insurance and other agreements or arrangements of whatever character
from time to time supporting or securing payment of the assets, investments and properties described above; and
(ix) all Proceeds of any and all of the foregoing.
(b) All terms used in this Section 7.01 but not defined in Section 1.01 shall have the respective meanings assigned to such terms in the UCC as applicable.
-119-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Section 7.02 Release of Security Interest
If and only if all Obligations have been Paid in Full, the Administrative Agent shall provide notice of the same to the Collateral Agent, the Collateral
Agent’s Lien over the Collateral on behalf of the Secured Parties shall be automatically terminated and the Collateral Agent, on behalf of the Secured Parties, shall, at the expense of
the Borrower, promptly execute, deliver and authorize for filing such instruments as the Borrower shall prepare and reasonably request in order to reassign, release or terminate the
Secured Parties’ security interest in the Collateral; provided that the Collateral Agent shall also promptly release or terminate the Secured Parties’ security interest in the Collateral
in connection with any sale of Collateral permitted under this Agreement. The Secured Parties acknowledge and agree that upon the sale or disposition of any Collateral by the
Borrower in compliance with the terms and conditions of this Agreement, the security interest of the Secured Parties in such Collateral shall immediately and automatically
terminate without further act, the Administrative Agent shall promptly provide notice of the same to the Collateral Agent, and the Collateral Agent shall, on behalf of the Secured
Parties and at the expense of the Borrower, execute, deliver and authorize for filing such instruments as the Borrower shall prepare and reasonably request to reflect or evidence such
termination. Any and all actions under this Article VII in respect of the Collateral shall be without any recourse to, or representation or warranty by any Secured Party and shall be at
the sole cost and expense of the Borrower.
Section 7.03 Rights and Remedies
(a) The Collateral Agent (for itself and on behalf of the other Secured Parties) shall have all of the rights and remedies of a secured party under the UCC and
other Applicable Law. Upon the occurrence and during the continuance of an Event of Default, and subject to Section 6.04(e), the Collateral Agent or its designees shall, acting
solely at the written direction of the Administrative Agent or the Required Lenders acting through the Administrative Agent, (i) instruct the Borrower to deliver any or all of the
Collateral, the Related Documents and any other document relating to the Collateral to the Collateral Agent or its designees and otherwise give all instructions for the Borrower
regarding the Collateral; (ii) sell or otherwise dispose of the Collateral, all without judicial process or proceedings; (iii) take control of the Proceeds of any such Collateral; (iv)
subject to the provisions of the applicable Related Documents, exercise any consensual or voting rights in respect of the Collateral; (v) release, make extensions, discharges,
exchanges or substitutions for, or surrender all or any part of the Collateral; (vi) enforce the Borrower’s rights and remedies with respect to the Collateral; (vii) institute and
prosecute legal and equitable proceedings to enforce collection of, or realize upon, any of the Collateral; (viii) require that the Borrower promptly take all actions necessary to cause
the liquidation of the Collateral in order to pay all amounts due and payable in respect of the Obligations, in accordance with the terms of the Related Documents; (ix) redeem or
withdraw or cause the Borrower to redeem or withdraw any asset of the Borrower to pay amounts due and payable in respect of the Obligations; (x) make copies of all books, records
and documents relating to the Collateral; and (xi) endorse the name of the Borrower upon any items of payment relating to the Collateral or upon any proof of claim in bankruptcy
against an account debtor. In the absence of written direction of the Administrative Agent or the Required Lenders (acting through the Administrative Agent), the Collateral Agent
shall take no action. The Collateral Agent shall not be liable to the Administrative Agent, the Required Lenders or any other party for any action taken or omitted to
-120-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
be taken at the direction of the Administrative Agent or the Required Lenders (acting through the Administrative Agent) or any inaction in the absence thereof.
(b) The Borrower hereby agrees that, upon the occurrence and during the continuance of an Event of Default, and subject to Section 6.04(e), at the request of
the Administrative Agent or the Required Lenders (acting through the Administrative Agent), it shall execute all documents and agreements which are necessary or appropriate to
have the Collateral assigned to the Collateral Agent or its designee. For purposes of taking the actions described in this Section 7.03, the Borrower hereby irrevocably appoints the
Collateral Agent as its attorney‑in‑fact (which appointment being coupled with an interest and is irrevocable until the Obligations are Paid in Full), with power of substitution, in the
name of the Collateral Agent or in the name of the Borrower or otherwise, for the use and benefit of the Collateral Agent for the benefit of the Secured Parties, but at the cost and
expense of the Borrower and, except as expressly required by Applicable Law, without notice to the Borrower. Such appointment shall in no way impose upon the Collateral Agent
any obligation to take any such action unless specifically directed to do so and subject to the receipt of an indemnity from the Lenders reasonably satisfactory to it.
Section 7.04 Remedies Cumulative
Each right, power, and remedy of the Agents and the other Secured Parties, or any of them, as provided for in this Agreement or in the other Facility
Documents or now or hereafter existing at law or in equity or by statute or otherwise shall be cumulative and concurrent and shall be in addition to every other right, power, or
remedy provided for in this Agreement or in the other Facility Documents or now or hereafter existing at law or in equity or by statute or otherwise, and the exercise or beginning of
the exercise by the Agents or any other Secured Party of any one or more of such rights, powers, or remedies shall not preclude the simultaneous or later exercise by such Persons of
any or all such other rights, powers, or remedies.
Section 7.05 Related Documents
(a) Each of the Borrower and the Servicer hereby agrees that, to the extent not expressly prohibited by the terms of the Related Documents, after the
occurrence and during the continuance of an Event of Default, it shall (i) upon the written request of the Administrative Agent, promptly forward to the Administrative Agent all
material information and notices which it receives under or in connection with the Related Documents relating to the Collateral, and (ii) upon the written request of the
Administrative Agent, act and refrain from acting in respect of any request, act, decision or vote under or in connection with the Related Documents relating to the Collateral only in
accordance with the direction of the Administrative Agent (in its reasonable discretion).
(b) The Borrower agrees that, to the extent the same shall be in the Borrower’s possession, it will hold all Related Documents relating to the Collateral in
trust for the Collateral Agent on behalf of the Secured Parties, and upon request of the Administrative Agent following the occurrence and during the continuance of an Event of
Default or as otherwise provided herein, promptly deliver the same to the Collateral Agent or its designee. In addition, in accordance with this Agreement, promptly (and in any
event within five (5) Business Days) following its
-121-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
acquisition of any Collateral Loan, the Borrower shall deliver (or cause to be delivered) to the Custodian the Required Loan Documents (to the extent in the possession of the
Servicer or the Borrower, or otherwise available to the Servicer on the relevant deal site).
Section 7.06 Borrower Remains Liable
(a) Notwithstanding anything herein to the contrary, (i) the Borrower shall remain liable under the contracts and agreements to which it is a party included in
and relating to the Collateral (including the Related Documents) to the extent set forth therein, and shall perform all of its duties and obligations under such contracts and agreements
to the same extent as if this Agreement had not been executed, and (ii) the exercise by any Secured Party of any of its rights hereunder shall not release the Borrower from any of its
duties or obligations under any such contracts or agreements included in the Collateral.
(b) No obligation or liability of the Borrower is intended to be assumed by the Administrative Agent, any Liquidity Bank or any other Secured Party under
or as a result of this Agreement or the other Facility Documents, or the transactions contemplated hereby or thereby, including under any Related Document or any other agreement
or document that relates to Collateral and, to the maximum extent permitted under provisions of Law, the Administrative Agent, any Liquidity Bank and the other Secured Parties
expressly disclaim any such assumption.
Section 7.07 Protection of Collateral
The Borrower shall from time to time execute and deliver all such supplements and amendments hereto and file or authorize the filing of all such UCC‑1
financing statements and continuation statements, instruments of further assurance and other instruments, and shall take such other action as may be necessary to secure the rights
and remedies of the Secured Parties hereunder and to:
(a) grant security more effectively on all or any portion of the Collateral;
(b) maintain, preserve and perfect any grant of security made or to be made by this Agreement including the first‑priority nature of the Lien (subject to
Permitted Liens) or carry out more effectively the purposes hereof;
(c) perfect or protect the validity of any grant made or to be made by this Agreement (including any and all actions necessary or desirable as a result of
changes in Applicable Law);
(d) enforce any of the Collateral or other instruments or property included in the Collateral;
(e) preserve and defend title to the Collateral and the rights therein of the Collateral Agent and the other Secured Parties in the Collateral against the claims
of all third parties; and
-122-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(f) pay or cause to be paid any and all Taxes levied or assessed upon all or any part of the Collateral (other than Taxes which are being contested in good
faith and by proper proceedings and against which adequate reserves are being maintained in accordance with GAAP).
If the Borrower fails to prepare and file any instrument or to take any action required pursuant to this Section 7.07 within ten (10) Business Days after the
Administrative Agent’s request and written instruction therefor, the Borrower hereby designates the Collateral Agent as its agent to prepare and file such instrument and take such
action required pursuant to this Section 7.07. The Borrower further authorizes, but does not obligate, the Collateral Agent to file UCC‑1 financing statements and continuation
statements therefor, that name the Borrower as debtor and the Collateral Agent as secured party and that describes “all assets in which the debtor now or hereafter has rights” (or
words of similar effect) as the Collateral in which the Collateral Agent has a grant of security hereunder. Such designation shall not impose upon the Collateral Agent or the
Administrative Agent or any other Secured Party, or release or diminish, the Borrower’s obligations under this Section 7.07.
Notwithstanding the generality of the foregoing, the Borrower shall, not earlier than six (6) months and not later than one (1) month prior to the fifth (5th)
anniversary of the date of filing of any financing statement filed pursuant to this Agreement authorize, deliver and file or cause to be filed an appropriate continuation statement with
respect to each such financing statement.
ARTICLE VIII
ACCOUNTS, ACCOUNTINGS AND RELEASES
Section 8.01 Collection of Money
Except as otherwise expressly provided herein, the Administrative Agent may and the Collateral Agent shall at the direction of the Administrative Agent (or
the Required Lenders acting through the Administrative Agent) demand payment or delivery of, and shall receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all Money and other property payable to or receivable by the Collateral Agent pursuant to this Agreement, including all payments due on the
Collateral, in accordance with the terms and conditions of such Collateral. The Collateral Agent shall segregate and hold all such Money and property received by it for the Secured
Parties and shall apply it as provided in this Agreement. Each Covered Account shall be established and maintained under the Account Control Agreement with a Qualified
Institution; provided that, for the avoidance of doubt, Computershare Trust Company, National Association, in its capacity as Securities Intermediary shall not be required to satisfy
the definition of “Qualified Institution” so long as the assets credited to each Covered Account are deposited and held by an institution that meets such requirements. Any Covered
Account may contain any number of subaccounts for the convenience of the Collateral Agent or as required by the Servicer for convenience in administering the Covered Accounts
or the Collateral.
Section 8.02 Collection Account
-123-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(a) In accordance with this Agreement and the Account Control Agreement, the Collateral Agent shall, on or prior to the A&R Effective Date, establish at
the Securities Intermediary two (2) segregated non-interest bearing accounts (including any sub-accounts deemed appropriate or necessary by the Securities Intermediary for
convenience in administering such accounts) for each Eligible Currency and in the name of the Borrower, one of which will be designated as the “Interest Collection Account” for
each such Eligible Currency (collectively, the “Interest Collection Account”) and one of which designated as the “Principal Collection Account” for each such Eligible Currency
(collectively, the “Principal Collection Account” and, together with the Interest Collection Account, the “Collection Account”), which shall be maintained by the Borrower with the
Securities Intermediary in accordance with the Account Control Agreement and which shall be subject to the Lien of the Collateral Agent. The Collateral Agent shall from time to
time deposit into the Interest Collection Account promptly upon receipt thereof all Interest Proceeds received by the Collateral Agent and identified as such by the Servicer. The
Collateral Agent shall from time to time deposit into the Principal Collection Account promptly upon receipt thereof all Principal Proceeds (unless simultaneously reinvested in
additional Collateral Loans in accordance with Article X or required to be deposited in the Unfunded Reserve Account pursuant to Section 8.04) received by the Collateral Agent and
identified as such by the Servicer. All funds deposited from time to time in the Collection Account pursuant to this Agreement shall be held on behalf of the Collateral Agent as part
of the Collateral and shall be applied to the purposes herein provided.
(b) At any time when reinvestment is permitted pursuant to Article X, the Servicer on behalf of the Borrower (subject to compliance with Article X) may, by
delivery of written instructions (which may be a .pdf or similar file sent by email) of a Responsible Officer of the Servicer to the Collateral Agent and the Collateral Administrator,
direct the Collateral Agent to, and upon receipt of such instructions the Collateral Agent shall, withdraw funds on deposit in the Collection Account representing Principal Proceeds
(together with accrued interest received with regard to any Collateral Loan and Interest Proceeds but only to the extent used to pay for accrued interest on an additional Collateral
Loan) and reinvest such funds in additional Collateral Loans in accordance with such instructions. If at any time the amount on deposit in the Unfunded Reserve Account is less than
the Unfunded Reserve Required Amount, the Servicer (on behalf of the Borrower) may, by delivery of written instructions (which may be a .pdf or similar file sent by email) of a
Responsible Officer of the Servicer to the Collateral Agent and the Collateral Administrator, direct the Collateral Agent to, and upon receipt of such instructions the Collateral Agent
shall, withdraw funds on deposit in the Collection Account representing Principal Proceeds and remit such funds as so directed by the Servicer to meet the Borrower’s funding
obligations in respect of Delayed Drawdown Collateral Loans or Revolving Collateral Loans.
(c) The Collateral Agent shall transfer from the Collection Account for application pursuant to Section 9.01(a), on each Payment Date, the amount set forth
to be so transferred in the Payment Date Report for such Payment Date.
Section 8.03 The Payment Account
In accordance with this Agreement and the Account Control Agreement, the Collateral Agent shall, on or prior to the A&R Effective Date, establish at the
Securities Intermediary one (1) segregated account, which shall be designated as the “Payment Account”,
-124-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
which shall be maintained by the Borrower with the Securities Intermediary in accordance with the Account Control Agreement and which shall be subject to the Lien of the
Collateral Agent. The only permitted deposits to or withdrawals from the Payment Account shall be in accordance with the provisions of this Agreement. All funds on deposit in the
Payment Account shall be investable at the direction of the Borrower. The Borrower hereby directs that all funds on deposit in the Payment Account will remain in uninvested.
Section 8.04 The Custodian Account
(a) In accordance with this Agreement and the Account Control Agreement, the Collateral Agent shall, on or prior to the A&R Effective Date, establish at
the Securities Intermediary one (1) segregated account with respect to each Eligible Currency, which shall be designated as the “Custodian Account” for each such Eligible Currency
(collectively, the “Custodian Account”), which shall be maintained by the Borrower with the Securities Intermediary in accordance with the Account Control Agreement and which
shall be subject to the Lien of the Collateral Agent.
Section 8.05 The Unfunded Reserve Account; Fundings
In accordance with this Agreement and the Account Control Agreement, the Collateral Agent shall, on or prior to the A&R Effective Date, establish at the
Securities Intermediary one (1) segregated non-interest bearing account for each Eligible Currency in the name of the Borrower, which shall be designated as the “Unfunded
Reserve Account” for each such Eligible Currency (collectively, the “Unfunded Reserve Account”), which shall be maintained by the Borrower with the Securities Intermediary in
accordance with the Account Control Agreement and which shall be subject to the Lien of the Collateral Agent. The only permitted deposits to or withdrawals from the Unfunded
Reserve Account shall be in accordance with the provisions of this Agreement.
On the Acquisition Date of any Delayed Drawdown Collateral Loan, Revolving Collateral Loan, and on any Payment Date, the Servicer shall instruct the
Collateral Agent to withdraw funds from the Collection Account for deposit into the Unfunded Reserve Account, to the extent required so that the amount of funds on deposit in the
Unfunded Reserve Account is equal to the Unfunded Reserve Required Amount.
During the Reinvestment Period, fundings of Delayed Drawdown Collateral Loans and Revolving Collateral Loans shall be made using, first, amounts on
deposit in the Unfunded Reserve Account (in an amount equal to the amount on deposit therein with respect to such Delayed Drawdown Collateral Loan or Revolving Collateral
Loan), then available Principal Proceeds and finally, borrowing of Advances under Section 2.01.
During the Amortization Period, Principal Proceeds received by the Borrower (or the Servicer on its behalf) in respect of Revolving Collateral Loans (to the
extent not accompanied by a permanent reduction in the related commitments) shall be deposited by the Borrower (or the Servicer on its behalf) into the Unfunded Reserve Account
to the extent the amount on deposit in the Unfunded Reserve Account is less than the Unfunded Reserve Required Amount.
-125-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Amounts on deposit in the Unfunded Reserve Account will be available solely to cover drawdowns on Delayed Drawdown Collateral Loans and Revolving
Collateral Loans; provided that, to the extent that the aggregate amount of funds on deposit therein at any time exceeds the Unfunded Reserve Required Amount, the Collateral
Agent shall remit such excess to the Collection Account.
Section 8.06 Account Control Agreement
The provisions of Sections 8.02, 8.03 and 8.04 are subject to the terms of the Account Control Agreement.
Section 8.07 Funds in Covered Accounts; Reports by Collateral Agent
(a) By delivery of a certificate of a Responsible Officer (which may be in the form of standing instructions), the Borrower (or the Servicer on behalf of the
Borrower) shall at all times direct the Collateral Agent to, and, upon receipt of such certificate, the Collateral Agent shall, invest all funds on deposit in the Collection Account and
the Unfunded Reserve Account in Eligible Investments having stated maturities no later than the Business Day preceding the next Payment Date (or such shorter maturities
expressly provided herein), as specified by the Borrower (or the Servicer on behalf of the Borrower). If no Event of Default has occurred and is continuing and the Borrower shall
not have given any such investment directions, the Collateral Agent shall seek instructions from the Servicer within three (3) Business Days after transfer of any funds to such
accounts and such funds shall remain un-invested until it shall receive written instructions from the Servicer. After the occurrence and during the continuance of an Event of Default,
the Collateral Agent shall invest and reinvest such funds as fully as practicable as directed by the Servicer and such funds shall remain un-invested until it shall receive written
instructions from the Servicer. Except to the extent expressly provided otherwise herein, all interest, gain, loss and other income from such investments shall be deposited, credited
or charged (as applicable) in and to the Collection Account. Absent its timely receipt of such instruction from the Servicer or Administrative Agent, as applicable, in accordance with
the foregoing, the Collateral Agent shall not be under an obligation to invest (or pay interest on) funds held hereunder. The Collateral Agent shall in no way be liable for any
insufficiency in a Covered Account resulting from any loss relating to any such investment.
(b) The Collateral Agent agrees to give the Borrower and the Servicer prompt notice if any Covered Account or any funds on deposit in any Covered
Account, or otherwise to the credit of a Covered Account, shall become subject to any writ, order, judgment, warrant of attachment, execution or similar process. All Covered
Accounts shall remain at all times with the Custodian or any sub-custodian of the Custodian.
(c) The Collateral Administrator shall supply, in a timely fashion, to the Borrower and the Servicer any information regularly maintained by the Collateral
Administrator that the Borrower or the Servicer may from time to time reasonably request with respect to the Collateral Loans, the Covered Accounts and the other Collateral and
provide any other requested information reasonably available to the Collateral Administrator and required to be provided by Section 8.08 or to permit the Servicer to perform its
obligations hereunder or the Borrower’s obligations hereunder that have been delegated to the Servicer. The Collateral Administrator shall
-126-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
promptly forward to the Servicer copies of notices, periodic financial reports and other writings received by it from the Obligor of any Collateral Loan or from any Clearing Agency
with respect to any Collateral Loan.
Section 8.08 Accountings
(a) Monthly. As used herein, the “Monthly Report Determination Date” with respect to any calendar month will be the last calendar day of the prior calendar
month. Not later than fifteen (15) days following each Monthly Report Determination Date, the Borrower shall compile and provide (or cause to be compiled and provided) to the
Administrative Agent, each Lender Group Agent, any Liquidity Bank and the Equityholder a monthly report (which includes a Borrowing Base Calculation Statement prepared by
the Servicer and provided to the Collateral Administrator for inclusion in the Monthly Report) (each, a “Monthly Report”) in accordance with this Section 8.08. The Borrower shall
compile and provide (or cause to be compiled and provided) to the Administrative Agent and the Collateral Administrator a loan data file (the “Data File”) for the monthly period
ending on the Monthly Report Determination Date (containing such information agreed upon by the Borrower (or the Servicer on its behalf), the Collateral Administrator and the
Administrative Agent). The Borrower shall provide (or cause to be provided) the Data File no later than five (5) days following the Monthly Report Determination Date. The first
Monthly Report shall be delivered not later than fifteen (15) days following August 31, 2024. The Monthly Report for a calendar month shall be in substantially the form attached
hereto as Exhibit H and shall contain the information with respect to the Collateral Loans and Eligible Investments included in the Collateral set forth in Schedule 2, and shall be
determined as of the Monthly Report Determination Date for such calendar month.
(b) Payment Accounting. The Borrower shall compile and provide (or cause to be compiled and provided) an accounting report (each, a “Payment Date
Report”), determined as of the close of business on each Determination Date preceding a Payment Date, and shall deliver such Payment Date Report to the Agents, the Borrower and
the Servicer the earlier of (i) fifteen (15) Business Days following such Determination Date and (ii) two (2) Business Days prior to the applicable Payment Date. The Payment Date
Report shall contain the information set forth in Schedule 3 hereto.
In addition, the Borrower shall provide (or cause to be provided) in each Monthly Report a statement notifying of any amendment, modification or waiver
under any Related Document for each Collateral Loan that constitutes a Material Modification that became effective since the immediately preceding Payment Date Report unless
previously disclosed under Section 5.01(d)(vii) or 8.08(a).
Each Payment Date Report shall constitute instructions to the Collateral Agent to withdraw funds from the Payment Account and pay or transfer such
amounts set forth in the Payment Date Report in the manner specific and in accordance with the Priority of Payments.
(c) Failure to Provide Accounting. If the Collateral Agent shall not have received any accounting provided for in this Section 8.08 on the first Business Day
after the date on which such accounting is due to the Collateral Agent, the Collateral Agent shall notify the
-127-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Borrower, who shall use reasonable efforts to obtain such accounting by the applicable Payment Date.
For the avoidance of doubt, the Borrower has engaged the Collateral Administrator pursuant to Article XV hereof to compile and provide the information
and reports to be provided in this Section 8.08; provided, however, that the Collateral Administrator’s obligation to compile and provide such information and reports is subject to
the receipt of the information necessary to do so from the Servicer and the Administrative Agent.
Section 8.09 Release of Collateral
(a) If no Event of Default has occurred and is continuing, the Borrower may, by delivery of a certificate of a Responsible Officer of the Servicer delivered to
the Collateral Agent and the Custodian on the Business Day prior to the settlement date for any sale of any item of Collateral certifying that the sale of such Collateral is being made
in accordance with Section 10.01 and such sale complies with all applicable requirements of Section 10.01 (which certificate shall be deemed delivered upon delivery by the
Borrower or the Servicer of a trade ticket or other instruction), direct the Collateral Agent (or the Custodian at the direction of the Collateral Agent) to release or cause to be released
such item from the Lien of this Agreement and, upon receipt of such certificate, the Collateral Agent (or Custodian, as applicable) shall deliver any such item, if in physical form,
duly endorsed to the broker or purchaser designated in such certificate or, if such item is a Clearing Corporation Security, cause an appropriate transfer thereof to be made, in each
case against receipt of the sales price therefor as specified by the Servicer in such certificate; provided that the Collateral Agent (or the Custodian at the direction of the Collateral
Agent) may deliver any such item in physical form for examination in accordance with street delivery custom; provided, further, that neither the Collateral Agent nor the Custodian
will be deemed to have notice of an Event of Default unless it has received notice thereof. Notwithstanding the foregoing, a trade ticket or other confirmation of trade in respect of
such sale of Collateral delivered by the Borrower (or the Servicer on its behalf) to the Collateral Agent and the Custodian shall constitute certification as to the matters described in
this Section 8.09, and the Collateral Agent and the Custodian may conclusively rely on such certification.
(b) The Collateral Agent (or the Custodian at the direction of the Collateral Agent) shall, upon the receipt of a certificate of a Responsible Officer of the
Servicer (which certificate shall be deemed delivered upon delivery by the Borrower or the Servicer of a trade ticket or other instruction), deliver any Collateral in accordance with
such certificate, and execute such documents or instruments as are delivered by or on behalf of the Borrower and reasonably necessary to release or cause to be released such security
from the Lien of this Agreement, which is set for any mandatory call or redemption or payment in full to the appropriate paying agent on or before the date set for such call,
redemption or payment, in each case against receipt of the call or redemption price or payment in full thereof.
(c) As provided in Section 8.02(a), the Collateral Agent (and its designees) shall deposit any proceeds received by it from the disposition of a Collateral Loan
in the Collection Account as instructed by the Servicer, unless simultaneously applied to the purchase of additional Collateral Loans as permitted under and in accordance with the
requirements of this Article VIII and Article X.
-128-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(d) The Collateral Agent shall, upon receipt of a certificate of a Responsible Officer of the Borrower certifying that there are no Commitments outstanding
and all Obligations of the Borrower hereunder and under the other Facility Documents have been satisfied (other than unasserted contingent obligations), execute such documents or
instruments as are delivered by or on behalf of the Borrower and reasonably necessary to release any remaining Collateral from the Lien of this Agreement.
(e) Any security, Collateral Loan or amounts that are released pursuant to Section 8.08(a) or (b) shall be automatically released from the Lien of this
Agreement.
(f) Any direction received by the Collateral Agent or the Custodian, as applicable, on or prior to 4:00 p.m. on any Business Day shall be effective on such
Business Day and any direction received by the Collateral Agent or the Custodian, as applicable, after 4:00 p.m. on any Business Day, or at any time on any day that is not a
Business Day, shall be effective in each case on the next succeeding Business Day.
Section 8.10 Reports by Independent Accountants
(a) The Servicer will appoint an independent audit or consulting firm specializing in securitization transactions (together with its successors, the
“Independent Accountants”) reasonably acceptable to the Administrative Agent to review and deliver the reports of such accountants required by this Agreement. The fees of such
Independent Accountants and any successor shall be payable by the Borrower.
(b) The Servicer shall cause the Independent Accountants to furnish to the Administrative Agent (with a copy to the Collateral Agent) within one hundred
twenty (120) days following the end of each fiscal year beginning with the fiscal year ending on June 30, 2025 (each such date, a “Report Date”), a report relating to a selection of
Monthly Reports (as agreed by the Servicer and the Administrative Agent), delivered during the twelve (12) months immediately preceding such Report Date, to the effect that such
firm has applied certain agreed‑upon procedures approved by the Administrative Agent as of the A&R Effective Date (it being understood that the Borrower shall cause such
Independent Accountants to comply with updates to such agreed‑upon procedures from time to time in response to reasonable requests of the Administrative Agent to the extent such
the Borrower is able in good faith to cause such compliance without undue burden or expense) with respect to such reports from the related period and, with respect to the Servicer’s
performance hereunder, to assist the Administrative Agent in determining that the Monthly Reports for the related period were prepared in compliance with this Agreement, except
for such exceptions as it believes to be immaterial and such other exceptions as will be set forth in such firm’s report (including, with respect to any such exceptions, an explanation
of how each such exception arose and reflecting the input/explanation of the Servicer thereto). Such reports pursuant to this clause (b) shall be at the expense of the Borrower. Each
such report pursuant to this clause (b) shall include a certification by the Servicer as to whether a Servicer Termination Event occurred during the related testing period and, if any
occurred, an explanation as to its resolution.
(c) In the event the Independent Accountants require the Collateral Agent or the Collateral Administrator, as applicable, to agree to the procedures
performed by such Independent Accountants with respect to any of the reports, statements of such Independent
-129-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Accountants, or sign any agreement in connection therewith, the Collateral Agent or the Collateral Administrator, as applicable, is hereby directed by the Borrower, to so agree to
the terms and conditions requested by such Independent Accountants as a condition to receiving documentation required by this Agreement; it being understood and agreed that the
Collateral Agent and the Collateral Administrator shall deliver such agreement in conclusive reliance on such direction and shall make no inquiry or investigation as to, and shall
have no obligation or responsibility in respect of, the terms of the engagement of such Independent Accountants by the Borrower or the sufficiency, validity or correctness of the
agreed upon procedures in respect of such engagement. The Collateral Agent and the Collateral Administrator may require the delivery of additional written direction to the
execution of any such agreement required for the delivery of any report or statement of such Independent Accountants to the Collateral Agent and the Collateral Administrator under
this Agreement. The Collateral Agent and the Collateral Administrator are hereby authorized, without liability on their part, to execute and deliver any such agreement with such
Independent Accountants, which agreement, to the extent so directed by the Borrower (or the Servicer on behalf of the Borrower), may include, amongst other things, (i) an
acknowledgement that the Borrower has agreed that the procedures by such Independent Accountants are sufficient for the relevant purposes, (ii) releases by the Collateral Agent
and the Collateral Administrator of any claims, liabilities and expenses arising out of or relating to such Independent Accountant’s engagement, agreed‑upon procedures or any
report or statement issued by such Independent Accountants under any such engagement and acknowledgement of other limitations of liability in favor of such Independent
Accountants and (iii) restrictions or prohibitions on the disclosure of any such reports, statements or other information or documents provided to it by such Independent Accountants.
ARTICLE IX
APPLICATION OF FUNDS
Section 9.01 Disbursements of Funds from Collection Account
(a) Notwithstanding any other provision in this Agreement, but subject to the other subsections of this Section 9.01, the Collateral Agent, based solely upon
the Payment Date Report, shall disburse amounts from the Payment Account pursuant to Section 8.02 in accordance with the following priorities (the “Priority of Payments”):
(i) On each Payment Date, so long as no Event of Default has occurred and is continuing or would result therefrom, Interest Proceeds on deposit in the
Interest Collection Account, to the extent received on or before the related Determination Date (or, if such Determination Date is not a Business Day, the next
succeeding Business Day) will be transferred to the Payment Account and on each Payment Date will be applied from the Payment Account in the following order of
priority:
(A) pro rata to each applicable Person, to pay Administrative Expenses in accordance with the priorities specified in the definition thereof;
provided that the amount in this clause (A) shall not exceed the Administrative Expense Cap for such Payment Date;
-130-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(B) to the Servicer to pay the Senior Servicing Fee, plus any Senior Servicing Fee that remains due and unpaid in respect of any prior Payment
Dates as a result of waiver or insufficient funds, except, in each case, to the extent that the Servicer elects to waive or defer such current or previously due
Senior Servicing Fee pursuant to this Agreement;
(C) (1) first, to the Administrative Agent, to pay any fees, expenses, indemnities and other amounts payable to the Administrative Agent
pursuant to the Agent Fee Letter and any other Facility Documents and (2) second, to the Administrative Agent (for the account of the Lenders on a pro rata
basis based on such Lender’s Percentage), to pay accrued and unpaid Interest on the Advances, Undrawn Fees and Prepayment Fees, if any, and other fees,
expenses, indemnities and amounts due to each such Lender under the Facility Documents;
(D) to the Administrative Agent (for the account of the Lenders on a pro rata basis based on such Lender’s Percentage) to pay principal of the
Advances in an aggregate amount required to cure any Borrowing Base Deficiency;
(E) during the Amortization Period, to the Administrative Agent (for the account of the Lenders on a pro rata basis based on such Lender’s
Percentage) to pay principal of the Advances in an amount equal to any outstanding Mandatory Amortization Amount on such applicable Payment Date;
(F) during the Amortization Period, pro rata to each Lender (based on such Lender’s Percentage) to pay principal of the Advances in an
amount equal to any outstanding Mandatory Amortization Amount on such applicable Payment Date;
(G) for deposit into the Unfunded Reserve Account until the amount on deposit therein equals the Unfunded Reserve Required Amount;
(H) to the Servicer to pay (1) any Senior Servicing Fee not paid pursuant to clause (B) above and (2) the Subordinated Servicing Fee, plus any
Subordinated Servicing Fee that remains due and unpaid in respect of any prior Payment Dates as a result of insufficient funds, except, in each case, to the
extent that the Servicer elects to waive or defer such current or previously due Subordinated Servicing Fee pursuant to this Agreement;
(I) (1) first, to any applicable Persons, to the payment or application of amounts referred to in clause (A) above (in the same order of priority
specified therein), to the extent not paid in full pursuant to applications under such clause; and (2) second, to any applicable Persons, to pay all other
Obligations then due and owing (other than Advances Outstanding); and
(J) (1) if a Default has occurred and is continuing, or would result therefrom, to remain in the Interest Collection Account or (2) otherwise, to
be allocated at the discretion of the Servicer (as set forth in the Payment Date Report) to any one or more of the following payments: (1) to prepay the
Advances, (2)
-131-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
during the Reinvestment Period, to the Principal Collection Account as Principal Proceeds for the purchase of additional Collateral Loans and the funding of
Delayed Drawdown Collateral Loans and Revolving Collateral Loans, or (3) to the Borrower or its designee, which amounts may be distributed to the
Equityholder; provided, that if any such Default is subsequently cured prior the next Payment Date, such amounts held under clause (J)(1) as a result of an
inability to distribute under clause (J)(2)(3) may be distributed pursuant to clause (J)(2)(3) prior to the next Payment Date so long as no other Default or
Event of Default has occurred and is continuing.
(ii) On each Payment Date, so long as no Event of Default has occurred and is continuing or would result therefrom, Principal Proceeds on deposit in
the Principal Collection Account (excluding any amounts necessary to fund the acquisition of any Collateral Loan that the Borrower has committed to purchase and with
respect to which the trade date has occurred) to the extent received on or before the related Determination Date (or, if such Determination Date is not a Business Day, the
next succeeding Business Day) will be transferred to the Payment Account and on each Payment Date will be applied from the Payment Account in the following order
of priority:
(A) to the payment of unpaid amounts under clauses (A) through (H) in clause (i) above (in the same order of priority specified therein), to the
extent not paid in full thereunder;
(B) during the Amortization Period, to the Administrative Agent (for the account of the Lenders on a pro rata basis based on such Lender’s
Percentage) to pay principal of the Advances until the Advances are paid in full; provided that if the amount on deposit in the Unfunded Reserve Account
equals or exceeds the amount of outstanding Advances, the Borrower (or the Servicer on its behalf) may elect to withdraw such amounts from the Unfunded
Reserve Account and repay the Advances pursuant to this clause (B);
(C) to the payment of unpaid amounts under clause (I) in clause (i) above (in the same order of priority specified therein), to the extent not paid
in full thereunder; and
(D) during the Reinvestment Period, (1) if a Default has occurred and is continuing, or would result therefrom, to remain in the Principal
Collection Account or (2) otherwise at the discretion of the Servicer, all remaining amounts shall be allocated to any one or more of the following payments:
(1) to the Principal Collection Account for the purchase of additional Collateral Loans and the funding of Delayed Drawdown Collateral Loans and
Revolving Collateral Loans, (2) for deposit into the Unfunded Reserve Account until the amount on deposit therein equals the Unfunded Reserve Required
Amount or (3) to the Borrower or its designee, which amounts may be distributed to the Equityholder; provided, that if any such Default is subsequently
cured prior the next Payment Date, such amounts held under clause (D)(1) as a result of an inability to distribute under clause (D)(2)(3) may be distributed
pursuant to clause (D)(2)(3) prior to the next Payment Date so long as no other Default or Event of Default has occurred and is continuing.
-132-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(iii) On each Payment Date after the occurrence and during the continuance of an Event of Default, or if an Event of Default would result from the
application of Collections pursuant to the preceding clause (i) or (ii), all Collections on deposit in the Collection Account (excluding any amounts necessary to fund the
acquisition of any Collateral Loan that the Borrower has committed to purchase and with respect to which the trade date has occurred), to the extent received on or before
the related Determination Date (or, if such Determination Date is not a Business Day, the next succeeding Business Day) will be transferred to the Payment Account and
on each Payment Date will be applied from the Payment Account in the following order of priority:
(A) pro rata to each applicable Person, to pay Administrative Expenses in accordance with the priorities specified in the definition thereof;
provided that the amount in this clause (A) shall not exceed the Administrative Expense Cap for such Payment Date;
(B) to the Servicer to pay the Senior Servicer Fee, plus any Senior Servicer Fee that remains due and unpaid in respect of any prior Payment
Dates as a result of insufficient funds, except, in each case, to the extent that the Servicer elects to waive or defer such current or previously due Senior
Servicer Fee pursuant to this Agreement;
(C) (1) first, to the Administrative Agent, to pay any fees, expenses, indemnities and other amounts payable to the Administrative Agent
pursuant to the Agent Fee Letter and any other Facility Documents and (2) second, to the Administrative Agent (for the account of the Lenders on a pro rata
basis based on such Lender’s Percentage), to pay accrued and unpaid Interest on the Advances, Undrawn Fees and Prepayment Fees, if any, and other fees,
expenses, indemnities and amounts due to each such Lender under the Facility Documents;
(D) to the Administrative Agent (for the account of the Lenders on a pro rata basis based on such Lender’s Percentage) to pay principal of the
Advances until the Advances are paid in full;
(E) to the Equityholder as a Permitted RIC Distribution as directed by the Servicer;
(F) for deposit into the Unfunded Reserve Account until the amount on deposit therein equals the Unfunded Reserve Required Amount;
(G) to the payment or application of amounts referred to in clause (A) above (in the same order of priority specified therein), to the extent not
paid in full pursuant to applications under such clause;
(H) to the Servicer to pay the Subordinated Servicing Fee, plus any Subordinated Servicing Fee that remains due and unpaid in respect of any
prior Payment Dates as a result of insufficient funds, except, in each case, to the extent that the Servicer elects to waive or defer such current or previously
due Subordinated Servicing Fee pursuant to this Agreement;
-133-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(I) (1) first, to the applicable Person, to the payment or application of amounts referred to in clause (A) above (in the same order of priority
specified therein), to the extent not paid in full pursuant to applications under such clause; and (2) second, to the applicable Person, to pay all other
Obligations then due and owing; and
(J) to the Borrower or its designee, which amounts may be distributed to the Equityholder.
(b) If on any Payment Date the amount available in the Collection Account is insufficient to make the full amount of the disbursements required by the
Payment Date Report, the Collateral Agent shall make the disbursements called for in the order and according to the priority set forth under Section 9.01(a) to the extent funds are
available therefor.
(c) On the A&R Effective Date, the Borrower shall pay pro rata to the Lenders all accrued and unpaid Interest on the Advances, Undrawn Fees and
Prepayment Fees (as incurred under the Existing Agreement and set forth in a flow of funds circulated to each of the parties hereto prior to the A&R Effective Date).
ARTICLE X
SALE OF COLLATERAL LOANS;
PURCHASE OF ADDITIONAL COLLATERAL LOANS
Section 10.01 Sales of Collateral Loans
(a) Sales of Collateral Loans. Subject to the satisfaction (or waiver, by the Administrative Agent) of the conditions specified in Section 10.04, the Borrower
may, but will not be required to, sell any Collateral Loan if such sale meets each of the requirements set forth below:
(i) no Default or Event of Default is continuing or would result upon giving effect thereto, to all other sales or purchases of Collateral Loans previously
or substantially concurrently committed to and to all substantially concurrent substitutions of Collateral Loans, unless consented to by the Administrative Agent in its
reasonable discretion (such consent not to be unreasonably withheld, conditioned or delayed) or unless such Default or Event of Default will be cured upon giving effect
to such transactions and the application of the proceeds thereof; provided that, notwithstanding the foregoing, this clause (i) shall not prohibit (x) any sale of a Collateral
Loan the trade date of which was prior to the occurrence of a Default or Event of Default, and the settlement date of which is scheduled to occur on a date following
such Default or Event of Default, or (y) any sale of a Collateral Loan at a price at least equal to par;
(ii) upon giving effect thereto, to all other sales or purchases of Collateral Loans previously or substantially concurrently committed to and to all
substantially concurrent substitutions of Collateral Loans and to the application of the proceeds thereof, each of the Collateral Quality Tests and the Concentration
Limitations is satisfied or, if it is not satisfied, it is maintained or improved;
-134-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(iii) such sale is made for Cash;
(iv) if such sale is made to an Affiliate of the Borrower, the Equityholder or the Servicer, either (a) such sale is for a price at least equal to the Asset
Value of such Collateral Loan or (b) the Administrative Agent has provided its prior written consent to such sale in its sole discretion;
(v) no adverse selection procedures were employed by the Borrower or the Servicer in selecting such Collateral Loan for sale; and
(vi) upon giving effect thereto, to all other sales or purchases of Collateral Loans previously or substantially concurrently committed to and to all
substantially concurrent substitutions of Collateral Loans and to the application of the proceeds thereof, the Borrowing Base Test is satisfied, unless consented to by the
Administrative Agent in its sole discretion.
(b) Sales of Equity Securities. The Borrower may sell any Equity Security at any time without restriction, and shall use its commercially reasonable efforts to
effect the sale of any Equity Security, regardless of price, within forty-five (45) days of receipt if such Equity Security constitutes Margin Stock, unless such sale is prohibited by
Applicable Law or contract, in which case such Equity Security should be sold as soon as such sale is permitted by Applicable Law or contract. The Borrower may also sell any
Ineligible Collateral Loan or any portion of any Collateral Loan that is allocated to the Excess Concentration Amount at any time unless an Event of Default has occurred and is
continuing (but otherwise without restriction).
(c) Application of Proceeds of Sales. The Servicer on behalf of the Borrower shall deposit the proceeds of any sale effected pursuant to this Section 10.01
into the Collection Account for disbursement in accordance with Section 9.01 or reinvestment in additional Collateral Loans in accordance with Section 10.02.
(d) Collateral Loan Dividend. The Borrower may, on any Collateral Loan Dividend Date, distribute by dividend to the Equityholder a portion of the
Collateral Loans (each, a “Collateral Loan Dividend”), without the consent of the Administrative Agent; so long as (i) the Borrower shall have provided to the Administrative Agent
(with a copy to the Collateral Agent) at least twenty (20) days and not more than forty-five (45) days prior written notice of its intent to effect a Collateral Loan Dividend on the
Collateral Loan Dividend Date, (ii) no event has occurred and is continuing, or would result from such Collateral Loan Dividend, which constitutes an Event of Default and no event
has occurred and is continuing, or would result from such Collateral Loan Dividend, which constitutes a Borrowing Base Deficiency, and (iii) at least two (2) days and not more than
five (5) days prior to the related Collateral Loan Dividend Date the Borrower and the Servicer shall have delivered to the Administrative Agent (with a copy to the Collateral Agent)
a written certificate (a “Collateral Loan Dividend Certificate”) that (x) lists all Collateral Loans to be subject to the Collateral Loan Dividend, and (y) certifies on a pro forma basis
as of the Collateral Loan Dividend Date after giving effect to such Collateral Loan Dividend, that (1) each Collateral Quality Test is improved and (2) clause (c) of the Borrowing
Base (Aggregate) minus the Advances Outstanding is at least equal to the Minimum Equity Amount.
-135-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(e) Optional Sales. The Borrower may, on any Optional Sale Date, prepay all or portion of the Advances Outstanding in connection with the sale of all or a
portion of the Collateral Loans in connection with a Permitted Securitization or a Permitted Refinancing (each, an “Optional Sale”), without the consent of the Administrative Agent;
so long as (i) the Borrower shall have provided to the Administrative Agent (with a copy to the Collateral Agent) at least twenty (20) days and not more than forty-five (45) days
prior written notice of its intent to effect an Optional Sale on the Optional Sale Date, (ii) the purchase price in cash deposited in the Collection Account with respect to the Optional
Sale is at least equal to the Aggregate Outstanding Loan Balance of the Collateral Loans being sold and purchased in connection therewith, and otherwise complies with the pricing
requirements set forth in clause (f) below, (iii) 100% of the net proceeds of such Optional Sale shall be deposited into the Collection Account to be disbursed in accordance with
Section 9.01 hereof, and (iv) no event has occurred and is continuing, or would result from such Optional Sale, which constitutes an Event of Default and no event has occurred and
is continuing, or would result from such Optional Sale, which constitutes an Event of Default or a Borrowing Base Deficiency.
(f) Conditions to Optional Sales and Collateral Loan Dividends. Any Collateral Loan Dividend or Optional Sale effected pursuant to Sections
10.01(d) or (e) shall be subject to the satisfaction of the following conditions (as certified in writing to the Administrative Agent and Collateral Agent by the Borrower):
(i) the Borrower shall deliver a Borrowing Base Calculation Statement to the Administrative Agent in connection with (and reflecting) such sale
demonstrating that no Borrowing Base Deficiency will exist following such sale, substitution or repurchase;
(ii) the Borrower shall deliver a list of all Collateral Loans to be sold or subject to dividend;
(iii) no selection procedures adverse to the interests of the Administrative Agent or the Lenders were utilized by the Borrower in the selection of the
Collateral Loans to be sold or subject to dividend;
(iv) the Borrower shall notify the Administrative Agent of any amount to be deposited into the Collection Account in connection with any sale,
substitution or repurchase;
(v) the representations and warranties contained in Sections 4.01, 4.02 and 4.03 hereof shall continue to be correct in all material respects, except to the
extent relating to an earlier date;
(vi) any repayment of Advances Outstanding in connection with any sale of Collateral Loans hereunder shall comply with the requirements set forth in
Section 2.05(a) and (b); and
(vii) the Borrower and the Servicer (on behalf of the Borrower) shall pay the reasonable legal fees and expenses of the Administrative Agent, the
Collateral Agent, the Collateral Agent, the Collateral Administrator and the Custodian in connection with any such sale or dividend (including, but not limited to,
expenses incurred in connection with
-136-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
the release of the Lien of the Collateral Agent, on behalf of the Secured Parties, and any other party having an interest in the Collateral Loan in connection with such sale
or dividend).
Section 10.02 Purchase of Additional Collateral Loans
During the Reinvestment Period, the Servicer on behalf of the Borrower may, if the conditions specified in this Section 10.02 and Section 10.05 are met (or
waived by the Administrative Agent), invest Principal Proceeds (and accrued interest received with respect to any Collateral Loan to the extent used to pay for accrued interest on
additional Collateral Loans) in additional Collateral Loans; provided that no Collateral Loan may be purchased unless each of the following conditions is satisfied as of the date such
Collateral Loan is added to the Collateral:
(i) such obligation is an Eligible Collateral Loan;
(ii) upon giving effect thereto, to all other sales or purchases of Collateral Loans previously or substantially concurrently committed to and to all
substantially concurrent substitutions of Collateral Loans and to the application of the proceeds thereof, the Borrowing Base Test is satisfied;
(iii) upon giving effect thereto, to all other sales or purchases of Collateral Loans previously or substantially concurrently committed to and to all
substantially concurrent substitutions of Collateral Loans and to the application of the proceeds thereof, each Collateral Quality Test and Concentration Limitation is
satisfied or, if it is not satisfied, maintained or improved;
(iv) no Default or Event of Default is continuing or would result upon giving effect thereto, to all other sales or purchases of Collateral Loans
previously or substantially concurrently committed to and to all substantially concurrent substitutions of Collateral Loans, unless such Default or Event of Default will be
cured upon giving effect to such transactions and the application of the proceeds thereof; provided that, notwithstanding the foregoing, this clause (iv) shall not prohibit
any purchase of a Collateral Loan the trade date of which was prior to the occurrence of a Default or Event of Default, and the settlement date of which is scheduled to
occur on a date following such Default or Event of Default; and
(v) such Principal Proceeds shall be denominated in the same Eligible Currency (or converted to such Eligible Currency pursuant to Section 2.15(c)
(iii)) as the Collateral Loan acquired.
The Borrower shall deliver to the Administrative Agent (with a copy to the Collateral Agent) on the date of such purchase a Borrowing Base Calculation
Statement.
Section 10.03 Substitution and Transfer of Loans
(a) Substitutions. The Borrower may replace any Collateral Loan with another Collateral Loan (a “Substitute Loan”), subject to the satisfaction (or waiver,
by the Administrative Agent) of the conditions set forth in clause (b) below and in Section 10.05.
-137-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(b) Conditions to Substitution. No substitution of a Collateral Loan with a Substitute Loan shall occur unless each of the following conditions is satisfied (or
waived by the Administrative Agent) as of the date of such substitution, after giving effect to such substitution, all other substitutions of Collateral Loans occurring substantially
concurrently and all sales or purchases of Collateral Loans previously or substantially concurrently committed to:
(i) such Substitute Loan is an Eligible Collateral Loan;
(ii) each Collateral Quality Test is satisfied or, if it is not satisfied, maintained or improved and (y) the Borrowing Base Test is satisfied;
(iii) the sum of the Asset Values of such Substitute Loans shall be equal to or greater than the sum of the Asset Values of the Collateral Loans being
substituted for;
(iv) no Default or Event of Default has occurred and is continuing (before or after giving effect to such substitution of Collateral Loans, all other
substitutions occurring substantially concurrently and all sales or purchases of Collateral Loans previously or substantially concurrently committed to), unless such
Default or Event of Default will be cured upon giving effect to such transactions and the application of the proceeds thereof;
(v) the Borrower (or the Servicer acting on its behalf) shall notify the Administrative Agent of any amount to be deposited into the Collection Account
in connection with any such substitution and shall deliver to the Custodian the Required Loan Documents for such Substitute Loan;
(vi) upon confirmation of the delivery of a Substitute Loan for each applicable Collateral Loan being substituted for (the date of such confirmation or
delivery, the “Retransfer Date”), each applicable Collateral Loan being substituted for shall be removed from the Collateral and the applicable Substitute Loan(s) shall
be included in the Collateral. On the Retransfer Date of a Collateral Loan, the Collateral Agent, for the benefit of the Secured Parties, shall automatically and without
further action be deemed to release and transfer to the Borrower, without recourse, representation or warranty, all the right, title and interest of the Collateral Agent, for
the benefit of the Secured Parties in, to and under such Collateral Loan being substituted for. The Collateral Agent, for the benefit of the Secured Parties, shall, at the
direction and sole expense of the Borrower, execute such documents and instruments of transfer as may be prepared by the Servicer, on behalf of the Borrower, and take
such other actions as shall reasonably be requested by the Borrower to effect the release and transfer of such Collateral Loan pursuant to this Section 10.03; and
(vii) the Borrower shall deliver to the Administrative Agent on the date of such substitution a Borrowing Base Calculation Statement.
Section 10.04 Limitations on Sales and Substitutions
(a) The Principal Balance of all Collateral Loans (other than Warranty Collateral Loans) sold pursuant to Section 10.01(a) or substituted pursuant to Section
10.03 to the Equityholder or an Affiliate thereof or released to the Equityholder pursuant to a Collateral Loan Dividend in accordance with Section 10.01(d) during any 12-month
period immediately preceding
-138-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
the proposed date of sale, dividend or substitution (or such lesser number of months as shall have elapsed as of such date) shall not exceed 20% of the highest aggregate Principal
Balance of any month during such 12-month period (or such lesser number of months as shall have elapsed as of such date); provided that the requirements of Section 10.04(a) may
be waived by the Administrative Agent in its sole discretion.
(b) The Principal Balance of all Eligible Collateral Loans subject to clause (a) or (b) of the definition of “Asset Value Adjustment Event” (other than
Warranty Collateral Loans) sold or transferred to the Equityholder (or an Affiliate thereof) or substituted pursuant to Section 10.03(a) during the 12-month period immediately
preceding the proposed date of sale or substitution (or such lesser number of months as shall have elapsed as of such date) does not exceed 10% of the highest aggregate Principal
Balance of any month during such 12-month period (or such lesser number of months as shall have elapsed as of such date); provided that the requirements of Section 10.04(b) may
be waived by the Administrative Agent in its sole discretion.
Section 10.05 Conditions Applicable to All Sale and Purchase Transactions
(a) Any transaction effected under this Article X or in connection with the acquisition of additional Collateral Loans if effected with the Equityholder or a
Person that is an Affiliate of the Equityholder (or with an account or portfolio for which the Equityholder or any of its Affiliates serves as investment adviser), shall be, in each case
except as otherwise expressly permitted under the Facility Documents, (i) for fair market value, (ii) on terms no less favorable to the Borrower than would be the case if such Person
were not an Affiliate or as otherwise expressly permitted in this Agreement, (iii) effected in accordance with all Applicable Laws, and (iv) no adverse selection procedures shall be
employed by the Borrower (or the Servicer on behalf of the Borrower) in selecting the Collateral Loans for acquisition.
(b) Upon each acquisition by the Borrower of a Collateral Loan (i) all of the Borrower’s right, title and interest to such Collateral Loan shall be subject to the
Lien granted to the Collateral Agent pursuant to this Agreement and (ii) such Collateral Loan shall be Delivered to the Custodian on behalf of the Collateral Agent.
(c) For purposes of this Article X, the term “substantially concurrent” or similar phrase shall include, without limitation, any sale, purchase or substitution
(each, a “reference transaction”), any other sale, purchase or substitution occurring within the cure period for a Borrowing Base Deficiency as set forth in Section 6.01(n).
(d) Any Proper Instructions provided to the Collateral Agent in respect of any acquisition or sale shall be deemed to be a certification by the Borrower that
the conditions to such acquisition, sale or substitution are satisfied.
Section 10.06 Additional Equity Contributions
The Equityholder may, but shall have no obligation to, at any time or from time to time, make a capital contribution to the Borrower for any purpose,
including for the purpose of curing any Default or Event of Default, satisfying the Borrowing Base Test, enabling the acquisition or sale of any Collateral Loan, satisfying the
Mandatory Amortization Amount on the applicable Payment Date or satisfying any conditions under Section 3.02. Each contribution shall
-139-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
either be made (a) in Cash, (b) by assignment and contribution of an Eligible Investment and/or (c) by assignment and contribution of an Eligible Collateral Loan. All Cash
contributed or loaned to the Borrower shall be treated as Principal Proceeds, except to the extent that the Equityholder specifies that such Cash shall constitute Interest Proceeds, and
shall be deposited into a Collection Account in accordance with Section 8.02 as designated by the Equityholder.
Section 10.07 Transfer of Warranty Collateral Loans
The Borrower may transfer any Warranty Collateral Loan to the Equityholder, or to any third party at the Equityholder’s direction, to consummate the sale
or substitution of such Warranty Collateral Loan pursuant to, and in accordance with the terms of, Article VI of the Contribution Agreement.
ARTICLE XI
THE AGENTS
Section 11.01 Authorization and Action
(a) Each Lender (and, in the case of the Collateral Agent, the Administrative Agent) hereby irrevocably appoints and authorizes the Administrative Agent
and the Collateral Agent to take such action as agent on its behalf and to exercise such powers under this Agreement and, to the extent applicable, the other Facility Documents as
are delegated to such Agent by the terms hereof and thereof, together with such powers as are reasonably incidental thereto, subject to the terms hereof. No Agent shall have any
duties or responsibilities, except those expressly set forth herein or in the other Facility Documents to which it is a party or any fiduciary relationship with any Secured Party and no
implied covenants, functions, responsibilities, duties or obligations or liabilities on the part of such Agent shall be read into this Agreement or any other Facility Document to which
such Agent is a party (if any) as duties on its part to be performed or observed. No Agent shall have or be construed to have any other duties or responsibilities in respect of this
Agreement or any other Facility Document and the transactions contemplated hereby or thereby. As to any matters not expressly provided for by this Agreement or the other Facility
Documents, no Agent shall be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the written instructions of the Required Lenders (or, with respect to the Collateral Agent, the Administrative Agent); provided that such Agent shall not
be required to take any action which exposes such Agent, in its judgment, to personal liability, cost or expense or which is contrary to this Agreement, the other Facility Documents
or Applicable Law, or would be, in its judgment, contrary to its duties hereunder, under any other Facility Document or under Applicable Law. Each Lender agrees that in any
instance in which the Facility Documents provide that the Administrative Agent’s consent may not be unreasonably withheld, provide for the exercise of the Administrative Agent’s
reasonable discretion, or provide to a similar effect, it shall not in its instructions (or by refusing to provide instruction) to the Administrative Agent withhold its consent or exercise
its discretion in an unreasonable manner.
(b) Neither the Collateral Agent nor any officer, agent or representative thereof shall be personally liable for any action taken by any such Person in
accordance with any notice
-140-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
given by the Administrative Agent or the Required Lenders pursuant to the terms of this Agreement or any other Facility Document even if, at the time such action is taken by any
such Person, the Administrative Agent or the Required Lenders or Persons purporting to be the Administrative Agent or the Required Lenders are not entitled to give such notice,
unless a Responsible Officer of the Collateral Agent shall have actual knowledge of the same or unless the Collateral Agent acts in breach of its standard of care hereunder. If any
dispute or disagreement shall arise as to the allocation of any sum of money received by the Collateral Agent hereunder or under any Facility Document, the Collateral Agent shall
have the right to deliver such sum to a court of competent jurisdiction and therein commence an action for interpleader.
(c) If in performing its duties under this Agreement, the Collateral Agent is required to decide between alternative courses of action, it may request written
instructions from the Administrative Agent as to the course of action desired by it. If the Collateral Agent does not receive such instructions within five (5) Business Days after it has
requested them, the Collateral Agent may, but shall be under no duty to, take or refrain from taking any such courses of action. The Collateral Agent shall act in accordance with
instructions received after such five (5) Business Day period except to the extent it has already, in good faith, taken or committed itself to take, action inconsistent with such
instructions.
(d) Instructions to Collateral Agent.
(i) The Collateral Agent shall be entitled to refrain from taking any action unless it has such instruction (in the form of Proper Instructions) from the
Borrower (or the Servicer on the Borrower’s behalf) the Required Lenders or the Administrative Agent, as applicable, as it reasonably deems necessary. In the absence
of gross negligence, fraud or willful misconduct by the Collateral Agent, the Collateral Agent shall have no liability for any action (or forbearance from action) taken
pursuant to the terms of this Agreement or any other Facility Document or pursuant to any Proper Instruction of the Borrower, the Servicer, the Required Lenders or the
Administrative Agent, as applicable.
(ii) Whenever the Collateral Agent is entitled or required to receive or obtain any communications or information pursuant to or as contemplated by this
Agreement, it shall be entitled to receive the same in writing, in form, content and medium reasonably acceptable to it and otherwise in accordance with any applicable
term of this Agreement; and whenever any report or other information is required to be produced or distributed by the Collateral Agent it shall be in form, content and
medium reasonably acceptable to it and the Borrower, and otherwise in accordance with any applicable term of this Agreement.
(iii) In case any reasonable question arises as to its duties hereunder, the Collateral Agent may, so long as no Event of Default has occurred and is
continuing, request written instructions from the Servicer and may, after the occurrence and during the continuance of an Event of Default, request written instructions
from the Administrative Agent, and shall be entitled at all times to refrain from taking any action unless it has received written instructions from the Servicer or the
Administrative Agent, as applicable. The Collateral Agent shall, in the absence of gross negligence, fraud or willful misconduct by the Collateral Agent, have no
liability, risk or cost for any action taken pursuant to and in compliance with the written instruction of the Administrative Agent or the Servicer.
-141-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(e) General Standards of Care for the Collateral Agent. Notwithstanding any terms herein contained to the contrary, the acceptance by the Collateral Agent
of its appointment hereunder is expressly subject to the following terms, which shall govern and apply to each of the terms and provisions of this Agreement (whether or not so
stated therein):
(i) The Collateral Agent shall not be deemed to have notice of any fact, claim or demand with respect hereto unless actually known by a Responsible
Officer of the Collateral Agent or unless (and then only to the extent) received in writing by the Collateral Agent and specifically referencing this Agreement. The
Collateral Agent shall not be charged with knowledge of any notices, documents, instruments or reports delivered or prepared by the Collateral Administrator. The
Collateral Agent is not responsible for or chargeable with knowledge of any terms or conditions contained in any other agreement to which it is not a party referred to
herein. It is hereby acknowledged that the Collateral Agent shall have no responsibility for filing or recording any financing or continuation statement in any public
office at any time or to otherwise perfect or maintain the perfection of any security interest or lien granted by any Person under any Facility Document or Related
Document.
(ii) No provision of this Agreement shall require the Collateral Agent to expend or risk its own funds, or to take any action (or forbear from action)
hereunder which might in its judgment involve any expense or any financial or other liability unless it shall be furnished with acceptable indemnification. Nothing herein
shall obligate the Collateral Agent to commence, prosecute or defend legal proceedings in any instance, whether on behalf of the Borrower or on its own behalf or
otherwise, with respect to any matter arising hereunder, or relating to this Agreement or the services contemplated hereby.
(iii) The permissive right of the Collateral Agent to take any action hereunder shall not be construed as a duty.
(iv) The Collateral Agent may act or exercise its duties or powers hereunder through agents or attorneys‑in‑fact, and the Collateral Agent shall not be
liable or responsible for the actions, omissions, negligence or misconduct of any such agent or attorney‑in‑fact selected by it with reasonable care.
(v) The Collateral Agent shall have no obligation to determine the Interest Rate or whether an asset is an Eligible Collateral Loan or otherwise satisfies
any eligibility requirements hereunder. None of the Collateral Agent, the Custodian or the Collateral Administrator shall be under any obligation to (i) monitor,
determine or verify the unavailability or cessation of the applicable Benchmark or Benchmark Replacement, the Prime Rate, Federal Funds Rate or other Base Rate, or
whether or when there has occurred, or to give notice to any other transaction party of the occurrence of, any Benchmark Transition Event or Benchmark Replacement
Date, (ii) select, determine or designate any Benchmark Replacement, or other successor or replacement benchmark index, or determine whether any conditions to the
designation of such a rate have been satisfied, or (iii) determine whether or what Conforming Changes are necessary or advisable, if any, in connection with any of the
foregoing. None of the Collateral Agent, the Custodian or the Collateral Administrator shall be liable for any inability, failure or delay on its part to
-142-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
perform any of its duties set forth in this Agreement or other Facility Document to the extent such inability, failure or delay is a result of the unavailability of any
Benchmark (or other applicable rate) and absence of a designated Benchmark Replacement, including as a result of any inability, delay, error or inaccuracy on the part of
any other transaction party in providing any direction, instruction, notice or information required or contemplated by the terms of this Agreement or other Facility
Document and reasonably required for the performance of such duties.
(vi) If at any time the Collateral Agent is served with any judicial or administrative order, judgment, decree, writ or other form of judicial or
administrative process (including orders of attachment or garnishment or other forms of levies or injunctions or stays relating to the transfer of any Collateral), the
Collateral Agent is authorized to comply therewith in any manner as it or its legal counsel of its own choosing deems appropriate, and if the Collateral Agent complies
with any such judicial or administrative order, judgment, decree, writ or other form of judicial or administrative process, the Collateral Agent shall not be liable to any of
the parties hereto or to any other person even though such order, judgment, decree, writ or process may be subsequently modified or vacated or otherwise determined to
have been without legal force or effect.
(vii) The Collateral Agent shall have no responsibility or liability for any loss which may result from any investment or sale of investment made
pursuant to this Agreement. The Collateral Agent is hereby authorized, in making or disposing of any investment permitted by this Agreement, to deal with itself (in its
individual capacity) or with any one or more of its affiliates, whether it or any such affiliate is acting as agent of the Collateral Agent or for any third person or dealing as
principal for its own account. The Collateral Agent shall not be deemed to be providing any investment supervision, recommendations, or advice.
(viii) The Collateral Agent may conclusively rely on and shall be fully protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent, order, note or other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties.
(ix) If the Collateral Agent has been requested or directed by the Administrative Agent or the Required Lenders to take any action pursuant to any
provision of this Agreement or any other Facility Document, the Collateral Agent shall not be under any obligation to exercise any of the rights or powers vested in it by
this Agreement or such Facility Document in the manner so requested unless it shall have been provided indemnity reasonably satisfactory to it against the costs,
expenses and liabilities which may be incurred by it in compliance with or in performing such request or direction. No provision of this Agreement or any other Facility
Document shall otherwise be construed to require the Collateral Agent to expend or risk its own funds or to take any action that could in its judgment cause it to incur
any cost, expenses or liability, unless it is provided indemnity acceptable to it against any such expenditure, risk, costs, expense or liability. For the avoidance of doubt,
the Collateral Agent shall not have any duty or obligation to take any action to exercise or enforce any power, right or remedy related to foreclosure on the
-143-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Collateral available to it under this Agreement or any other Facility Document or any Related Document unless and until directed by the Required Lenders (or the
Administrative Agent on their behalf).
(x) Concurrently herewith, the Administrative Agent directs the Collateral Agent and the Collateral Agent is authorized to enter into the Account
Control Agreement. For the avoidance of doubt, all of the Collateral Agent’s rights, protections and immunities provided herein shall apply to the Collateral Agent for
any actions taken or omitted to be taken under the Securities Account Control Agreement in such capacity.
Section 11.02 Delegation of Duties
(a) Each Agent may execute any of its duties under this Agreement and each other Facility Document by or through Affiliates, agents or attorneys‑in‑fact
and shall be entitled to advice of counsel concerning all matters pertaining to such duties; provided that, so long as no Event of Default has occurred and is continuing, the
Administrative Agent may not execute any of its duties under this Agreement or any other Facility Document by or through a Disqualified Institution. No Agent shall be responsible
for the negligence or misconduct of any non-Affiliated agents or attorneys‑in‑fact selected by it with reasonable care.
(b) Without limiting the generality of Section 11.02(a), the Administrative Agent may at any time or from time to time designate one or more of its Affiliates
to execute any of its duties under this Agreement and each other Facility Document.
Section 11.03 Agents’ Reliance, Etc.
(a) Neither Agent nor any of their respective directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them
under or in connection with this Agreement or any of the other Facility Documents, except for its or their own gross negligence, fraud or willful misconduct. Without limiting the
generality of the foregoing, each Agent: (i) may consult with legal counsel (including counsel for the Borrower or the Servicer or any of their Affiliates) and independent public
accountants and other experts selected by it and the advice or opinion of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered
or omitted to be taken by such Agent in good faith in accordance with such opinion and shall not be liable for any action taken, suffered or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (ii) makes no warranty or representation to any Secured Party or any other Person and shall not be responsible to
any Secured Party or any Person for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement or the other Facility
Documents; (iii) shall not have any duty to monitor, ascertain, or investigate as to the performance or observance of any of the terms, covenants or conditions of this Agreement, the
other Facility Documents, any Related Document or any notice, consent, certificate, instruction or waiver, report, statement, opinion, direction or other instrument or writing on the
part of the Borrower, the Servicer or any other Person or to inspect the property (including the books and records) of the Borrower or the Servicer; (iv) shall not be responsible to any
Secured Party or any other Person for the due execution, legality, validity, enforceability, perfection, genuineness, sufficiency or value of any Collateral (or the validity, perfection,
priority or enforceability of the Liens on the
-144-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Collateral), this Agreement, the other Facility Documents, any Related Document or any other instrument or document furnished pursuant hereto or thereto; (v) shall incur no
liability under or in respect of this Agreement or any other Facility Document by relying on, acting upon (or by refraining from action in reliance on) any notice, consent, certificate
(including, for the avoidance of doubt, the Borrowing Base Calculation Statement), instruction or waiver, report, statement, opinion, direction, electronic communication or other
instrument or writing (which may be delivered by email, if acceptable to it) reasonably believed by it to be genuine and believed by it to be signed or sent by the proper party or
parties; (vi) shall not be responsible to any Person for any recitals, statements, information, representations or warranties regarding the Borrower or the Collateral or in any
document, certificate or other writing delivered in connection herewith or therewith or for the execution, effectiveness, genuineness, validity, enforceability, perfection,
collectability, priority or sufficiency of thereof or any such other document or the financial condition of any Person or be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions related to any Person or the existence or possible existence of any Default or Event of Default; and (vii) shall
not have any obligation whatsoever to any Person to assure that any collateral exists or is owned by any Person or is cared for, protected or insured or that any liens have been
properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise or to continue exercising at all or in any manner or
under any duty of care, disclosure or fidelity any of the rights, authorities and powers granted or available with respect thereto. No Agent shall have any liability to the Borrower, any
Lender or any other Person for the Borrower’s, the Servicer’s, any Lender’s, or any other Person’s, as the case may be, performance of, or failure to perform, any of their respective
obligations and duties under this Agreement or any other Facility Document.
(b) No Agent shall be liable for the actions or omissions of any other Agent (including concerning the application of funds), or under any duty to monitor or
investigate compliance on the part of any other Agent with the terms or requirements of this Agreement, any Facility Document or any Related Document, or their duties hereunder
or thereunder. Each Agent shall be entitled to assume the due authority of any signatory and genuineness of any signature appearing on any instrument or document it may receive
(including each Notice of Borrowing received hereunder). No Agent shall be liable for any action taken in good faith and reasonably believed by it to be within the powers conferred
upon it, or taken by it pursuant to any direction or instruction by which it is governed, or omitted to be taken by it by reason of the lack of direction or instruction required hereby for
such action (including for refusing to exercise discretion or for withholding its consent in the absence of its receipt of, or resulting from a failure, delay or refusal on the part of the
Required Lenders (or with respect to the Collateral Agent, the Administrative Agent) to provide, written instruction to exercise such discretion or grant such consent from the
Required Lenders (or with respect to the Collateral Agent, the Administrative Agent), as applicable). No Agent shall be liable for any error of judgment made in good faith unless it
is proven by a non-appealable court of competent jurisdiction that such Agent was grossly negligent in ascertaining the relevant facts or engaged in fraud or willful misconduct.
Nothing herein or in any Facility Document or Related Document shall obligate any Agent to advance, expend or risk its own funds, or to take any action which in its reasonable
judgment may cause it to incur any expense or financial or other liability for which it is not adequately indemnified. No Agent shall be liable for any indirect, special, punitive or
consequential damages (including lost profits) whatsoever, even if it has been informed of the likelihood thereof and regardless of the form of action. No Agent shall be charged
with knowledge or notice of any matter (including any Default,
-145-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Event of Default or Servicer Termination Event) unless actually known to a Responsible Officer of such Agent, or unless and to the extent written notice of such matter is received
by such Agent at its address in accordance with Section 12.02. Any permissive grant of power to an Agent hereunder shall not be construed to be a duty to act. Neither Agent shall be
bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, entitlement order,
approval or other paper, electronic communication or document. Neither Agent shall be liable for any error of judgment, or for any act done or step taken or omitted by it, in good
faith, or for any mistakes of fact or law, or for anything that it may do or refrain from doing in connection herewith, except in the case of its willful misconduct or grossly negligent
performance or omission of its duties.
(c) No Agent shall be responsible or liable for delays or failures in performance resulting from acts beyond its control; provided that such Agent shall use
commercially reasonable efforts which are consistent with accepted practices in the banking industry to maintain performance, and, if necessary, resume performance as soon as
practicable under the circumstances. Such acts shall include acts of God, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural
catastrophes, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services, any provision of any present or future law or
regulation or act of any governmental authority, labor dispute, disease, epidemic or pandemic, quarantine, national emergency, malware or ransomware attack, communications
system failure, unavailability of the Federal Reserve Bank wire or telex system or other applicable wire or funds transfer system, or unavailability of any securities clearing system.
(d) The delivery of reports and other documents and information to the Collateral Agent hereunder or under any other Facility Document is for informational
purposes only and the Collateral Agent’s receipt of such documents and information shall not constitute constructive notice of any information contained therein or determinable
from information contained therein. The Collateral Agent is hereby authorized and directed to execute and deliver the other Facility Documents to which it is a party. Whether or not
expressly stated in such Facility Documents, in performing (or refraining from acting) thereunder, the Collateral Agent shall have all of the rights, benefits, protections and
indemnities which are afforded to it in this Agreement.
(e) Each Lender acknowledges that, except as expressly set forth in this Agreement, neither Agent has made any representation or warranty to it, and that no
act by either Agent hereafter taken, including any consent and acceptance of any assignment or review of the affairs of the Borrower, shall be deemed to constitute any
representation or warranty by such Agent to any Secured Party as to any matter. Each Lender represents to each Agent that it has, independently and without reliance upon such
Agent and based on such documents and information as it has deemed appropriate, made its own appraisal of, and investigation into, the business, prospects, operations, property,
financial and other condition and creditworthiness of the Borrower and the Servicer, and made its own decision to enter into this Agreement and the other Facility Documents to
which it is a party. Each Lender also represents that it will, independently and without reliance upon either Agent or any other Secured Party and based on such documents and
information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the Facility Documents, and to
make such investigations as it deems necessary to inform itself as to the business, prospects, operations,
-146-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
property, financial and other condition and creditworthiness of the Borrower and the Servicer. Neither Agent shall have any duty or responsibility to provide any Secured Party with
any credit or other information concerning the business, prospects, operations, property, financial or other condition or creditworthiness of the Borrower or Servicer which may
come into the possession of such Agent.
Section 11.04 Indemnification
Each of the Lenders (on a pro rata basis based on its percentage of the Commitments) agrees to indemnify and hold the Administrative Agent harmless (to
the extent not reimbursed by or on behalf of the Borrower pursuant to Section 12.04 or otherwise) from and against any and all Liabilities which may be imposed on, incurred by, or
asserted against the Administrative Agent in any way relating to or arising out of this Agreement or any other Facility Document or any Related Document or any action taken or
omitted by the Administrative Agent under this Agreement or any other Facility Document or any Related Document; provided that no Lender shall be liable to the Administrative
Agent for any portion of such Liabilities resulting from the Administrative Agent’s gross negligence or willful misconduct; provided, further, that each Lender shall be fully liable to
the Administrative Agent for gross negligence and willful misconduct. The rights of the Administrative Agent and obligations of the Lenders under or pursuant to this Section 11.04
shall survive the termination of this Agreement, and the earlier removal or resignation of the Administrative Agent hereunder.
Section 11.05 Successor Agents
(a) Subject to the terms of this Section 11.05, each Agent may, upon thirty (30) days’ notice to the Lenders and the Borrower, resign as Administrative
Agent or the Collateral Agent, as applicable. If an Agent shall resign or be removed, then the Required Lenders shall appoint a successor agent. If for any reason a successor agent is
not so appointed and does not accept such appointment within thirty (30) days of notice of resignation or removal, such Agent may appoint, or petition a court of competent
jurisdiction at the Borrower’s expense to appoint, a successor agent; provided that no such successor agent may be a Defaulting Lender without the prior written consent of the
Borrower.
(b) Any successor Administrative Agent and any successor Collateral Agent shall be a U.S. Person (within the meaning of Section 7701(a)(30) of the Code)
and shall be a bank with an office in the United States of America or an Affiliate of such bank and a “financial institution” within the meaning of Treasury Regulations Section
1.1441-1 (as in effect on the date hereof). The appointment of any successor Agent shall be subject to the prior written consent of the Borrower (which consent shall not be
unreasonably withheld or delayed); provided that the consent of the Borrower to any such appointment shall not be required if an Event of Default shall have occurred and is
continuing. Any resignation or removal of an Agent shall be effective upon the appointment of a successor agent pursuant to this Section 11.05. After the effectiveness of any
retiring or removed Agent’s resignation or removal hereunder as Agent, the retiring or removed Agent shall be discharged from its duties and obligations hereunder and under the
other Facility Documents and the provisions of this Article XI shall continue in effect for its benefit with respect to any actions taken or omitted to be taken by it while it was Agent
under this Agreement and under the other Facility Documents.
-147-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(c) Subject to the terms of this Section 11.05(c) the Administrative Agent may, upon thirty (30) days’ notice to the Servicer, the Equityholder, the Collateral
Agent, the Lenders and the Borrower, remove and discharge the Collateral Agent from the performance of its obligations under this Agreement and under the other Facility
Documents without cause at any time. If the Collateral Agent shall be removed pursuant to this Section 11.05(c), then the Administrative Agent during such thirty (30) day period
shall appoint a successor Collateral Agent. The appointment of any successor Collateral Agent pursuant to this Section 11.05(c) shall be subject to the prior written consent of the
Borrower (provided that no Event of Default has occurred and is continuing) and the Required Lenders. If the Collateral Agent is removed pursuant to this Section 11.05(c), the
Collateral Agent shall be removed in all other capacities in which it serves under this Agreement and under any of the other Facility Documents (including in its capacity as
Custodian), but not in its capacities as Administrative Agent or Lender, if applicable. Any removal of the Collateral Agent pursuant to this Section 11.05(c) shall be effective upon
the appointment of a successor Collateral Agent pursuant to this Section 11.05(c) and the acceptance of such appointment by such successor. After the effectiveness of any removal
of the Collateral Agent pursuant to this Section 11.05(c), the Collateral Agent shall be discharged from its duties and obligations hereunder and under the other Facility Documents
(but not in its capacities as Administrative Agent or Lender, if applicable) and the provisions of this Article XI and Section 11.05(c) shall continue in effect for its benefit with
respect to any actions taken or omitted to be taken by it while it was the Collateral Agent under this Agreement and under the other Facility Documents. In the event a successor
Collateral Agent shall not be appointed within such thirty (30) day period, the Collateral Agent may petition a court of competent jurisdiction at the Borrower’s expense for the
appointment of a successor Collateral Agent.
Section 11.06 Merger, Conversion, Consolidation or Succession to Business of Agents
Any organization or entity into which any Agent may be merged or converted or with which it may be consolidated, or any organization or entity resulting
from any merger, conversion or consolidation to which such Agent shall be a party, or any organization or entity succeeding to all or substantially all of the corporate trust business
of such Agent, shall be the successor of such Agent hereunder and any other Facility Document to which it is a party, without the execution or filing of any document or any further
act on the part of any of the parties hereto.
Section 11.07 Erroneous Payments
(a) (i) If the Administrative Agent notifies a Lender, Secured Party or other recipient that the Administrative Agent has determined in its sole discretion that any funds
received by such recipient from the Administrative Agent or any of its Affiliates were erroneously transmitted to, or otherwise erroneously or mistakenly received by, such recipient
(whether or not known to such recipient) (any such funds whether as a payment, prepayment or repayment of principal, interest, fees or other amounts; a distribution or otherwise;
individually and collectively, a “Payment” and any such recipient, an “Unintended Recipient”) and demands the return of such Payment (or a portion thereof), such Unintended
Recipient shall promptly, but in no event later than one Business Day thereafter, return to the Administrative Agent the amount of any such Payment (or portion thereof) as to which
such a demand was made, together with interest thereon in respect of each day from and including the date such Payment (or portion thereof) was received by such
-148-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Unintended Recipient to the date such amount is repaid to the Administrative Agent at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in
accordance with banking industry rules on interbank compensation from time to time in effect.
(ii) To the extent permitted by applicable law, each party hereto and each Secured Party shall not assert any right or claim to the Payment, and hereby
waives, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return
of any Payments received, including without limitation waiver of any defense based on “discharge for value” or any similar doctrine.
(iii) A notice of the Administrative Agent to any Unintended Recipient under this clause (a) shall be conclusive, absent manifest error.
(b) If an Unintended Recipient receives a Payment from the Administrative Agent (or any of its Affiliates):
(i) that is in a different amount than, or on a different date from, that specified in a notice of payment or calculation statement sent by the Administrative
Agent (or any of its Affiliates) with respect to such Payment (a “Payment Notice”),
(ii) that was not preceded or accompanied by a Payment Notice, or
(iii) that such Unintended Recipient otherwise becomes aware was transmitted, or received, in error or mistake (in whole or in part) or such Payment is
otherwise inconsistent with such recipient’s or market expectations,
in each case, an error shall be presumed to have been made with respect to such Payment absent written confirmation from the Administrative Agent to the
contrary. Upon demand from the Administrative Agent, such Unintended Recipient shall promptly, but in no event later than one Business Day thereafter, return to the
Administrative Agent the amount of any such Payment (or portion thereof) as to which such a demand was made.
ARTICLE XII
MISCELLANEOUS
Section 12.01 No Waiver; Modifications in Writing
(a) No failure or delay on the part of any Secured Party exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. Any waiver of any
provision of this Agreement or any other Facility Document and any consent to any departure by any party to this Agreement or any other Facility Document from the terms of any
provision of this Agreement or such other Facility Document, shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on
the Borrower, the Servicer or the Equityholder in any case shall
-149-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
entitle the Borrower, the Servicer or the Equityholder to any other or further notice or demand in similar or other circumstances.
(b) No amendment, modification, supplement or waiver of this Agreement shall be effective unless signed by the Borrower, the Servicer, the Equityholder,
the Administrative Agent and the Required Lenders; provided that:
(i) except for an amendment pursuant to clause (c) below, any Fundamental Amendment shall require the written consent of each Lender directly
affected thereby; and
(ii) no such amendment, modification, supplement or waiver shall amend, modify or otherwise affect the rights or duties of any Agent, the Custodian or
the Collateral Administrator hereunder without the prior written consent of such Agent, the Custodian or the Collateral Administrator, as the case may be.
(c) Benchmark Replacement.
(i) Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Facility Document, upon the occurrence of a Benchmark
Transition Event with respect to any then-current Benchmark, the Administrative Agent and the Borrower may amend this Agreement to replace such Benchmark with a
Benchmark Replacement. Any such amendment with respect to a Benchmark Transition Event will become effective at 5:00 p.m. (New York City time) on the fifth
(5th) Business Day after the Administrative Agent has provided notice of such proposed amendment to the Servicer and each Lender so long as the Administrative Agent
has not received, by such time, written notice of objection to such amendment from Lenders comprising the Required Lenders. No replacement of a Benchmark with a
Benchmark Replacement pursuant to this Section 12.01(c)(i) will occur prior to the applicable Benchmark Transition Start Date.
(ii) Conforming Changes. In connection with the implementation and administration of any Benchmark Replacement, the Administrative Agent, in
consultation with the Borrower, will have the right to make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other
Facility Document, any amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this
Agreement.
(iii) Notices; Standards for Decisions and Determinations. The Administrative Agent will promptly notify the Borrower and the Lenders of (A) the
implementation of any Benchmark Replacement and (B) the effectiveness of any Conforming Changes. For the avoidance of doubt, any notice required to be delivered
by the Administrative Agent as set forth in this Section 12.01(c) may be provided, at the option of the Administrative Agent (in its sole discretion), in one or more
notices and may be delivered together with, or as part of any amendment which implements any Benchmark Replacement or Conforming Changes. Any determination,
decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 12.01(c), including any
determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain
-150-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
from taking any action, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party
hereto, except, in each case, as expressly required pursuant to this Section 12.01(c).
(iv) Unavailability of Tenor of Benchmark. Notwithstanding anything to the contrary herein or in any other Facility Document, at any time (including in
connection with the implementation of a Benchmark Replacement), (i) if a then-current Benchmark is a term rate (including the Term SOFR Reference Rate) and either
(A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative
Agent, in consultation with the Borrower, in its reasonable discretion or (B) the administrator of such Benchmark or the regulatory supervisor for the administrator of
such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is not or will not be representative or in
compliance with or aligned with the International Organization of Securities Commissions (IOSCO) Principles for Financial Benchmarks, then the Administrative
Agent, in consultation with the Borrower, may modify the definition of “Interest Accrual Period” (or any similar or analogous definition) for any Benchmark settings at
or after such time to remove such unavailable, non-representative, non-compliant or non-aligned tenor and (ii) if a tenor that was removed pursuant to clause (i) above
either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to
an announcement that it is not or will not be representative or in compliance with or aligned with the International Organization of Securities Commissions (IOSCO)
Principles for Financial Benchmarks for a Benchmark (including a Benchmark Replacement), then the Administrative Agent, in consultation with the Borrower, may
modify the definition of “Interest Accrual Period” (or any similar or analogous definition) for all Benchmark settings at or after such time to reinstate such previously
removed tenor.
(v) Benchmark Unavailability Period. Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period with respect to
any then-current Benchmark, (A) the Borrower may, notwithstanding anything herein to the contrary, revoke any pending request for an Advance in the applicable
currency during any Benchmark Unavailability Period and (B) all Advances in such currency shall bear interest at the Base Rate. During a Benchmark Unavailability
Period for any then-current Benchmark or at any time that a tenor for any then-current Benchmark is not an Available Tenor, the component of the Base Rate based upon
such Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of the Base Rate.
(vi) Disclaimer. The Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to (A) the
administration, submission or any other matter related to Term SOFR or other rates in the definition of “Applicable Reference Rate” or with respect to any alternative or
successor rate thereto, or replacement rate thereof (including, without limitation any Benchmark Replacement implemented hereunder), (B) the composition or
characteristics of any such Benchmark Replacement, including whether it is similar to, or produces the same value or economic equivalence to Term SOFR or any other
Benchmark or have the same volume or liquidity as did Term SOFR or any other Benchmark, (C) any actions or use of its discretion or other
-151-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
decisions or determinations made with respect to any matters covered by this Section 12.01(c) including, without limitation, whether or not a Benchmark Transition
Event has occurred, the removal or lack thereof of unavailable or non-representative tenors, the implementation or lack thereof of any Conforming Changes, the delivery
or non-delivery of any notices required by clause (iv) above or otherwise in accordance herewith, and (D) the effect of any of the foregoing provisions of this Section
12.01(c). The Administrative Agent shall not be under any obligation (i) to monitor, determine or verify the unavailability or cessation of any interest rate under this
Agreement, or whether or when there has occurred, or to give notice to any other transaction party of the occurrence of, any Disruption Event, Benchmark Transition
Event, Benchmark Unavailability Period or a Benchmark Replacement Date, (ii) to select, determine or designate any Base Rate, or other successor or replacement
benchmark index, or whether any conditions to the designation of such a rate have been satisfied, (iii) to select, determine or designate any adjustment or other modifier
to any replacement or successor index, or (iv) to determine whether or what conforming changes or amendments (including any Conforming Changes) are necessary or
advisable, if any, in connection with any of the foregoing. The Administrative Agent shall not be liable for any inability, failure or delay on its part to perform any of its
duties set forth in the Facility Documents as a result of the unavailability of any interest rate hereunder and absence of a designated Base Rate or Benchmark
Replacement, including as a result of any inability, delay, error or inaccuracy on the part of any other transaction party, in providing any direction, instruction, notice or
information required or contemplated by the terms of the Facility Documents and reasonably required for the performance of such duties.
Section 12.02 Notices, Etc.
(a) Except where telephonic instructions are authorized herein to be given, all notices, demands, instructions and other communications required or permitted
to be given to or made upon any party hereto shall be in writing, unless otherwise expressly specified herein, and shall be (i) personally delivered or sent by registered, certified or
express mail or postage prepaid, or by prepaid courier service, or by electronic mail (if the recipient has provided an email address and provides a return receipt to the sender of any
such notice, demand, instruction or other communication) to the address or email address, as applicable, set forth with respect to such party on Schedule 5 (or, if not provided on
Schedule 5 with respect to any party, such address or email address provided by such party in writing to the Administrative Agent), or (ii) in the case of notices to any Lender, posted
to an electronic system approved by or set up by or at the direction of the Administrative Agent, and shall in each case be deemed to be given for purposes of this Agreement on the
day that such writing is received by the intended recipient thereof or posted in accordance with the provisions of this Section 12.02. Unless otherwise specified in a notice sent or
delivered in accordance with the foregoing provisions of this Section 12.02, notices, demands, instructions and other communications in writing shall be given to or made upon the
respective parties hereto at their respective addresses (or to their respective email addresses) indicated in Schedule 5 (or, if not provided on Schedule 5 with respect to any party,
such address or email address provided in writing by such party to the Administrative Agent), and, in the case of telephonic instructions or notices, by calling the telephone number
or numbers indicated for such party in Schedule 5 (or, if not provided on Schedule 5 with respect to any party, such telephone number or numbers provided in writing by such party
to the Administrative Agent). Each party shall notify the Administrative
-152-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Agent in writing of any changes in the address, telephone number or email address to which notices to such Person should be directed, and of such other administrative information
as the Administrative Agent shall reasonably request. Notwithstanding anything herein to the contrary, when any notice is sent or delivered to the Borrower in accordance with this
Agreement, reasonable efforts shall be made to also send a copy of such notice to the Servicer.
(b) Each of the Collateral Agent, the Custodian and the Collateral Administrator hereby agrees to accept and act upon instructions or directions pursuant to
this Agreement sent by unsecured e‑mail (or .pdf files of executed documents) or other similar unsecured electronic methods; provided that any person providing such instructions
or directions shall provide to any of the Collateral Agent, the Custodian or the Collateral Administrator, as applicable, an incumbency certificate listing such designated persons,
which such incumbency certificate shall be amended and replaced whenever a person is to be added or deleted from the listing. If any party hereto elects to give any of the Collateral
Agent, the Custodian or the Collateral Administrator, as applicable or e‑mail (or .pdf files of executed documents), the Collateral Agent’s, the Custodian’s or the Collateral
Administrator’s understanding of such instructions actually received by any of the Collateral Agent, the Custodian or the Collateral Administrator, as applicable, shall be deemed
controlling in the event that such instructions are ambiguous; provided that prior to acting in response to any such instructions that it deems to be ambiguous, the Collateral Agent,
Custodian or Collateral Administrator shall use commercially reasonable efforts to contact the instructing party and obtain from such instructing party any necessary clarifications
with respect to such instructions. Each of the other parties hereto understands and agrees that none of the Collateral Agent, the Custodian or the Collateral Administrator can
determine the identity of the actual sender of such instructions and that the Collateral Agent, the Custodian or the Collateral Administrator shall conclusively presume that directions
that purport to have been sent by an officer listed on the incumbency certificate provided to it have been sent by such officer. The other parties hereto shall be responsible for
ensuring that only authorized officers transmit such instructions to the Collateral Agent, the Custodian or the Collateral Administrator and that each such party is solely responsible
to safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon receipt by it. None of the Collateral Agent, the
Custodian or the Collateral Administrator shall be liable for any losses, costs or expenses arising directly or indirectly from the Collateral Agent’s, the Custodian’s or the Collateral
Administrator’s, as applicable, reasonable, good faith reliance upon and compliance with such instructions, notwithstanding that such directions conflict with or are inconsistent with
a subsequent written instruction, subject to the duty of care applicable to such Person acting in such capacity. Each of the other parties hereto agrees (i) to assume all risks arising out
of its respective use of such electronic methods to submit instructions and directions to any of the Collateral Agent, the Custodian or the Collateral Administrator, as applicable,
including without limitation the risk of any of the Collateral Agent, the Custodian or the Collateral Administrator, as applicable, acting on unauthorized instructions, and the risk of
interception and misuse by third parties, (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting instructions to the Collateral
Agent, the Custodian or the Collateral Administrator and that there may be more secure methods of transmitting instructions than the method(s) selected by it, (iii) that the security
procedures (if any) to be followed in connection with its transmission of instructions provide to it a commercially reasonable degree of protection in light of its particular needs and
circumstances and (iv) to notify the Collateral Agent, the Custodian or the Collateral
-153-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Administrator immediately upon learning of any compromise or unauthorized use of the security procedures.
(c) By executing this Agreement, the parties hereto hereby acknowledge and agree, and direct the Collateral Agent, the Custodian and the Collateral
Administrator to acknowledge and agree and the Collateral Agent, the Custodian and the Collateral Administrator do hereby acknowledge and agree, that execution of this
Agreement, any instruction, direction, notice, form or other document executed by any party to this Agreement or the Facility Documents in connection with this Agreement or such
other Facility Documents, by electronic signatures (whether by Orbit, Adobe Fill & Sign, Adobe Sign, DocuSign, or any other similar platform identified by such party and
reasonably available at no undue burden or expense to the Collateral Agent, the Custodian or the Collateral Administrator) shall be permitted hereunder notwithstanding anything to
the contrary herein and such electronic signatures shall be legally binding as if such electronic signatures were handwritten signatures. Any electronically signed document delivered
via email from a person purporting to be a Responsible Officer shall be considered signed or executed by such Responsible Officer on such party’s behalf. To the extent received
from a Responsible Officer, the parties hereto also hereby acknowledge and agree that the Collateral Agent, the Custodian and the Collateral Administrator shall have no duty to
inquire into or investigate the authenticity or authorization of any such electronic signature and shall be entitled to conclusively rely on any such electronic signature without any
liability with respect thereto.
Section 12.03 Taxes
(a) Any and all payments by, or on account of any obligation of the Borrower under any Facility Document shall be made without deduction or withholding
for any Taxes, except as required by Applicable Law. If any Applicable Law (as determined in the good faith discretion of the applicable withholding agent) requires the deduction
or withholding of any Tax from any such payment by the Borrower, the Collateral Agent or the Administrative Agent, then the Borrower, the Collateral Agent or the Administrative
Agent (as applicable) shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in
accordance with Applicable Law and, if such Tax is a Non‑Excluded Tax, then the sum payable by the Borrower shall be increased as necessary so that after such deduction or
withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section) the applicable Secured Party receives an amount
(such amount, an “Additional Amount”) equal to the sum it would have received had no such deduction or withholding been made. In no event shall the Collateral Agent be
responsible for the calculation or withholding of any taxes.
(b) In addition, the Borrower agrees to timely pay (or at the option of the Administrative Agent, timely reimburse it for the payment of) any present or future
stamp, court or documentary, intangible, recording or filing Taxes or any other or similar Taxes that arise from any payment made hereunder, under the Notes or under any other
Facility Document, or from the execution, delivery, performance, enforcement or registration of from the receipt or perfection of a security interest under, or otherwise with respect
to, this Agreement, the Notes or under any other Facility Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (collectively, the
“Other Taxes”).
-154-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(c) The Borrower agrees to indemnify, within ten (10) days after demand therefor, each Secured Party for (i) the full amount of Non‑Excluded Taxes
(including any Non‑Excluded Taxes imposed or asserted on or attributable to amounts payable under this Section 12.03) paid or payable by any Secured Party (or required to be
withheld or deducted from payments to a Secured Party) and (ii) any reasonable expenses arising therefrom or with respect thereto, in each case whether or not such Non‑Excluded
Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability will be promptly delivered to
the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender or other Secured Party and shall be
conclusive absent manifest error.
(d) As soon as practicable after the date of any payment of Taxes pursuant to this Section 12.03, the Borrower will furnish to each Agent the original or a
certified copy of a receipt issued by the relevant Governmental Authority evidencing payment thereof (or other evidence of payment as may be reasonably satisfactory to such
Agent).
(e) If any party determines, in its sole discretion exercised in good faith, that it has received a refund (for this purpose, including credits elected by such party
in lieu of a refund) of any Taxes as to which it has been indemnified pursuant to this Section 12.03 (including by the payment of Additional Amounts pursuant to this Section 12.03),
it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to
such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority
with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this
paragraph (e) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund
to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (e), in no event will the indemnified party be required to pay any amount to an
indemnifying party pursuant to this paragraph (e) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party
would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or
Additional Amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any
other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.
(f) Each Secured Party that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under this Agreement or any
Facility Document shall deliver to the Borrower and each Agent, at the time or times reasonably requested by the Borrower or such Agent, such properly completed and executed
documentation reasonably requested by the Borrower or such Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition,
each Secured Party, if reasonably requested by the Borrower or any Agent, shall deliver such other documentation reasonably requested by the Borrower or such Agent as will
enable the Borrower or such Agent to determine whether or not such Secured Party is subject to backup withholding or information reporting requirements. Notwithstanding
anything to the contrary in the preceding two sentences, the
-155-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
completion, execution and submission of such documentation (other than such documentation set forth in Sections 12.03(f)(i)(A), (B) and (D)) shall not be required if, in the Secured
Party’s reasonable judgment, such completion, execution or submission would subject such Secured Party to any material unreimbursed cost or expense or would materially
prejudice the legal or commercial position of such Secured Party.
(i) Without limiting the generality of the foregoing:
(A) any Secured Party that is a United States Person (as defined in Section 7701(a)(30) of the Code) shall deliver to the Borrower and the
Agents on or prior to the date on which such Secured Party becomes a party to this Agreement (and from time to time thereafter upon the reasonable request
of the Borrower or the Agents), executed copies of IRS Form W‑9 certifying that such Secured Party is exempt from U.S. federal backup withholding tax;
(B) any Lender that is not a “United States person” under Section 7701(a)(30) of the Code (a “Non‑U.S. Lender”) shall, to the extent it is
legally entitled to do so, deliver to the Borrower and the Agents (in such number of copies as shall be requested by the recipient) on or prior to the date on
which such Non‑U.S. Lender becomes a party to under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or an
Agent), whichever of the following is applicable:
(1) in the case of a Non-U.S. Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with
respect to payments of interest under any Facility Document, executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable,
establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with
respect to any other applicable payments under any Facility Document, IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, establishing
an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
(2) executed copies of IRS Form W‑8ECI;
(3) in the case of a Non-U.S. Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the
Code, (x) a certificate substantially in the form of Exhibit F-1 to the effect that such Non-U.S. Lender is not a “bank” within the meaning of
Section 881(C)(3)(A) of the Code, a “10 percent shareholder” of the Borrower (or to the extent the Borrower is disregarded for U.S. federal tax
purposes, its regarded owner) within the meaning of Section 881(c)(3)(B) of the Code or a “controlled foreign corporation” related to the
Borrower (or to the extent the Borrower is disregarded for U.S. federal tax purposes, its regarded owner) as described in Section 881(c)(3)(C) of
the Code (a “U.S. Tax
-156-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable; or
(4) to the extent a Non-U.S. Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS
Form W-8ECI, IRS Form W-8BEN or IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit F-2 or
Exhibit F-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Non-U.S.
Lender is a partnership and one or more direct or indirect partners of such Non-U.S. Lender are claiming the portfolio interest exemption, such
Non-U.S. Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit F-4 on behalf of each such direct and
indirect partner;
(C) any Non‑U.S. Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Agents (in such number of copies as
shall be requested by the recipient) on or prior to the date on which such Non‑U.S. Lender becomes a party to this Agreement (and from time to time
thereafter upon the reasonable request of the Borrower or Agents), executed copies of any other form prescribed by Applicable Law as a basis for claiming
exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by
Applicable Law to permit the Borrower or the Agents to determine the withholding or deduction required to be made; and
(D) if a payment made to a Secured Party under any Facility Document would be subject to U.S. federal withholding Tax imposed by FATCA
if such Secured Party were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b)
of the Code as applicable), such Secured Party shall deliver to the Borrower and the Agents at the time or times prescribed by law and at such time or times
reasonably requested by the Borrower or the Agents such documentation prescribed by Applicable Law (including as prescribed by Section 1471(b)(3)(C)(i)
of the Code) and such additional documentation reasonably requested by the Borrower or the Agents as may be necessary for the Borrower and the Agents to
comply with their obligations under FATCA and to determine that such Secured Party has complied with such Secured Party’s obligations under FATCA or
to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made
to FATCA after the date of this Agreement.
Each Secured Party agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect it shall update
such form or certification or promptly notify the Borrower and the Agents in writing of its legal inability to do so.
(g) Nothing in this Section 12.03 shall be construed to require any Secured Party to make available its Tax returns (or any other information relating to its
Taxes that it deems confidential) to the Borrower or any other Person.
-157-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(h) Each Lender shall severally indemnify each Agent, within ten (10) days after demand therefor, for (i) any Non‑Excluded Taxes attributable to such
Lender (but only to the extent that the Borrower has not already indemnified such Agent for such Non‑Excluded Taxes and without limiting the obligation of the Borrower to do so),
(ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 12.06(c) relating to the maintenance of a Participant Register and (iii) any Excluded
Taxes attributable to such Lender, in each case, that are payable or paid by such Agent in connection with any Facility Document, and any reasonable expenses arising therefrom or
with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment
or liability delivered to any Lender by the applicable Agent shall be conclusive absent manifest error. Each Lender hereby authorizes each Agent to set off and apply any and all
amounts at any time owing to such Lender under any Facility Document or otherwise payable by such Agent to the Lender from any other source against any amount due to such
Agent under this clause (h).
(i) Each party’s obligations under this Section 12.03 shall survive the resignation or replacement of an Agent or any assignment of rights by, or the
replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Facility Documents.
(j) For purposes of this Section, the term “Applicable Law” includes FATCA.
Section 12.04 Costs and Expenses; Indemnification
(a) The Borrower agrees to promptly pay on written demand all reasonable and documented out‑of‑pocket costs and expenses of the Agents, the Custodian,
the Securities Intermediary and the Collateral Administrator in connection with the preparation, review, negotiation, reproduction, execution and delivery of this Agreement and the
other Facility Documents, including (but limited, in the case of legal fees and expenses, to) the reasonable and documented fees and disbursements of one outside counsel for the
Administrative Agent and the Collateral Agent plus, if necessary, one additional local counsel, one outside counsel for the Custodian, the Securities Intermediary and the Collateral
Administrator (unless one counsel shall not be able to represent such parties due to an actual or perceived conflict of interest, in which case one additional counsel for each party
affected by such conflict), costs and expenses of creating, perfecting, releasing or enforcing the Collateral Agent’s security interests in the Collateral, including filing and recording
fees, expenses and taxes, stamp or documentary taxes, search fees, UCC filing fees, and the equivalent thereof in any foreign jurisdiction, and all other related fees and expenses in
connection therewith, and in connection with the administration and any modification or amendment of this Agreement, the Notes or any other Facility Document and advising the
Agents, the Custodian, the Securities Intermediary and the Collateral Administrator as to their respective rights, remedies and responsibilities. The Borrower agrees to promptly pay
on written demand all reasonable and documented out-of-pocket costs and expenses of each of the Secured Parties in connection with the enforcement of this Agreement (including
the enforcement of this Section 12.04), the Notes or any other Facility Document, including all reasonable and documented out-of-pocket costs and expenses incurred by any
Secured Party in connection with the preservation, collection, foreclosure or enforcement of the Collateral subject to the Facility Documents or any interest, right, power or remedy
of any Secured Party or in connection with the
-158-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
collection or enforcement of any of the Obligations or the proof, protection, administration or resolution of any claim based upon the Obligations in any insolvency proceeding,
including all reasonable and documented fees and disbursements of attorneys (subject to the limitations set forth in the first sentence of this clause (a)), accountants, auditors,
consultants, appraisers, rating agencies and other professionals engaged by any Secured Party. Without prejudice to its rights hereunder, the expenses and the compensation for the
services of the Secured Parties are intended to constitute expenses of administration under any applicable insolvency Law.
(b) The Borrower agrees to indemnify and hold harmless each Secured Party and each of their Affiliates and the respective officers, directors, employees,
agents, managers of, and any Person controlling any of, the foregoing (each, an “Indemnified Party”) from and against any and all Liabilities that may be incurred by or asserted or
awarded against any Indemnified Party (including reasonable and documented attorneys’ fees and expenses for each Indemnified Party and limited, solely in the case of Liabilities
owing to the Administrative Agent in respect of attorney’s fees and expenses, to the reasonable and documented out-of-pocket fees and expenses of one outside counsel and one
local counsel in each applicable jurisdiction), in each case arising out of or in connection with or by reason of the execution, delivery, enforcement (including the enforcement of this
Section 12.04), performance, administration of or otherwise arising out of or incurred in connection with this Agreement, any other Facility Document, any Related Document or any
transaction contemplated hereby or thereby or the use of proceeds of any Advance (and regardless of whether or not any such transactions are consummated) and regardless of
whether or not arising out of a suit, claim or other action brought by the Borrower, the Servicer, the Equityholder or any third party, except (A) to the extent any such Liability is
found in a final, non‑appealable judgment by a court of competent jurisdiction to have resulted from the gross negligence, bad faith or willful misconduct of such Indemnified Party,
any of its Affiliates or the respective officers, directors, employees, agents, managers of, and any Person controlling any of, the foregoing or (B) in the case of any Indemnified Party
other than the Collateral Agent, the Collateral Administrator, the Custodian and the Securities Intermediary (or their respective Affiliates, officers, directors, employees, agents,
managers or controlling Persons), to the extent any such Liability results from a claim brought by the Borrower against an Indemnified Party for a material breach of such
Indemnified Party’s obligations hereunder or under any other Facility Document, if the Borrower has obtained a final, non-appealable judgment in its favor on such claim as
determined by a court of competent jurisdiction. In the case of an investigation, litigation or proceeding to which the indemnity in this paragraph applies, such indemnity shall be
effective whether or not such investigation, litigation or proceeding is brought by the Borrower, any of the Borrower’s equityholders or creditors, an Indemnified Party or any other
Person, whether or not an Indemnified Party is otherwise a party hereto. The Borrower shall not, without the prior written consent of the Indemnified Party, effect any settlement of
any pending or threatened proceeding in respect of which any Indemnified Party is a party (or, in the case of a threatened proceeding, could reasonably have been expected to be a
party if such proceeding had been brought) and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement (i) does not include a statement as to
or admission of, fault, culpability or a failure to act by or on behalf of any such Indemnified Party or (ii) includes an unconditional release of such Indemnified Party from all liability
on claims that are the subject matter of such proceeding. This Section 12.04(b) shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc.
arising from any non‑Tax claim.
-159-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Section 12.05 Execution in Counterparts
This Agreement may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of which counterparts, when
so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Agreement. Signature pages provided
in the form of a “pdf” or similar imaged document transmitted by electronic transmission (including .jpeg file or any electronic signature complying with the U.S. federal ESIGN Act
of 2000, including Orbit, Adobe Fill & Sign, Adobe Sign, DocuSign, or any other similar platform identified by the Borrower and reasonably available at no undue burden or
expense to the Collateral Administrator, Custodian or Collateral Agent) shall be deemed original signatures for all purposes hereunder. Any electronically signed document
delivered via email from a person purporting to be an Authorized Person shall be considered signed or executed by such Authorized Person on behalf of the applicable Person. To
the extent received by a Responsible Officer, none of the Collateral Administrator, Custodian or Collateral Agent shall have a duty to inquire into or investigate the authenticity or
authorization of any such electronic signature and shall be entitled to conclusively rely on any such electronic signature without any liability with respect thereto.
Section 12.06 Assignability
(a) Subject to the conditions set forth in this Section 12.06, each Lender may, with the consent of the Borrower (such consent not to be unreasonably
withheld, conditioned or delayed) and the Administrative Agent, assign to any Person all or a portion of its rights and obligations under this Agreement (including all or a portion of
its Advances Outstanding or interests therein owned by it, together with ratable portions of its Commitment); provided that such consent shall be deemed to have been granted by the
Borrower if the Borrower shall not have objected in writing within five (5) Business Days of receipt of any such request for consent; provided, further, that:
(i) neither the Borrower’s nor the Administrative Agent’s consent to any such assignment shall be required if the assignee is (A) a Lender or any of its
Affiliates or (B) managed by a Lender or any of its Affiliates;
(ii) the Borrower’s consent to any such assignment pursuant to this Section 12.06(a) shall not be required if an Event of Default shall have occurred and
be continuing; and
(iii) notwithstanding anything herein to the contrary, each Lender may make an assignment to any Person with notice to, but without the consent of, the
Borrower or the Administrative Agent if such Lender makes a reasonable determination that its ownership of any of its rights or obligations hereunder is prohibited by
Applicable Law; provided that, to the extent not prohibited by applicable law, obligation of privilege or a binding confidentiality agreement (not entered into in
contemplation of such assignment), such notice shall identify the material regulatory reasons necessitating such assignment or participation; provided, further, that, prior
to approaching any such prospective assignee or making any such assignment under this clause (iii), such Lender will use reasonable efforts
-160-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
to consult in good faith with the Borrower to designate an assignee that is not a Disqualified Institution.
The parties to each such assignment shall execute and deliver to the Administrative Agent (with a copy to the Collateral Agent) an Assignment and
Acceptance and the applicable tax forms required by Section 12.03(f), together with administrative details for the applicable assignee (if such assignee is not a current Lender or an
Affiliate of Citibank, N.A.). Subject to acceptance and recording thereof by the Administrative Agent pursuant to Section 12.06(d), from and after the effective date specified in each
Assignment and Acceptance, the assignee thereunder shall be a party to this Agreement, and to the extent of the interest assigned by such assigning Lender, have the rights and
obligations of a Lender under this Agreement. Notwithstanding any other provision of this Section 12.06, (x) no assignment may be made to the Borrower, the Servicer, the
Equityholder or any of their respective Affiliates, (y) no assignment shall be made to any Defaulting Lender, a natural person or any Person that, upon becoming a Lender hereunder,
would constitute any of the foregoing Persons described in this clause (y) and (z) unless an Event of Default has occurred and is continuing, no assignment may be made to a
Disqualified Institution without the prior written consent of the Borrower.
(b) The Borrower may not assign its rights or obligations hereunder or any interest herein without the prior written consent of the Administrative Agent and
the Lenders.
(c) (i) Any Lender may, without the consent of (but with notice to) the Borrower, sell participations to Participants (x) during an Event of Default or (y) at
any time to any Person other than a Disqualified Institution (unless the Borrower has consented (such consent not to be unreasonably withheld or delayed, provided that such consent
shall be deemed fifteen (15) Business Days following notice of such sale)) in all or a portion of such Lender’s rights and obligations under this Agreement; provided that (A) such
Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such
obligations, (C) the Borrower, the Agents, the Collateral Administrator, the Custodian and the Securities Intermediary and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and obligations under this Agreement, and (D) each Participant shall have agreed to be bound by this Section
12.06(c), Section 12.06(e), Section 12.09 and Section 12.16. Any agreement pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole
right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement. The Borrower agrees that each Participant shall be
entitled to the benefits of Sections 2.09 and 12.03 (subject to the requirements and limitations therein, including the requirements under Section 12.03(f) (it being understood that the
documentation required under Section 12.03(f) shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment
under clause (a) of this Section; provided that such Participant (A) agrees to be subject to the provisions of Section 2.20 as if it were an assignee under paragraph (b) of this Section;
and (B) shall not be entitled to receive any greater payment under Sections 2.09 or 12.03, with respect to any participation, than its participating Lender would have been entitled to
receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation.
-161-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(ii) In the event that any Lender sells participations in any portion of its rights and obligations hereunder, such Lender as non-fiduciary agent for the
Borrower shall maintain a register on which it enters the name of all participants in the Advances held by it and the principal amount (and stated interest thereon) of the
portion of the Advance which is the subject of the participation (the “Participant Register”). An Advance may be participated in whole or in part only by registration of
such participation on the Participant Register (and each Note, if any, shall expressly so provide). No Lender shall have any obligation to disclose all or any portion of the
Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any rights and obligations hereunder) to any Person
except to the extent necessary to establish that such rights and obligations are in registered form under Section 5f.103-1 and proposed Section 1.163-5(b) of the United
States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is
recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of
doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.
(d) The Administrative Agent, on behalf of and acting solely for this purpose as the non-fiduciary agent of the Borrower, shall maintain at its address
specified in Section 12.02 or such other address as the Administrative Agent shall designate in writing to the Lenders, a copy of this Agreement, each signature page hereto, each
Assignment and Acceptance delivered to and accepted by it, and a register (the “Register”) for the recordation of the names, addresses and wiring instructions of the Lenders and the
aggregate outstanding principal amount of the Advances Outstanding maintained by each Lender under this Agreement (and any stated interest thereon). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Servicer, the Agents, the Collateral Administrator, the Custodian, the Securities
Intermediary and the Lenders shall treat each Person whose name is recorded in the Register as a Lender and the owner of the amounts owing to it under the Facility Documents as
reflected in the Register for all purposes of the Facility Documents. The Register shall be available for inspection by the Borrower, the Servicer, the Collateral Agent or any Lender
at any reasonable time and from time to time upon reasonable prior notice. An Advance (and a Note, if any, evidencing the same) may be assigned or sold in whole or in part only by
registration of such assignment or sale on the Register (and each Note with respect to the Advances, if any, shall expressly so provide) and compliance with this Section 12.06.
(e) Notwithstanding anything to the contrary set forth herein or in any other Facility Document and each Lender hereunder, and each Participant, must at all
times be an “accredited investor” as defined in paragraphs (1), (2), (3), and (7) of Rule 501(a) under the Securities Act (an “Accredited Investor”) and a “qualified purchaser” as
defined in the Investment Company Act (a “Qualified Purchaser”). Each Lender severally represents to the Borrower, (i) on the date that it becomes a party to this Agreement
(whether by being a signatory hereto or by entering into an Assignment and Acceptance) and (ii) on each date on which it makes an Advance hereunder, that it is an Accredited
Investor and a Qualified Purchaser.
(f) Notwithstanding any other provision of this Section 12.06, (i) any Lender may at any time pledge or grant a security interest in all or any portion of its
rights (including
-162-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
rights to payment of principal and interest) under this Agreement to secure obligations of such Lender, including any pledge or security interest granted to a Federal Reserve Bank,
and (ii) each Conduit Lender may at any time pledge or grant a security interest or Lien in all or any portion of its rights under this Agreement to secure any obligations of such
Conduit Lender, in each case without notice to or consent of the Borrower or the Administrative Agent; provided that no such pledge or grant of a security interest shall release such
Lender from any of its obligations hereunder or substitute any such pledgee or grantee for such Lender as a party hereto.
(g) Nothing in this Agreement shall restrict or delay (x) a Conduit Lender’s ability to assign its interests hereunder to its Liquidity Bank or an Affiliate or to
any other Conduit Lender in its Lender Group or to grant a security interest in its interests hereunder to a Conduit Trustee or (y) any Lender in a Lender Group from assigning its
Advances to another Lender in such Lender Group.
(h) Each Lender, without the consent of the Borrower, may assign to any Eligible Assignee all or a portion of its rights and obligations under this Agreement.
The parties to each such assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance (provided that in the event that the assignment is between
Conduit Lenders or a Conduit Lender and the Committed Purchaser or the Committed Purchaser and one of its Affiliates (including a Conduit Lender), the assigning entity will be
permitted to use its internal form of assignment instead of the Assignment and Acceptance attached hereto and each such assignment shall be recorded on the books and records of
the relevant Lenders, without the need to execute and deliver an Assignment and Acceptance, and for all purposes of this Agreement and all related documents, the relevant Lenders
shall be deemed to have the benefit of an executed, delivered, accepted and recorded Assignment and Acceptance relating to such assignment.
Section 12.07 Governing Law
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT OR ANY OTHER FACILITY
DOCUMENT (EXCEPT, AS TO ANY OTHER FACILITY DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
Section 12.08 Severability of Provisions
Any provision of this Agreement or any other Facility Document which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in
any other jurisdiction.
Section 12.09 Confidentiality
The Borrower, the Equityholder and the Servicer, shall hold in confidence, and not disclose to any Person, the identity of any Lender or the terms of any fees
payable in connection with this Agreement except they may disclose such information (i) to their officers, directors, employees, agents, rating agencies, counsel, accountants,
auditors, advisors, prospective lenders, equity investors (including the Equityholder and its direct or indirect equity investors) or
-163-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
representatives, (ii) with the consent of such Lender, (iii) to the extent such information has become available to the public other than as a result of a disclosure by or through such
Person, (iv) to the extent the Borrower, the Equityholder or the Servicer or any Affiliate of any of them should be required by any law or regulation applicable to it (including
securities laws) or requested by any Governmental Authority to disclose such information, or (v) solely with respect to the existence of this Agreement and the identity of the parties
hereto and other information necessary to effect the transfer of assets and the administration of its financing facilities (but for the avoidance of doubt, not any economic terms
hereof), to current or prospective lenders to the Equityholder or its subsidiaries.
Each Secured Party agrees to keep confidential all information provided to it by the Borrower, the Servicer or the Equityholder with respect to the Borrower,
its Affiliates, the Collateral, the Related Documents, the Obligors, the Servicer, the Equityholder or any other information furnished to such Secured Party under or in connection
with this Agreement (collectively, the “Borrower Information”); provided that nothing herein shall prevent any Secured Party from disclosing any Borrower Information (a) as
reasonably required to comply with the provisions of this Agreement and the other Facility Documents (i) to any Secured Party or any Affiliate of a Secured Party or (ii) any of their
respective Affiliates, employees, officers, directors, auditors, agents, attorneys, accountants and other professional advisors (collectively, the “Secured Party Representatives”), it
being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Borrower Information and instructed to keep such Borrower
Information confidential, (b) subject to an agreement to comply with the provisions of this Section and to use the Borrower Information only in connection with this Agreement and
the other Facility Documents and not for any other purpose, to any actual or bona fide prospective permitted assignees and Participants in any of the Secured Parties’ interests under
or in connection with this Agreement (including in connection with any pledge or grant of a security interest permitted pursuant to Section 12.06(f)) or any actual or prospective
party (or its Secured Party Representatives) to any swap, derivative or other transaction under which payments are to be made by reference to the Borrower and its obligations, this
Agreement or payments hereunder, (c) to any Governmental Authority with jurisdiction over any Secured Party or its Affiliates or any Secured Party Representative, (d) in response
to any order of any court or other Governmental Authority or as may otherwise be required to be disclosed pursuant to any Applicable Law, (e) that is a matter of general public
knowledge or that has heretofore been made available to the public by any Person other than any Secured Party or any Secured Party Representative in violation of this Agreement,
(f) in connection with the performance of the terms of this Agreement and the exercise of any remedy hereunder or under any other Facility Document or any action or proceeding
relating to this Agreement or any other Facility Document or the enforcement of rights hereunder or thereunder, (g) to the extent required or requested by any regulatory authority
purporting to have jurisdiction over such Person or its Secured Party Representatives (including any self‑regulatory authority, such as the National Association of Insurance
Commissioners), (h) on a confidential basis to (i) (x) any rating agency in connection with rating the Borrower or the credit facilities provided hereunder, (y) any rating agency then
rating the commercial paper notes of any Conduit Lender or (z) any other rating agencies as required by any Conduit Lender for purposes of complying with such Conduit Lender’s
obligations under Rule 17g-5 of the Exchange Act or (ii) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers or
other market identifiers with respect to the credit facilities provided hereunder, (i) with the written consent of the Borrower and the Servicer or (j) to any commercial
-164-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
paper dealer or provider of a surety, guaranty or credit or liquidity enhancement to any Lender or Conduit Trustee or any Person providing financing to, or holding equity interests in,
any Conduit Lender, as applicable, and to any officers, directors, employees, outside accountants and attorneys of any of the foregoing.
Section 12.10 Merger
This Agreement and the other Facility Documents executed by the Administrative Agent or the Lenders (or any other Secured Party, as applicable) taken as
a whole incorporate the entire agreement between the parties hereto and thereto concerning the subject matter hereof and thereof and this Agreement and such other Facility
Documents supersede any prior agreements among the parties relating to the subject matter thereof.
Section 12.11 Survival
All representations and warranties made hereunder, in the other Facility Documents and in any certificate delivered pursuant hereto or thereto or in
connection herewith or therewith shall survive the execution and delivery of this Agreement and the making of the Advances hereunder. The agreements in Sections 2.09, 2.10, 2.12,
2.19, 12.03, 12.04, 12.09, 12.16, 12.17, 12.18, 13.09(d), 14.06(b), and this Section 12.11 shall survive the termination of this Agreement in whole or in part, the Payment in Full of
the principal of and interest on the Advances, any foreclosure under, or modification, release or discharge of, any or all of the Related Documents and the resignation or replacement
of any Agent; provided that the agreements in Section 12.09 shall survive for a period of one year following the termination of this Agreement.
Section 12.12 Submission to Jurisdiction; Waivers; Etc.
(a) The Borrower, the Servicer and the Equityholder each hereby irrevocably and unconditionally submits, for itself and its property, to the non-exclusive
jurisdiction of any U.S. Federal or New York State court sitting in New York County, New York in any action or proceeding arising out of or relating to any Facility Document, or
for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. The Custodian, Collateral Agent, Securities Intermediary,
the Collateral Administrator, the Administrative Agent and the Lenders each hereby irrevocably and unconditionally submits, for itself and its property, to the non-exclusive
jurisdiction of any U.S. Federal or New York State court sitting in New York County, New York in any action or proceeding arising out of or relating to any Facility Document or
for recognition or enforcement of any judgment. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or any other Facility Document shall affect any right that the
Administrative Agent or any other Secured Party may otherwise have to bring any action or proceeding relating to this Agreement or any other Facility Document against the
Borrower, the Servicer or the Equityholder or its respective properties in the courts of any jurisdiction.
-165-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(b) Each party hereto hereby irrevocably and unconditionally consents that any such action or proceeding may be brought in any court described in Section
12.12(a) and waives to the fullest extent permitted by Applicable Law any objection that it may now or hereafter have to the venue of any such action or proceeding in any such
court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same.
(c) Each party hereto other than the Collateral Administrator, the Securities Intermediary and the Custodian agrees that service of process in any such action
or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party at its address set
forth in Section 12.02 or at such other address as may be permitted hereunder. Each party hereto hereby also agrees that nothing in this Agreement shall affect the right of any party
hereto to serve process in any other manner permitted by Applicable Law.
(d) Each party hereto waives, to the maximum extent not prohibited by Law, any right it may have to claim or recover in any legal action or proceeding
against any Secured Party arising out of or relating to this Agreement or any other Facility Document any special, exemplary, punitive or consequential damages.
Section 12.13 IMPORTANT WAIVERS
(a) TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER FACILITY DOCUMENT OR FOR ANY COUNTERCLAIM HEREIN OR THEREIN OR
RELATING HERETO OR THERETO, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
THE SERVICER, THE BORROWER, THE EQUITYHOLDER, THE AGENTS, THE COLLATERAL ADMINISTRATOR, THE CUSTODIAN, THE SECURITIES
INTERMEDIARY OR ANY OTHER AFFECTED PERSON. EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER FACILITY DOCUMENT TO WHICH IT IS A PARTY)
AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR ITS ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER FACILITY DOCUMENT.
(b) TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HEREBY WAIVES ANY RIGHT TO CLAIM OR RECOVER IN ANY
LITIGATION WHATSOEVER INVOLVING ANY INDEMNIFIED PARTY, ANY SPECIAL, EXEMPLARY, PUNITIVE, INDIRECT, INCIDENTAL OR CONSEQUENTIAL
DAMAGES OF ANY KIND OR NATURE WHATSOEVER OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES, WHETHER SUCH
WAIVED DAMAGES ARE BASED ON STATUTE, CONTRACT, TORT, COMMON LAW OR ANY OTHER LEGAL THEORY, WHETHER THE LIKELIHOOD OF SUCH
DAMAGES WAS KNOWN AND REGARDLESS OF THE FORM OF THE CLAIM OF ACTION; PROVIDED THAT THE FOREGOING SHALL NOT LIMIT THE
INDEMNIFICATION OBLIGATIONS OF THE BORROWER OR THE SERVICER
-166-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
PURSUANT TO THE FACILITY DOCUMENTS. NO PARTY OR INDEMNIFIED PARTY SHALL BE LIABLE FOR ANY DAMAGES ARISING FROM THE USE BY
UNINTENDED RECIPIENTS OF ANY INFORMATION OR OTHER MATERIALS DISTRIBUTED BY IT THROUGH TELECOMMUNICATIONS, ELECTRONIC OR
OTHER INFORMATION TRANSMISSION SYSTEMS IN CONNECTION WITH ANY FACILITY DOCUMENT OR THE TRANSACTIONS.
(c) EACH PARTY CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY OR AN INDEMNIFIED PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY OR AN INDEMNIFIED PARTY WOULD NOT SEEK TO ENFORCE ANY OF THE
WAIVERS IN THIS SECTION 12.13 IN THE EVENT OF LITIGATION OR OTHER CIRCUMSTANCES. THE SCOPE OF SUCH WAIVERS IS INTENDED TO BE ALL—
ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THE FACILITY
DOCUMENTS, REGARDLESS OF THEIR LEGAL THEORY.
(d) EACH PARTY ACKNOWLEDGES THAT THE WAIVERS IN THIS SECTION 12.13 ARE A MATERIAL INDUCEMENT TO ENTER INTO A
BUSINESS RELATIONSHIP, THAT SUCH PARTY HAS ALREADY RELIED ON SUCH WAIVERS IN ENTERING INTO THE FACILITY DOCUMENTS, AND THAT
SUCH PARTY WILL CONTINUE TO RELY ON SUCH WAIVERS IN THEIR RELATED FUTURE DEALINGS UNDER THE FACILITY DOCUMENTS. EACH PARTY
FURTHER REPRESENTS AND WARRANTS THAT IT HAS REVIEWED SUCH WAIVERS WITH ITS LEGAL COUNSEL AND THAT TO THE EXTENT PERMITTED
BY APPLICABLE LAW, IT KNOWINGLY AND VOLUNTARILY WAIVES ITS RIGHT TO A JURY TRIAL AND OTHER RIGHTS FOLLOWING CONSULTATION WITH
LEGAL COUNSEL.
(e) THE WAIVERS IN THIS SECTION 12.13 ARE IRREVOCABLE, MEANING THAT THEY MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND SHALL APPLY TO ANY AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO ANY OF THE FACILITY DOCUMENTS. IN THE
EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
(f) THE PROVISIONS OF THIS SECTION 12.13 SHALL SURVIVE TERMINATION OF THE FACILITY DOCUMENTS AND THE INDEFEASIBLE
PAYMENT IN FULL OF THE OBLIGATIONS.
Section 12.14 PATRIOT Act Notice
Each Agent, the Collateral Administrator, the Custodian, the Securities Intermediary and each Lender hereby notifies the Borrower, the Servicer and each
other Agent and Lender that, pursuant to the requirements of the PATRIOT Act, it is required to obtain, verify, update and record information that identifies the Borrower, the
Servicer and each other Agent and Lender, which information includes the name and address of the Borrower and other information that will allow such Agent, the Collateral
Administrator, the Custodian, the Securities Intermediary
-167-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
or such Lender to identify the Borrower, the Servicer and each other Agent and Lender in accordance with the PATRIOT Act. The Borrower, the Servicer and each other Agent and
Lender shall provide, to the extent commercially reasonable, such information and take such actions as are reasonably requested by any Lender, the Collateral Administrator, the
Custodian, the Securities Intermediary or any Agent in order to assist such Lender, the Collateral Administrator, the Custodian, the Securities Intermediary or such Agent, as
applicable, in maintaining compliance with the PATRIOT Act or any other laws, regulations and execute orders of the United States or any state or political subdivision thereof as
are in effect from time to time applicable to financial institutions relations to the funding of terrorist activities and money laundering.
Section 12.15 Legal Holidays
In the event that the date of prepayment of Advances or the Final Maturity Date shall not be a Business Day, then notwithstanding any other provision of this
Agreement or any other Facility Document, payment need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if
made on the nominal date of any such date of prepayment or Final Maturity Date, as the case may be, and interest shall accrue on such payment for the period from and after any
such nominal date to but excluding such next succeeding Business Day.
Section 12.16 Non‑Petition
Each Secured Party hereby agrees not to institute against, or join, cooperate with or encourage any other Person in instituting against, the Borrower any
bankruptcy, reorganization, receivership, arrangement, insolvency, moratorium or liquidation proceeding or other proceeding under federal or state bankruptcy, insolvency or similar
Laws until at least one year and one day, or, if longer, the applicable preference period then in effect plus one day, after the Payment in Full of all outstanding Obligations and the
termination of all Commitments; provided that nothing in this Section 12.16 shall preclude, or be deemed to prevent, any Secured Party (a) from taking any action prior to the
expiration of the aforementioned one year and one day period, or, if longer, the applicable preference period then in effect, in (i) any case or proceeding voluntarily filed or
commenced by the Borrower or (ii) any involuntary insolvency proceeding filed or commenced against the Borrower by a Person other than any such Secured Party, or (b) from
commencing against the Borrower or any properties of the Borrower any legal action which is not a bankruptcy, reorganization, receivership, arrangement, insolvency, moratorium
or liquidation proceeding or other proceeding under federal or state bankruptcy, insolvency or similar Laws.
Section 12.17 Waiver of Setoff
To the extent permitted by Applicable Law, each of the Borrower, the Servicer and the Equityholder hereby waives any right of setoff it may have or to
which it may be entitled under this Agreement or any Applicable Law from time to time against the Administrative Agent, any Lender or its respective assets.
Section 12.18 Recognition of the U.S. Special Resolution Regimes
To the extent that the Facility Documents provide support, through a guarantee or otherwise, for hedging agreements or any other agreement or instrument
that is a QFC (such
-168-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
support, “QFC Credit Support” and each such QFC a “Supported QFC”) the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit
Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations
promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding
that the Facility Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the
United States):
In the event a Lender that is party to a Supported QFC (each a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime,
the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and
any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective
under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in the property) were governed by the
laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S.
Special Resolution Regime, default rights under the Facility Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against
such Covered Party are permitted to be exercised to no greater extent than such default rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and
the Facility Documents were governed by the laws of the United States or a state of the United Sates. Without limitation of the foregoing, it is understood and agreed that rights and
remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.
Section 12.19 Acknowledgement and Consent to Bail-In of EEA Financial Institutions
Notwithstanding anything to the contrary in any Facility Document or in any other agreement, arrangement or understanding among any such parties, each
party hereto acknowledges that any liability of any Affected Financial Institution arising under any Facility Document, to the extent such liability is unsecured, may be subject to the
write-down and conversion powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(a) the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be
payable to it by any party hereto that is an Affected Financial Institution; and
(b) the effects of any Bail-In Action on any such liability, including, if applicable:
(i) a reduction in full or in part or cancellation of any such liability;
-169-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent
undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in
lieu of any rights with respect to any such liability under this Agreement or any other Facility Document; or
the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority.
Section 12.20 Amendment and Restatement
(a) This Agreement is an amendment and restatement of the Existing Agreement. The parties hereto acknowledge and agree that the indebtedness evidenced
by the Existing Agreement constitutes the same indebtedness evidenced by this Agreement. This Agreement is in no way intended to constitute a novation of the Existing
Agreement or indebtedness thereunder. The Borrower confirms its obligations under each other Facility Document after giving effect to the amendment and restatement of the
Existing Agreement contemplated hereby, and each reference in any other Facility Document to the “Loan and Servicing Agreement” or words of similar import shall be a reference
to this Agreement as the same may be amended, supplemented and otherwise modified and in effect from time to time.
ARTICLE XIII
THE CUSTODIAN
Section 13.01 Appointment of Custodian
(a) Appointment and Acceptance. The Borrower and the Administrative Agent each hereby appoints the Custodian as Custodian of any Loan Files delivered
to it for all Collateral Loans owned by the Borrower at any time during the term of this Agreement, on the terms and conditions set forth in this Agreement (which shall include any
addendum hereto which is hereby incorporated herein and made a part of this Agreement), and the Custodian hereby accepts such appointment and agrees to perform the services
and duties set forth in this Agreement with respect to it, subject to and in accordance with the provisions hereof. The Custodian’s services hereunder shall be conducted through its
CCT division (including, as applicable, any agents or Affiliates utilized thereby).
(b) Instructions. The Borrower agrees that it shall from time to time provide, or cause to be provided, to the Custodian all necessary instructions and
information, and shall respond promptly to all inquiries and requests of the Custodian as may reasonably be necessary to enable the Custodian to perform its duties hereunder.
(c) Custodian. The Custodian shall take and retain custody of the Loan Files delivered by the Borrower hereunder in accordance with the terms and
conditions of this Agreement, all for the benefit of the Collateral Agent and the other Secured Parties, in order to perfect under the UCC the Collateral Agent’s security interest
therein for the benefit of the Secured Parties. In taking and retaining custody of the Loan Files, the Custodian shall be deemed to be
-170-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
acting as the agent of Collateral Agent for the benefit of the Secured Parties; provided that the Custodian makes (a) no warranty or representation and shall have no responsibility for
the enforceability, completeness, validity, sufficiency, value, genuineness, ownership or transferability of the Collateral Loans and (b) no representation as to the existence,
perfection or priority of any lien on the Collateral Loans or the Required Loan Documents. It is expressly agreed and acknowledged that the Custodian is not guaranteeing
performance of or assuming any liability for the obligations of the other parties hereto or any parties to the Collateral Loans.
Section 13.02 Duties of Custodian
(a) Segregation. All Loan Files held by the Custodian for the account of the Borrower hereunder shall be (a) subject to the lien of the Collateral Agent on
behalf of the Secured Parties, (b) physically segregated from other loans and non‑cash property in the possession of the Custodian and (c) identified by the Custodian as subject to
this Agreement.
(b) Register. The Custodian shall maintain a register of the Collateral Loans for which it holds Loan Files under this Agreement containing such information
as the Borrower and the Custodian may reasonably agree; provided that, with respect to such Collateral Loans, all Loan Files shall be held in safekeeping by the Custodian,
individually segregated from the securities and investments of any other Person and marked so as to clearly identify such Loan Files as the property of the Borrower as set forth in
this Agreement.
Section 13.03 Delivery of Collateral Loans to Custodian
(a) The Servicer (on behalf of the Borrower) shall deliver, or cause to be delivered (which may be via email, except for the original Underlying Note, if any)
promptly to the Custodian all of the Loan Files for each Collateral Loan owned by the Borrower at any time during the term of this Agreement at the address identified herein;
provided, however, that all documents (other than the original Underlying Notes) shall be transmitted in electronic format and the Custodian shall only be required to retain the
original Underlying Note, if any. The Custodian shall not be responsible for any Collateral Loan or related Loan File until actually received by it. The Custodian shall notify the
Collateral Administrator of the Custodian’s receipt of any sealed envelopes described in Section 5.01(o) purporting to contain any original assignment of any Collateral Loan or any
original executed Underlying Note with respect to any Collateral Loan.
(b) Notwithstanding anything herein to the contrary, delivery of the Collateral Loans acquired by the Borrower which constitute Noteless Loans or which are
otherwise not evidenced by a “security” or “instrument” as defined in Section 8‑102 and Section 9‑102(a)(47) of the UCC, respectively, shall be made by delivery to the Custodian
of a copy of the loan register with respect to such Noteless Loan evidencing registration of such Collateral Loan on the books and records of the applicable Obligor or bank agent to
the name of the Borrower (or its nominee) or a copy (which may be an email copy) of an assignment agreement in favor of the Borrower as assignee. Any duty on the part of the
Custodian with respect to the custody of such Collateral Loans shall be limited to the exercise of reasonable care by the Custodian in the physical custody of the related Loan Files
delivered to it.
-171-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(c) In the absence of gross negligence, fraud or willful misconduct of the Custodian, the Custodian may assume the genuineness of any document in a Loan
File it may receive and the genuineness and due authority of any signatures appearing thereon, and shall be entitled to assume that each document it may receive is what it purports
to be on its face. If an original “security” or “instrument” as defined in Section 8‑102 and Section 9‑102(a)(47) of the UCC, respectively, is or shall be or become available with
respect to any Collateral Loan to be held by the Custodian under this Agreement, it shall be the sole responsibility of the Borrower to make or cause delivery thereof to the
Custodian, and the Custodian shall not be under any obligation at any time to determine whether any such original “security” or “instrument” has been or is required to be issued or
made available in respect of any Collateral Loan or to compel or cause delivery thereof to the Custodian.
Section 13.04 Release of Documents/Control By Agents
(a) The Custodian shall release and ship for delivery, or direct its agents or sub‑custodians to release and ship for delivery, as the case may be, Loan Files of
the Borrower held by the Custodian, its agents or its sub‑custodians from time to time upon receipt of a Request for Release and Receipt (substantially in the form of Exhibit G and
specifying, among other things, the Collateral Loans and Loan Files to be released and delivery instructions and other information as may be necessary to enable the Custodian to
release and ship such Loan Files), which may be standing instructions (in a form acceptable to the Custodian) in accordance with this Agreement.
(b) Upon receipt by the Custodian from the Administrative Agent or the Collateral Agent (acting at the direction of the Administrative Agent), of written
notice of the occurrence of an Event of Default that is continuing and indicating the Administrative Agent’s intent to prohibit the Custodian from accepting instructions from or on
behalf of the Borrower (each such notice, a “Block Notice”), the Custodian shall no longer accept or act upon any Request for Release and Receipt, Proper Instructions or other
instructions from the Borrower (or the Servicer on its behalf) hereunder with respect to the Collateral Loans or the Loan Files. From and after its receipt of a Block Notice, the
Custodian shall only comply with Requests for Release and Receipt and Proper Instructions from the Collateral Agent (acting at the direction of the Administrative Agent) or
Administrative Agent.
Section 13.05 Records
The Custodian shall create and maintain complete and accurate records relating to its activities under this Agreement with respect to the Collateral Loans or
other property of the Borrower held for the benefit of the Collateral Agent and the other Secured Parties under this Agreement. All such records shall be the property of the
Borrower and, upon reasonable advance notice, shall at all times during the regular business hours of the Custodian be open for inspection by duly authorized officers, employees or
agents of the Borrower, the Collateral Agent and the Administrative Agent.
Section 13.06 Reporting
(a) If requested by the Borrower, the Collateral Agent or the Administrative Agent, the Custodian shall render an itemized report of the Loan Files held
pursuant to this
-172-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Agreement as of the end of each month and such other matters as the parties may agree from time to time in form and substance reasonably satisfactory to the Borrower, the
Collateral Agent and the Administrative Agent.
(b) The Custodian shall have no duty or obligation to undertake any market valuation of the Collateral Loans under any circumstance.
Section 13.07 Certain General Terms
(a) No Duty to Examine Related Documents. Nothing herein shall obligate the Custodian to review or examine the terms of any underlying instrument,
certificate, credit agreement, indenture, loan agreement, promissory note or any other document contained in the Loan Files evidencing or governing any Collateral Loan to
determine the validity, sufficiency, marketability or enforceability of any Collateral Loan (and shall have no responsibility for the genuineness or completeness thereof) or otherwise.
(b) Resolution of Discrepancies. In the event of any discrepancy between the information set forth in any report provided by the Custodian to the Borrower
and any information contained in the books or records of the Borrower, the Borrower (or the Servicer, on behalf of the Borrower) shall promptly notify the Custodian thereof and the
parties shall cooperate to diligently resolve the discrepancy.
(c) Improper Instructions. Notwithstanding anything herein to the contrary, the Custodian shall not be obligated to take any action (or forebear from taking
any action), which it reasonably determines to be contrary to the terms of this Agreement or Applicable Law. In no instance shall the Custodian be obligated to provide services on
any day that is not a Business Day.
(d) Proper Instructions.
(i) Each of the Administrative Agent, the Servicer and the Borrower will give a notice to the Custodian, specifying the names and specimen signatures
of Persons authorized to give Proper Instructions (collectively, “Authorized Persons” and each, an “Authorized Person”) which notice shall be signed by an Authorized
Person set forth on Schedule 6 or otherwise previously certified to the Custodian. The Custodian shall be entitled to rely upon the identity and authority of such Persons
until it receives written notice from an Authorized Person of the Borrower, the Administrative Agent or the Servicer, as applicable, to the contrary. The initial
Authorized Persons are set forth on Schedule 6 (as such Schedule 6 may be modified from time to time by written notice from the Borrower, the Administrative Agent
and the Servicer as applicable, to the Custodian).
(ii) The Custodian shall have no responsibility or liability to the Borrower (or any other Person) and shall be indemnified and held harmless by the
Borrower in the event that a subsequent written confirmation of an oral instruction fails to conform to the oral instructions received by the Custodian. The Custodian
shall not have an obligation to act in accordance with purported instructions to the extent that they conflict with Applicable Law or regulations. The Custodian shall not
be liable for any loss resulting from a delay while it obtains clarification of any Proper Instruction.
-173-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(e) Evidence of Authority. The Custodian shall be protected in acting upon any instruction, notice, request, consent, certificate instrument or paper
reasonably believed by it to be genuine and to have been properly executed or otherwise given by or on behalf of the Borrower, the Servicer or Administrative Agent, as applicable,
by an Authorized Person thereof. The Custodian may receive and accept a certificate signed by any Authorized Person as conclusive evidence of:
(i) the authority of any Person to act in accordance with such certificate; or
(ii) any determination or of any action by such Person as described in such certificate;
and such certificate may be considered as in full force and effect until receipt by the Custodian of written notice to the contrary from an Authorized Person of the
Borrower, the Servicer or Administrative Agent, as applicable.
(f) Receipt of Communications. Any communication received by the Custodian on a day which is not a Business Day or after 4:00 p.m. (or such other time
as is agreed by the Borrower and the Custodian from time to time) on a Business Day will be deemed to have been received on the next Business Day; provided that in the case of
communications so received after 4:00 p.m. on a Business Day the Custodian will use its commercially reasonable efforts to process such communications as soon as possible after
receipt.
(g) In the event that (i) the Borrower, the Administrative Agent, the Servicer, the Custodian or the Collateral Agent shall be served by a third party with any
type of levy, attachment, writ or court order with respect to any Loan File or a document included within a Loan File or (ii) a third party shall institute any court proceeding by
which any Loan File or a document included within a Loan File shall be required to be delivered other than in accordance with the provisions of this Agreement, the party receiving
such service shall promptly deliver or cause to be delivered to the other parties to this Agreement (to the extent not prohibited by Applicable Law) copies of all court papers, orders,
documents and other materials concerning such proceedings. The Custodian shall, to the extent permitted by Law, continue to hold and maintain all the Loan Files that are the
subject of such proceedings pending a final, non-appealable order of a court of competent jurisdiction permitting or directing disposition thereof. Upon final determination of such
court, the Custodian shall dispose of such Loan File or a document included within such Loan File as directed by the Administrative Agent, which shall give a direction consistent
with such determination. Expenses of the Custodian incurred as a result of such proceedings shall be borne by the Borrower.
Section 13.08 Compensation and Reimbursement of Custodian
(a) Fees. The Custodian shall be entitled to compensation for its services in accordance with the terms of the Collateral Administration and Agency Fee
Letter.
(b) Expenses. The Borrower agrees to pay or reimburse to the Custodian upon its request from time to time all reasonable and documented costs,
disbursements, advances, and expenses (but limited, in the case of legal fees and expenses, to the reasonable fees and expenses of one firm of outside legal counsel, plus, if
necessary, one additional local counsel) incurred in
-174-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
connection with the preparation or execution of this Agreement, or in connection with the transactions contemplated hereby or the administration of this Agreement or performance
by the Custodian of its duties and services under this Agreement (including costs and expenses of any action deemed necessary by the Custodian to collect any amounts owing to it
under this Agreement).
(c) Priority of Payments. Amounts owing to the Custodian hereunder shall be payable in accordance with the Priority of Payments.
Section 13.09 Responsibility of Custodian
(a) General Duties. The Custodian shall have no duties, obligations or responsibilities under this Agreement or with respect to the Collateral Loans, except
for such duties as are expressly and specifically set forth in this Agreement, and the duties and obligations of the Custodian shall be determined solely by the express provisions of
this Agreement. No implied duties, obligations or responsibilities shall be read into this Agreement against, or on the part of, the Custodian.
(b) Instructions.
(i) The Custodian shall be entitled to refrain from taking any action unless it has such instruction (in the form of Proper Instructions) from the Borrower
(or the Servicer on the Borrower’s behalf), the Administrative Agent or the Collateral Agent, as applicable, as it reasonably deems necessary, and shall be entitled to
require, upon notice to the Borrower, the Administrative Agent or the Collateral Agent, as applicable, that Proper Instructions to it be in writing. In the absence of gross
negligence, fraud, bad faith or willful misconduct of the Custodian, the Custodian shall have no liability for any action (or forbearance from action) taken pursuant to
this Agreement or any other Facility Document or pursuant to any Proper Instruction of the Borrower, the Servicer, the Administrative Agent or the Collateral Agent, as
applicable, except in the case of the Custodian’s own gross negligence, fraud or willful misconduct.
(ii) Whenever the Custodian is entitled or required to receive or obtain any communications or information pursuant to or as contemplated by this
Agreement, it shall be entitled to receive the same in writing, in form, content and medium reasonably acceptable to it and otherwise in accordance with any applicable
term of this Agreement; and whenever any report or other information is required to be produced or distributed by the Custodian it shall be in form, content and medium
reasonably acceptable to it and the Borrower, and otherwise in accordance with any applicable term of this Agreement.
(iii) In case any reasonable question arises as to its duties hereunder, the Custodian may, so long as no Event of Default has occurred and is continuing,
request instructions from the Servicer and may, after the occurrence and during the continuance of an Event of Default, request instructions from the Administrative
Agent, and shall be entitled at all times to refrain from taking any action unless it has received instructions from the Servicer or the Administrative Agent, as applicable.
The Custodian shall in all
-175-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
events have no liability, risk or cost for any action taken pursuant to and in compliance with the instruction of the Administrative Agent.
(c) General Standards of Care. Notwithstanding any terms herein contained to the contrary, the acceptance by the Custodian of its appointment hereunder is
expressly subject to the following terms, which shall govern and apply to each of the terms and provisions of this Agreement (whether or not so stated therein):
(i) The Custodian may rely on and shall be protected in acting or refraining from acting upon any written notice, instruction, statement, certificate,
request, waiver, consent, opinion, report, receipt or other paper or document furnished to it (including any of the foregoing provided to it by telecopier or electronic
means), not only as to its due execution and validity, but also as to the truth and accuracy of any information therein contained, which it in good faith believes to be
genuine and signed or presented by the proper person (which in the case of any instruction from or on behalf of the Borrower shall be an Authorized Person); and the
Custodian shall be entitled to presume the genuineness and due authority of any signature appearing thereon. The Custodian shall not be bound to make any independent
investigation into the facts or matters stated in any such notice, instruction, statement, certificate, request, waiver, consent, opinion, report, receipt or other paper or
document; provided that if the form thereof is specifically prescribed by the terms of this Agreement, the Custodian shall examine the same to determine whether it
substantially conforms on its face to such requirements hereof.
(ii) Neither the Custodian nor any of its directors, officers or employees shall be liable to anyone for any error of judgment, or for any act done or step
taken or omitted to be taken by it (or any of its directors, officers of employees), or for any mistake of fact or Law, or for anything which it may do or refrain from doing
in connection herewith, unless such action constitutes gross negligence, fraud or willful misconduct on its part and in breach of the terms of this Agreement. Subject to
the foregoing, the Custodian shall not be liable for any action taken by it in good faith and reasonably believed by it to be within powers conferred upon it, or taken by it
pursuant to any direction or instruction by which it is governed hereunder, or omitted to be taken by it by reason of the lack of direction or instruction required hereby
for such action.
(iii) In no event shall the Custodian be liable for any indirect, special, punitive or consequential damages (including lost profits) whether or not it has
been advised of the likelihood of such damages.
(iv) The Custodian may consult with, and obtain advice from, legal counsel selected in good faith with respect to any question as to any of the
provisions hereof or its duties hereunder, or any matter relating hereto, and the written opinion or advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by the Custodian in good faith in accordance with the opinion and directions of such counsel; the reasonable
cost of such services shall be reimbursed pursuant to Section 13.08(b) and (c) above.
-176-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(v) The Custodian shall not be deemed to have notice of any fact, claim or demand with respect hereto unless actually known by a Responsible Officer
of the Custodian or unless (and then only to the extent) received in writing by a Responsible Officer of the Custodian and specifically referencing this Agreement.
(vi) No provision of this Agreement shall require the Custodian to expend or risk its own funds, or to take any action (or forbear from action) hereunder
which might in its judgment involve any expense or any financial or other liability unless it shall be furnished with acceptable indemnification. Nothing herein shall
obligate the Custodian to commence, prosecute or defend legal proceedings in any instance, whether on behalf of the Borrower or on its own behalf or otherwise, with
respect to any matter arising hereunder, or relating to this Agreement or the services contemplated hereby.
(vii) The permissive right of the Custodian to take any action hereunder shall not be construed as a duty.
(viii) The Custodian may act or exercise its duties or powers hereunder through Affiliates, agents or attorneys, and the Custodian shall not be liable or
responsible for the actions, omissions, negligence or misconduct of any such non-Affiliated agent or attorney selected by it with reasonable care.
(ix) The Custodian shall not be responsible or liable for delays or failures in performance resulting from acts beyond its control; provided that the
Custodian shall use commercially reasonable efforts which are consistent with accepted practices in the banking industry to maintain performance, and, if necessary,
resume performance as soon as practicable under the circumstances. Such acts shall include acts of God, strikes, work stoppages, accidents, acts of war or terrorism, civil
or military disturbances, nuclear or natural catastrophes, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware)
services, any provision of any present or future law or regulation or act of any governmental authority, labor dispute, disease, epidemic or pandemic, quarantine, national
emergency, malware or ransomware attack, communications system failure, unavailability of the Federal Reserve Bank wire or telex system or other applicable wire or
funds transfer system, or unavailability of any securities clearing system.
(x) All indemnifications contained in this Agreement in favor of the Custodian shall survive the termination of this Agreement and the resignation or
removal of the Custodian.
(xi) Each of the protections, reliances, indemnities and immunities offered to the Collateral Agent in Article XI shall be afforded to the Custodian.
(xii) The Custodian shall not be responsible for the accuracy or content of any certificate, statement, direction or opinion furnished to it in connection
with this Agreement or any other Facility Document or Related Document. The Custodian shall not be bound to make any investigation into the facts stated in any
resolution, certificate, statement, instrument, opinion, report, consent, order, approval, bond or other document or have any
-177-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
responsibility for filing or recording any financing or continuation statement in any public office at any time or to otherwise perfect or maintain the perfection of any
security interest or lien granted by any Person under any Facility Document or Related Document. The Custodian shall not be responsible to any Person for any recitals,
statements, information, representations or warranties regarding the Borrower or the Collateral or in any document, certificate or other writing delivered in connection
herewith or therewith or for the execution, effectiveness, genuineness, validity, enforceability, perfection, collectability, priority or sufficiency of thereof or any such
other document or the financial condition of any Person or be required to make any inquiry concerning either the performance or observance of any of the terms,
provisions or conditions related to any Person or the existence or possible existence of any Default or Event of Default. The Custodian shall not have any obligation
whatsoever to any Person to assure that any collateral exists or is owned by any Person or is cared for, protected or insured or that any liens have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise or to continue exercising at all or in any manner or
under any duty of care, disclosure or fidelity any of the rights, authorities and powers granted or available with respect thereto.
(d) Collateral Agent’s Lien.
Each of the Borrower, the Collateral Agent and the Custodian hereby agrees that the Loan Files in respect of the Collateral Loans are being held by the
Custodian hereunder to perfect the lien of the Collateral Agent, on behalf of the Secured Parties, in the Collateral Loans in accordance with this Agreement.
Section 13.10 Resignation and Removal; Appointment of Successor
(a) Notwithstanding anything to the contrary contained in this Agreement (including clauses (b) and (c) below), no resignation or removal of the Custodian
and no appointment of a successor Custodian pursuant to this Article XIII shall become effective until the acceptance of such appointment by the successor Custodian under Section
13.11 and the assumption by such successor Custodian of the duties and obligations of the Custodian hereunder.
(b) The Custodian may, at any time, resign under this Agreement by giving not less than thirty (30) days advance written notice thereof to the Borrower, the
Servicer, the Collateral Agent and the Administrative Agent.
(c) The Custodian may be removed at any time by the Administrative Agent (i) upon thirty (30) days’ notice (with the prior written consent of the Servicer)
or (ii) at any time if (A) an Event of Default shall have occurred and be continuing or (B) the Custodian shall become incapable of acting or shall become the subject of an
Insolvency Event. Notice of any such removal shall be sent by the Administrative Agent to the Custodian, the Borrower, the Lenders and the Servicer.
(d) If the Custodian shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of the Custodian for any reason (other
than resignation with no replacement within sixty (60) days), the Borrower shall, promptly after becoming aware of such
-178-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
resignation, removal, incapacity or vacancy, appoint a successor Custodian by written instrument, executed by a Responsible Officer of the Borrower, one copy of which shall be
delivered to the retiring Custodian and one copy to the successor Custodian, together with a copy to the Administrative Agent and the Lenders; provided that such successor
Custodian shall be appointed only upon the prior written consent of the Administrative Agent and, if no Event of Default or Servicer Termination Event has occurred and is
continuing, the Servicer (in each case which consent shall not be unreasonably withheld, conditioned or delayed). In the case of a resignation by (or removal of) the Custodian, if no
successor Custodian shall have been appointed and an instrument of acceptance by a successor Custodian shall not have been delivered to the resigning or removed Custodian and
the Administrative Agent within thirty (30) days after the giving of such notice of resignation or removal, the Administrative Agent may appoint a successor Custodian or the
resigning or removed Custodian may petition any court of competent jurisdiction at the expense of the Borrower to appoint a successor Custodian.
(e) Upon termination of this Agreement or resignation of the Custodian, the Borrower shall pay to the Custodian such compensation, and shall likewise
reimburse the Custodian for its reasonable and documented costs, expenses and disbursements, as may be due as of the date of such termination or resignation (or removal, as the
case may be) all in accordance with the Priority of Payments. All indemnifications in favor of the Custodian under this Agreement shall survive the termination of this Agreement, or
any resignation or removal of the Custodian.
(f) In the event of any resignation or removal of the Custodian, the Custodian shall provide to the Borrower a complete final report or data file transfer of any
confidential information as of the date of such resignation or removal.
Section 13.11 Acceptance and Appointment by Successor
Each successor Custodian appointed hereunder shall execute, acknowledge and deliver to the Borrower, the Servicer, the Administrative Agent, the Lenders
and the retiring Custodian an instrument accepting such appointment. Upon delivery of the required instruments, the resignation or removal of the retiring Custodian shall become
effective and such successor Custodian, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts, duties and obligations of the retiring
Custodian; but, on request of the Borrower, the Servicer, the Administrative Agent or the successor Custodian, such retiring Custodian shall (i) execute and deliver an instrument
transferring to such successor Custodian all the rights and powers and trusts of the retiring Custodian and (ii) execute and deliver such further documents and instruments and take
such further action as may be reasonably requested in order to effect the transfer of the rights, powers, duties and obligations of the Custodian hereunder. Upon request of any such
successor Custodian, the Borrower shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Custodian all such rights, powers
and trusts.
Section 13.12 Merger, Conversion, Consolidation or Succession to Business of Custodian
Any organization or entity into which the Custodian may be merged or converted or with which it may be consolidated, or any organization or entity
resulting from any merger,
-179-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
conversion or consolidation to which the Custodian shall be a party, or any organization or entity succeeding to all or substantially all of the corporate trust business of the Custodian,
shall be the successor of the Custodian hereunder and any other Facility Document to which the Custodian is a party, without the execution or filing of any document or any further
act on the part of any of the parties hereto.
ARTICLE XIV
THE SERVICER
Section 14.01 Designation of the Servicer
(a) Initial Servicer. The servicing, administering and collection of the Collateral shall be conducted by the Servicer in accordance with the Facility
Documents (such Person, the “Servicer”). SLR Investment Corp. is hereby appointed as, and hereby accepts such appointment and agrees to perform the duties and responsibilities,
of Servicer pursuant to the terms hereof.
(b) Subcontracts. The Servicer may, with the prior written consent of the Administrative Agent (which consent shall not be required in the case of Affiliates
of the Servicer), subcontract with any other Person for servicing, administering or collecting the Collateral; provided that (i) the Servicer shall select any such Person with
reasonable care and shall be solely responsible for the fees and expenses payable to such Person, (ii) the Servicer shall not be relieved of, and shall remain liable for, the
performance of the duties and obligations of the Servicer pursuant to the terms hereof without regard to any subcontracting arrangement and (iii) any such subcontract shall be
subject to the provisions hereof.
Section 14.02 Duties of the Servicer
(a) Duties. The Servicer shall take or cause to be taken all such actions as may be necessary or advisable to service, administer and collect on the Collateral
from time to time, all in accordance with the Servicing Standard. Without limiting the foregoing, the duties of the Servicer shall include the following (it being understood that the
following shall not be construed to expand the scope of any express covenant of the Servicer set forth in the Facility Documents, and shall be subject to all exceptions and
qualifications set forth in such express covenants):
(i) directing the acquisition, sale or substitution of Collateral in accordance with Article X;
(ii) supervising the Collateral, including (A) communicating with Obligors or, if applicable, the administrative agents on the Collateral Loans; (B)
subject to the provisos to this subclause (B), executing amendments or other modifications, providing consents and waivers, exercising voting rights, enforcing and
collecting on the Collateral; provided that the Servicer shall not consent to any amendment or other modification of any Collateral Loan or any Related Document for
any Collateral Loan that would violate the provisions of Section 5.02(r); and (C) otherwise managing the Collateral on behalf of the Borrower;
-180-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(iii) preparing and submitting claims to Obligors, or if applicable, the administrative agents on the Collateral Loans, on each Collateral Loan;
(iv) maintaining appropriate books of account and servicing records with respect to the Collateral (including copies of the Related Documents)
reasonably necessary or advisable for the services to be performed hereunder;
(v) promptly delivering to the Administrative Agent or the Collateral Agent, from time to time, such information and servicing records (including
information relating to its performance under this Agreement) as the Administrative Agent or the Collateral Agent may from time to time reasonably request;
(vi) notifying the Administrative Agent of any material action, suit, proceeding, dispute, offset, deduction, defense or counterclaim (A) that is or is
threatened to be asserted by an Obligor with respect to any Collateral Loan (or portion thereof) of which it has actual knowledge or has received notice; or (B) that could
reasonably be expected to have a Material Adverse Effect:
(vii) using commercially reasonable efforts to maintain the perfected security interest of the Collateral Agent, for the benefit of the Secured Parties, in
the Collateral;
(viii) instructing the Obligors or, if applicable, the administrative agents on the Collateral Loans to make payments directly into the Collection
Account;
(ix) complying with such other duties and responsibilities as required of the Servicer by this Agreement;
(x) providing to the Borrower, each Lender, the Administrative Agent, the Collateral Administrator and the Collateral Agent the reports required to be
delivered by the Servicer under this Agreement; and
(xi) directing the Collateral Agent to convert amounts denominated in any Eligible Currency to any other Eligible Currency for any permitted purpose
hereunder.
It is acknowledged and agreed that the Borrower possesses only such rights with respect to the enforcement of rights and remedies with respect to the
Collateral Loans and the underlying assets securing such Collateral Loans under the Related Documents as have been transferred to the Borrower with respect to the related
Collateral Loan, and therefore, for all purposes under this Agreement, the Servicer shall perform its administrative and management duties hereunder only to the extent that, as a
lender under the Related Documents, the Borrower has the right to do so.
(b) The Administrative Agent, each Lender, the Collateral Agent and the other Secured Parties shall not have any obligation or liability with respect to any
Collateral, nor shall any of them be obligated to perform any of the obligations of the Servicer hereunder.
(c) The Servicer shall not be responsible or liable for delays or failures in performance resulting from acts of God, strikes, lockouts, riots, acts of war,
epidemics,
-181-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
governmental regulations imposed after the fact, fire, communication line failures, computer viruses, power failures, earthquakes or other disasters.
Section 14.03 Authorization of the Servicer
The Borrower hereby authorizes the Servicer to take any and all reasonable steps in its name and on its behalf necessary or desirable in the determination of
the Servicer and not inconsistent with the pledge of the Collateral by the Borrower to the Collateral Agent, on behalf of the Secured Parties hereunder, to collect all amounts due
under any and all Collateral, including endorsing its name on checks and other instruments representing Collections, executing and delivering any and all instruments of satisfaction
or cancellation, or of partial or full release or discharge, and all other comparable instruments, with respect to the Collateral and, after the delinquency of any Collateral and to the
extent permitted under and in compliance with Applicable Law, to commence proceedings with respect to enforcing payment thereof, to the same extent as the Servicer could have
done if it owned such Collateral. In furtherance of the foregoing, the Borrower hereby irrevocably appoints the Servicer as its true and lawful agent and attorney‑in‑fact (with full
power of substitution) in its name, place and stead and at its expense, to sign, execute, certify, swear to, acknowledge, deliver, file, receive and record any and all documents which
the Servicer reasonably deems appropriate or necessary in connection with the performance of its duties provided for herein. The Borrower shall furnish the Servicer (and any
successors thereto) with any powers of attorney and other documents necessary or appropriate to enable the Servicer to carry out its servicing duties hereunder, and shall cooperate
with the Servicer to the fullest extent in order to ensure the collectability of the Collateral. In no event shall the Servicer be entitled to make the Collateral Agent, the Administrative
Agent, any Lender or any other Secured Party a party to any litigation without such party’s express prior written consent, or to make the Borrower a party to any litigation (other
than any foreclosure or similar collection procedure) without the Administrative Agent’s consent. Following the occurrence and during the continuance of an Event of Default
(unless otherwise waived by the Lenders in accordance with Section 12.01), the Administrative Agent (acting in its sole discretion or at the direction of the Required Lenders) may
provide notice to the Servicer (with a copy to the Collateral Agent) that the Secured Parties are exercising their control rights with respect to the Collateral in accordance with
Section 6.02(b). Notwithstanding the foregoing, the Servicer shall act solely on behalf of the Borrower as an independent contractor for the sole purpose of providing the services
described herein.
Section 14.04 Separateness Provisions of the Borrower
The Servicer shall not knowingly or with gross negligence interfere with or frustrate the Borrower’s compliance with the provisions of Section 5.05 of this
Agreement.
Section 14.05 Compensation
As compensation for its administrative and management activities hereunder, the Servicer or its designee shall be entitled to receive the Servicing Fee
pursuant to the Priority of Payments, and the Servicer hereby directs the Servicing Fee be paid to the Equityholder and such payment to the Equityholder shall satisfy the obligation
to pay the Servicing Fee pursuant to the Priority of Payments.
-182-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
The Servicer may, in its sole discretion, elect to defer or waive payment of any or all of any Servicing Fee otherwise due on any Payment Date by notice to
the Borrower, the Collateral Administrator and the Collateral Agent no later than the Determination Date immediately prior to such Payment Date.
If and to the extent that there are insufficient funds to pay any Servicing Fee in full on any Payment Date or if any Servicing Fee has accrued but is not yet
due and payable, the amount due or accrued and unpaid will be deferred and will be payable on such later Payment Date on which funds are available in accordance with the Priority
of Payments.
Section 14.06 Expenses; Indemnification
(a) The Servicer shall be responsible for its expenses incurred by it in the performance of its obligations under this Agreement to the extent not otherwise
reimbursed by the Borrower.
(b) The Servicer agrees to indemnify and hold harmless each Indemnified Party from and against any and all Liabilities that may be incurred by or asserted
or awarded against any Indemnified Party, in each case arising out of or in connection with any acts or omissions of the Servicer in connection with (a) any breach by the Servicer of
any Facility Document (including a breach of any representation or warranty made by the Servicer under any Facility Document) or (b) any gross negligence or willful misconduct
of the Servicer; in each case, except to the extent any such Liability (x) is found in a final, non‑appealable judgment by a court of competent jurisdiction to have resulted from the
gross negligence or willful misconduct of such Indemnified Party, any of its Affiliates or the respective officers, directors, employees, agents, managers of, and any Person
controlling any of, the foregoing or (y) constitutes credit recourse for the performance of the Collateral Loans. In the case of an investigation, litigation or proceeding to which the
indemnity in this paragraph applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by the Servicer, any of the Servicer’s
equityholders or creditors, an Indemnified Party or any other Person, whether or not an Indemnified Party is otherwise a party hereto. The Servicer shall not, without the prior
written consent of the Indemnified Party, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Party is a party (or, in the case of a
threatened proceeding, could reasonably have been expected to be a party if such proceeding had been brought) and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement (i) does not include a statement as to or admission of, fault, culpability or a failure to act by or on behalf of any such Indemnified Party, and
(ii) includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such proceeding. In no event shall the Servicer be liable for
special, punitive, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost profits) even if the Servicer has been advised of the likelihood of
such damages and regardless of the form of such action. This Section 14.06(b) shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc.
arising from any non‑Tax claim.
Section 14.07 The Servicer Not to Resign; Assignment
-183-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(a) Other than in the case of an assignment to an Affiliate that would not cause a Change of Control under clause (b) of the definition thereof, the Servicer
shall not resign from the obligations and duties hereby imposed on it unless such resignation is necessary for the Servicer to comply with Applicable Law. For the avoidance of
doubt, any such resignation will constitute a Servicer Default.
(b) The Servicer may not assign its rights or obligations hereunder or any interest herein without the prior written consent of the Administrative Agent.
Section 14.08 Appointment of Successor Servicer
(a) Upon the occurrence and during the continuance of a Servicer Termination Event, notwithstanding anything herein to the contrary, but subject to Section
6.04(e), the Administrative Agent may (or shall if directed by the Required Lenders), with notice to the Borrower, the Equityholder, the Collateral Agent and the Lenders, terminate
all of the rights and obligations of the Servicer as “Servicer” under this Agreement. The Administrative Agent with notice to the Borrower, the Equityholder, the Collateral Agent
and the Lenders, may appoint a successor Servicer (the “Successor Servicer”), which, for the avoidance of doubt may be the Administrative Agent or any Lender, and such
Successor Servicer shall accept its appointment by a written assumption in a form acceptable to the Administrative Agent in its sole discretion. Until a Successor Servicer is
appointed as set forth above, the Servicer shall (i) unless otherwise notified by the Administrative Agent, continue to act in such capacity in accordance with Section 14.02 and (ii) as
requested by the Administrative Agent in its sole discretion (A) terminate some or all of its activities as Servicer hereunder by the Administrative Agent in its sole discretion as
necessary or desirable, (B) provide such information as may be requested by the Administrative Agent to facilitate the transition of the performance of such activities to the
Administrative Agent or any agent thereof and (C) take all other actions requested by the Administrative Agent, in each case to facilitate the transition of the performance of such
activities to the Administrative Agent or any agent thereof.
(b) Upon its appointment, the Successor Servicer shall be the successor in all respects to the Servicer with respect to servicing functions under this
Agreement and shall be subject to all the responsibilities, duties and liabilities relating thereto placed on the Servicer by the terms and provisions hereof, and all references in this
Agreement to the Servicer shall be deemed to refer to the Successor Servicer; provided that the Successor Servicer shall have (i) no liability with respect to any action performed by
the terminated Servicer prior to the date that the Successor Servicer becomes the successor to the Servicer or any claim of a third party based on any alleged action or inaction of the
terminated Servicer, (ii) no obligation to pay any taxes required to be paid by the Servicer; provided that the Successor Servicer shall pay any income taxes for which it is liable, (iii)
no obligation to pay any of the fees and expenses of any other party to the transactions contemplated hereby, and (iv) no liability or obligation with respect to any Servicer
indemnification obligations of any prior Servicer, including the original Servicer.
(c) Notwithstanding anything contained in this Agreement to the contrary, a Successor Servicer is authorized to accept and rely on all of the accounting,
records (including computer records) and work of the prior Servicer relating to the Collateral Loans (collectively, the “Predecessor Servicer Work Product”) without any audit or
other examination thereof, and such
-184-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Successor Servicer shall have no duty, responsibility, obligation or liability for the acts and omissions of the prior Servicer. If any error, inaccuracy, omission or incorrect or
non‑standard practice or procedure (collectively, “Errors”) exist in any Predecessor Servicer Work Product and such Errors make it materially more difficult to service or should
cause or materially contribute to the Successor Servicer making or continuing any Errors (collectively, “Continued Errors”), such Successor Servicer shall have no duty,
responsibility, obligation or liability for such Continued Errors; provided that such Successor Servicer agrees to use its best efforts to prevent further Continued Errors. In the event
that the Successor Servicer becomes aware of Errors or Continued Errors, it shall, with the prior consent of the Administrative Agent, use its best efforts to reconstruct and reconcile
such data as is commercially reasonable to correct such Errors and Continued Errors and to prevent future Continued Errors.
ARTICLE XV
THE COLLATERAL ADMINISTRATOR
Section 15.01 Designation of Collateral Administrator
(a) Initial Collateral Administrator. Until a successor Collateral Administrator is appointed in accordance with this Article XV, Computershare Trust
Company, National Association is hereby appointed as, and hereby accepts such appointment and agrees to perform the duties and obligations of the Collateral Administrator
pursuant to the terms hereof and of the other Facility Documents to which the Collateral Administrator is a party. The Collateral Administrator’s services hereunder shall be
conducted through its CCT division (including any Affiliates or agents utilized thereby).
(b) Successor Collateral Administrator. Upon the Collateral Administrator’s receipt of written notice from the Administrative Agent of the designation of a
successor Collateral Administrator pursuant to the provisions of Section 15.05, the Collateral Administrator agrees that it will terminate its activities as Collateral Administrator
hereunder. Notwithstanding such termination, the Collateral Administrator shall be entitled to receive all accrued and unpaid Collateral Administration and Agency Fees and
Administrative Expenses due and owing to it at the time of such termination.
Section 15.02 Certain Duties and Powers
(a) The Collateral Administrator shall assist the Borrower and the Servicer in connection with monitoring the Collateral by maintaining a database on certain
characteristics of the Collateral on an ongoing basis and providing to the Borrower and the Servicer (and, where applicable, the Borrower’s independent public accountants) certain
reports, schedules, calculations all as more particularly described in this Section 15.02 (in each case, such reports, schedules and calculations shall be prepared in such form and
content, and in such greater detail, as may be mutually agreed upon by the parties hereto from time to time and as may be required by this Agreement) based upon information and
data received from the Borrower and/or the Servicer, as required to be prepared and delivered (or which are necessary to be prepared and delivered in order that certain other reports,
schedules and calculations can be prepared and delivered) under Article VIII of this Agreement. The Collateral Administrator’s duties and authority to act as Collateral
-185-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Administrator hereunder are limited to the duties and authority specifically provided for in this Agreement and no implied duties, obligations or responsibilities shall be read into
this Agreement against, or on the part of, the Collateral Administrator. The Collateral Administrator shall not be deemed to assume the obligations of the Borrower or the Servicer
hereunder or any other Facility Document, and nothing herein contained shall be deemed to release, terminate, discharge, limit, reduce, diminish, modify, amend or otherwise alter in
any respect the duties, obligations or Liabilities of the Borrower or the Servicer under or pursuant to this Agreement or any other Facility Document. Without limiting the foregoing,
the Collateral Administrator shall perform the following functions:
(i) create a collateral database of certain characteristics (to the extent required for the performance of its obligations hereunder, and otherwise as
reasonably agreed to between the Collateral Administrator and the Servicer) of the Collateral Loans and Eligible Investments credited from time to time to the Covered
Accounts (the “Collateral Database”);
(ii) permit access to the information in the Collateral database by the Servicer and the Borrower;
(iii) update the Collateral Database promptly for ratings changes and for Collateral Loans, Equity Securities and Eligible Investments acquired or sold
or otherwise disposed of and for any amendments or changes to Collateral Loan amounts or interest rates and, if direct online viewing access to the foregoing is
unavailable, report any updates as of the close of business on the preceding Business Day to the Collateral database to the Administrative Agent no later than 5:00 p.m.
on each Business Day, in each case based upon, and to the extent of, information furnished to the Collateral Administrator by or on behalf of the Borrower or the
Servicer as may be reasonably required by the Collateral Administrator, or by the agents for the obligors from time to time;
(iv) track the receipt and daily allocation of cash to the Collection Account and any withdrawals therefrom (including the applicable Interest Rates
provided to the Collateral Administrator by the Administrative Agent) and, if direct online viewing access to the foregoing is unavailable, report the balances of the
Collection Account to the Administrative Agent no later than 5:00 p.m. on each Business Day as of the close of business on the preceding Business Day;
(v) deliver the Administrative Agent, on each Business Day, a trade blotter, cash flow and position report with respect to the Collateral;
(vi) draft and make available to the parties required under this Agreement each of the Monthly Reports and Payment Date Reports which are required
to be provided pursuant to Section 8.08(a) of this Agreement by the time specified in this Agreement and on the basis of the information contained in the Collateral
Database or as provided to the Collateral Administrator by the Borrower, Servicer or Administrative Agent; and
-186-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(vii) provide the Servicer with such other information as may be reasonably requested in writing by the Servicer and as is within the possession of the
Collateral Administrator.
(b) No provision of this Agreement shall be construed to relieve the Collateral Administrator from liability for its own grossly negligent action, its own
grossly negligent failure to act, or its own willful misconduct or fraud, except that:
(i) this subsection shall not be construed to limit the effect of subsection (a) of this Section 15.02;
(ii) the Collateral Administrator shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Collateral
Administrator, unless it shall be proven that the Collateral Administrator was grossly negligent in ascertaining the pertinent facts or engaged in fraud or willful
misconduct;
(iii) no provision of this Agreement shall require the Collateral Administrator to expend or risk its own funds or otherwise incur any financial or other
liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers contemplated hereunder, if it shall have reasonable grounds for
believing that repayment of such funds or indemnity satisfactory to it against such risk or liability is not reasonably assured to it unless such risk or liability relates to the
performance of its ordinary services under this Agreement; and
(iv) in no event shall the Collateral Administrator be liable for special, punitive, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits) even if the Collateral Administrator has been advised of the likelihood of such damages and regardless of the form of such
action.
(c) Upon request of the Collateral Administrator, the Borrower and the Servicer shall cooperate with the Collateral Administrator in connection with the
matters described herein, including calculations and information relating to the Monthly Reports and the Payment Date Reports or as otherwise reasonably requested hereunder.
Nothing herein shall obligate the Collateral Administrator to determine independently the correct characterization or categorization of any item of Collateral under this Agreement (it
being understood that any such characterization or categorization shall be based exclusively upon the determination and notification received by the Collateral Administrator from
the Servicer). The Servicer shall review and verify the contents of the contents of the Monthly Reports and the Payment Date Reports. To the extent the Servicer becomes actually
aware that the information with respect to any Collateral Loan in any report, instruction or certificate required to be delivered by the Collateral Administrator conflicts with
information, data or calculations in the records of the Servicer, the Servicer shall notify the Collateral Administrator of such discrepancy and use commercially reasonable efforts to
assist the Collateral Administrator in reconciling such discrepancy. The Collateral Administrator shall cooperate with the Servicer in connection with the Servicer’s review of the
contents of the aforesaid reports, instruction and certificates and will use commercially reasonable efforts to provide such items to the Servicer within a reasonably sufficient time (as
agreed between the Servicer and the Collateral Administrator) prior to any applicable due date to enable such review.
-187-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
The Servicer further agrees to send such reports, instructions, statements and certificates to the Borrower for execution.
(d) The Collateral Administrator shall have no obligation to determine the Asset Value or the price of any Collateral in connection with any actions or duties
under this Agreement. Nothing herein shall prevent the Collateral Administrator or any of its Affiliates from engaging in other businesses or from rendering services of any kind to
any Person.
(e) The Collateral Administrator shall in no event have any liability for the actions or omissions of the Borrower, the Servicer, the Administrative Agent, the
Custodian (but only if not the same Person as the Collateral Administrator) or any other Person, and shall have no liability for any inaccuracy or error in any duty performed by it
that results from or is caused by inaccurate, untimely or incomplete information or data received by it from the Borrower, the Servicer, the Custodian (but only if not the same
Person as the Collateral Administrator) or another Person except to the extent that such inaccuracies or errors are caused by the Collateral Administrator’s own bad faith, willful
misconduct, gross negligence or fraud. The Collateral Administrator shall not be liable for failing to perform or any delay in performing its specified duties hereunder which results
from or is caused by a failure or delay on the part of the Borrower, the Servicer, the Administrative Agent, the Custodian (but only if not the same Person as the Collateral
Administrator) or any other Person in furnishing necessary, timely and accurate information to the Collateral Administrator.
(f) It is expressly acknowledged by the Borrower and the Servicer that application and performance by the Collateral Administrator of its various duties
hereunder (including recalculations to be performed in respect of the matters contemplated hereby) shall be based upon, and in reliance upon, data and information provided to it by
the Servicer (and/or the Borrower) with respect to the Collateral, and the Collateral Administrator shall have no responsibility for the accuracy of any such information or data
provided to it by such Persons. Nothing herein shall impose or imply any duty or obligation on the part of the Collateral Administrator to verify, investigate or audit any such
information or data, or to determine or monitor on an independent basis whether any obligor under the Collateral is in default or in compliance with the underlying documents
governing or securing such securities, from time to time, the role of the Collateral Administrator hereunder being solely to perform certain mathematical computations and data
comparisons and to provide certain reports and other deliveries, as provided herein. For purposes of monitoring changes in ratings, the Collateral Administrator shall be entitled to
use and rely (in good faith) exclusively upon one or more reputable electronic financial information reporting services, and shall have no liability for any inaccuracies in the
information reported by, or other errors or omissions of, any such services.
(g) Nothing herein shall obligate the Collateral Administrator to determine independently any characteristic of a Collateral Loan, or to evaluate or verify the
Servicer’s characterization of any Collateral Loan, including whether any item of Collateral is a Revolving Collateral Loan, Delayed Drawdown Collateral Loan, Fixed Rate
Obligation, Noteless Loan, PIK Loan, DIP Loan, Eligible Collateral Loan, Ineligible Collateral Loan, Equity Security, First Lien Last Out Loan, Floor Obligation, Second Lien
Loan, Structured Finance Obligation, Certificated Security, Covenant Lite Loan or Uncertificated Security, any such determination being based exclusively upon notification the
Collateral Administrator receives from the Servicer or from (or
-188-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
in its capacity as) the Collateral Agent (based upon notices received by the Collateral Agent from the obligor, trustee or agent bank under an underlying governing document, or
similar source) and nothing herein shall obligate the Collateral Administrator to review or examine any underlying instrument or contract evidencing, governing or guaranteeing or
securing any Collateral Loan in order to verify, confirm, audit or otherwise determine any characteristic thereof. In addition, the Servicer shall notify the Collateral Administrator of
any amendment or modification of a Collateral Loan to the extent a Responsible Officer of the Servicer has actual knowledge of such amendment or modification.
Section 15.03 Certain Rights of Collateral Administrator
Notwithstanding any terms herein contained to the contrary, the acceptance by the Collateral Administrator of its appointment hereunder is expressly subject
to the following terms, which shall govern and apply to each of the terms and provisions of this Agreement (whether or not so stated therein):
(a) The Collateral Administrator may conclusively rely on and shall be fully protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent, order, note or other paper, electronic communication or document reasonably believed by it to be genuine
and to have been signed or presented by the proper party or parties.
(b) If, in performing its duties under this Agreement, the Collateral Administrator is required to decide between alternative courses of action, the Collateral
Administrator may request written instructions from (x) so long as no Event of Default has occurred and is continuing, the Servicer acting on behalf of the Borrower or (y) after the
occurrence and during the continuance of an Event of Default, the Administrative Agent, as to the appropriate course of action desired by it. If the Collateral Administrator does not
receive such instructions within two (2) Business Days after it has requested them, the Collateral Administrator may, but shall be under no duty to, take or refrain from taking any
such courses of action; provided that the Collateral Administrator shall, as soon as practicable thereafter, notify the Servicer of which course of action, if any, it has decided to take.
The Collateral Administrator shall act in accordance with instructions received after such two (2) Business Day period except to the extent it has already taken, or committed itself to
take, action inconsistent with such instructions.
(c) Neither the Collateral Administrator nor any of its directors, officers or employees shall be liable to anyone for any error of judgment, or for any act done
or step taken or omitted to be taken by it (or any of its directors, officers of employees), or for any mistake of fact or Law, or for anything which it may do or refrain from doing in
connection herewith, unless such action constitutes gross negligence, fraud, bad faith or willful misconduct on its part and in breach of the terms of this Agreement. The Collateral
Administrator shall not be liable for any action taken by it in good faith and reasonably believed by it to be within powers conferred upon it, or taken by it pursuant to any direction
or instruction by which it is governed hereunder, or omitted to be taken by it by reason of the lack of direction or instruction required hereby for such action.
(d) The Collateral Administrator may consult with, and obtain advice from, legal counsel selected in good faith with respect to any question as to any of the
provisions hereof
-189-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
or its duties hereunder, or any matter relating hereto, and the written opinion or advice of such counsel shall be full and complete authorization and protection in respect of any action
taken, suffered or omitted by the Collateral Administrator in good faith in accordance with the opinion and directions of such counsel, the reasonable cost of such services shall be
reimbursed pursuant to Section 15.04 below.
(e) The Collateral Administrator shall not be deemed to have notice of any fact, claim or demand with respect hereto unless actually known by a Responsible
Officer of the Collateral Administrator or unless (and then only to the extent) received in writing by the Collateral Administrator and specifically referencing this Agreement.
(f) No provision of this Agreement shall require the Collateral Administrator to expend or risk its own funds, or to take any action (or forbear from action)
hereunder which might in its judgment involve any expense or any financial or other liability unless it shall be furnished with acceptable indemnification. Nothing herein shall
obligate the Collateral Administrator to commence, prosecute or defend legal proceedings in any instance, whether on behalf of the Borrower or on its own behalf or otherwise, with
respect to any matter arising hereunder, or relating to this Agreement or the services contemplated hereby.
(g) The permissive right of the Collateral Administrator to take any action hereunder shall not be construed as a duty.
(h) The Collateral Administrator may act or exercise its duties or powers hereunder through agents or attorneys, and the Collateral Administrator shall not be
liable or responsible for the actions or omissions of any such agent or attorney selected by it with reasonable care.
(i) The Collateral Administrator shall not be responsible or liable for delays or failures in performance resulting from acts beyond its control; provided that
the Collateral Administrator shall use commercially reasonable efforts which are consistent with accepted practices in the banking industry to maintain performance, and, if
necessary, resume performance as soon as practicable under the circumstances. Such acts shall include strikes, work stoppages, accidents, acts of war or terrorism, civil or military
disturbances, nuclear or natural catastrophes, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services, any provision of any
present or future law or regulation or act of any governmental authority, labor dispute, disease, epidemic or pandemic, quarantine, national emergency, malware or ransomware
attack, communications system failure, unavailability of the Federal Reserve Bank wire or telex system or other applicable wire or funds transfer system, or unavailability of any
securities clearing system.
(j) All indemnifications contained in this Agreement in favor of the Collateral Administrator shall survive the termination of this Agreement.
(k) Each of the protections, reliances, indemnities and immunities offered to the Collateral Agent in Article XI shall be afforded to the Collateral
Administrator.
(l) The Collateral Administrator shall not be responsible for the accuracy or content of any certificate, statement, direction or opinion furnished to it in
connection with this
-190-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Agreement or any other Facility Document or Related Document. The Collateral Administrator shall not be bound to make any investigation into the facts stated in any resolution,
certificate, statement, instrument, opinion, report, consent, order, approval, bond or other document or have any responsibility for filing or recording any financing or continuation
statement in any public office at any time or to otherwise perfect or maintain the perfection of any security interest or lien granted by any Person under any Facility Document or
Related Document. The Collateral Administrator shall not be responsible to any Person for any recitals, statements, information, representations or warranties regarding the
Borrower or the Collateral or in any document, certificate or other writing delivered in connection herewith or therewith or for the execution, effectiveness, genuineness, validity,
enforceability, perfection, collectability, priority or sufficiency of thereof or any such other document or the financial condition of any Person or be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions or conditions related to any Person or the existence or possible existence of any Default or Event of
Default. The Collateral Administrator shall not have any obligation whatsoever to any Person to assure that any collateral exists or is owned by any Person or is cared for, protected
or insured or that any liens have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise or to
continue exercising at all or in any manner or under any duty of care, disclosure or fidelity any of the rights, authorities and powers granted or available with respect thereto.
Section 15.04 Compensation and Reimbursement of Collateral Administrator
(a) The Borrower agrees to pay, and the Collateral Administrator shall be entitled to receive, as compensation for the Collateral Administrator’s performance
of the duties called for herein, the amounts set forth in the Collateral Administration and Agency Fee Letter.
(b) The Borrower agrees to pay or reimburse to the Collateral Administrator upon its request from time to time all reasonable and documented costs,
disbursements, advances, and expenses (but limited, in the case of legal fees and expenses, to the reasonable fees and expenses of one firm of outside legal counsel, plus, if
necessary, one additional local counsel) incurred in connection with the preparation or execution of this Agreement, or in connection with the transactions contemplated hereby or
the administration of this Agreement or performance by the Collateral Administrator of its duties and services under this Agreement (including costs and expenses of any action
deemed necessary by the Collateral Administrator to collect any amounts owing to it under this Agreement).
(c) All payments hereunder, including, but not limited to indemnities, shall be paid in accordance with Section 9.01.
Section 15.05 Resignation and Removal; Appointment of Successor
(a) Notwithstanding anything to the contrary contained in this Agreement (including clauses (b) and (c) below), no resignation or removal of the Collateral
Administrator and no appointment of a successor Collateral Administrator pursuant to this Article XV shall become effective until the acceptance of such appointment by the
successor Collateral Administrator under Section 15.06 and the assumption by such successor Collateral Administrator of the duties and obligations of the Collateral Administrator
hereunder.
-191-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
(b) The Collateral Administrator may resign at any time by giving written notice thereof to the Borrower, the Administrative Agent, the Servicer and the
Lenders not less than thirty (30) days prior to such resignation.
(c) The Collateral Administrator may be removed at any time by the Administrative Agent (i) upon thirty (30) days’ notice (with the prior written consent of
the Servicer) or (ii) at any time if (A) an Event of Default shall have occurred and be continuing, or (B) the Collateral Administrator shall become incapable of acting or shall
become the subject of an Insolvency Event. Notice of any such removal shall be sent by the Administrative Agent to the Collateral Administrator, the Borrower, the Lenders and the
Servicer.
(d) The Collateral Administrator may be removed at any time by the Servicer upon thirty (30) days’ notice (with the prior written consent of the
Administrative Agent).
(e) If the Collateral Administrator shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of the Collateral
Administrator for any reason (other than resignation), the Borrower shall, promptly after becoming aware of such resignation, removal, incapacity or vacancy, appoint a successor
collateral administrator by written instrument, executed by a Responsible Officer of the Borrower, one copy of which shall be delivered to the retiring Collateral Administrator and
one copy to the successor Collateral Administrator, together with a copy to the Administrative Agent and the Lenders; provided that such successor Collateral Administrator shall be
appointed only upon the prior written consent of the Administrative Agent (not to be unreasonably withheld, conditioned or delayed) and, so long as no Servicer Termination Event
shall have occurred and be continuing, the Servicer (in each case which consent shall not be unreasonably withheld, conditioned or delayed). In the case of a resignation by the
Collateral Administrator, if no successor Collateral Administrator shall have been appointed and an instrument of acceptance by a successor Collateral Administrator shall not have
been delivered to the resigning or removed Collateral Administrator and the Administrative Agent within thirty (30) days after the giving of such notice of resignation or removal,
the Administrative Agent may appoint a successor Collateral Administrator or the resigning or removed Collateral Administrator may petition any court of competent jurisdiction at
the expense of the Borrower to appoint a successor Collateral Administrator.
Section 15.06 Acceptance and Appointment by Successor
Each successor Collateral Administrator appointed hereunder shall execute, acknowledge and deliver to the Borrower, the Servicer, the Administrative
Agent, the Lenders and the retiring Collateral Administrator an instrument accepting such appointment. Upon delivery of the required instruments, the resignation or removal of the
retiring Collateral Administrator shall become effective and such successor Collateral Administrator, without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts, duties and obligations of the retiring Collateral Administrator; but, on request of the Borrower, the Servicer, the Administrative Agent or the successor
Collateral Administrator, such retiring Collateral Administrator shall (i) execute and deliver an instrument transferring to such successor Collateral Administrator all the rights,
powers and trusts of the retiring Collateral Administrator and (ii) execute and deliver such further documents and instruments and take such further action as may be reasonably
requested in order to effect the transfer of the rights, powers, duties and obligations of the Collateral
-192-
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
Administrator hereunder. Upon request of any such successor Collateral Administrator, the Borrower shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Collateral Administrator all such rights, powers and trusts.
Section 15.07 Merger, Conversion, Consolidation or Succession to Business of Collateral Administrator
Any organization or entity into which the Collateral Administrator may be merged or converted or with which it may be consolidated, or any organization or
entity resulting from any merger, conversion or consolidation to which the Collateral Administrator shall be a party, or any organization or entity succeeding to all or substantially all
of the corporate trust business of the Collateral Administrator, shall be the successor of the Collateral Administrator hereunder, without the execution or filing of any document or
any further act on the part of any of the parties hereto.
Section 15.08 Certain Duties of Collateral Administrator Related to Delayed Payment of Proceeds
In the event that in any month the Collateral Administrator shall not have received any payment (or is unable to identify whether any payment consists of
Principal Proceeds or Interest Proceeds) with respect to any Collateral Loan pursuant to the applicable Related Documents, (a) the Collateral Administrator shall promptly notify the
Administrative Agent, the Borrower, and the Servicer and (b) unless within three (3) Business Days (or the end of the applicable grace period for such payment, if longer) after such
notice such payment shall have been received by the Collateral Custodian (or such Collections shall have been identified), the Servicer shall request the applicable Obligor or
designated paying agent, as applicable, to make such payment (or identify such Collections) as soon as practicable after such request but in no event later than three (3) Business
Days after the date of such request. In the event that such payment is not made (or such Collections are not identified) within such time period, the Collateral Administrator, subject
to the provisions of this Article XV, shall take such reasonable action at the Borrower’s expense as the Servicer shall direct. Any such action shall be without prejudice to any right
to claim a Default or Event of Default under this Agreement. All Collections that the Collateral Administrator is unable to identify as Principal Proceeds or Interest Proceeds shall be
held in the Collection Account.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
[Signature Page to Amended and Restated Credit and Security Agreement]
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date
first above written.
SUNS SPV LLC,
as Borrower
By:
Name:
Title:
[Signature Page to Amended and Restated Credit and Security Agreement]
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
SLR INVESTMENT CORP., as Servicer
By:
Name:
Title:
[Signature Page to Amended and Restated Credit and Security Agreement]
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
SLR INVESTMENT CORP., as Equityholder
By:
Name:
Title:
[Signature Page to Amended and Restated Credit and Security Agreement]
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
CITIBANK, N.A., as Administrative Agent, as a Lender Group Agent and as a Lender
By:
Name:
Title:
[Signature Page to Amended and Restated Credit and Security Agreement]
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
CITIBANK, N.A., as Collateral Agent
By:
Name:
Title:
[Signature Page to Amended and Restated Credit and Security Agreement]
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
ING CAPITAL LLC, as a Lender
By:
Name:
Title:
[Signature Page to Amended and Restated Credit and Security Agreement]
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
CAFCO, LLC, as a Conduit Lender
By: Citibank, N.A., as Attorney-in-Fact
By: ___________________________________
Name:
Title:
CHARTA, LLC, as a Conduit Lender
By: Citibank, N.A., as Attorney-in-Fact
By: ___________________________________
Name:
Title:
CIESCO, LLC, as a Conduit Lender
By: Citibank, N.A., as Attorney-in-Fact
By: ___________________________________
Name:
Title:
CRC FUNDING, LLC, as a Conduit Lender
By: Citibank, N.A., as Attorney-in-Fact
By:
Name:
Title:
[Signature Page to Amended and Restated Credit and Security Agreement]
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
COMPUTERSHARE TRUST COMPANY, N.A., as Collateral Administrator and as Custodian
By:
Name:
Title:
[Signature Page to Amended and Restated Credit and Security Agreement]
DOCPROPERTY "DocID" \* MERGEFORMAT USActive 60781347.5
ING CAPITAL LLC, as Joint Lead Arranger
By:
Name:
Title:
Execution Version
FILENAME 2016G Sixth Supplement and Note (SLR) 4854-5874-6611 v8.docx
4453122
SLR INVESTMENT CORP.
(f/k/a Solar Capital Ltd.)
500 Park Avenue, 3rd Floor
New York, New York 10022
Dated as of
December 16, 2024
To the Series 2016G Additional
Purchasers named in
Schedule A hereto
Ladies and Gentlemen:
This Sixth Supplement to Note Purchase Agreement (the “Supplement” or “Sixth Supplement”) is among SLR Investment Corp. (f/k/a Solar Capital Ltd.), a Maryland
corporation (the “Company”), and the institutional investors named on Schedule A attached hereto (the “Series 2016G Additional Purchasers”).
Reference is hereby made to that certain Note Purchase Agreement dated as of November 8, 2016 (the “Note Purchase Agreement”) among the Company and the
Purchasers listed on Schedule A thereto. All capitalized terms not otherwise defined herein shall have the same meanings as specified in the Note Purchase Agreement. Reference
is further made to Section 4.18 of the Note Purchase Agreement which requires that, prior to the delivery of any Additional Notes, the Company and each Additional Purchaser shall
execute and deliver a Supplement.
The Company hereby agrees with the Series 2016G Additional Purchasers as follows:
1. The Company has authorized the issue and sale of $49,000,000 aggregate principal amount of its 6.24% Series 2016G, Senior Notes, due December 16, 2027 (the “Series 2016G
Notes”). The Series 2016G Notes, together with the Series 2016A Notes issued pursuant to the Note Purchase Agreement, the Series 2016B Notes issued pursuant to the First
Supplement to Note Purchase Agreement dated as of February 15, 2017, the Series 2016C Notes issued pursuant to the Second Supplement to Note Purchase Agreement dated as of
December 28, 2017, the Series 2016D Notes issued pursuant to the Third Supplement to Note Purchase Agreement dated as of December 18, 2019, the Series 2016E Notes issued
pursuant to the Fourth Supplement to Note Purchase Agreement dated as of September 14, 2021, the Series 2016F Notes issued pursuant to the Fifth Supplement to Note Purchase
Agreement dated as of January 6, 2022 and each series of Additional Notes which may from time to time hereafter be issued pursuant to the provisions of Section 2.4 of the Note
Purchase Agreement, are collectively referred to as the “Notes” (such term shall also include any such notes issued in substitution therefor pursuant to Section 13 of the Note
Purchase
SLR Investment Corp. Sixth Supplement
-2-
Agreement). The Series 2016G Notes shall be substantially in the form set out in Exhibit 1 hereto with such changes therefrom, if any, as may be approved by the Series 2016G
Additional Purchasers and the Company.
2. Subject to the terms and conditions hereof and as set forth in the Note Purchase Agreement and on the basis of the representations and warranties hereinafter set forth, the
Company agrees to issue and sell to each Series 2016G Additional Purchaser, and each Series 2016G Additional Purchaser agrees to purchase from the Company, Series 2016G
Notes in the principal amount set forth opposite such Series 2016G Additional Purchaser’s name on Schedule A hereto at a price of 100% of the principal amount thereof on the
closing date hereinafter mentioned.
3. The sale and purchase of the Series 2016G Notes to be purchased by each Series 2016G Additional Purchaser shall occur at the offices of Chapman and Cutler LLP in Chicago,
Illinois, at 8:00 a.m. Chicago time, at a closing (the “Series 2016G Closing”) on December 16, 2024. At the Series 2016G Closing, the Company will deliver to each Series 2016G
Additional Purchaser the Series 2016G Notes of the tranche to be purchased by such Purchaser in the form of a single Series 2016G Note (or such greater number of Series 2016G
Notes in denominations of at least $100,000 as such Series 2016G Additional Purchaser may request) dated the date of the Series 2016G Closing and registered in such Series
2016G Additional Purchaser’s name (or in the name of such Series 2016G Additional Purchaser’s nominee), against delivery by such Series 2016G Additional Purchaser to the
Company or its order of immediately available funds in the amount of the purchase price therefor by wire transfer of immediately available funds for the account of the Company to
[]. If, at the Series 2016G Closing, the Company shall fail to tender such Series 2016G Notes to any Series 2016G Additional Purchaser as provided above in this Section 3, or any
of the conditions specified in Section 4 shall not have been fulfilled to any Series 2016G Additional Purchaser’s satisfaction, such Series 2016G Additional Purchaser shall, at such
Series 2016G Additional Purchaser’s election, be relieved of all further obligations under this Agreement, without thereby waiving any rights such Series 2016G Additional
Purchaser may have by reason of such failure or such nonfulfillment.
4. The obligation of each Series 2016G Additional Purchaser to purchase and pay for the Series 2016G Notes to be sold to such Series 2016G Additional Purchaser at the Series
2016G Closing is subject to the fulfillment to such Series 2016G Additional Purchaser’s satisfaction, prior to the Series 2016G Closing, of the conditions set forth in Section 4 of
the Note Purchase Agreement with respect to the Series 2016G Notes to be purchased at the Series 2016G Closing as if each reference to “2016A Notes” or “Notes,” “Closing” and
“Purchaser” set forth therein was modified to refer the “Series 2016G Notes,” the “Series 2016G Closing” and the “Series 2016G Additional Purchaser” (each as defined in this
Sixth Supplement) and to the following additional conditions:
(a) Each of the representations and warranties of the Company set forth in Exhibit A hereto shall be correct as of the date of the Series 2016G Closing (except for
representations and warranties which apply to a specific earlier date (other than an earlier closing date in connection with the Note Purchase Agreement or a prior
supplement) which shall be true as of such earlier date) and the Company shall have delivered to each Series
SLR Investment Corp. Sixth Supplement
-3-
2016G Additional Purchaser an Officer’s Certificate, dated the date of the Series 2016G Closing certifying that such condition has been fulfilled.
(b) Contemporaneously with the Series 2016G Closing, the Company shall sell to each Series 2016G Additional Purchaser, and each Series 2016G Additional Purchaser
shall purchase, the Series 2016G Notes to be purchased by such Series 2016G Additional Purchaser at the Series 2016G Closing as specified in Schedule A hereto.
(c) Contemporaneously with the Series 2016G Closing, the Company shall provide to each Series 2016G Additional Purchaser:
(i) a copy of each of the Subsidiary Guarantees delivered by NEFCORP, LLC and NEFPASS, LLC, respectively;
(ii) a certificate signed by an authorized responsible officer of such Subsidiary Guarantors dated the date of the Series 2016G Closing certifying that the
representations and warranties of each Subsidiary Guarantor made at the time of the execution and delivery of its Subsidiary Guarantee are true and correct
as of the date of the Series 2016G Closing;
(iii) a certificate of its Secretary or Assistant Secretary dated the date of the Series 2016G Closing certifying as to the due organization, continuing existence
and good standing of such Subsidiary and the due authorization by all requisite action on the part of such Subsidiary of the execution and delivery of such
Subsidiary Guaranty and the performance by such Subsidiary of its obligations thereunder; and
(iv) a reliance letter of counsel dated the date of the Series 2016G Closing permitting reliance by the Series 2016G Additional Purchasers on the opinions of
Latham & Watkins LLP delivered in accordance with Section 9.7(b)(iv) of the Note Purchase Agreement at the time of the execution and delivery of each
Subsidiary Guarantee.
5. The Company covenants and agrees with the holders of the Series 2016G Notes that Section 13.2 of the Note Purchase Agreement shall be amended by deleting the last sentence
of such Section 13.2 and replacing it with the following: “Any transferee, by its acceptance of the Note registered in its name (or the name of its nominee), shall be deemed to have
made the representations and agreements set forth in Section 6.1(b) and (f) and Section 6.2 of the Note Purchase Agreement and in Section 6(b) of the Sixth Supplement.”
6. (a) Each Series 2016G Additional Purchaser severally represents and warrants that the representations and warranties set forth in Section 6.1(a), (b), (c) and (f) and in Section
6.2 of the Note Purchase Agreement are true and correct on the date hereof with respect to the purchase of the Series 2016G Notes by such Series 2016G Additional Purchaser as if
each reference to “2016A Notes” or “Notes,” “Closing” and “Purchaser” set forth therein was modified to refer the “Series 2016G Notes,” the “Series 2016G Closing” and the
“Series 2016G Additional Purchaser”
SLR Investment Corp. Sixth Supplement
-4-
and each reference to “this Agreement” therein was modified to refer to the Note Purchase Agreement as supplemented by this Sixth Supplement.
(b) Each Series 2016G Additional Purchaser for itself represents that it is either (i) an Institutional Accredited Investor acting for its own account or as a fiduciary or agent for
others (which others are also Institutional Accredited Investors) or (ii) a “qualified institutional buyer” as defined under Rule 144A acting for its own account or as a fiduciary or
agent for others (which others are also “qualified institutional buyers”).
(c) Each Series 2016G Additional Purchaser severally represents that the purchase of the Notes by such Purchaser has not been solicited by or through anyone other than the
Company.
7. The Company and each Series 2016G Additional Purchaser agree to be bound by and comply with the terms and provisions of the Note Purchase Agreement as fully and
completely as if such Series 2016G Additional Purchaser were an original signatory to the Note Purchase Agreement.
8. This Sixth Supplement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York, excluding
choice‑of‑law principles of the law of such State that would permit the application of the laws of a jurisdiction other than such State.
9. The Company covenants and agrees with the holders of the Series 2016G Notes that the definitions of “Canada Blocked Person” and “Canadian Economic Sanctions Laws” shall
be amended and restated in their entirety to read as follows:
“Canada Blocked Person” means (i) a “terrorist group” as defined for the purposes of Part II.1 of the Criminal Code (Canada), as amended or (ii) a Person identified in
or pursuant to (w) Part II.1 of the Criminal Code (Canada), as amended or (x) the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, as amended or
(y) the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law), as amended or (z) regulations or orders promulgated pursuant to the Special
Economic Measures Act (Canada), as amended, the United Nations Act (Canada), as amended, or the Freezing Assets of Corrupt Foreign Officials Act (Canada), as
amended, in any case pursuant to this clause (ii) as a Person in respect of whose property or benefit a holder of Notes would be prohibited from entering into or
facilitating a related financial transaction.
“Canadian Economic Sanctions Laws” means those laws, including enabling legislation, orders-in-council or other regulations administered and enforced by Canada or a
political subdivision of Canada pursuant to which economic sanctions have been imposed on any Person, entity, organization, country or regime, including Part II.1 of
the Criminal Code (Canada), as amended, the Special Economic Measures Act (Canada), as amended, the Proceeds of Crime (Money Laundering) and Terrorist
Financing Act, as amended, the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law), as amended, the United Nations Act (Canada), as
amended, the Export and Import Permits Act (Canada), as amended, and the Freezing Assets of Corrupt Foreign Officials Act (Canada),
SLR Investment Corp. Sixth Supplement
-5-
as amended, and including all regulations promulgated under any of the foregoing, or any other similar sanctions program or action.
10. [Reserved].
11. The Company covenants and agrees with the holders of the Series 2016G Notes that Section 18 of the Note Purchase Agreement shall be amended and restated in its entirety to
read as follows:
(a) All notices and communications provided for hereunder shall be in writing and sent (i) by tele-facsimile if the recipient has provided a fax number in its notice
details and if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid), (ii) by registered or
certified mail with return receipt requested (postage prepaid), (iii) by priority or express mail with online tracking services, (iv) by a recognized overnight delivery service
(with charges prepaid) or (v) by e-mail if the recipient has provided an e-mail address in its notice details. Any such notice must be sent:
(A) if to any Purchaser or its nominee, to such Purchaser or nominee at the address specified for such communications in Schedule A, or at such other address as such
Purchaser or nominee shall have specified to the Company in writing,
(B) if to any other holder of any Note, to such holder at such address as such other holder shall have specified to the Company in writing, or
(C) if to the Company, to the Company at its address or e-mail address set forth at the beginning hereof to the attention of the Chief Financial Officer, or at such other
address as the Company shall have specified to the holder of each Note in writing.
(D) if to an Additional Purchaser or such Additional Purchaser’s nominee, to such Additional Purchaser or such Additional Purchaser’s nominee at the address specified
for such communications in Schedule A to any Supplement, or at such other address as such Additional Purchaser or such Additional Purchaser’s nominee shall have
specified to the Company in writing.
Notices under this Section 18 will be deemed given only when actually received. Notices delivered through electronic communications to the extent provided in
paragraph (b) below, shall be effective as provided in said paragraph (b).
(b) Notices and other communications to the Company, Purchasers, Additional Purchasers or other holders of any Note hereunder may be delivered or furnished by
electronic communication (including e‑mail and Internet or intranet websites); provided that the foregoing shall not apply to notices to a Purchaser, Additional Purchaser
or other holder of any Note if such Purchaser, Additional Purchaser or holder has notified the Company that it is incapable of receiving notices under this Agreement by
electronic communication. Notices and other communications (i) sent to an e‑mail address shall be
SLR Investment Corp. Sixth Supplement
-6-
deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such as by the “return receipt requested” function, as available, return
e‑mail or other written acknowledgment), provided that if such notice or other communication is not sent during normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient, and (ii) posted to an Internet or intranet website
shall be deemed received upon the deemed receipt by the intended recipient at its e‑mail address as described in the foregoing clause (i) of the notification that such
notice or communication is available and identifying the website address therefor. Unless a Purchaser, Additional Purchaser or other holder of any Note has notified the
Company that it is incapable of receiving notices by electronic communication, each Purchaser, Additional Purchaser or other holder of any Note agrees to notify the
Company in writing (including by electronic communication) from time to time of any change in such Purchaser’s, Additional Purchaser’s or holder’s e‑mail address to
which the foregoing notice may be sent by electronic transmission and that the foregoing notice may be sent to such e‑mail address.
12. Pursuant to Section 18(a)(C) of the Note Purchase Agreement and Section 14(a) of each Subsidiary Guarantee, notices and communications to (i) the Company provided for
under the Note Purchase Agreement and (ii) each Guarantor under the Subsidiary Guarantees, should be sent to the address or e-mail below:
SLR Investment Corp.
500 Park Avenue, 3rd Floor
New York, New York 10022
Attention: Chief Financial Officer
Email: slr_capital_finance@slrcp.com
The execution hereof shall constitute a contract between the Company and the Series 2016G Additional Purchasers for the uses and purposes hereinabove set forth, and
this agreement may be executed in any number of counterparts, each executed counterpart constituting an original but all together only one agreement. Each counterpart may consist
of a number of copies hereof, each signed by less than all, but together signed by all, of the parties hereto. The parties agree to electronic contracting and signatures with respect to
this agreement and the other Note Documents (other than the Notes). Delivery of an electronic signature to, or a signed copy of, this agreement and such other Note Documents
(other than the Notes) by email or other electronic transmission shall be fully binding on the parties to the same extent as the delivery of the signed originals and shall be admissible
into evidence for all purposes.
Schedule A
(to Supplement)
SLR INVESTMENT CORP. (F/K/A SOLAR CAPITAL LTD.)
By
Name:
Title:
Accepted as of the date of this Supplement.
[Purchaser]
By:
Name:
Title:
By:
Name:
Title:
SLR Investment Corp. Sixth Supplement
Exhibit A
(to Supplement)
SUPPLEMENTAL REPRESENTATIONS
tion 5. Representations and Warranties of the Company
Section 5.1. Organization; Power and Authority. Each of the Company and its Subsidiaries is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted and, except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is
required of the Company or such Subsidiary, as applicable.
Section 5.2. Authorization, Etc. The Transactions are within the Company’s corporate powers and have been duly authorized by all necessary corporate action and, if required, by
all necessary shareholder action. The Note Purchase Agreement and the Sixth Supplement have been duly executed and delivered by the Company and the Note Purchase
Agreement as supplemented by the Sixth Supplement constitutes, and each of the other Note Documents to which it is a party when executed and delivered will constitute, a legal,
valid and binding obligation of the Company, enforceable in accordance with its terms, except as such enforceability may be limited by (a) bankruptcy, insolvency, reorganization,
moratorium or similar laws of general applicability affecting the enforcement of creditors’ rights and (b) the application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
Section 5.3. Disclosure. The Company has disclosed to the Series 2016G Additional Purchasers all agreements, instruments and corporate, limited liability company or other
restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. None of the reports, financial statements, certificates or other information furnished by or on behalf of the Company to the Series 2016G Additional
Purchasers in connection with the negotiation of the Note Purchase Agreement, the Sixth Supplement and the other Note Documents or delivered hereunder or thereunder (as
modified or supplemented by other information so furnished) when taken together with the Company’s public filings contains any material misstatement of fact therein (or omits to
state any material fact necessary to make the statements therein not misleading), in the light of the circumstances under which they were made; provided that, with respect to
projected financial information, the Company represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.
Since the date of the most recent Applicable Financial Statements, there has not been any event, development or circumstance that has had or could reasonably be
expected to have a material adverse effect on (i) the business, Portfolio Investments and other assets, liabilities and financial condition of the Company and its Subsidiaries taken as a
whole (excluding in any case a decline in the net asset value of the Company or a change in general market conditions or values of the Company’s or any of its Subsidiaries’
Portfolio Investments), or (ii) the validity or
SLR Investment Corp. Sixth Supplement
- 2 -
enforceability of any of the Note Documents or the rights or remedies of the Purchasers and the holders of the Notes thereunder.
Section 5.4. Organization and Ownership of Shares of Subsidiaries. (a) Schedule 5.4 contains (except as noted therein) complete and correct lists (i) of the Company’s
Subsidiaries, showing, as to each Subsidiary, the correct name thereof, the jurisdiction of its organization, and the percentage of shares of each class of its capital stock or similar
equity interests outstanding owned by the Company and each other Subsidiary (other than any tax blocker or investment held by such tax blocker), and (ii) of the Company’s
directors and senior officers.
(b) All of the outstanding shares of capital stock or similar equity interests of each Subsidiary shown in Schedule 5.4 as being owned by the Company and its Subsidiaries have
been validly issued, are fully paid and nonassessable and are owned by the Company or another Subsidiary free and clear of any Lien (except Permitted Liens, Liens created
pursuant to the Security Documents or as otherwise disclosed in Schedule 5.4).
(c) Each Subsidiary identified in Schedule 5.4 is a corporation or other legal entity duly organized, validly existing and, where legally applicable, in good standing under the laws of
its jurisdiction of organization, and is duly qualified as a foreign corporation or other legal entity and, where legally applicable, is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Each such Subsidiary has the corporate or other power and authority to own or hold under lease the properties it purports to own or hold
under lease and to transact the business it transacts and proposes to transact.
(d) No Subsidiary is a party to, or otherwise subject to any legal, regulatory, contractual or other restriction (other than the Note Purchase Agreement, the Sixth Supplement, the
Senior Secured Credit Agreement, the agreements listed on Schedule 5.4 and customary limitations imposed by corporate law or similar statutes) restricting the ability of such
Subsidiary to pay dividends out of profits or make any other similar distributions of profits to the Company or any of its Subsidiaries that owns outstanding shares of capital stock or
similar equity interests of such Subsidiary.
Section 5.5. Financial Statements; Material Liabilities. The Company has heretofore delivered to each Purchaser the audited consolidated statement of assets and liabilities (or
balance sheet) and statements of operations, changes in net assets and cash flows of the Company and its Subsidiaries as of and for the fiscal year ending on December 31, 2023;
such financial statements present fairly, in all material respects, the consolidated financial position and results of operations and cash flows of the Company and its Subsidiaries as of
such date in accordance with GAAP. The Company and its Subsidiaries do not have any Material liabilities that are not disclosed on such financial statements.
Section 5.6. Compliance with Laws. Each of the Company and its Subsidiaries is in compliance with all laws, regulations and orders of any Governmental Authority applicable to it
or its property and all indentures, agreements and other instruments binding upon it or its property,
SLR Investment Corp. Sixth Supplement
- 3 -
except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries is subject to any contract or other arrangement, the performance of which by the Company or any such Subsidiary could reasonably be expected to result in a Material
Adverse Effect.
Section 5.7. Governmental Authorizations, Compliance with Laws, Other Instruments, Etc. The Transactions (a) do not require any consent or approval of, registration or filing
with, or any other action by, any Governmental Authority, except for such as have been or will be obtained or made and are in full force and effect and are described in Schedule 5.7,
(b) will not violate any applicable law or regulation or the limited liability company operating agreement, charter, by‑laws or other organizational documents of the Company or any
of its Subsidiaries or any order of any Governmental Authority, (c) will not violate or result in a default in any material respect under any indenture, agreement or other instrument
binding upon the Company or any of its Subsidiaries or assets, or give rise to a right thereunder to require any payment to be made by any such Person, and (d) will not result in the
creation or imposition of any Lien on any asset of the Company or any of its Subsidiaries.
Section 5.8. Litigation; Observance of Agreements, Statutes and Orders. (a) There are no actions, suits, investigations or proceedings by or before any arbitrator or Governmental
Authority now pending against or, to the knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries (i) as to which there is a reasonable
possibility of an adverse determination and that if adversely determined could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect or (ii)
that involve the Note Purchase Agreement, the Sixth Supplement, the Note Purchase Agreement as supplemented by the Sixth Supplement or the Transactions.
(b) Neither the Company nor any Subsidiary is in default under any term of any agreement or instrument to which it is a party or by which it is bound, or any order, judgment,
decree or ruling of any court, arbitrator or Governmental Authority or is in violation of any applicable law, ordinance, rule or regulation of any Governmental Authority, which
default or violation, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
Section 5.9. Taxes. Each of the Company and its Subsidiaries has timely filed or caused to be filed all material Tax returns and reports required to have been filed and has paid or
caused to be paid all material Taxes required to have been paid by it, except (a) Taxes that are being contested in good faith by appropriate proceedings and for which such Person
has set aside on its books adequate reserves or (b) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect. The charges, accruals
and reserves on the books of the Company and its Subsidiaries in respect of Federal, state or other taxes for all fiscal periods are adequate in all material respects.
Section 5.10. Title to Property; Leases. Each of the Company and the other Obligors has good title to, or valid leasehold interests in, all its real and personal property material to its
business, except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes.
SLR Investment Corp. Sixth Supplement
- 4 -
Section 5.11. Licenses, Permits, Etc. Each of the Company and its Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual
property material to its business, and the use thereof by the Company and its Subsidiaries does not infringe upon the rights of any other Person, except for any such infringements
that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.
Section 5.12. ERISA. (a) The execution and delivery of the Note Purchase Agreement or the Sixth Supplement and the issuance and sale of the Series 2016G Notes under the Note
Purchase Agreement as supplemented by the Sixth Supplement will not involve any transaction that is subject to the prohibitions of section 406 of ERISA or in connection with
which a tax could be imposed pursuant to section 4975(c)(1)(A)‑(D) of the Code. The representation by the Company in the first sentence of this Section 5.12(a) is made in
reliance upon and subject to the accuracy of such Purchaser’s representation in Section 6.2 as to the sources of the funds used to pay the purchase price of the Series 2016G Notes to
be purchased by such Purchaser.
(b) No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur,
could reasonably be expected to result in a Material Adverse Effect.
Section 5.13. Private Offering by the Company. Neither the Company nor anyone acting on its behalf has offered the Series 2016G Notes or any similar Securities for sale to, or
solicited any offer to buy any of the same from, or otherwise approached or negotiated in respect thereof with, any Person other than the Series 2016G Additional Purchasers, each of
which has been offered the Series 2016G Notes at a private sale for investment. Neither the Company nor anyone acting on its behalf has taken, or will take, any action that would
subject the issuance or sale of the Series 2016G Notes to the registration requirements of Section 5 of the Securities Act or to the registration requirements of any Securities or blue
sky laws of any applicable jurisdiction.
Section 5.14. Use of Proceeds; Margin Regulations. The Company will apply the proceeds of the sale of the Series 2016G Notes for refinancing of existing debt and general
corporate purposes and in compliance with all laws referenced in Section 5.16. Neither the Company nor any of its Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose, whether immediate, incidental or ultimate, of buying or carrying Margin Stock, and no part of the proceeds of the sale
of the Series 2016G Notes hereunder will be used to buy or carry any Margin Stock, or to extend credit to others for the purpose of buying or carrying Margin Stock. After
application of the proceeds of the sale of the Series 2016G Notes, not more than 25% of the value (as determined by any reasonable method) of the assets of the Company subject to
any provision of the Note Purchase Agreement under which the sale, pledge or disposition of assets is restricted will consist of Margin Stock.
Section 5.15. Existing Indebtedness; Future Liens. (a) Part A of Schedule 5.15 is a complete and correct list of each note, bond, certificate, credit agreement, loan agreement,
indenture, note purchase agreement, guarantee, letter of credit or other arrangement providing for or otherwise relating to any Indebtedness or any extension of credit (or
commitment for any extension of credit) to, or guarantee by, the Company or any of its Subsidiaries outstanding on the date of the Series 2016G Closing, and the aggregate principal
or face amount outstanding or that
SLR Investment Corp. Sixth Supplement
- 5 -
is, or may become, outstanding, the interest rate, collateral and related guaranties under each such arrangement is correctly described in Part A of Schedule 5.15.
(b) Part B of Schedule 5.15 is a complete and correct list of each Lien securing Indebtedness of any Person outstanding or consented to on the date of the Series 2016G Closing
covering any property of the Company or any Subsidiary Guarantor, and the aggregate Indebtedness secured (or that may be secured) by each such Lien and the property covered by
each such Lien is correctly described in Part B of Schedule 5.15.
(c) Neither the Company nor any Subsidiary is a party to, or otherwise subject to any provision contained in, any instrument evidencing Indebtedness of the Company or such
Subsidiary, any agreement relating thereto or any other agreement (including, but not limited to, its charter or other organizational document) which limits the amount of, or
otherwise imposes restrictions on the incurring of, Indebtedness of the Company, except for the Senior Secured Credit Agreement (and the other documents related thereto) and
except as specifically indicated in Schedule 5.15.
Section 5.16. Foreign Assets Control Regulations, Etc. (a) Neither the Company nor any Affiliated Entity is (i) a Person whose name appears on the list of Specially Designated
Nationals and Blocked Persons published by the Office of Foreign Assets Control, United States Department of the Treasury (“OFAC”) (an “OFAC Listed Person”), (ii) an agent,
department, or instrumentality of, or is otherwise beneficially owned by, controlled by or acting on behalf of, directly or indirectly, (x) any OFAC Listed Person or (y) any Person,
entity, organization, foreign country or regime that is subject to any OFAC Sanctions Program, or (iii) otherwise blocked, subject to sanctions under or engaged in any activity in
violation of other United States economic sanctions, including but not limited to, the Trading with the Enemy Act, the International Emergency Economic Powers Act, the
Comprehensive Iran Sanctions, Accountability and Divestment Act (“CISADA”) or any similar law or regulation with respect to Iran or any other country, the Sudan Accountability
and Divestment Act, any OFAC Sanctions Program, or any economic sanctions regulations administered and enforced by the United States or any enabling legislation or executive
order relating to any of the foregoing (collectively, “U.S. Economic Sanctions”) (each OFAC Listed Person and each other Person, entity, organization and government of a country
described in clause (i), clause (ii) or clause (iii), a “Blocked Person”). Neither the Company nor any Affiliated Entity has been notified that its name appears or may in the future
appear on a state list of Persons that engage in investment or other commercial activities in Iran or any other country that is subject to U.S. Economic Sanctions.
(b) No part of the proceeds from the sale of the Series 2016G Notes hereunder constitutes or will constitute funds obtained on behalf of any Blocked Person or Canada Blocked
Person or will otherwise be used by the Company or any Controlled Entity, directly or indirectly, (i) in connection with any investment in, or any transactions or dealings with, any
Blocked Person or Canada Blocked Person, or (ii) otherwise in violation of U.S. Economic Sanctions or Canadian Economic Sanctions.
(c) Neither the Company nor any Affiliated Entity (i) has been found in violation of, charged with, or convicted of, money laundering, drug trafficking, terrorist‑related activities or
SLR Investment Corp. Sixth Supplement
- 6 -
other money laundering predicate crimes under the Currency and Foreign Transactions Reporting Act of 1970 (otherwise known as the Bank Secrecy Act), the USA PATRIOT Act,
any similar provisions of the Criminal Code (Canada), any U.S. Economic Sanctions, any Canadian Economic Sanctions or any other United States or Canadian law or regulation
governing such activities (collectively, “Anti‑Money Laundering Laws”) or any U.S. Economic Sanctions violations or violations of Canadian Economic Sanctions Laws, (ii) to the
Company’s actual knowledge after making due inquiry, is under investigation by any governmental authority for possible violation of Anti‑Money Laundering Laws or any U.S.
Economic Sanctions violations or violations of Canadian Economic Sanctions Laws, (iii) has been assessed civil penalties under any Anti‑Money Laundering Laws or any U.S.
Economic Sanctions or Canadian Economic Sanctions Laws, or (iv) has had any of its funds seized or forfeited in an action under any Anti‑Money Laundering Laws. The Company
has established procedures and controls which it reasonably believes are adequate (and otherwise comply with applicable law) to ensure that the Company and each Controlled
Entity is and will continue to be in compliance with all applicable current and future Anti‑Money Laundering Laws and U.S. Economic Sanctions and Canadian Economic Sanctions
Laws.
(d) (1) Neither the Company nor any Affiliated Entity (i) has been charged with, or convicted of bribery or any other anti‑corruption related activity under any applicable law or
regulation in a U.S. or any non‑U.S. country or jurisdiction, including but not limited to, the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act 2010 and any similar
provisions of the Criminal Code (Canada) (collectively, “Anti‑Corruption Laws”) in the past five years, (ii) to the Company’s actual knowledge after making due inquiry, is under
investigation by any U.S. or non‑U.S. Governmental Authority for possible violation of Anti‑Corruption Laws, (iii) has been assessed civil or criminal penalties under any
Anti‑Corruption Laws in the past five years or (iv) has been or is the target of sanctions imposed by the United Nations, Canada or the European Union;
(2) To the Company’s actual knowledge after making due inquiry, neither the Company nor any Affiliated Entity has, within the last five years, directly or indirectly offered,
promised, given, paid or authorized the offer, promise, giving or payment of anything of value to a Governmental Official or a commercial counterparty for the purposes of: (i)
influencing any act, decision or failure to act by such Governmental Official in his or her official capacity or such commercial counterparty, (ii) inducing a Governmental Official to
do or omit to do any act in violation of the Governmental Official’s lawful duty, or (iii) inducing a Governmental Official or a commercial counterparty to use his or her influence
with a government or instrumentality to affect any act or decision of such government or entity; in each case in order to improperly obtain, retain or direct business or to otherwise
secure an improper advantage in violation of any applicable law or regulation or which would cause any holder to be in violation of any Anti-Corruption Laws; and
(3) No part of the proceeds from the sale of the Series 2016G Notes hereunder will be used, directly or indirectly, for any improper payments, including bribes, to any
Governmental Official or commercial counterparty in order to improperly obtain, retain or direct business or obtain any improper advantage. The Company has established
procedures and controls which it reasonably believes are adequate (and otherwise comply with applicable law) to ensure that the
SLR Investment Corp. Sixth Supplement
- 7 -
Company and each Affiliated Entity is and will continue to be in compliance with the Anti‑Corruption Laws.
(e) Neither the Company nor any Affiliated Entity is (i) a Canada Blocked Person, (ii) an agent, department, or instrumentality of, or is otherwise controlled by or knowingly acting
on behalf of, directly or indirectly, any such Person, or (iii) otherwise blocked, subject to sanctions under or engaged in any activity in violation of any Canadian Economic Sanctions
Laws. Neither the Company nor any Affiliated Entity has been notified by a governmental authority in Canada that its name appears or has been proposed for inclusion on a list of
Persons maintained by a governmental authority in Canada that engage in investment or other commercial activities in any country that is subject to Canadian Economic Sanctions
Laws. Neither the Company nor any Affiliated Entity knowingly engages in any dealings or transactions with any Canada Blocked Person.
Section 5.17. Status under Certain Statutes. (a) The Company is a company that has elected to be regulated as a “business development company” within the meaning of the
Investment Company Act and qualifies as a RIC.
(b) The business and other activities of the Company and its Subsidiaries, including the issuance of the Series 2016G Notes under the Note Purchase Agreement as supplemented by
the Sixth Supplement, the application of the proceeds and repayment thereof by the Company and the consummation of the Transactions contemplated by the Note Documents do
not result in a violation or breach in any material respect of the applicable provisions of the Investment Company Act or any rules, regulations or orders issued by the SEC
thereunder.
(c) The Company is in compliance with its Investment Policies, except to the extent that the failure to so comply could not reasonably be expected to result in a Material Adverse
Effect.
Section 5.18. Series 2016G Notes Rank Pari Passu. The obligations of the Company under the Note Purchase Agreement as supplemented by the Sixth Supplement and the Series
2016G Notes rank at least pari passu in right of payment with all other Senior Unsecured Indebtedness (actual or contingent) of the Company, including, without limitation, the
Series 2016D Notes, the Series 2016E Notes, the Series 2016F Notes and all other Senior Unsecured Indebtedness of the Company described in Schedule 5.15 hereto.
Section 5.19. Investments. Set forth in Schedule 5.19 is a complete and correct list of all Investments (other than Investments of the types referred to in clauses (b), (c) and (d) of
Section 10.4) held by the Company or any Subsidiary Guarantor in any Person on the date of the Series 2016G Closing and, for each such Investment, (x) the identity of the Person
or Persons holding such Investment and (y) the nature of such Investment. Except as disclosed in Schedule 5.19, as of the date of the Series 2016G Closing each of the Company
and the Subsidiary Guarantors owns, free and clear of all Liens (other than Permitted Liens or Liens created pursuant to the Security Documents), all such Investments.
SLR Investment Corp. Sixth Supplement
- 8 -
Section 5.20. Affiliate Agreements. As of the date of the Series 2016G Closing, the Company has heretofore delivered (to the extent not otherwise publicly filed with the SEC) to
each of the Purchasers true and complete copies of each of the Affiliate Agreements (including schedules and exhibits thereto, and any amendments, supplements or waivers
executed and delivered thereunder). As of the date of the Series 2016G Closing, each of the Affiliate Agreements is in full force and effect.
SLR Investment Corp. Sixth Supplement
Exhibit 1
(to Supplement)
[FORM OF SERIES 2016G NOTE]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “Act”), OR THE SECURITIES LAWS OF ANY
JURISDICTION. SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, ASSIGNED, ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT (I) PURSUANT TO A
REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES THAT IS EFFECTIVE UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS, OR (II) IN A TRANSACTION THAT DOES NOT REQUIRE
REGISTRATION UNDER THE ACT OR APPLICABLE STATE SECURITIES LAW, INCLUDING, WITHOUT LIMITATION, PURSUANT TO RULE 144 OR RULE 144A, provided THAT AN OPINION OF COUNSEL
(WHICH MAY BE INTERNAL COUNSEL) SHALL BE FURNISHED TO THE COMPANY (IF REASONABLY REQUESTED BY THE COMPANY), IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE
COMPANY, TO THE EFFECT THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE ACT AND/OR APPLICABLE STATE SECURITIES LAW.
SLR Investment Corp. (f/k/a Solar Capital Ltd.)
6.24% Series 2016G, Senior Note, due December 16, 2027
No. [_________] [Date]
$[____________] PPN 83413U C#5
For Value Received, the undersigned, SLR Investment Corp. (f/k/a Solar Capital Ltd.) (herein called the “Company”), a corporation organized and existing under the
laws of the State of Maryland, hereby promises to pay to [________________], or registered assigns, the principal sum of [________________] Dollars (or so much thereof as shall
not have been prepaid) on December 16, 2027, with interest (computed on the basis of a 360‑day year of twelve 30‑day months) on the unpaid balance hereof at the rate of (a)
6.24% per annum from the date hereof, payable semiannually, on the 16th day of June and December in each year, commencing June 16, 2025, and on the Maturity Date until the
principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment of interest and, during the continuance of an Event of Default,
on such unpaid balance and on any overdue payment of any Make‑Whole Amount, at a rate per annum from time to time equal to the Default Rate (as defined in the hereinafter
defined Note Purchase Agreement).
Payments of principal of, interest on and any Make‑Whole Amount with respect to this Note are to be made in lawful money of the United States of America at the
principal office of Goldman Sachs Bank USA in New York, New York or at such other place as the Company shall have designated by written notice to the holder of this Note as
provided in the Note Purchase Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the “Notes”) issued pursuant to the Sixth Supplement dated as of December 16, 2024 (the “Sixth
Supplement”), among the Company and the Series 2016G Additional Purchasers named therein, which supplements the Note Purchase Agreement dated as of November 8, 2016 (as
from time to time amended, supplemented
-2-
or modified, the “Note Purchase Agreement”), among the Company and the respective Purchasers named therein. This Note and the holder hereof are entitled equally and ratably
with the holders of all other Notes of all series from time to time outstanding under the Note Purchase Agreement to all the benefits provided for thereby or referred to therein. Each
holder of this Note will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase Agreement, (ii) made
the representations and agreements set forth in Sections 6.2 and 6.1(b) and (f) of the Note Purchase Agreement and in Section 6(b) of the Sixth Supplement, and (iii) agreed that
any transfer or other disposition of this Note is otherwise subject to the terms and conditions contained in the Note Purchase Agreement. Unless otherwise indicated, capitalized
terms used in this Note shall have the respective meanings ascribed to such terms in the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied
by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note of the same Series and tranche for a
like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the Person in
whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the
contrary.
This Note and the holder hereof are entitled equally and ratably with the holders of all of the Notes, the Series 2016A Notes, the Series 2016B Notes, the Series 2016C
Notes, the Series 2016D Notes, the Series 2016E Notes, the Series 2016F Notes and any Additional Notes issued and outstanding from time to time to the rights and benefits
provided pursuant to the terms and provision of the Subsidiary Guarantee (as such term is defined in the Note Purchase Agreement). Reference is hereby made to the foregoing for
a statement of the nature and extent of the benefits for the Notes afforded thereby and the rights of the holders of the Notes.
This Note is subject to prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.
If an Event of Default occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including
any applicable Make‑Whole Amount) and with the effect provided in the Note Purchase Agreement.
-3-
This Note shall be construed and enforced in accordance with, and the rights of the Company and the holder of this Note shall be governed by, the law of the
State of New York, excluding choice‑of‑law principles of the law of such State that would permit application of the laws of a jurisdiction other than such State.
SLR Investment Corp. (f/k/a Solar Capital Ltd.)
By
Name:
Title:
[Signature Page to Amendment No. 4]
AMENDMENT NO. 4 TO SENIOR SECURED CREDIT AGREEMENT
AMENDMENT NO. 4 dated as of December 3, 2024 (this “Amendment No. 4”) among SLR Investment Corp. (formerly known as SOLAR CAPITAL LTD.), a
Maryland corporation (the “Borrower”), NEFPASS LLC, a Delaware limited liability company (“NEFPASS”), NEFCORP LLC, a Delaware limited liability company, (together
with NEFPASS, each a “Subsidiary Guarantor” and collectively, the “Subsidiary Guarantors”), the undersigned Lenders (as defined in the Credit Agreement) constituting the
Required Lenders, and CITIBANK, N.A., as administrative agent for the Lenders party to the Credit Agreement referenced below (in such capacity, together with its successors in
such capacity, the “Administrative Agent”).
WHEREAS, the Borrower, the Lenders party thereto, and the Administrative Agent are parties to a Senior Secured Credit Agreement dated as of August 28, 2019 (as
amended, restated, supplemented, or otherwise modified from time to time prior to the effectiveness of this Amendment No. 4, the “Credit Agreement”);
WHEREAS, the Borrower has requested, and the Lenders party hereto (constituting the Required Lenders) and the Administrative Agent have agreed, to amend the
Credit Agreement in order to effect the changes described below;
NOW THEREFORE, in consideration of the promises and the mutual agreements contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each of the Borrower, the Lenders party hereto, and the Administrative Agent hereby agrees as follows:
Section 1.Definitions.
(a)Except as otherwise defined in this Amendment No. 4, terms defined in the Credit Agreement (including the preamble and recitals above) are used herein as defined
therein.
(b)References in the Credit Agreement and the other Loan Documents (including references to the Credit Agreement as amended hereby) to “this Agreement” (and
indirect references such as “hereunder”, “hereby”, “herein”, “hereof” “thereunder”, “thereby”, “therein”, or “thereof”) shall be deemed to be references to the Credit Agreement, as
amended hereby.
Section 2.Amendments
(a)Section 1.01 of the Credit Agreement is hereby amended by inserting the following new defined term in the correct alphabetical order therein:
“Amendment No. 4 Effective Date” means December 3, 2024.
(b)Clause (e)(i)(B) of Section 2.08 of the Credit Agreement is hereby amended by deleting the reference to $800,000,000 and replacing it with $900,000,000.
(c)Section 6.01 of the Credit Agreement is hereby amended by (x) deleting the reference to “and” at the end of clause (i) thereof, (y) replacing the period at the end of
clause (j) thereof with “; and” and (z) adding the following after clause (j) thereof:
[Signature Page to Amendment No. 4]
“(k) Secured Shorter-Term Indebtedness and Unsecured Shorter-Term Indebtedness in an aggregate principal amount (determined at the time of the incurrence of such
Indebtedness) not exceeding $250,000,000 in the aggregate and that shall be used, in whole or in part, and shall be incurred to refinance, redeem, and/or reduce, in whole
or in part, the 2024 Notes and/or the 2025 Notes (including any interim refinancing thereof).”
Section 3.Representations and Warranties.
Each of the Borrower and each Subsidiary Guarantor represents and warrants to the Lenders and the Administrative Agent, as of the date of this Amendment No. 4 and
on and as of the Amendment Effective Date (as defined below) and immediately after giving effect to this Amendment No. 4, as follows:
(a)Authorization; Enforceability. This Amendment No. 4 has been duly authorized, executed, and delivered by it and each of this Amendment No. 4 and the Credit
Agreement, as amended by this Amendment No. 4, constitutes a legal, valid, and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms,
except as such enforceability may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting the enforcement of
creditors’ rights and (ii) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).
(b)No Conflict. Neither the execution, delivery and performance of this Amendment No. 4 nor the transactions contemplated herein will (i) violate any applicable law or
regulation or the limited liability company operating agreement, charter, by-laws or other organizational documents of the Borrower or any of its Subsidiaries or any order of any
Governmental Authority or (ii) violate or result in a default in any material respect under any Loan Document or any indenture, agreement or other instrument binding upon the
Borrower or any of its Subsidiaries or any of their respective assets, or give rise to a right thereunder to require any payment to be made by any such Person.
(c)Solvency. Immediately after the consummation of the transactions contemplated by this Amendment No. 4, the present fair value of the assets of the Borrower will
exceed the sum of the probable liabilities and identified contingent liabilities of the Borrower. The Borrower is solvent both before and after giving effect to the execution, delivery
and performance of this Amendment No. 4 and the Credit Agreement (as amended by this Amendment No. 4) and the other Loan Documents and the consummation of the
transactions contemplated by this Amendment No. 4, and is not, and after giving effect to the execution, delivery and performance of this Amendment No. 4 and the Credit
Agreement (as amended by this Amendment No. 4) and the other Loan Documents and the consummation of the transactions contemplated by this Amendment No. 4, will not be
(A) left with unreasonably small capital with which to carry on its business as it is proposed to be conducted and (B) unable to pay its debts (contingent or otherwise) as they mature.
(d)Representations in Loan Documents. The representations and warranties of the Borrower and each Subsidiary Guarantor set forth in Article III of the Credit
Agreement (as amended hereby) and in the other Loan Documents, as applicable, are true and correct in all material respects (except to the extent any such representation or
warranty is itself qualified by
[Signature Page to Amendment No. 4]
materiality or reference to a Material Adverse Effect, in which case it is true and correct in all respects, subject to such qualification) on and as of the date of this Amendment No. 4
and on the Amendment Effective Date (as defined below).
(e)No Default. No Default has occurred and is continuing.
Section 4.Conditions Precedent.
This Amendment No. 4 shall become effective as of the date (the “Amendment Effective Date”) when, and only when, each of the following conditions precedent shall
have been satisfied:
(a)The Administrative Agent shall have received one or more counterparts of this Amendment No. 4 executed by the Borrower, each Subsidiary Guarantor, and the
Lenders constituting the Required Lenders; and
(b)The Borrower shall have paid such reasonable and documented fees and expenses of Norton Rose Fulbright US LLP, special New York counsel to the Administrative
Agent, in connection with the negotiation, preparation, execution and delivery of this Amendment No. 4 and the other Loan Documents (to the extent that statements for such fees
and expenses have been delivered to the Borrower prior to the Amendment Effective Date).
Section 5.Miscellaneous.
(a)Except as herein provided, the Credit Agreement shall remain unchanged. The Credit Agreement, as specifically amended by this Amendment No. 4, and each of the
other Loan Documents are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed. The Borrower and each Subsidiary Guarantor hereby
agree and acknowledge that the Collateral shall continue to secure the payment and performance of all Secured Obligations (as defined in the Guarantee and Security Agreement) on
the terms and conditions set forth in the Loan Documents, and each hereby ratifies the security interests granted by it pursuant to the Security Documents.
(b)This Amendment No. 4 may be executed in any number of counterparts, all of which taken together shall constitute one and the same amendatory instrument and any
of the parties hereto may execute this Amendment No. 4 by signing any such counterpart. Delivery of an executed counterpart of a signature page of this Amendment No. 4 by
telecopy or other electronic means shall be effective as delivery of a manually executed counterpart of this Amendment No. 4.
(c)This Amendment No. 4 shall be construed in accordance with and governed by the law of the State of New York. The provisions of Sections 9.09(b), 9.09(c) ,
9.09(d), and 9.10 of the Credit Agreement are hereby incorporated herein, mutatis mutandis, as if a part hereof.
(d)This Amendment No. 4 is a Loan Document.
(e)The execution, delivery, and effectiveness of this Amendment No. 4 shall not, except as expressly provided herein, operate as a waiver of any right, power, or remedy
of any
[Signature Page to Amendment No. 4]
Lender or the Administrative Agent under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents.
(f)As of the Amendment Effective Date, Citibank, N.A., JPMorgan Securities LLC, and Sumitomo Mitsui Banking Corporation are Joint Lead Bookrunner and Joint
Lead Arrangers. Section 8.09 of the Credit Agreement is hereby incorporated herein, mutatis mutandis, as if a part hereof.
[Remainder of page intentionally left blank; signature pages follow]
Execution Version
SLR INVESTMENT CORP.
500 Park Avenue, 3rd Floor New York, New York 10022
Dated as
of February 18, 2025
To the Series 2016H Additional Purchasers named in
Schedule A hereto
Ladies and Gentlemen:
This Seventh Supplement to Note Purchase Agreement (the “Supplement” or “Seventh Supplement”) is among SLR Investment Corp., a Maryland corporation (the
“Company”), and the institutional investors named on Schedule A attached hereto (the “Series 2016H Additional Purchasers”).
Reference is hereby made to that certain Note Purchase Agreement dated as of November 8, 2016 (the “Note Purchase Agreement”) among the Company (f/k/a
Solar Capital Ltd.) and the Purchasers listed on Schedule A thereto. All capitalized terms not otherwise defined herein shall have the same meanings as specified in the Note
Purchase Agreement. Reference is further made to Section 4.18 of the Note Purchase Agreement which requires that, prior to the delivery of any Additional Notes, the
Company and each Additional Purchaser shall execute and deliver a Supplement.
The Company hereby agrees with the Series 2016H Additional Purchasers as follows:
1.The Company has authorized the issue and sale of $50,000,000 aggregate principal amount of its 6.14% Series 2016H, Senior Notes, due February 18, 2028 (the
“Series 2016H Notes”). The Series 2016H Notes, together with the Series 2016A Notes issued pursuant to the Note Purchase Agreement, the Series 2016B Notes issued
pursuant to the First Supplement to Note Purchase Agreement dated as of February 15, 2017, the Series 2016C Notes issued pursuant to the Second Supplement to Note
Purchase Agreement dated as of December 28, 2017, the Series 2016D Notes issued pursuant to the Third Supplement to Note Purchase Agreement dated as of December 18,
2019, the Series 2016E Notes issued pursuant to the Fourth Supplement to Note Purchase Agreement dated as of September 14, 2021, the Series 2016F Notes issued pursuant to
the Fifth Supplement to Note Purchase Agreement dated as of January 6, 2022, the Series 2016G Notes issued pursuant to the Sixth Supplement to Note Purchase Agreement
dated as of December 16, 2024 and each series of Additional Notes which may from time to time hereafter be
2016H Seventh Supplement and Note 4903-1339-2660 v5.docx 4460382
2
issued pursuant to the provisions of Section 2.4 of the Note Purchase Agreement, are collectively referred to as the “Notes” (such term shall also include any such notes issued
in substitution therefor pursuant to Section 13 of the Note Purchase Agreement). The Series 2016H Notes shall be substantially in the form set out in Exhibit 1 hereto with such
changes therefrom, if any, as may be approved by the Series 2016H Additional Purchasers and the Company.
2.Subject to the terms and conditions hereof and as set forth in the Note Purchase Agreement and on the basis of the representations and warranties hereinafter set
forth, the Company agrees to issue and sell to each Series 2016H Additional Purchaser, and each Series 2016H Additional Purchaser agrees to purchase from the Company,
Series 2016H Notes in the principal amount set forth opposite such Series 2016H Additional Purchaser’s name on Schedule A hereto at a price of 100% of the principal amount
thereof on the closing date hereinafter mentioned.
3.The sale and purchase of the Series 2016H Notes to be purchased by each Series 2016H Additional Purchaser shall occur at the offices of Chapman and Cutler
LLP in Chicago, Illinois, at 8:00 A.M. Chicago time, at a closing (the “Series 2016H Closing”) on February 18, 2025. At the Series 2016H Closing, the Company will deliver to
each Series 2016H Additional Purchaser the Series 2016H Notes of the tranche to be purchased by such Purchaser in the form of a single Series 2016H Note (or such greater
number of Series 2016H Notes in denominations of at least $100,000 as such Series 2016H Additional Purchaser may request) dated the date of the Series 2016H Closing and
registered in such Series 2016H Additional Purchaser’s name (or in the name of such Series 2016H Additional Purchaser’s nominee), against delivery by such Series 2016H
Additional Purchaser to the Company or its order of immediately available funds in the amount of the purchase price therefor by wire transfer of immediately available funds for
the account of the Company to [].If, at the Series 2016H Closing, the Company shall fail to tender such Series 2016H Notes to any Series 2016H Additional Purchaser as
provided above in this Section 3, or any of the conditions specified in Section 4 shall not have been fulfilled to any Series 2016H Additional Purchaser’s satisfaction, such Series
2016H Additional Purchaser shall, at such Series 2016H Additional Purchaser’s election, be relieved of all further obligations under this Agreement, without thereby waiving
any rights such Series 2016H Additional Purchaser may have by reason of such failure or such nonfulfillment.
4.The obligation of each Series 2016H Additional Purchaser to purchase and pay for the Series 2016H Notes to be sold to such Series 2016H Additional Purchaser
at the Series 2016H Closing is subject to the fulfillment to such Series 2016H Additional Purchaser’s satisfaction, prior to the Series 2016H Closing, of the conditions set forth
in Section 4 of the Note Purchase Agreement with respect to the Series 2016H Notes to be purchased at the Series 2016H Closing as if each reference to “2016A Notes” or
“Notes,” “Closing” and “Purchaser” set forth therein was modified to refer the “Series 2016H Notes,” the “Series 2016H Closing” and the “Series 2016H Additional Purchaser”
(each as defined in this Seventh Supplement) and to the following additional conditions:
(a)Each of the representations and warranties of the Company set forth in Exhibit A hereto shall be correct as of the date of the Series 2016H Closing
(except for
3
representations and warranties which apply to a specific earlier date (other than an earlier closing date in connection with the Note Purchase Agreement or a prior
supplement) which shall be true as of such earlier date) and the Company shall have delivered to each Series 2016H Additional Purchaser an Officer’s Certificate,
dated the date of the Series 2016H Closing certifying that such condition has been fulfilled.
(b)Contemporaneously with the Series 2016H Closing, the Company shall sell to each Series 2016H Additional Purchaser, and each Series 2016H
Additional Purchaser shall purchase, the Series 2016H Notes to be purchased by such Series 2016H Additional Purchaser at the Series 2016H Closing as specified in
Schedule A hereto.
(c)Contemporaneously with the Series 2016H Closing, the Company shall provide to each Series 2016H Additional Purchaser:
(i)a copy of each of the Subsidiary Guarantees delivered by NEFCORP, LLC and NEFPASS, LLC, respectively;
(ii)a certificate signed by an authorized responsible officer of such Subsidiary Guarantors dated the date of the Series 2016H Closing
certifying that the representations and warranties of each Subsidiary Guarantor made at the time of the execution and delivery of its Subsidiary
Guarantee are true and correct as of the date of the Series 2016H Closing;
(iii)a certificate of its Secretary or Assistant Secretary dated the date of the Series 2016H Closing certifying as to the due organization,
continuing existence and good standing of such Subsidiary and the due authorization by all requisite action on the part of such Subsidiary of the
execution and delivery of such Subsidiary Guaranty and the performance by such Subsidiary of its obligations thereunder; and
(iv)a reliance letter of counsel dated the date of the Series 2016H Closing permitting reliance by the Series 2016H Additional Purchasers
on the opinions of Latham & Watkins LLP delivered in accordance with Section 9.7(b)(iv) of the Note Purchase Agreement at the time of the execution
and delivery of each Subsidiary Guarantee.
5.The Company covenants and agrees with the holders of the Series 2016H Notes that Section 13.2 of the Note Purchase Agreement shall be amended by deleting
the last sentence of such Section 13.2 and replacing it with the following: “Any transferee, by its acceptance of the Note registered in its name (or the name of its nominee), shall
be deemed to have made the representations and agreements set forth in Section 6.1(b) and (f) and Section 6.2 of the Note Purchase Agreement and in Section 6(b) of the
Seventh Supplement.”
6.(a) Each Series 2016H Additional Purchaser severally represents and warrants that the representations and warranties set forth in Section 6.1(a), (b), (c), (e) and
(f) and in Section 6.2 of the Note Purchase Agreement are true and correct on the date hereof with respect to the
4
purchase
5
of the Series 2016H Notes by such Series 2016H Additional Purchaser as if each reference to “2016A Notes” or “Notes,” “Closing” and “Purchaser” set forth therein was
modified to refer the “Series 2016H Notes,” the “Series 2016H Closing” and the “Series 2016H Additional Purchaser” and each reference to “this Agreement” therein was
modified to refer to the Note Purchase Agreement as supplemented by this Seventh Supplement.
(b) Each Series 2016H Additional Purchaser for itself represents that it is either (i) an Institutional Accredited Investor acting for its own account or as a fiduciary or
agent for others (which others are also Institutional Accredited Investors) or (ii) a “qualified institutional buyer” as defined under Rule 144A acting for its own account or as a
fiduciary or agent for others (which others are also “qualified institutional buyers”).
7.The Company and each Series 2016H Additional Purchaser agree to be bound by and comply with the terms and provisions of the Note Purchase Agreement as
fully and completely as if such Series 2016H Additional Purchaser were an original signatory to the Note Purchase Agreement.
8.This Seventh Supplement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York,
excluding choice-of-law principles of the law of such State that would permit the application of the laws of a jurisdiction other than such State.
9.The Company covenants and agrees with the holders of the Series 2016H Notes that the definitions of “Canada Blocked Person” and “Canadian Economic
Sanctions Laws” shall be amended and restated in their entirety to read as follows:
“Canada Blocked Person” means (i) a “terrorist group” as defined for the purposes of Part II.1 of the Criminal Code (Canada), as amended or (ii) a
Person identified in or pursuant to (w) Part II.1 of the Criminal Code (Canada), as amended or (x) the Proceeds of Crime (Money Laundering) and Terrorist
Financing Act, as amended or (y) the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law), as amended or
(z) regulations or orders promulgated pursuant to the Special Economic Measures Act (Canada), as amended, the United Nations Act (Canada), as amended, or the
Freezing Assets of Corrupt Foreign Officials Act (Canada), as amended, in any case pursuant to this clause (ii) as a Person in respect of whose property or benefit a
holder of Notes would be prohibited from entering into or facilitating a related financial transaction.
“Canadian Economic Sanctions Laws” means those laws, including enabling legislation, orders-in-council or other regulations administered and
enforced by Canada or a political subdivision of Canada pursuant to which economic sanctions have been imposed on any Person, entity, organization, country or
regime, including Part II.1 of the Criminal Code (Canada), as amended, the Special Economic Measures Act (Canada), as amended, the Proceeds of Crime (Money
Laundering) and Terrorist Financing Act, as amended, the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law), as amended, the United
Nations Act (Canada), as amended, the Export and Import Permits Act (Canada), as amended, and the Freezing Assets of Corrupt Foreign Officials Act (Canada),
6
as amended, and including all regulations promulgated under any of the foregoing, or any other similar sanctions program or action.
10.The Company covenants and agrees with the holders of the Series 2016H Notes that, notwithstanding Section 9.12 of the Note Purchase Agreement, the Company
shall be required to deliver to the 2016H Additional Purchasers in the manner provided in Section 18 of the Note Purchase Agreement a Rating in form and substance
satisfactory to the 2016H Additional Purchasers evidencing that the Series 2016H Notes have been rated Investment Grade or better by either Fitch, S&P or another NRSRO,
within 30 days after the 2016H Closing.
The Company furher covenants and agrees with the holders of the Series 2016H Notes that For puposes of this paragraph 10 the definitions of “Rating” and
“Private Rating Rationale Report” shall read as follows:
“Rating” means a rating of the Series 2016H Notes issued by either Fitch, S&P or another NRSRO, which rating shall (a) specifically describe the
Series 2016H Notes, including their interest rate, maturity and Private Placement Number and (b) in the event that such Rating is a “private letter rating,” also (i)
state that the Rating addresses the likelihood of payment of both the principal and interest of such Series 2016H Notes (which requirement shall be deemed satisfied
if the evidence of such Rating is silent as to the likelihood of payment of both principal and interest and does not otherwise include any indication to the contrary),
(ii) not include any prohibition against sharing such evidence with the SVO or any other regulatory authority having jurisdiction over the holders of the Series
2016H Notes, (iii) include such other information relating to the Rating for the Notes as may be required from time to time by the SVO or any other regulatory
authority having jurisdiction over the holders of the Notes and (iv) include or be accompanied by the related Private Rating Rationale Report.
“Private Rating Rationale Report” means, with respect to any private Rating, a report issued by either Fitch, S&P or another NRSRO in connection
with such private Rating setting forth an analytical review of the Series 2016H Notes explaining the transaction structure, methodology relied upon, and, as
appropriate, analysis of the credit, legal, and operational risks and mitigants supporting the assigned private Rating for the Series 2016H Notes, in each case, on the
letterhead of the Rating Agency or its controlled website and generally consistent with the work product that a Rating Agency would produce for a similar publicly
rated security and otherwise in form and substance generally required by the SVO or any other regulatory authority having jurisdiction over any holder of any Series
2016H Notes from time to time.
11.The Company covenants and agrees with the holders of the Series 2016H Notes that Section 18 of the Note Purchase Agreement shall be amended and restated in
its entirety to read as follows:
(a)All notices and communications provided for hereunder shall be in writing and sent (i) by tele-facsimile if the recipient has provided a fax number
in its notice details and if the sender on the same day sends a confirming copy of such notice by a recognized
7
overnight delivery service (charges prepaid), (ii) by registered or certified mail with return receipt requested (postage prepaid), (iii) by priority or express mail with
online tracking services, (iv) by a recognized overnight delivery service (with charges prepaid) or (v) by e-mail if the recipient has provided an e-mail address in its
notice details. Any such notice must be sent:
(A)if to any Purchaser or its nominee, to such Purchaser or nominee at the address specified for such communications in Schedule A, or at such other
address as such Purchaser or nominee shall have specified to the Company in writing,
(B)if to any other holder of any Note, to such holder at such address as such other holder shall have specified to the Company in writing, or
(C)if to the Company, to the Company at its address or e-mail address set forth at the beginning hereof to the attention of the Chief Financial Officer,
or at such other address as the Company shall have specified to the holder of each Note in writing.
(D)if to an Additional Purchaser or such Additional Purchaser’s nominee, to such Additional Purchaser or such Additional Purchaser’s nominee at the
address specified for such communications in Schedule A to any Supplement, or at such other address as such Additional Purchaser or such Additional Purchaser’s
nominee shall have specified to the Company in writing.
Notices under this Section 18 will be deemed given only when actually received. Notices delivered through electronic communications to the extent provided in
paragraph (b) below, shall be effective as provided in said paragraph (b).
(b)Notices and other communications to the Company, Purchasers, Additional Purchasers or other holders of any Note hereunder may be delivered or
furnished by electronic communication (including e-mail and Internet or intranet websites); provided that the foregoing shall not apply to notices to a Purchaser,
Additional Purchaser or other holder of any Note if such Purchaser, Additional Purchaser or holder has notified the Company that it is incapable of receiving notices
under this Agreement by electronic communication. Notices and other communications (i) sent to an e-mail address shall be deemed received upon the sender’s
receipt of an acknowledgment from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written
acknowledgment), provided that if such notice or other communication is not sent during normal business hours of the recipient, such notice or communication shall
be deemed to have been sent at the opening of business on the next Business Day for the recipient, and (ii) posted to an Internet or intranet website shall be deemed
received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of the notification that such notice or
communication is available and identifying the website address therefor. Unless a Purchaser, Additional Purchaser or other holder of any Note has notified the
Company that it is incapable of receiving notices by electronic communication, each Purchaser, Additional Purchaser or other holder of any Note agrees to notify the
Company in writing (including by electronic communication)
8
from time to time of any change in such Purchaser’s, Additional Purchaser’s or holder’s e-mail address to which the foregoing notice may be sent by electronic
transmission and that the foregoing notice may be sent to such e-mail address.
12.Pursuant to Section 18(a)(C) of the Note Purchase Agreement and Section 14(a) of each Subsidiary Guarantee, notices and communications to (i) the Company
provided for under the Note Purchase Agreement and (ii) each Guarantor under the Subsidiary Guarantees, should be sent to the address or e-mail below:
SLR Investment Corp.
500 Park Avenue, 3rd Floor New York, New York 10022
Attention: Chief Financial Officer Email: slr_capital_finance@slrcp.com
The execution hereof shall constitute a contract between the Company and the Series 2016H Additional Purchasers for the uses and purposes hereinabove set forth,
and this agreement may be executed in any number of counterparts, each executed counterpart constituting an original but all together only one agreement. Each counterpart
may consist of a number of copies hereof, each signed by less than all, but together signed by all, of the parties hereto. The parties agree to electronic contracting and signatures
with respect to this agreement and the other Note Documents (other than the Notes). Delivery of an electronic signature to, or a signed copy of, this agreement and such other
Note Documents (other than the Notes) by email or other electronic transmission shall be fully binding on the parties to the same extent as the delivery of the signed originals
and shall be admissible into evidence for all purposes.
SLR INVESTMENT CORP.
By: Name: Shiraz Kajee
Title: Chief Financial Officer and Treasurer
[Signature Page to Seventh Supplement]
to Note Purchase Agreement
Accepted as of the date of this Supplement.
By:
By:
Name:
Title:
[SIGNATURE PAGE]
SUPPLEMENTAL REPRESENTATIONS
Section 5. Representations and Warranties of the Company
Section 5.1. Organization; Power and Authority. Each of the Company and its Subsidiaries is duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted and, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such
qualification is required of the Company or such Subsidiary, as applicable.
Section 5.2. Authorization, Etc. The Transactions are within the Company’s corporate powers and have been duly authorized by all necessary corporate action and, if
required, by all necessary shareholder action. The Note Purchase Agreement and the Seventh Supplement have been duly executed and delivered by the Company and the Note
Purchase Agreement as supplemented by the Seventh Supplement constitutes, and each of the other Note Documents to which it is a party when executed and delivered will
constitute, a legal, valid and binding obligation of the Company, enforceable in accordance with its terms, except as such enforceability may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium or similar laws of general applicability affecting the enforcement of creditors’ rights and (b) the application of general principles of
equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).
Section 5.3. Disclosure. The Company has disclosed to the Series 2016H Additional Purchasers all agreements, instruments and corporate, limited liability company or
other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in
a Material Adverse Effect. None of the reports, financial statements, certificates or other information furnished by or on behalf of the Company to the Series 2016H Additional
Purchasers in connection with the negotiation of the Note Purchase Agreement, the Seventh Supplement and the other Note Documents or delivered hereunder or thereunder (as
modified or supplemented by other information so furnished) when taken together with the Company’s public filings contains any material misstatement of fact therein (or omits
to state any material fact necessary to make the statements therein not misleading), in the light of the circumstances under which they were made; provided that, with respect to
projected financial information, the Company represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.
Since the date of the most recent Applicable Financial Statements, there has not been any event, development or circumstance that has had or could reasonably be
expected to have a material adverse effect on (i) the business, Portfolio Investments and other assets, liabilities and financial condition of the Company and its Subsidiaries taken
as a whole (excluding in any case a decline in the net asset value of the Company or a change in general market conditions or values of the Company’s or any of its Subsidiaries’
Portfolio Investments), or (ii) the validity or
Exhibit A
(to Supplement)
2
enforceability of any of the Note Documents or the rights or remedies of the Purchasers and the holders of the Notes thereunder.
Section 5.4. Organization and Ownership of Shares of Subsidiaries. (a) Schedule 5.4 contains (except as noted therein) complete and correct lists (i) of the Company’s
Subsidiaries, showing, as to each Subsidiary, the correct name thereof, the jurisdiction of its organization, and the percentage of shares of each class of its capital stock or similar
equity interests outstanding owned by the Company and each other Subsidiary (other than any tax blocker or investment held by such tax blocker), and (ii) of the Company’s
directors and senior officers.
(b)All of the outstanding shares of capital stock or similar equity interests of each Subsidiary shown in Schedule 5.4 as being owned by the Company and its
Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by the Company or another Subsidiary free and clear of any Lien (except Permitted Liens,
Liens created pursuant to the Security Documents or as otherwise disclosed in Schedule 5.4).
(c)Each Subsidiary identified in Schedule 5.4 is a corporation or other legal entity duly organized, validly existing and, where legally applicable, in good standing
under the laws of its jurisdiction of organization, and is duly qualified as a foreign corporation or other legal entity and, where legally applicable, is in good standing in each
jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect. Each such Subsidiary has the corporate or other power and authority to own or hold under lease the
properties it purports to own or hold under lease and to transact the business it transacts and proposes to transact.
(d)No Subsidiary is a party to, or otherwise subject to any legal, regulatory, contractual or other restriction (other than the Note Purchase Agreement, the Seventh
Supplement, the Senior Secured Credit Agreement, the agreements listed on Schedule 5.4 and customary limitations imposed by corporate law or similar statutes) restricting the
ability of such Subsidiary to pay dividends out of profits or make any other similar distributions of profits to the Company or any of its Subsidiaries that owns outstanding shares
of capital stock or similar equity interests of such Subsidiary.
Section 5.5. Financial Statements; Material Liabilities. The Company has heretofore delivered to each Purchaser the audited consolidated statement of assets and
liabilities (or balance sheet) and statements of operations, changes in net assets and cash flows of the Company and its Subsidiaries as of and for the fiscal year ending on
December 31, 2023; such financial statements present fairly, in all material respects, the consolidated financial position and results of operations and cash flows of the Company
and its Subsidiaries as of such date in accordance with GAAP. The Company and its Subsidiaries do not have any Material liabilities that are not disclosed on such financial
statements.
Section 5.6. Compliance with Laws. Each of the Company and its Subsidiaries is in compliance with all laws, regulations and orders of any Governmental Authority
applicable to it
3
or its property and all indentures, agreements and other instruments binding upon it or its property,
4
except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries is subject to any contract or other arrangement, the performance of which by the Company or any such Subsidiary could reasonably be expected to result in a
Material Adverse Effect.
Section 5.7. Governmental Authorizations, Compliance with Laws, Other Instruments, Etc. The Transactions (a) do not require any consent or approval of, registration
or filing with, or any other action by, any Governmental Authority, except for such as have been or will be obtained or made and are in full force and effect and are described in
Schedule 5.7, (b) will not violate any applicable law or regulation or the limited liability company operating agreement, charter, by-laws or other organizational documents of
the Company or any of its Subsidiaries or any order of any Governmental Authority, (c) will not violate or result in a default in any material respect under any indenture,
agreement or other instrument binding upon the Company or any of its Subsidiaries or assets, or give rise to a right thereunder to require any payment to be made by any such
Person, and (d) will not result in the creation or imposition of any Lien on any asset of the Company or any of its Subsidiaries.
Section 5.8. Litigation; Observance of Agreements, Statutes and Orders. (a) There are no actions, suits, investigations or proceedings by or before any arbitrator or
Governmental Authority now pending against or, to the knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries (i) as to which there
is a reasonable possibility of an adverse determination and that if adversely determined could reasonably be expected, individually or in the aggregate, to result in a Material
Adverse Effect or (ii) that involve the Note Purchase Agreement, the Seventh Supplement, the Note Purchase Agreement as supplemented by the Seventh Supplement or the
Transactions.
(b) Neither the Company nor any Subsidiary is in default under any term of any agreement or instrument to which it is a party or by which it is bound, or any order,
judgment, decree or ruling of any court, arbitrator or Governmental Authority or is in violation of any applicable law, ordinance, rule or regulation of any Governmental
Authority, which default or violation, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
Section 5.9. Taxes. Each of the Company and its Subsidiaries has timely filed or caused to be filed all material Tax returns and reports required to have been filed and
has paid or caused to be paid all material Taxes required to have been paid by it, except (a) Taxes that are being contested in good faith by appropriate proceedings and for which
such Person has set aside on its books adequate reserves or (b) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect. The
charges, accruals and reserves on the books of the Company and its Subsidiaries in respect of Federal, state or other taxes for all fiscal periods are adequate in all material
respects.
Section 5.10. Title to Property; Leases. Each of the Company and the other Obligors has good title to, or valid leasehold interests in, all its real and personal property
material to its business, except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their
intended purposes.
5
Section 5.11. Licenses, Permits, Etc. Each of the Company and its Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other
intellectual property material to its business, and the use thereof by the Company and its Subsidiaries does not infringe upon the rights of any other Person, except for any such
infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.
Section 5.12. ERISA. (a) The execution and delivery of the Note Purchase Agreement or the Seventh Supplement and the issuance and sale of the Series 2016H Notes
under the Note Purchase Agreement as supplemented by the Seventh Supplement will not involve any transaction that is subject to the prohibitions of section 406 of ERISA or in
connection with which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The representation by the Company in the first sentence of this Section
5.12(a) is made in reliance upon and subject to the accuracy of such Purchaser’s representation in Section 6.2 as to the sources of the funds used to pay the purchase price of the
Series 2016H Notes to be purchased by such Purchaser.
(b) No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably
expected to occur, could reasonably be expected to result in a Material Adverse Effect.
Section 5.13. Private Offering by the Company. Neither the Company nor anyone acting on its behalf has offered the Series 2016H Notes or any similar Securities for
sale to, or solicited any offer to buy any of the same from, or otherwise approached or negotiated in respect thereof with, any Person other than the Series 2016H Additional
Purchasers, each of which has been offered the Series 2016H Notes at a private sale for investment. Neither the Company nor anyone acting on its behalf has taken, or will take,
any action that would subject the issuance or sale of the Series 2016H Notes to the registration requirements of Section 5 of the Securities Act or to the registration requirements
of any Securities or blue sky laws of any applicable jurisdiction.
Section 5.14. Use of Proceeds; Margin Regulations. The Company will apply the proceeds of the sale of the Series 2016H Notes for refinancing of existing debt and
general corporate purposes and in compliance with all laws referenced in Section 5.16. Neither the Company nor any of its Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose, whether immediate, incidental or ultimate, of buying or carrying Margin Stock, and no part of the
proceeds of the sale of the Series 2016H Notes hereunder will be used to buy or carry any Margin Stock, or to extend credit to others for the purpose of buying or carrying
Margin Stock. After application of the proceeds of the sale of the Series 2016H Notes, not more than 25% of the value (as determined by any reasonable method) of the assets of
the Company subject to any provision of the Note Purchase Agreement under which the sale, pledge or disposition of assets is restricted will consist of Margin Stock.
Section 5.15. Existing Indebtedness; Future Liens. (a) Part A of Schedule 5.15 is a complete and correct list of each note, bond, certificate, credit agreement, loan
agreement, indenture, note purchase agreement, guarantee, letter of credit or other arrangement providing for or otherwise relating to any Indebtedness or any extension of credit
(or commitment for any extension of credit) to, or guarantee by, the Company or any of its Subsidiaries outstanding on the date of the Series
6
2016H Closing, and the aggregate principal or face amount outstanding or that
7
is, or may become, outstanding, the interest rate, collateral and related guaranties under each such arrangement is correctly described in Part A of Schedule 5.15.
(b)Part B of Schedule 5.15 is a complete and correct list of each Lien securing Indebtedness of any Person outstanding or consented to on the date of the Series
2016H Closing covering any property of the Company or any Subsidiary Guarantor, and the aggregate Indebtedness secured (or that may be secured) by each such Lien and the
property covered by each such Lien is correctly described in Part B of Schedule 5.15.
(c)Neither the Company nor any Subsidiary is a party to, or otherwise subject to any provision contained in, any instrument evidencing Indebtedness of the Company
or such Subsidiary, any agreement relating thereto or any other agreement (including, but not limited to, its charter or other organizational document) which limits the amount of,
or otherwise imposes restrictions on the incurring of, Indebtedness of the Company, except for the Senior Secured Credit Agreement (and the other documents related thereto)
and except as specifically indicated in Schedule 5.15.
Section 5.16. Foreign Assets Control Regulations, Etc. (a) Neither the Company nor any Affiliated Entity is (i) a Person whose name appears on the list of Specially
Designated Nationals and Blocked Persons published by the Office of Foreign Assets Control, United States Department of the Treasury (“OFAC”) (an “OFAC Listed
Person”), (ii) an agent, department, or instrumentality of, or is otherwise beneficially owned by, controlled by or acting on behalf of, directly or indirectly, (x) any OFAC Listed
Person or (y) any Person, entity, organization, foreign country or regime that is subject to any OFAC Sanctions Program, or (iii) otherwise blocked, subject to sanctions under or
engaged in any activity in violation of other United States economic sanctions, including but not limited to, the Trading with the Enemy Act, the International Emergency
Economic Powers Act, the Comprehensive Iran Sanctions, Accountability and Divestment Act (“CISADA”) or any similar law or regulation with respect to Iran or any other
country, the Sudan Accountability and Divestment Act, any OFAC Sanctions Program, or any economic sanctions regulations administered and enforced by the United States or
any enabling legislation or executive order relating to any of the foregoing (collectively, “U.S. Economic Sanctions”) (each OFAC Listed Person and each other Person, entity,
organization and government of a country described in clause (i), clause (ii) or clause (iii), a “Blocked Person”). Neither the Company nor any Affiliated Entity has been notified
that its name appears or may in the future appear on a state list of Persons that engage in investment or other commercial activities in Iran or any other country that is subject to
U.S. Economic Sanctions.
(b)No part of the proceeds from the sale of the Series 2016H Notes hereunder constitutes or will constitute funds obtained on behalf of any Blocked Person or
Canada Blocked Person or will otherwise be used by the Company or any Controlled Entity, directly or indirectly, (i) in connection with any investment in, or any transactions or
dealings with, any Blocked Person or Canada Blocked Person, or (ii) otherwise in violation of U.S. Economic Sanctions or Canadian Economic Sanctions.
(c)Neither the Company nor any Affiliated Entity (i) has been found in violation of,
8
charged with, or convicted of, money laundering, drug trafficking, terrorist-related activities or
9
other money laundering predicate crimes under the Currency and Foreign Transactions Reporting Act of 1970 (otherwise known as the Bank Secrecy Act), the USA PATRIOT
Act, any similar provisions of the Criminal Code (Canada), any U.S. Economic Sanctions, any Canadian Economic Sanctions or any other United States or Canadian law or
regulation governing such activities (collectively, “Anti-Money Laundering Laws”) or any U.S. Economic Sanctions violations or violations of Canadian Economic Sanctions
Laws, (ii) to the Company’s actual knowledge after making due inquiry, is under investigation by any governmental authority for possible violation of Anti-Money Laundering
Laws or any U.S. Economic Sanctions violations or violations of Canadian Economic Sanctions Laws, (iii) has been assessed civil penalties under any Anti-Money Laundering
Laws or any U.S. Economic Sanctions or Canadian Economic Sanctions Laws, or
(iv) has had any of its funds seized or forfeited in an action under any Anti-Money Laundering Laws. The Company has established procedures and controls which it reasonably
believes are adequate (and otherwise comply with applicable law) to ensure that the Company and each Controlled Entity is and will continue to be in compliance with all
applicable current and future Anti-Money Laundering Laws and U.S. Economic Sanctions and Canadian Economic Sanctions Laws.
(d)(1) Neither the Company nor any Affiliated Entity (i) has been charged with, or convicted of bribery or any other anti-corruption related activity under any
applicable law or regulation in a U.S. or any non-U.S. country or jurisdiction, including but not limited to, the
U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act 2010 and any similar provisions of the Criminal Code (Canada) (collectively, “Anti-Corruption Laws”) in the past
five years, (ii) to the Company’s actual knowledge after making due inquiry, is under investigation by any U.S. or non-U.S. Governmental Authority for possible violation of
Anti-Corruption Laws, (iii) has been assessed civil or criminal penalties under any Anti-Corruption Laws in the past five years or
(iv) has been or is the target of sanctions imposed by the United Nations, Canada or the European Union;
(2)To the Company’s actual knowledge after making due inquiry, neither the Company nor any Affiliated Entity has, within the last five years, directly or indirectly
offered, promised, given, paid or authorized the offer, promise, giving or payment of anything of value to a Governmental Official or a commercial counterparty for the purposes
of: (i) influencing any act, decision or failure to act by such Governmental Official in his or her official capacity or such commercial counterparty, (ii) inducing a Governmental
Official to do or omit to do any act in violation of the Governmental Official’s lawful duty, or (iii) inducing a Governmental Official or a commercial counterparty to use his or
her influence with a government or instrumentality to affect any act or decision of such government or entity; in each case in order to improperly obtain, retain or direct business
or to otherwise secure an improper advantage in violation of any applicable law or regulation or which would cause any holder to be in violation of any Anti-
Corruption Laws; and
(3)No part of the proceeds from the sale of the Series 2016H Notes hereunder will be used, directly or indirectly, for any improper payments, including bribes, to any
Governmental Official or commercial counterparty in order to improperly obtain, retain or direct business or obtain any improper advantage. The Company has established
procedures and controls which it
10
reasonably believes are adequate (and otherwise comply with applicable law) to ensure that the
11
Company and each Affiliated Entity is and will continue to be in compliance with the Anti-Corruption Laws.
(e)Neither the Company nor any Affiliated Entity is (i) a Canada Blocked Person, (ii) an agent, department, or instrumentality of, or is otherwise controlled by or
knowingly acting on behalf of, directly or indirectly, any such Person, or (iii) otherwise blocked, subject to sanctions under or engaged in any activity in violation of any
Canadian Economic Sanctions Laws. Neither the Company nor any Affiliated Entity has been notified by a governmental authority in Canada that its name appears or has been
proposed for inclusion on a list of Persons maintained by a governmental authority in Canada that engage in investment or other commercial activities in any country that is
subject to Canadian Economic Sanctions Laws. Neither the Company nor any Affiliated Entity knowingly engages in any dealings or transactions with any Canada Blocked
Person.
Section 5.17. Status under Certain Statutes. (a) The Company is a company that has elected to be regulated as a “business development company” within the meaning of
the Investment Company Act and qualifies as a RIC.
(b)The business and other activities of the Company and its Subsidiaries, including the issuance of the Series 2016H Notes under the Note Purchase Agreement as
supplemented by the Seventh Supplement, the application of the proceeds and repayment thereof by the Company and the consummation of the Transactions contemplated by
the Note Documents do not result in a violation or breach in any material respect of the applicable provisions of the Investment Company Act or any rules, regulations or orders
issued by the SEC thereunder.
(c)The Company is in compliance with its Investment Policies, except to the extent that the failure to so comply could not reasonably be expected to result in a
Material Adverse Effect.
Section 5.18. Series 2016H Notes Rank Pari Passu. The obligations of the Company under the Note Purchase Agreement as supplemented by the Seventh Supplement
and the Series 2016H Notes rank at least pari passu in right of payment with all other Senior Unsecured Indebtedness (actual or contingent) of the Company, including, without
limitation, the Series 2016D Notes, the Series 2016E Notes, the Series 2016F Notes, the Series 2016G Notes and all other Senior Unsecured Indebtedness of the Company
described in Schedule 5.15 hereto.
Section 5.19. Investments. Set forth in Schedule 5.19 is a complete and correct list of all Investments (other than Investments of the types referred to in clauses (b), (c)
and (d) of Section 10.4) held by the Company or any Subsidiary Guarantor in any Person on the date of the Series 2016H Closing and, for each such Investment, (x) the identity
of the Person or Persons holding such Investment and (y) the nature of such Investment. Except as disclosed in Schedule 5.19, as of the date of the Series 2016H Closing each of
the Company and the Subsidiary Guarantors owns, free and clear of all Liens (other than Permitted Liens or Liens created pursuant to the Security Documents), all such
Investments.
Section 5.20. Affiliate Agreements. As of the date of the Series 2016H Closing, the Company
12
has heretofore delivered (to the extent not otherwise publicly filed with the SEC) to each
of the Purchasers true and complete copies of each of the Affiliate Agreements (including schedules and exhibits thereto, and any amendments, supplements or waivers executed
and delivered thereunder). As of the date of the Series 2016H Closing, each of the Affiliate Agreements is in full force and effect.
[FORM OF SERIES 2016H NOTE]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES
LAWS OF ANY JURISDICTION. SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
ASSIGNED, ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT (I) PURSUANT TO A REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES THAT IS EFFECTIVE UNDER
THE ACT OR APPLICABLE STATE SECURITIES LAWS, OR (II) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE ACT OR APPLICABLE STATE SECURITIES LAW, INCLUDING,
WITHOUT LIMITATION, PURSUANT TO RULE 144 OR RULE 144A, PROVIDED THAT AN OPINION OF
COUNSEL (WHICH MAY BE INTERNAL COUNSEL) SHALL BE FURNISHED TO THE COMPANY (IF REASONABLY REQUESTED BY THE COMPANY), IN FORM AND SUBSTANCE REASONABLY SATISFACTORY
TO THE COMPANY, TO THE EFFECT THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE ACT AND/OR APPLICABLE STATE SECURITIES LAW.
SLR Investment Corp.
6.14% Series 2016H, Senior Note, due February 18, 2028
No. [ ] [Date]
$[ ] PPN 83413U D*8
FOR VALUE RECEIVED, the undersigned, SLR INVESTMENT CORP. (herein called the “Company”), a corporation organized and existing under the laws of the State
of Maryland, hereby promises to pay to [ ], or registered assigns, the principal sum of [ ] DOLLARS (or so much thereof as shall not have been prepaid) on February 18, 2028,
with interest (computed on the basis of a 360-day year of twelve 30-day months) on the unpaid balance hereof at the rate of (a) 6.14% per annum from the date hereof, payable
semiannually, on the 18th day of February and August in each year, commencing August 18, 2025, and on the Maturity Date until the principal hereof shall have become due
and payable, and (b) to the extent permitted by law, on any overdue payment of interest and, during the continuance of an Event of Default, on such unpaid balance and on any
overdue payment of any Make-Whole Amount, at a rate per annum from time to time equal to the Default Rate (as defined in the hereinafter defined Note Purchase Agreement).
Payments of principal of, interest on and any Make-Whole Amount with respect to this Note are to be made in lawful money of the United States of America at the
principal office of Goldman Sachs Bank USA in New York, New York or at such other place as the Company shall have designated by written notice to the holder of this Note
as provided in the Note Purchase Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the “Notes”) issued pursuant to the Seventh Supplement dated as of February 18, 2025 (the “Seventh
Supplement”), among the Company and the Series 2016H Additional Purchasers named therein, which supplements the Note Purchase Agreement dated as of November 8,
2016 (as from time to time amended, supplemented
Exhibit 1
(to Supplement)
2
or modified, the “Note Purchase Agreement”), among the Company and the respective Purchasers named therein. This Note and the holder hereof are entitled equally and
ratably with the holders of all other Notes of all series from time to time outstanding under the Note Purchase Agreement to all the benefits provided for thereby or referred to
therein. Each holder of this Note will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase
Agreement, (ii) made the representations and agreements set forth in Sections 6.2 and 6.1(b) and (f) of the Note Purchase Agreement and in Section 6(b) of the Seventh
Supplement, and (iii) agreed that any transfer or other disposition of this Note is otherwise subject to the terms and conditions contained in the Note Purchase Agreement. Unless
otherwise indicated, capitalized terms used in this Note shall have the respective meanings ascribed to such terms in the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note of the same
Series and tranche for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company
may treat the Person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be
affected by any notice to the contrary.
This Note and the holder hereof are entitled equally and ratably with the holders of all of the Notes, the Series 2016A Notes, the Series 2016B Notes, the Series
2016C Notes, the Series 2016D Notes, the Series 2016E Notes, the Series 2016F Notes, the 2016G Notes and any Additional Notes issued and outstanding from time to time to
the rights and benefits provided pursuant to the terms and provision of the Subsidiary Guarantee (as such term is defined in the Note Purchase Agreement). Reference is hereby
made to the foregoing for a statement of the nature and extent of the benefits for the Notes afforded thereby and the rights of the holders of the Notes.
This Note is subject to prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.
If an Event of Default occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price
(including any applicable Make-Whole Amount) and with the effect provided in the Note Purchase Agreement.
3
This Note shall be construed and enforced in accordance with, and the rights of the Company and the holder of this Note shall be governed by, the law of
the State of New York, excluding choice-of-law principles of the law of such State that would permit application of the laws of a jurisdiction other than such State.
SLR Investment Corp.
By: Name: Title:
Exhibit 21.1
Subsidiaries of SLR Investment Corp.
The following list sets forth our consolidated subsidiaries, the state or country under whose laws the subsidiaries are organized, and the percentage of voting securities or membership interests owned by us in each
such subsidiary:
NEFCORP LLC (Delaware) – 100%
NEFPASS LLC (Delaware) – 100%
ESP SSC Corporation (Delaware) – 100%
SUNS SPV LLC (Delaware) – 100%
The subsidiaries listed above are consolidated for financial reporting purposes. We may also be deemed to control certain portfolio companies.
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the registration statement on Form N-2 of SLR Investment Corp. of our report dated February 25, 2025, with respect to the consolidated financial statements and the
effectiveness of internal control over financial reporting, which appears in the annual report on Form 10-K of SLR Investment Corp. for the year ended December 31, 2024, and to the use of our report dated February 25,
2025 on the senior securities table included herein as an exhibit to the Form 10-K. We also consent to the reference to our firm under the heading “Controls and Procedures” in the Form 10-K.
/s/ KPMG LLP
New York, New York
February 25, 2025
CONSENT OF INDEPENDENT AUDITOR
SLR Investment Corp.
New York, New York
We consent to the incorporation by reference in the Registration Statement (No. 333-278755) on Form N-2 of SLR Investment Corp. of our report dated February 21, 2025, relating to the
consolidated financial statements of KBH Topco, LLC, appearing in this Annual Report on Form 10-K of SLR Investment Corp. dated February 25, 2025.
/s/ FGMK, LLC
Bannockburn, Illinois
February 25, 2025
Consent of Independent Auditor
We hereby consent to the incorporation by reference of our report dated February 13, 2025 on the consolidated financial statements of NEF Holdings, LLC and Subsidiaries, which report appears in the
annual report on Form 10-K of SLR Investment Corp. dated February 25, 2025, in the Registration Statement on Form N-2 (No. 333-278755) of SLR Investment Corp.
/s/ Baker Tilly US, LLP
Philadelphia, Pennsylvania
February 25, 2025
Consent of Independent Auditor
We hereby consent to the incorporation by reference of our report dated February 12, 2025 on the consolidated financial statements of Crystal Financial LLC, which report appears in the annual report
on Form 10-K of SLR Investment Corp. dated February 25, 2025, in the Registration Statement on Form N-2 (No. 333-278755) of SLR Investment Corp.
/s/ Baker Tilly US, LLP
Philadelphia, Pennsylvania
February 25, 2025
Consent of Independent Auditor
We hereby consent to the incorporation by reference of our report dated February 14, 2025 on the consolidated financial statements of Gemino Healthcare Finance, LLC, which report appears in the
annual report on Form 10‑K of SLR Investment Corp. dated February 25, 2025, in the Registration Statement on Form N-2 (No. 333-278755) of SLR Investment Corp.
/s/ Baker Tilly US, LLP
Philadelphia, Pennsylvania
February 25, 2025
1
Exhibit 23.6
Consent of Independent Auditor
We hereby consent to the incorporation by reference of our report dated February 12, 2025 on the consolidated financial statements of North Mill Holdco LLC and Subsidiaries, which report appears in
the annual report on Form 10‑K of SLR Investment Corp. dated February 25, 2025, in the Registration Statement on Form N-2 (No. 333-278755) of SLR Investment Corp.
/s/ Baker Tilly US, LLP
Philadelphia, Pennsylvania
February 25, 2025
Exhibit 31.1
Certification Pursuant to Section 302
Certification of Co-Chief Executive Officer
I, Michael S. Gross, certify that:
1. I have reviewed this annual report on Form 10-K of SLR Investment Corp.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation; and
(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to
record, process, summarize and report financial information; and
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Dated this 25th day of February 2025.
By:
/s/ MICHAEL S. GROSS
Michael S. Gross
Co-Chief Executive Officer
Exhibit 31.2
Certification Pursuant to Section 302
Certification of Co-Chief Executive Officer
I, Bruce J. Spohler, certify that:
1. I have reviewed this annual report on Form 10-K of SLR Investment Corp.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and
(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal
quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial information; and
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Dated this 25th day of February 2025.
By:
/s/ BRUCE J. SPOHLER
Bruce J. Spohler
Co-Chief Executive Officer
Exhibit 31.3
Certification Pursuant to Section 302
Certification of Chief Financial Officer
I, Shiraz Y. Kajee, certify that:
1. I have reviewed this annual report on Form 10-K of SLR Investment Corp.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and
(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal
quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial information; and
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Dated this 25th day of February 2025.
By:
/s/ SHIRAZ Y. KAJEE
Shiraz Y. Kajee
Chief Financial Officer
Exhibit 32.1
Certification of Co-Chief Executive Officer
Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
In connection with the Annual Report on Form 10-K for the year ended December 31, 2024 (the “Report”) of SLR Investment Corp. (the “Registrant”), as filed with the Securities and Exchange Commission on the
date hereof, I, Michael S. Gross, the Co-Chief Executive Officer of the Registrant, hereby certify, to the best of my knowledge, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
/s/ MICHAEL S. GROSS
Name:
Michael S. Gross
Title:
Co-Chief Executive Officer
Date:
February 25, 2025
Exhibit 32.2
Certification of Co-Chief Executive Officer
Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
In connection with the Annual Report on Form 10-K for the year ended December 31, 2024 (the “Report”) of SLR Investment Corp. (the “Registrant”), as filed with the Securities and Exchange Commission on the
date hereof, I, Bruce J. Spohler, the Co-Chief Executive Officer of the Registrant, hereby certify, to the best of my knowledge, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
/s/ BRUCE J. SPOHLER
Name:
Bruce J. Spohler
Title:
Co-Chief Executive Officer
Date:
February 25, 2025
Exhibit 32.3
Certification of Chief Financial Officer
Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
In connection with the Annual Report on Form 10-K for the year ended December 31, 2024 (the “Report”) of SLR Investment Corp. (the “Registrant”), as filed with the Securities and Exchange Commission on the
date hereof, I, Shiraz Y. Kajee, the Chief Financial Officer of the Registrant, hereby certify, to the best of my knowledge, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
/s/ SHIRAZ Y. KAJEE
Name:
Shiraz Y. Kajee
Title:
Chief Financial Officer
Date:
February 25, 2025
Exhibit 99.1
Crystal Financial LLC
dba SLR Credit Solutions
(A Delaware Limited Liability Company)
Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
Page(s)
Independent Auditors’ Report
1-2
Consolidated Financial Statements
Consolidated Balance Sheets
3
Consolidated Statements of Operations
4
Consolidated Statements of Changes in Member’s Equity
5
Consolidated Statements of Cash Flows
6
Notes to Consolidated Financial Statements
7-19
Baker Tilly Advisory Group, LP and Baker Tilly US, LLP, trading as Baker Tilly, are members of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Baker Tilly US, LLP is a
licensed CPA firm that provides assurance services to its clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services to their clients and are not licensed CPA firms.
1
Independent Auditors' Report
To the Board of Managers and Member of Crystal Financial LLC
Opinion
We have audited the consolidated financial statements of Crystal Financial LLC dba SLR Credit Solutions (the Company), which comprise the consolidated balance sheets as of December 31, 2024 and
2023, and the related consolidated statements of operations, changes in member’s equity and cash flows for the years then ended, and the related notes to the consolidated financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of
their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the
Auditors' Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in
accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America,
and for the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the
Company's ability to continue as a going concern within one year after the date that the financial statements are available to be issued.
2
Auditors' Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with
GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations or the override of internal control.
Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated
financial statements.
In performing an audit in accordance with GAAS, we:
•Exercise professional judgment and maintain professional skepticism throughout the audit.
•Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such
procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
•Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company's internal control. Accordingly, no such opinion is expressed.
•Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the
consolidated financial statements.
•Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable
period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings and certain internal control-
related matters that we identified during the audit.
Philadelphia, Pennsylvania February 12, 2025
The accompanying notes are an integral part of these consolidated financial statements.
3
Crystal Financial LLC dba SLR Credit Solutions
Consolidated Balance Sheets
Years Ended December 31, 2024 and 2023
Assets:
2024
2023
Cash and cash equivalents
$
30,392,073
$
4,155,344
Restricted cash
3,047,138
14,204,878
Loan interest and fees receivable
3,369,606
3,853,372
Loans
317,564,915
406,553,535
Less: Unearned fee income
(5,992,318 )
(7,437,788 )
Allowance for credit losses
(6,326,708 )
(9,448,619 )
Total loans, net
305,245,889
389,667,128
Property and equipment, net
88,328
16,469
Goodwill
5,156,542
5,156,542
Other assets
16,958,216
21,368,095
Total assets
$
364,257,792
$
438,421,828
Liabilities:
Revolving credit facility, net
$
147,411,083
$
215,343,743
Accrued expenses
6,150,217
5,872,387
Distributions payable
5,500,000
5,000,000
Other liabilities
4,918,803
6,525,994
Collateral held for borrower obligations
-
9,783,573
Total liabilities
163,980,103
242,525,697
Commitments and Contingencies (see Note 8)
Member's equity:
Class A units
279,191,400
279,191,400
Accumulated deficit
(78,913,711)
(83,295,269)
Total member's equity
200,277,689
195,896,131
Total liabilities and member's equity
$
364,257,792
$
438,421,828
The accompanying notes are an integral part of these consolidated financial statements.
4
Crystal Financial LLC dba SLR Credit Solutions
Consolidated Statements of Operations
Years Ended December 31, 2024 and 2023
2024
2023
Net interest income:
Interest income
$
55,246,665 $
57,823,000
Interest expense
18,352,784
20,308,902
Net interest income
36,893,881
37,514,098
Recovery (provision) for credit losses
(2,849,618)
17,481,887
Net interest income after recovery (provision) for credit losses
39,743,499
20,032,211
Operating expenses:
Compensation and benefits
9,011,903
10,517,444
Depreciation and amortization
22,031
12,628
General and administrative expenses
2,465,543
3,008,930
Total operating expenses
11,499,477
13,539,002
Other income (loss):
(Loss) from equity method investment
-
(22,796)
Impairment on investment in equity securities
(3,349,308)
-
Total other income (loss), net
(3,349,308)
(22,796)
Realized (loss) gain from foreign currency transactions, net
(33,079)
69,572
Unrealized gain (loss) from foreign currency translations, net
19,923
(64,164)
Net income
$
24,881,558 $
6,475,821
The accompanying notes are an integral part of these consolidated financial statements.
5
Crystal Financial LLC dba SLR Credit Solutions
Consolidated Statements of Changes in Member’s Equity
Years Ended December 31, 2024 and 2023
Class A Units
Accumulated
Deficit
Total Member's
Equity
Balance, December 31, 2022
$
279,191,400 $
(69,924,574)
$
209,266,826
Cumulative effect of adopting new accounting
standard (see Note 2)
153,484
153,484
Distributions
-
(20,000,000)
(20,000,000)
Net income
-
6,475,821
6,475,821
Balance, December 31, 2023
279,191,400
(83,295,269)
195,896,131
Distributions
-
(20,500,000)
(20,500,000)
Net income
-
24,881,558
24,881,558
Balance, December 31, 2024
$
279,191,400 $
(78,913,711)
$
200,277,689
The accompanying notes are an integral part of these consolidated financial statements.
6
Crystal Financial LLC dba SLR Credit Solutions
Consolidated Statements of Cash Flows
Years Ended December 31, 2024 and 2023
2024
2023
Cash flows from operating activities:
Net income
$
24,881,558
$
6,475,821
Adjustments to reconcile net income to net cash provided by
operating activities:
(Recovery) provision for credit losses
(2,849,618 )
17,481,887
Accretion of original issue discount
(326,938)
(869,532)
Depreciation
22,031
12,628
Amortization of debt issuance costs
991,618
961,665
Paid-in-kind interest and fee income
-
(925,689)
Loss from equity method investment
-
22,796
Unrealized (gain) loss on foreign currency transactions
(20,403 )
64,271
Realized loss on foreign currency transactions
14,875
7,709
Write down of amounts classified as other assets
-
282,107
Impairment on investment in equity securities
3,349,308
-
Net change in loan interest and fees receivable
533,220
1,706,725
Net change in other assets
1,060,571
(2,164,850 )
Net change in unearned fees
(1,553,362 )
686,448
Net change in accrued expenses
277,830
2,213,631
Net change in other liabilities
(1,827,774 )
2,957,432
Net cash provided by operating activities
24,552,918
28,913,049
Cash flows from investing activities:
Purchases of property and equipment
(93,890 )
(13,075 )
Investment in term loans
(91,006,470)
(193,501,153 )
Repayment of term loans
184,789,596
176,268,136
Lending on revolving lines of credit, net
(6,892,010 )
17,836,797
Distributions received from Crystal Financial SBIC LP
-
2,552,540
Net change in collateral held for borrower obligations
(9,783,573 )
(7,410,178 )
Net cash provided by (used in) investing activities
77,013,653
(4,266,933 )
Cash flows from financing activities:
Repayments on revolving credit facility
(66,409,821)
(6,103,274 )
Distributions to members
(20,000,000)
(20,000,000)
Payment of debt issuance costs
(75,030 )
(2,265,869 )
Payment of finance lease obligations
(2,730 )
(3,725 )
Net cash used in financing activities
(86,487,581)
(28,372,868)
Net change in cash, cash equivalents, and restricted cash
15,078,989
(3,726,752 )
Cash, cash equivalents, and restricted cash at beginning of year
18,360,222
22,086,974
Cash, cash equivalents and restricted cash at end of year
$
33,439,211
$
18,360,222
Supplemental disclosure of cash flow information:
Cash paid for interest
$
17,361,166
$
19,253,926
Supplemental disclosure of non-cash investing and financing
activities:
Use of loan to obtain equity interest in joint venture (see Note 3)
$
-
$
17,808,297
Right-of-use assets obtained in exchange for new operating lease
liabilities
$
-
$
2,818,752
7
Crystal Financial LLC dba SLR Credit Solutions
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
1.Organization
Crystal Financial LLC (“Crystal Financial” or the “Company”), along with its wholly owned subsidiary,
Crystal Financial SPV LLC (“Crystal Financial SPV”), is a commercial finance company based in Boston, Massachusetts, that primarily originates, underwrites, and manages secured debt
to middle market companies within various industries. The Company was formed in the state of Delaware on March 18, 2010. During 2021, the Company executed a dba filing to do
business using the name SLR Credit Solutions.
At December 31, 2024 and 2023, SLR Investment Corp. (“SLRC”) owns 100% of the outstanding ownership units of the Company.
2.Summary of Significant Accounting Policies
The following is a summary of significant accounting policies adopted by the Company:
Basis of Accounting
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary Crystal Financial SPV. All inter-company investments, accounts and
transactions have been eliminated in these consolidated financial statements.
Use of Estimates
The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements as well as the reported amounts of revenues and expenses during the
reporting period. Actual results could differ materially from those estimates.
Cash, Cash Equivalents, and Restricted Cash
The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash includes all deposits held at banks. Deposits in
excess of amounts insured by the Federal Deposit Insurance Corporation (“FDIC”) are exposed to loss in the event of nonperformance by the institution. The Company has had cash
deposits in excess of the FDIC insurance coverage and has not experienced any losses on such accounts.
Restricted cash consists of interest and fees collected on those loans held within Crystal Financial SPV that serve as collateral against the Company’s outstanding line of credit. Upon
receipt, these funds are restricted from the Company’s access until the fifteenth of the following month. Also included in restricted cash may be funds that serve as collateral against loans
outstanding to certain borrowers as well as funds that serve as collateral to outstanding letters of credit.
Crystal Financial LLC dba SLR Credit Solutions
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
8
2.Summary of Significant Accounting Policies…continued
Cash, Cash Equivalents, and Restricted Cash…continued
In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 230, Statement of Cash Flows, the Company presents the change during the
period in the total of cash, cash equivalents, and amounts generally described as restricted cash in the consolidated statements of cash flows. Accordingly, amounts generally described as
restricted cash will be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the consolidated statements of cash
flows.
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheet that sum to the total of the same such amounts
shown in the consolidated statements of cash flows.
December 31,
2024
2023
Cash and cash equivalents
$
30,392,073 $
4,155,344
Restricted cash
3,047,138
14,204,878
Total cash, cash equivalents, and restricted cash
shown in the consolidated statements of cash flows
$
33,439,211
$
18,360,222
Loans
The Company typically classifies all loans as held to maturity. Loans funded by the Company are recorded at the amount of unpaid principal, net of unearned fees, discounts and the
allowance for credit losses in the Company’s consolidated balance sheets.
Interest income is recorded on the accrual basis in accordance with the terms of the respective loan. Generally, interest is not accrued on loans with interest or principal payments 90 days
or greater past due or on other loans when management believes collection is doubtful. Loans considered impaired, as defined below, are non-accruing. When a loan is placed on
nonaccrual status, all interest previously accrued, but not collected, is reversed against current interest income and all future proceeds received will generally be applied against principal or
interest, in the judgment of management. Interest on loans classified as nonaccrual is accounted for on the cash basis or cost-recovery method, until qualifying for return to accrual status.
Loans are generally returned to accrual status when all of the principal and interest amounts contractually due are brought current and future payments are reasonably assured. The
Company did not have any loans that are non-performing, modified or past due 30 days or more as of December 31, 2024 and 2023.
Allowance for Credit Losses
Effective January 1, 2023, the Company adopted Accounting Standards Update ("ASU") 2016-13, Financial Instruments-Credit Losses (ASC 326): Measurement of Credit Losses on
Financial Instruments, as amended (“ASU 2016-13”). ASU 2016-13 replaces the incurred loss methodology with an expected loss methodology, referred to as the current expected credit
loss (“CECL”) methodology. The Company adopted ASU 2016-13 using the modified retrospective method. In 2023 the Company recorded a net increase to member’s equity of $153,484
as of the adoption date for the cumulative effect of adopting ASU 2016-13.
Crystal Financial LLC dba SLR Credit Solutions
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
9
2.Summary of Significant Accounting Policies…continued
Allowance for Credit Losses…continued
The allowance for credit losses reflects our current estimate of potential losses inherent in the loan portfolio at year end. Changes to the allowance are recognized through net income in the
consolidated statements of operations. While ASU 2016-13 does not require any particular method for determining the allowance for credit losses, it does specify that the reserve should be
based on relevant information about past events, including, but not limited to, historical loss rates, current portfolio composition, market conditions, and reasonable and supportable forecasts
for the duration of each respective loan.
The Company’s portfolio consists of both revolvers and term loans. The loans are further classified as either “Pass” or “Criticized.” These classifications are a direct result of the internal risk
ratings assigned to each loan during regular loan review meetings. All loans in the Company’s portfolio with similar risk characteristics are individually reviewed when determining the risk
rating for each loan. Internal risk ratings are derived upon consideration of various factors related to both the borrower and the borrower’s facility, with those factors related to the borrower’s
facility being the key determinant of the overall risk rating. A lower internal risk rating represents less risk while a higher internal risk rating represents more risk. Risk factors of the borrower
that are considered include asset and earnings quality, historical and projected financial performance, borrowing liquidity and/or access to capital. Risk factors of the facility that are
considered include collateral coverage and the facility’s position within the overall capital structure. Loans rated below a certain threshold are classified as “Pass” and loans rated above a
certain threshold are classified as “Criticized.”
The allowance for credit losses on loans classified as “Pass” is assessed using historical loss data, the expected weighted-average remaining maturity of the portfolio, and a qualitative
economic view. The Company also reviews trends in the weighted-average risk rating of the portfolio in order to determine whether risk characteristics of the current portfolio, relative to the
historical portfolio, could signal a greater risk of expected loss.
In accordance with CECL, the Company’s allowance for credit losses may be adjusted to reflect management’s assessment of current and future economic conditions that may impact the
performance of the borrowers. The assessment includes, but is not limited to, unemployment rates, interest rates, expectations of inflation and/or recession, as well as various other
macroeconomic factors that could impact the likelihood of potential credit losses during a loan’s anticipated term.
Specific allowances for credit losses are generally applied to loans classified as “Criticized.” Generally, these loans are deemed to be impaired and are typically measured based on a
comparison of the recorded carrying value of the loan to the present value of the loan’s expected cash flow using the loan’s effective interest rate, the loan’s estimated market price, or the
estimated fair value of the underlying collateral, if the loan is collateral-dependent. Loans are charged off against the allowance at the earlier of either the substantial completion of the
liquidation of assets securing the loan, or when senior management deems the loan to be permanently impaired.
A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due in accordance with the contractual
terms of the loan agreement. All loans are individually evaluated for impairment according to the Company’s normal loan review process, including overall credit evaluation, nonaccrual
status and payment experience. Loans identified as impaired are further evaluated to determine the estimated extent of impairment.
Crystal Financial LLC dba SLR Credit Solutions
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
10
2.Summary of Significant Accounting Policies…continued
Goodwill
The Company typically assesses goodwill for impairment at the end of each fiscal year using a qualitative assessment.
Goodwill recognized in business combinations is assigned to the reporting units that are expected to benefit from the combination as of the acquisition date. Goodwill is not amortized; rather
goodwill is tested annually for impairment or more frequently upon the occurrence of certain events or substantive changes in circumstances. The Company has elected to perform a
qualitative assessment to determine if an impairment is more likely than not to have occurred. If the conclusion is supported that it is not more likely than not that the fair value of a reporting
unit is less than its carrying amount, then the Company would not need to perform a quantitative impairment test. If the conclusion cannot be supported, or if the Company does not elect to
do the qualitative assessment, then the Company will perform a quantitative assessment. If a quantitative goodwill impairment assessment is performed, the Company utilizes a combination
of market and income valuation approaches. If the fair value of a reporting unit is less than its carrying value, an impairment loss is recorded to the extent that the fair value of the reporting
unit is less than its carrying value. No impairment of goodwill resulted from the annual impairment testing in 2024 or 2023.
Debt Issuance Costs
Debt issuance costs represent fees and other direct incremental costs incurred in connection with the Company’s borrowings against its revolving credit facility (see Note 5). These amounts
are amortized using the straight-line method into earnings as interest expense ratably over the contractual term of the facility. Net unamortized debt issuance costs totaled $2,586,255 and
$3,534,603 at December 31, 2024 and 2023 and are recorded as a direct deduction in the carrying amount of the revolving credit facility on the accompanying consolidated balance sheets.
Fee Income Recognition
Certain loans in the Company’s portfolio have been issued at a discount. Income related to the accretion of these discounts totaled $326,938 and $869,532 during the years ended
December 31, 2024 and 2023, respectively, and is included as a component of interest income on the consolidated statements of operations.
Nonrefundable loan fees and costs associated with the origination or purchase of loans are deferred and included in loans, net, in the consolidated balance sheets. These commitment fees,
as well as certain other fees charged to borrowers, such as amendment and prepayment fees, are recorded in interest income, after receipt, over the remaining life of the loan using a
method which approximates the interest method. Income recognized on these fees totaled $8,753,999 and $6,498,210 during the years ended December 31, 2024 and 2023, respectively,
and is recorded as a component of interest income on the consolidated statements of operations. Unused line fees are recorded in interest income when received. Unamortized fees totaling
$5,992,318 and $7,437,788 are recorded as unearned fee income on the accompanying consolidated balance sheets at December 31, 2024 and 2023, respectively.
Crystal Financial LLC dba SLR Credit Solutions
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
11
2.Summary of Significant Accounting Policies…continued
Property and Equipment, net
Property and equipment are carried at cost. Such items are depreciated or amortized on a straight-line basis over the following useful lives:
Furniture and fixtures
5-7 years
Computer equipment
3-5 years
Computer software
3 years
Leasehold improvements
shorter of remaining lease term or the asset’s
estimated useful life
The Company leases office space and equipment under various operating and finance lease agreements. The leases have varying terms and may include escalation clauses or lease
concessions. Lease expense for operating leases is recognized on a straight-line basis over the lease term.
Depreciation expense for finance leases is recognized over either the useful life of the asset or the lease term based on the terms of the lease agreement and is recorded as a component of
depreciation and amortization on the consolidated statements of operations.
The Company recognizes a right-of-use asset and a lease liability in the consolidated balance sheets as of December 31, 2024 and 2023 for those leases classified as operating or finance
leases with a term in excess of twelve months. The lease term is determined at lease commencement and includes any noncancellable period for which the Company has the right to use
the underlying asset together with any periods covered by an option to extend the lease, if it is reasonably certain that the Company will exercise the option to extend. The initial
determination of the lease liability is calculated as the net present value of the lease payments not yet paid. The discount rate used to determine the present value is the rate implicit in the
lease, if present, or if not present, the Company’s incremental borrowing rate. The incremental borrowing rate is defined as the rate that reflects the amount of interest that would have to be
paid to borrow funds on a collateralized basis over a similar term to the lease in a similar economic environment. Lease payments include fixed payments less any lease incentives available
to the Company plus variable lease payments (see Note 5). During 2023, the right-of-use asset and lease liability were increased by $2,818,752 as a result of a lease modification and
extension.
Investment in Equity Securities
The Company accounts for equity securities in accordance with the guidance set forth in Financial Instruments (ASC 825). The Company obtained an equity interest in an entity formed to
acquire certain assets of a borrower during the year ended December 31, 2023 (see Note 3) and elected the measurement alternative set forth in FASB ASC 321-10. The measurement
alternative is optional and may be applied to equity securities without a readily determinable fair value. In accordance with the measurement alternative, the interest is recorded at cost, less
impairment, plus or minus any changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. The company recorded
impairment on investment in equity securities totaling $3,349,308 during the year ended December 31, 2024. No impairment or price changes were recorded on the equity interest during
the year ended December 31, 2023.
Crystal Financial LLC dba SLR Credit Solutions
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
12
2.Summary of Significant Accounting Policies…continued
Foreign Currency
The functional currency of the Company is the US Dollar. The Company has two loans denominated in foreign currency in its portfolio at December 31, 2024 and 2023. The Company also
has the ability to borrow foreign currency denominated funds under its revolving line of credit (see Note 5). Gains and losses arising from exchange rate fluctuations on transactions
denominated in currencies other than the US Dollar are included in earnings as incurred. The Company recorded unrealized gains on foreign currency translations totaling $19,923 during
the year ended December 31, 2024 and unrealized losses on foreign currency translations totaling $64,164 during the year ended December 31, 2023. Realized losses totaling $33,079 and
realized gains totaling $69,572 were recorded during the years ended December 31, 2024 and December 31, 2023, respectively.
Distributions
Distributions to members are recorded as of the date of declaration and are approved by the Company’s Board of Managers. Distributions totaling $5,500,000 and $5,000,000 were declared
by the Company at December 31, 2024 and 2023, respectively, but were not paid until the following year.
Income Taxes
The Company is a single member LLC treated as a disregarded entity for tax purposes. The sole member of Crystal Financial is individually liable for the taxes, if any.
The Company applies the provisions set forth in Accounting for Uncertainty in Income Taxes (ASC 740- 10). ASC 740-10 provides a comprehensive model for the recognition,
measurement and disclosure of uncertain income tax positions. The Company recognizes the tax effect of certain tax positions when it is more likely than not that the tax position will be
sustained upon examination, based solely on the technical merits of the tax position. As of December 31, 2024, the Company does not have any uncertain tax positions that meet the
recognition or measurement criteria of ASC 740-10.
As a disregarded entity, the Company has no obligation to file a U.S. federal return for tax periods beginning after July 28, 2016, the date the Company became a disregarded entity for tax
purposes. The Company does however continue to file certain state tax returns. As of December 31, 2024, the Company is subject to examination by various state tax authorities for tax
years beginning after December 31, 2020.
3.Allowance for Credit Losses
There are no individually evaluated loans and no interest or principal payments outstanding as of December 31, 2024 and 2023.
During 2023, the Company placed a loan with outstanding principal of $37,232,381 on non-accrual. The loan was restructured and the Company used $17,808,297 of the outstanding loan
balance to purchase an equity ownership in an entity formed to acquire certain assets of the borrower during the bankruptcy process. After applying cash repayments received, the
remaining loan balance was written-off in accordance with ASU 2016-13. The equity ownership is deemed to be a variable interest entity of the Company, however it is not subject to
consolidation (see Note 9) and is recorded as a component of other assets on the accompanying consolidated balance sheet as of December 31, 2024.
Crystal Financial LLC dba SLR Credit Solutions
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
13
3.Allowance for Credit Losses…continued
Depending on the assigned internal risk rating, loans are classified as either Pass or Criticized. Generally, once a loan is classified as Criticized, the loan is individually evaluated and a
specific reserve analysis is required. There are no loans classified as Criticized at December 31, 2024 and 2023.
The Company also maintains an allowance on unfunded revolver and delayed draw term loan commitments. At December 31, 2024 and 2023, an allowance of $789,061 and $516,768,
respectively, was recorded relating to these commitments. This amount is recorded as a component of other liabilities on the Company’s consolidated balance sheets with changes recorded
in the provision for credit losses on the Company’s consolidated statements of operations. The methodology for determining the allowance for unfunded revolver and delayed draw term
loan commitments is consistent with the methodology used for determining the allowance for credit losses, with the exception that only the portion of the outstanding commitment expected
to be drawn is applied against the unfunded commitments.
The summary of changes in the allowance for credit losses relating to funded commitments for the years ended December 31, 2024 and 2023 is as follows:
Year Ended December 31, 2024
Revolvers
Term Loans
Total
Allowance for credit losses:
Beginning balance,
$
656,589
$
8,792,030
$
9,448,619
Provision (recovery) for credit losses
61,311
(3,183,222)
(3,121,911)
Loans charged-off
-
-
-
Ending allowance for credit losses
$
717,900
$
5,608,808
$
6,326,708
Year Ended December 31, 2023
Revolvers
Term Loans
Total
Allowance for credit losses:
Beginning balance, prior to adoption
of ASU 2016-13
$
629,962
$
8,500,574
$
9,130,536
Impact of adopting ASU 2016-13
(16,684)
(136,800)
(153,484)
Provision for credit losses
43,311
17,344,643
17,387,954
Loans charged-off
-
(16,916,387)
(16,916,387)
Ending allowance for credit losses
$
656,589
$
8,792,030
$
9,448,619
Crystal Financial LLC dba SLR Credit Solutions
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
14
3.Allowance for Credit Losses…continued
The Company’s primary credit quality indicator is its internal risk ratings, which are used to determine whether a loan should be classified as “Pass” or “Criticized.” The following tables
present the net book value of the Company’s loan portfolio as of December 31, 2024 and 2023, by year of origination, loan type, and risk classification.
December 31, 2024
Net Book Value of Loans Receivable by Year of Origination
2024
2023
2022
2021
Prior
Revolving
Loans
Amortized Cost
Basis
Total
Revolvers
Pass
$
- $
- $
- $
- $
- $
31,901,165 $
31,901,165
Criticized
-
-
-
-
-
-
-
Total revolvers
-
-
-
-
-
31,901,165
31,901,165
Term loans
Pass
76,717,742
110,294,940
72,458,588
-
20,200,162
-
279,671,432
Criticized
-
-
-
-
-
-
-
Total term loans
76,717,742
110,294,940
72,458,588
-
20,200,162
-
279,671,432
Total loans receivable
$
76,717,742 $
110,294,940 $
72,458,588 $
- $
20,200,162 $
31,901,165
311,572,597
Allowance for credit losses
(6,326,708)
Loans receivable, net
$
305,245,889
December 31, 2023
Net Book Value of Loans Receivable by Year of Origination
2023
2022
2021
Prior
Revolving
Loans
Amortized Cost
Basis
Total
Revolvers
Pass
$
- $
- $
- $
- $
26,058,783 $
26,058,783
Criticized
-
-
-
-
-
-
Total revolvers
-
-
-
-
26,058,783
26,058,783
Term loans
Pass
168,134,079
90,866,630
48,117,243
65,939,012
-
373,056,964
Criticized
-
-
-
-
-
-
Total term loans
168,134,079
90,866,630
48,117,243
65,939,012
-
373,056,964
Total loans receivable
$
168,134,079 $
90,866,630 $
48,117,243 $
65,939,012 $
26,058,783
399,115,747
Allowance for credit losses
(9,448,619)
Loans receivable, net
$
389,667,128
Loans charged-off
$
- $
- $
16,916,387 $
- $
- $
16,916,387
Accrued interest receivable is $2,464,813 and $2,896,583 at December 31, 2024 and 2023 and is included as a component of loan interest and fees receivable on the consolidated balance
sheets. Accrued interest receivable is excluded from the estimate of credit losses. The accrual of accrued interest is in accordance with the non-accrual policy as stated in Note 2.
Crystal Financial LLC dba SLR Credit Solutions
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
15
4.Property and Equipment, net
The cost basis of the Company’s property and equipment as well as the accumulated depreciation at December 31, 2024 and 2023, are as follows:
December 31,
2024
2023
Furniture and fixtures
$
95,280 $
26,954
Leasehold Improvements
20,618
-
Computer equipment
232,272
232,272
Computer software
21,315
20,846
$
369,485 $
280,072
Less: Accumulated depreciation
(281,157)
(263,603)
$
88,328 $
16,469
Finance lease assets totaling $25,907 are included as a component of computer equipment in the above schedule at December 31, 2024 and 2023.
Depreciation expense of $22,031 and $12,628 was recognized during the years ended December 31, 2024 and 2023, respectively.
5.Debt Obligations and Financings
Revolving Credit Facility
On May 12, 2011, the Company entered into a Loan Financing and Servicing Agreement (the “Credit Agreement”) in the form of a revolving credit facility.
The Company has the ability to borrow funds denominated in certain foreign currencies under the facility. The maximum amount available to be borrowed in foreign denominated currencies
is the US Dollar equivalent of $120,000,000. During 2024 and 2023, the Company incurred fees and expenses totaling $143,271 and $2,264,178 in connection with certain amendments to
the credit facility. These costs were deferred and are being amortized on a straight-line basis over the contractual term of the Credit Agreement as an adjustment to interest expense.
At December 31, 2024, the amount available to be borrowed under the facility is the lesser of (a) $300,000,000 or (b) the amount calculated and available per the Borrowing Base, as
defined in the amended Credit Agreement. Borrowings on the facility bear interest at a rate of 2.95% plus the Lenders’ cost of funds, as defined in the Credit Agreement. The applicable cost
of funds varies depending on the currency in which the funds are borrowed. At December 31, 2024, the effective rates were between 6.69% and 7.50%. The Company also pays an undrawn
fee on unfunded commitments and an administrative agent fee.
The revolving credit facility is comprised of the following at December 31, 2024 and 2023:
December 31,
2024
2023
Principal borrowings
$
149,997,338 $
218,878,346
Unamortized debt issuance costs
(2,586,255)
(3,534,603)
Revolving credit facility, net
$
147,411,083 $
215,343,743
Crystal Financial LLC dba SLR Credit Solutions
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
16
5.Debt Obligations and Financings…continued
The credit facility terminates on the earlier of August 15, 2027 or upon the occurrence of a Facility Termination Event, as defined in the amended Credit Agreement.
Commencing on February 15, 2026 and continuing every three months until the facility’s termination date, the Company may be required to make principal pay-downs on certain amounts
outstanding. The amount to be paid down is contingent upon the future amount outstanding as well as the amount of future non-mandatory prepayments made on the credit facility.
Cash, as well as those of the Company’s loans that are held within Crystal Financial SPV, serve as collateral against the facility. The Company has made certain customary representations
and warranties under the facility, and is required to comply with various covenants, reporting requirements, and other customary requirements for similar credit facilities. The Credit
Agreement includes usual and customary events of default for credit facilities of this nature. The Company is in compliance with all covenants at December 31, 2024 and 2023.
The Company has recorded a right-of-use asset and a lease liability for the Company’s operating lease totaling $2,619,517 and $2,821,468, respectively, at December 31, 2024 and
$3,318,438 and $3,306,627, respectively, at December 31, 2023. The operating lease right-of-use asset and liability are recorded as a component of other assets and other liabilities on the
accompanying consolidated balance sheets. The lease has a weighted average remaining lease term of 5.0 years and a weighted average discount rate of 3.50%.
The cost of the Company’s operating lease totaled $598,752 and $657,878 during the years ended December 31, 2024 and December 31, 2023 respectively.
As of December 31, 2024, future minimum lease commitments under the lease include:
Operating Lease
2025
$
585,933
2026
595,609
2027
617,176
2028
637,526
2029
650,030
Total lease payments
3,086,274
Less: interest expense
(264,806)
Lease liability balance
$
2,821,468
6.Related Party Activity
The Company may co-invest with SLRC in certain loans and investments. These transactions occur in the normal course of business.
7.Member’s Capital
Crystal Financial has issued limited liability company interests, referred to as Class A Units. Each unit entitles its holder to one vote on all matters submitted to a vote of the members. At
December 31, 2024 and 2023, the Company has 280,303 outstanding Class A Units, all of which are owned by SLRC.
Crystal Financial LLC dba SLR Credit Solutions
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
17
8.Commitments and Contingencies
The Company is party to financial instruments with off-balance sheet risk including unfunded revolver and delayed draw term loan commitments to certain borrowers.
Under the revolving credit and delayed draw term loans, aggregate unfunded commitments total $115,751,802 and $74,645,250 at December 31, 2024 and 2023, respectively. These
agreements have fixed expiration dates. The revolving credit agreements typically require payment of a monthly fee equal to a certain percentage times the unused portion of the revolving
line of credit. As the unfunded commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The amount of
credit that can be extended under each of the revolving credit agreements and delayed draw term loan agreements is typically limited to the borrower’s available collateral, which is used in
calculating the borrower’s borrowing base at the time of a respective draw.
9.Variable Interest Entity
In accordance with US GAAP, the Company evaluates (a) whether it holds a variable interest in an entity, (b) whether the entity is a variable interest entity (“VIE”) and (c) whether the
Company is the primary beneficiary of the VIE.
As part of a loan restructuring (see Note 3), the Company obtained a minority ownership interest in a joint venture operating company during 2023. It was determined that the Company has
a variable interest in the joint venture. The Company does not have the individual power to direct the joint venture’s activities and it does not share disproportionally in the obligation to
absorb potential losses or the right to receive expected returns of the joint venture. Accordingly, it was determined that the Company is not the primary beneficiary and the VIE is not
consolidated in the accompanying consolidated financial statements.
The following table sets forth the information with respect to the unconsolidated VIEs in which the Company holds a variable interest as of December 31, 2024 and 2023.
December 31, 2024
December 31, 2023
Equity interest included in Other assets on the
consolidated balance sheets
$
14,144,910
$
17,808,297
Maximum risk of loss (1)
14,144,910
17,808,297
(1)includes the equity investment the Company has made, or could be required to make
Crystal Financial LLC dba SLR Credit Solutions
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
18
10.Fair Value of Financial Instruments
Fair Value Measurements (Topic 820) establishes a three-level hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the
valuation of an asset or liability as of the measurement date. The three levels are defined as follows:
Level 1- inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2- inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability,
either directly or indirectly, for substantially the full term of the financial instrument.
Level 3- inputs to the valuation methodology are unobservable and significant to the fair value measurement.
A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
There were no financial assets or financial liabilities measured at fair value on a recurring basis at December 31, 2024 and 2023.
Financial instruments that are not recorded at fair value on a recurring basis consist of cash, restricted cash, interest receivable, loans receivable, collateral held for borrower obligations and
the revolving credit facility. Due to the short-term nature of the Company’s cash, restricted cash, interest receivable, and collateral held for borrower obligations, the carrying value
approximates fair value.
The Company’s loans receivable are recorded at outstanding principal, net of any deferred fees and costs, unamortized purchase discounts and the allowance for credit losses. If the
Company elected the fair value option, the estimated fair value of the Company’s loans receivable would be derived using among other things, a discounted cash flow methodology that
considers various factors including the type of loan and related collateral, current market yields for similar debt investments, estimated cash flows, as well as a discount rate that reflects the
Company’s assessment of risk inherent in the cash flow estimates.
If the Company elected the fair value option, the estimated fair value of the Company’s revolving credit facility would approximate the carrying value at December 31, 2024 and 2023. The
fair value is estimated based on consideration of current market interest rates for similar debt instruments.
Crystal Financial LLC dba SLR Credit Solutions
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
19
10.Fair Value of Financial Instruments…continued
The following table presents the carrying amounts, estimated fair values, and placement in the fair value hierarchy of the Company’s long-term financial instruments, at December 31, 2024
and 2023.
December 31, 2024
Fair Value Measurements
Carrying
Amount
Estimated Fair
Value
Level 1
Level 2
Level 3
Financial assets:
Loans receivable
$
317,564,915 $
317,564,915 $
- $
- $
317,564,915
Financial liabilities:
Revolving credit facility
149,997,338
149,997,338
-
-
149,997,338
December 31, 2023
Fair Value Measurements
Carrying
Amount
Estimated Fair
Value
Level 1
Level 2
Level 3
Financial assets:
Loans receivable
$
406,553,535 $
406,553,535 $
- $
- $
406,553,535
Financial liabilities:
Revolving credit facility
218,878,346
218,878,346
-
-
218,878,346
11.Subsequent Events
The Company has evaluated subsequent events through February 12, 2025, the date which the financial statements were available to be issued.
Exhibit 99.2
C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s
NEF Holdings, LLC and Subsidiaries
(A Limited Liability Company)
Years ended December 31, 2024 and December 31, 2023
With Independent Auditors’ Report
NEF Holdings, LLC and Subsidiaries
Consolidated Financial Statements
Years ended December 31, 2024 and December 31, 2023
Contents
Independent Auditors’ Report
1
Consolidated Balance Sheets
3
Consolidated Statements of Operations
4
Consolidated Statements of Comprehensive Income/(Loss)
5
Consolidated Statements of Changes in Members’ Capital
6
Consolidated Statements of Cash Flows
7
Notes to the Consolidated Financial Statements
8
1
Independent Auditors' Report
To the Board of Managers and Members of
NEF Holdings, LLC and Subsidiaries
Opinion
We have audited the consolidated financial statements of NEF Holdings, LLC and Subsidiaries (the Company), which comprise the consolidated balance sheets as of December 31, 2024 and 2023, and the related
consolidated statements of operations, comprehensive income/(loss), changes in members’ capital, and cash flows for the years then ended, and the related notes to the consolidated financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of their operations and
their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP).
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditors' Responsibilities
for the Audit of the Consolidated Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical
requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with U.S. GAAP, and for the design, implementation and maintenance of internal control relevant to
the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue
as a going concern within one year after the date that the financial statements are available to be issued.
Baker Tilly Advisory Group, LP and Baker Tilly US, LLP, trading as Baker Tilly, are members of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Baker Tilly US, LLP is a licensed CPA firm
that provides assurance services to its clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services to their clients and are not licensed CPA firms.
2
Auditors' Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that
includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material
misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable
user based on the consolidated financial statements.
In performing an audit in accordance with GAAS, we:
•Exercise professional judgment and maintain professional skepticism throughout the audit.
•Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures
include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
•Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the Company's internal control. Accordingly, no such opinion is expressed.
•Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial
statements.
•Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings and certain internal control-related matters that we
identified during the audit.
Philadelphia, Pennsylvania
February 13, 2025
3
NEF Holdings, LLC and Subsidiaries
Consolidated Balance Sheets
At December 31, 2024 and December 31, 2023
(In Thousands)
2024
2023
Assets
Cash
$
6,252
$
13,789
Restricted cash
72
71
Financing receivables:
Financing receivables, gross
330,508
207,091
Allowance for credit losses on financing receivables
(5,569 )
(3,417 )
Financing receivables, net
324,939
203,674
Equipment off lease, net of impairment
899
1,665
Fixed assets, net
225
278
Goodwill
29,832
29,832
Other assets
4,039
5,388
Total assets
$
366,258
$
254,697
Liabilities and Members’ Capital
Liabilities:
Senior secured credit facility, net
$
260,483
$
138,071
Loans from affiliate
13,582
14,734
Accounts payable and accrued expenses
2,260
1,998
Good faith deposits
661
518
Other liabilities
3,434
3,554
Total liabilities
280,420
158,875
Members’ capital:
Members’ capital
85,838
95,822
Total members’ capital
85,838
95,822
Total liabilities & members’ capital
$
366,258
$
254,697
See accompanying notes to the consolidated financial statements.
4
NEF Holdings, LLC and Subsidiaries
Consolidated Statements of Operations
For the Years ended December 31, 2024 and December 31, 2023
(In Thousands)
2024
2023
Net operating income:
Interest income
$
19,917 $
16,334
Interest expense
14,774
10,732
Net interest income
5,143
5,602
Other income
2,099
3,284
Net operating income
7,242
8,886
Provision for credit losses and impairments of equipment off lease
3,354
2,861
Net operating income after provisions and impairments
3,888
6,025
Expenses:
Compensation and benefits
9,639
8,748
General and administrative expenses
3,486
3,036
Lease and loan restructuring costs
226
551
Depreciation and amortization
71
75
Total expenses
13,422
12,410
Net income/(loss)
$
(9,534 ) $
(6,385 )
See accompanying notes to the consolidated financial statements.
5
NEF Holdings, LLC and Subsidiaries
Consolidated Statements of Comprehensive Income/(Loss)
For the Years ended December 31, 2024 and December 31, 2023
(In Thousands)
2024
2023
Net income/(loss)
$
(9,534 )
$
(6,385 )
Other comprehensive income/(loss):
Derivative instruments designated and qualifying as cash flow hedges:
Realized holding gain/(loss) arising during the year
(262 )
-
Unrealized holding gain/(loss) arising during the year
-
(754 )
Reclassification adjustment for losses/(gains) included in net income/(loss)
(147 )
67
Total other comprehensive income/(loss)
(409 )
(687 )
Total comprehensive income/(loss)
$
(9,943 )
$
(7,072 )
See accompanying notes to the consolidated financial statements.
6
NEF Holdings, LLC and Subsidiaries
Consolidated Statements of Changes in Members’ Capital
For the Years ended December 31, 2024 and December 31, 2023
(In Thousands)
Members’ capital at December 31, 2022
$
103,028
Capital distributions
(134 )
Other comprehensive income/(loss)
(687 )
Net income/(loss)
(6,385 )
Members’ capital at December 31, 2023
$
95,822
Capital distributions
(41)
Other comprehensive income/(loss)
(409 )
Net income/(loss)
(9,534 )
Members’ capital at December 31, 2024
$
85,838
See accompanying notes to the consolidated financial statements.
7
NEF Holdings, LLC and Subsidiaries
Consolidated Statements of Cash Flows
For the Years ended December 31, 2024 and December 31, 2023
(In Thousands)
2024
2023
Cash flows from operating activities
Net income/(loss)
$
(9,534 )
$
(6,385 )
Adjustments to reconcile net income/(loss) to net cash provided by/(used in)
operating activities:
Provision for credit losses and impairments of equipment off lease
3,354
2,861
Depreciation and Amortization
71
75
Amortization of deferred financing costs
878
549
Amortization of upfront fees received and initial direct costs paid
322
311
Amortization of software as a service implementation costs
64
-
Net (gains)/losses on sales of equipment off lease
(119 )
-
Change in interest rate derivative fair value
43
725
Changes in operating assets and liabilities:
(Increase)/Decrease in other assets
171
(117 )
(Increase)/Decrease in interest receivable
(1,249 )
80
Increase/(Decrease) in interest payable
618
277
Increase/(Decrease) in accounts payable and accrued expenses
262
(707 )
Increase/(Decrease) in good faith deposits
143
(88)
Increase/(Decrease) in other liabilities
205
102
Net cash provided by/(used in) operating activities
(4,771 )
(2,317 )
Cash flows from investing activities
Investments in secured loans and direct finance leases
(197,948 )
(95,623 )
Collections of principal on secured loans and direct finance leases
74,565
78,350
Purchase of financing receivables from affiliate
(2,231 )
-
Initial direct costs paid
(349 )
(528 )
Proceeds from sales of equipment off lease
3,493
1,163
Cash flows from (purchases)/sales of fixed assets
(18)
(28)
Net cash provided by/(used in) investing activities
(122,488 )
(16,666 )
Cash flows from financing activities
Borrowings on credit facility and loans from affiliate
347,795
121,754
Repayments on credit facility and loans from affiliate
(225,344 )
(101,160 )
Payment of credit facility closing fees
(2,687 )
(327 )
Capital distributions
(41)
(134 )
Net cash provided by/(used in) financing activities
119,723
20,133
Net increase/(decrease) in cash and restricted cash
(7,536 )
1,150
Cash and restricted cash at the beginning of period
13,860
12,710
Cash and restricted cash at the end of period
$
6,324
$
13,860
Supplemental disclosures of cash flow information
Interest paid
$
13,235
$
9,180
See accompanying notes to the consolidated financial statements
8
NEF Holdings, LLC and Subsidiaries
Notes to the Consolidated Financial Statements
For the Years ended December 31, 2024 and December 31, 2023
(In Thousands)
1. Organization and Business
NEF Holdings, Inc. was organized on June 7, 2013 as a Delaware corporation and commenced its operations in June 2013. Effective January 1, 2014, NEF Holdings, Inc. converted from a corporation to a limited liability
company (“LLC”), NEF Holdings, LLC (“NEF Holdings”), pursuant to Section 18-214 of the Limited Liability Act in the State of Delaware. Subsequent to the close of business on July 31, 2017, NEF Holdings was
acquired by SLR Investment Corp., formerly Solar Capital Ltd. (“SLRC”).
As of December 31, 2024 and December 31, 2023, NEF Holdings had four wholly-owned subsidiaries: Nations Fund I, LLC (“Fund I”), Nations Equipment Finance, LLC (“NEF”), Equipment Operating Leases, LLC
(“EOL”), and Loyer Capital LLC (“Loyer Capital”) (collectively, the “Company”). The Company is headquartered in Wilton, Connecticut.
Nations Fund I, Inc. was organized on September 17, 2010 as a Delaware corporation. Effective January 1, 2014, Nations Fund I, Inc. converted from a corporation to a LLC, Nations Fund I, LLC, pursuant to Section 18-
214 of the Limited Liability Act in the State of Delaware. Fund I is a commercial equipment finance company that provides term loans and leases primarily to middle market and privately held companies. Fund I focuses on
direct origination of loans and equipment leases secured by equipment collateral, such as trailers, trucks, transportation and construction equipment.
NEF was organized as a LLC under the laws of the State of Delaware and commenced operations on August 24, 2010. NEF, doing business as SLR Equipment Finance, serves as the investment manager for the Company.
Services provided by NEF include, among other things, identifying, structuring and negotiating transactions, monitoring, advising and managing investments, exercising control rights, options or warrants, liquidating
investments, cash management, accounting, tax, compliance and legal services.
NEF Investments, LLC, a wholly owned subsidiary of NEF Holdings, was organized as a Delaware LLC on January 22, 2018. On April 18, 2018, NEF Investments’ LLC agreement was amended which changed the
company’s name to Equipment Operating Leases, LLC. EOL is a commercial equipment finance company that provides term loans and leases primarily to middle market and privately held companies.
Loyer Capital was organized as a LLC under the laws of the State of Delaware and commenced operations in May 2019. Loyer Capital is a commercial equipment finance company that provides term loans and leases
primarily to middle market and privately held companies.
NEF Holdings, LLC and Subsidiaries
Notes to the Consolidated Financial Statements (continued)
(In Thousands)
9
2. Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). These consolidated financial statements include the accounts
of NEF Holdings and its wholly owned subsidiaries, Fund I, NEF, EOL, and Loyer Capital. All significant intercompany balances and transactions are eliminated in consolidation. Certain amounts in the prior period
financial statements have been reclassified to conform to the current year’s presentation.
Use of Estimates
The presentation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that impact the amounts reported in the consolidated financial statements
and accompanying notes. Such estimates and assumptions are subject to change in the future as additional information becomes available or as circumstances are modified. Actual results could differ materially from these
estimates. Management’s estimates and assumptions are used in estimating an allowance for credit losses on financing receivables, impairments of equipment off lease, useful lives of leasing equipment and fixed assets, fair
values of unguaranteed residual values and goodwill.
Cash
The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash includes all deposits held at banks. Deposits in excess of amounts insured by the
Federal Deposit Insurance Corporation (“FDIC”) are exposed to loss in the event of non-performance by the institution. The Company has had cash deposits in excess of the FDIC insurance coverage and has not experienced
any losses on such accounts.
At December 31, 2024 and December 31, 2023, the Company’s cash balance totaled $6,324, and $13,860, respectively. Included in the Company’s cash balance as of December 31, 2024 and December 31, 2023 is
restricted cash of $72 and $71 respectively, which is maintained in connection with the lease of the Company’s office space.
Financing Receivables
Included in financing receivables in the consolidated balance sheets are the Company’s net investments in direct financing leases and secured loans.
Net investment in direct finance leases is reported net of unearned income, deferred non-refundable fees and initial direct costs associated with their origination, and inclusive of guaranteed and unguaranteed residual values.
Direct finance leases are usually long-term in nature, typically ranging for a period of three to seven years and include either a nominal or fair market value purchase option at the end of the lease term. Non-refundable fees
received and initial direct costs incurred associated with the origination of direct finance leases are deferred and are recognized as an adjustment to interest income over the contractual life of the direct finance leases using
the interest method.
Secured loans are reported at the principal amount outstanding, net of non-refundable fees, initial direct costs and accrued interest. These fees and initial direct costs are deferred and recognized as an adjustment to interest
income over the contractual life of the loans using the interest method.
NEF Holdings, LLC and Subsidiaries
Notes to the Consolidated Financial Statements (continued)
(In Thousands)
10
2. Summary of Significant Accounting Policies (continued)
Income Recognition
The Company recognizes revenue in accordance with the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, which outlines a
single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The core principle of the revenue model is for an entity to recognize revenue to depict the transfer of promised
goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. While this guidance replaced most existing revenue recognition
guidance in U.S. GAAP, ASC 606 is not applicable to financial instruments and, therefore, does not impact most of the Company’s revenues.
For direct finance leases, the difference between the cost of the equipment and the total finance lease receivable plus, where applicable, the unguaranteed or guaranteed residual value is recorded as unearned income.
Unearned income is amortized as earned income over the term of the transaction using the interest method. For the years ended December 31, 2024 and December 31, 2023, interest income from direct financing leases
totaled $11,888 and 11,543, respectively, which is included in interest income in the consolidated statements of operations. For secured loans, interest income is recorded on the accrual basis in accordance with the terms of
the respective loan. For the years ended December 31, 2024 and December 31, 2023, interest income from secured loans totaled $8,029 and $4,791, respectively, which is included in interest income in the consolidated
statements of operations.
The Company’s revenue recognition pattern for revenue streams within the scope of ASC 606 include fees for providing administrative and collateral monitoring services, which are earned ratably over the period in which
the services are provided. Such revenues are recognized when evidence of an arrangement exists, the performance obligations are satisfied, collections are probable and the price is fixed or determinable.
Other Income
Amounts in other income in the consolidated statements of operations primarily include gains and losses on sales of equipment, fees charged for early terminations of financing arrangements, other miscellaneous fees earned
in connection with the administration of such financing arrangements and net impacts of foreign currency translation.
Fixed Assets
Fixed assets consist of furniture and fixtures, software, computers, leasehold improvements, automobiles, telephone and office equipment and auto hauling trucks, and are stated at cost less accumulated depreciation and
amortization. Expenditures for repairs and maintenance that do not extend the useful life of the asset are expensed as incurred and are included in general and administrative expenses in the Company’s consolidated
statements of operations.
Depreciation and amortization of fixed assets are calculated using the straight-line method over their respective useful lives, and recorded in depreciation and amortization in the consolidated statements of operations.
Useful Life (Years)
Furniture and fixtures
7
Telephone
7
Office equipment
5
Automobile
5
Computers
3
Software
Lesser of 5 years or license period
Leasehold improvements
Lesser of the useful life of the asset
or lease term
NEF Holdings, LLC and Subsidiaries
Notes to the Consolidated Financial Statements (continued)
(In Thousands)
11
2. Summary of Significant Accounting Policies (continued)
Good Faith Deposits
Good faith deposits represent cash received from the Company’s customers, when the proposal for a potential transaction is signed. These deposits are used to pay expenses such as third-party appraisals, document fees and
travel and related costs incurred by the Company in connection with the origination of the transaction. If the deposit exceeds the expenses incurred by the Company, the excess amount may be refundable to the customer. If
the expenses incurred exceed the deposits received, the Company’s customers are liable for the overage. Such overages are included in other assets on the consolidated balance sheets. In the event the Company approves a
transaction with a customer and the customer elects not to pursue the transaction, the Company recognizes any remaining good faith deposit into income, as allowed by the agreed upon terms of the signed proposal. Such
amounts are included in other income in the consolidated statements of operations.
In certain instances, the Company incurs costs to restructure financing receivables, which are in excess of the customer's good faith deposit, such as legal fees and other expenses associated with the repossession and
liquidation of equipment. If these costs are deemed not collectable from the Company’s customers, then such costs are expensed and recorded as lease and loan restructuring costs on the consolidated statements of
operations.
Allowance for Credit Losses on Financing Receivables
In June 2016, the FASB issued Accounting Standards Update (ASU) 2016-13 – Financial Instruments – Credit Losses. This ASU requires companies to broaden the information considered in developing its expected credit
loss estimates on financing receivables measured either individually or collectively. In November 2019, the FASB issued ASU 2019- 10, Financial Instruments – Credit Losses, which delayed the effective date of ASU
2016-13 and made the adoption effective for the Company for the fiscal year beginning after December 15, 2022. The Company adopted this guidance on January 1, 2023 using the modified retrospective approach, which
did not have a material impact on its consolidated balance sheets and consolidated statements of operations, however expanded the disclosure requirements surrounding this topic.
The Company maintains an allowance for credit losses on financing receivables (which includes accrued interest in secured loans) at a level sufficient to absorb credit losses expected to arise over the life of the financing
receivables, as of the date of the consolidated financial statements. The Company’s financing receivables are all secured by the underlying collateral. Additionally, the Company looks to three forms of repayment in
analyzing the risk of loss associated with underwriting an individual transaction, namely, cash flows of the obligor’s existing operations, the value of the underlying collateral securing the financing receivable and where
applicable, the potential for repayment from a personal or corporate guarantor.
In determining its allowance for credit losses on financing receivables, the Company considers numerous factors including forward looking industry benchmarks and equipment trends, type of financing receivable, credit
quality of its customer, historical loss rates, collateral coverage, and remaining term to maturity of the financing arrangement, which are reviewed and updated, as appropriate, on an ongoing basis. The Company’s
application of its credit loss policy is applied on an individual transaction basis.
Individually identified non-performing financing receivables are measured based on the specific circumstances of the transaction and a specific allowance for credit loss is established, if necessary. The specific allowance is
measured based on a comparison of the recorded carrying value of the financing receivables to the present value of the financing receivable’s expected cash flow using the transaction internal rate of return, the financing
receivable’s estimated market price, or the estimated fair value of the underlying collateral, if the financing receivable is collateral dependent.
NEF Holdings, LLC and Subsidiaries
Notes to the Consolidated Financial Statements (continued)
(In Thousands)
12
2. Summary of Significant Accounting Policies (continued)
Allowance for Credit Losses on Financing Receivables (continued)
Uncollectible financing receivables are charged off against the allowance at the earlier of either the substantial completion of the liquidation of assets securing the financing receivable, or when senior management deems the
financing receivable to be permanently impaired. The Company classifies a financing receivable as delinquent when it is overdue by more than 60 days. As of December 31, 2024, financing receivables with an outstanding
balance of $16,708, $0, and $0 were between 61-90 days past due, 91-120 days past due and greater than 120 days past due, respectively. As of December 31, 2023, financing receivables with an outstanding balance of $0,
$21, and $0 were between 61-90 days past due, 91-120 days past due and greater than 120 days past due, respectively.
The Company assessed that there is a secured loan where the borrower is experiencing financing difficulty. We expect that the repayment will be provided substantially through cash flow from operations or sale of the
collateral. At December 31, 2024 and December 31, 2023, the outstanding balance on the secured loan that has been delinquent in its payments is $17,883 and $17,943, respectively. While the Company continues to engage
with the borrower for repayment, it has determined, based on third party appraisals, that the underlying collateral is sufficient to cover the total of the secured loan in the event the customer cannot repay.
The net book value of financing receivables by year of origination at December 31, 2024 and December 31, 2023 were as follows:
Net Book Value of Financing Receivables by Year of Origination
At December 31, 2024
2024
2023
2022
2021
Prior
Total
Financing Receivables, gross
$
181,662 $
82,736 $
18,058 $
34,419 $
13,633 $
330,508
Allowance for credit losses
(5,569 )
Financing Receivables, net
$
324,939
At December 31, 2023
2023
2022
2021
2020
Prior
Total
Financing Receivables, gross
$
103,591
$
26,320 $
51,238 $
8,920 $
17,022 $
207,091
Allowance for credit losses
(3,417 )
Financing Receivables, net
$
203,674
Non-Accrual Financing Receivables
Income recognition is generally suspended for financing receivables after 90 days of non-payment, or if full recovery becomes doubtful based on the assessment by the Company. Income recognition is resumed when
financing receivables are less than 90 days past due. At December 31, 2024 and December 31, 2023, financing receivables with an outstanding balance of $17,883 and $17,943, respectively, were on non-accrual of income.
Equipment on Lease
Leasing equipment is comprised of equipment under operating leases. Leasing equipment is recorded at cost and depreciated on a straight-line basis over the estimated useful life of the equipment. Income is recorded on a
straight- line basis over the term of the lease which is included in interest income in the consolidated statements of operations.
NEF Holdings, LLC and Subsidiaries
Notes to the Consolidated Financial Statements (continued)
(In Thousands)
13
2. Summary of Significant Accounting Policies (continued)
Equipment on Lease (continued)
The estimated useful lives and residual values of the Company’s leasing equipment are based on independent third- party appraisals and management’s judgment. The Company reviews its depreciation policies on a regular
basis to determine whether changes have taken place that would suggest that a change in its depreciation policies, useful lives of its equipment or the assigned residual values is warranted. At December 31, 2024, and
December 31, 2023 the Company had no leasing equipment under operating leases.
Leasing equipment is tested for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recovered. Key indicators of impairment on leasing equipment include, among other
factors, a sustained decrease in operating profitability, a sustained decrease in utilization, or indications of technological obsolescence.
Equipment off Lease
Equipment off lease arises when the Company repossesses collateral that secured a financing receivable in a customer default scenario. Such equipment is intended to be sold and is classified as assets held for sale, in
accordance with the provisions of ASC 360, Property, Plant & Equipment. At the time of repossession, the financing receivable is transferred to equipment off lease at the lower of cost or fair value. At December 31, 2024
and December 31, 2023, equipment off lease totaled $899 and $1,665, respectively, in the consolidated balance sheets.
A review for impairment of equipment off lease is performed at least annually or when events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. During the years ended
December 31, 2024 and December 31, 2023, the Company recorded impairment charges of $1,198 and $2,683, respectively, which are included in provision for credit losses and impairments of equipment off lease on the
consolidated statements of operations.
Derivative Instruments
The Company manages exposure to interest rates through the use of interest rate caps and zero cost interest rate collars traded in the over-the-counter markets with other financial institutions. The Company does not enter
into derivative financial instruments for speculative purposes. Derivative instruments are recognized at fair value and included in other assets in the consolidated balance sheets.
More specifically, interest rate caps and zero cost interest rate collars are used to manage the Company’s interest rate exposure on its floating rate senior secured credit facility. At December 31, 2024 and December 31,
2023, such derivatives had notional amounts of $190,000 and $15,000, respectively, which are included in other assets in the consolidated balance sheets. For the years ended December 31, 2024 and December 31, 2023,
changes in fair value of interest rate caps totaled ($409) and ($1,413), respectively. In 2024, there were no material changes in fair value of the zero cost interest rate collars.
The Company designated its derivative instruments as highly effective hedges. On the date the derivative contract is entered into, the Company formally documents the relationships between the hedging instrument and the
hedged item, as well as its risk management objective and strategy for undertaking various hedge transactions. Hedge effectiveness is measured at the hedge’s inception and, on an on-going basis, to determine whether the
derivatives are highly effective in offsetting the changes in cash flows of the hedged item.
NEF Holdings, LLC and Subsidiaries
Notes to the Consolidated Financial Statements (continued)
(In Thousands)
14
2. Summary of Significant Accounting Policies (continued)
Derivative Instruments (continued)
At December 31, 2024, as mentioned above, the Company held two interest rate collars that was deemed highly effective that had a notional value totaling $190,000 and a fair value of $1. At December 31, 2023, the
Company held one interest rate cap that was deemed highly effective that had a notional value of $15,000 and a fair value of $452. Changes in fair values of these derivative instruments, which were deemed highly effective
during the years ended December 31, 2024 and December 31, 2023, totaled ($262) and ($754), respectively and are included in other comprehensive income, offset by reclassification gains/(losses) into earnings of ($147)
and $67, respectively. Reclassifications into earnings are included in interest expense in the consolidated statements of operations.
Debt
Senior secured credit facility represents the Company’s principal balance under its long-term revolver, which is carried at amortized cost, along with the related accrued interest payable, net of unamortized deferred
financing costs.
Loans from affiliate represent the Company’s unpaid principal balance on term loans, along with the related accrued interest payable to SLRC, a related party, as described in note 1. Maturity dates range from December 1,
2025 through September 25, 2026 and carry interest rates ranging from 8.37% to 11.52%.
Additionally, the Company entered into a $6,000 revolver facility with SLRC on December 1, 2024, with a maturity date of December 1, 2025. The facility has an interest rate of 8.5% per annum, payable at the end of each
quarter and as at December 31, 2024, the Company had drawn down $3,000 of the $6,000 commitment.
Apart from the revolver facility, future scheduled principal payments on loans from affiliates are $2,884 in 2025, and $7,500 in 2026.
Deferred Financing Costs
Deferred financing costs represent fees and other incremental costs incurred in connection with the financing of the Company’s senior secured credit facilities. Such costs are amortized using the straight-line method into
earnings over the contractual term of the facilities. The unamortized balance of such costs is included as a reduction to the senior secured credit facility balance. On January 31, 2024, the Company entered into a new credit
facility (see note 6), the “2024 Facility” and incurred closing fees of $2,687.
Contingencies and Commitments
The Company may be subject to various legal proceedings, claims, and litigation, either asserted or unasserted that arise in the ordinary course of business. The Company records accruals for contingent losses when such
losses are probable and reasonably estimable. In the event that estimates or assumptions prove to differ from actual results, adjustments are made in subsequent periods to reflect more current information. Legal fees are
expensed as incurred.
NEF Holdings, LLC and Subsidiaries
Notes to the Consolidated Financial Statements (continued)
(In Thousands)
15
2. Summary of Significant Accounting Policies (continued)
Financial Asset Transfers
The Company accounts for transfers of financial assets under FASB ASC 860, Transfers and Servicing, utilizing a control oriented, financial components approach to financial asset transfer transactions whereby the
Company:
(1) recognizes the financial and servicing assets it controls and the liabilities it has incurred; (2) derecognizes financial assets when control has been surrendered; and (3) derecognizes liabilities once they are extinguished.
Control is considered to have been surrendered only if: (i) the transferred assets have been isolated from the Company and its creditors, even in the event of bankruptcy or other receivership; (ii) the purchaser has the right
to pledge or exchange the transferred assets, or, is a qualifying special purpose entity (as defined) and the holders of beneficial interests in that entity have the right to pledge or exchange those interests; and (iii) the
Company does not maintain effective control over the transferred assets through an agreement which both entitles and obligates it to repurchase or redeem those assets prior to maturity, or through an agreement which both
entitles or obligates it to repurchase or redeem those assets if they were not readily obtainable elsewhere. If any of these conditions are not met, the Company accounts for the transfer as a secured borrowing.
Foreign Currencies
Assets and liabilities recorded in foreign currencies are translated at the exchange rate on the date of the consolidated balance sheets. Income and expenses are translated at average rates of exchange prevailing during the
year. Translation adjustments resulting from this process, which totaled ($11) and $4 for the years ended December 31, 2024 and December 31, 2023, respectively, are recorded in other income in the consolidated
statements of operations. At December 31, 2024 and December 31, 2023, the Company had cash, financing receivables and debt denominated in the Canadian dollar.
Income Taxes
The Company is a LLC and has elected to be taxed as a partnership. Accordingly, the Company is not subject to federal or state income taxes. Taxable income, losses and deductions flow through to the Company’s
members.
Fair Value Measurement
Fair value is defined as the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction at the measurement date. In determining fair value of
financial instruments and intangibles, the Company uses various valuation approaches, which utilize certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk to
the valuation technique. The inputs can be readily observable, market corroborated or generally unobservable internal inputs. The Company utilizes valuation techniques that rely on both observable and unobservable inputs.
Leases
The Company accounts for leases in accordance with ASC 842, Leases. Included in other assets and other liabilities on the consolidated balance sheets as of December 31, 2024 and December 31, 2023, are right of use
assets and corresponding lease obligations, associated with the Company’s office spaces, of $2,633 and $2,958, respectively. The Company paid $393 and $385 for the years ended December 31, 2024 and December 31,
2023, respectively, for such leases. The Company’s aggregate scheduled remaining contractual payments under these leases are $401, $409, $417, $425, $433, and $778 for 2025, 2026, 2027, 2028, 2029 and thereafter,
respectively.
NEF Holdings, LLC and Subsidiaries
Notes to the Consolidated Financial Statements (continued)
(In Thousands)
16
2.Summary of Significant Accounting Policies (continued)
Goodwill
Goodwill represents the excess of consideration paid for the Company over the fair value of the related assets acquired and liabilities assumed from the acquisition of the Company on July 31, 2017, as discussed in note 1.
The Company assesses goodwill for impairment, annually or more frequently if events or changes in circumstances occur, by comparing the carrying value to its fair value. If the fair value is less than the carrying value, an
impairment charge is recorded in that period. Goodwill recognized in business combinations is assigned to the reporting units that are expected to benefit from the combination as of the acquisition date. Goodwill is not
amortized; rather goodwill is tested annually for impairment or more frequently upon the occurrence of certain events or substantive changes in circumstances. The Company has the option to perform a qualitative
assessment to determine if an impairment is more likely than not to have occurred. If the conclusion is supported that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then
the Company would not need to perform a quantitative impairment test. If the conclusion cannot be supported, or if the Company does not elect to do the qualitative assessment, then the Company will perform a quantitative
assessment. If a quantitative goodwill impairment test is performed, the Company utilizes a combination of market and income valuation approaches. If the fair value of a reporting unit is less than its carrying value, an
impairment loss is recorded to the extent that the fair value of the reporting unit is less than its carrying value. No impairment of goodwill resulted from the annual impairment assessment in 2024 or 2023.
3. Financing Receivables
Net investment in financing receivables consists of the following at December 31, 2024 and December 31, 2023:
2024
2023
Gross finance lease receivables
$
151,080
$
137,344
Guaranteed residuals
9,741
11,386
Unguaranteed residuals
9,864
10,340
Unearned income
(27,139 )
(27,208 )
Deferred non-refundable fees collected
(29)
(167 )
Deferred initial direct costs paid
803
682
144,320
132,377
Allowance for credit losses on direct finance leases
(2,464)
(2,246 )
Total net investment in direct finance leases
$
141,856
$
130,131
2024
2023
Secured loans, principal
$
184,689
$
74,240
Accrued interest receivable
1,506
257
Total secured loans, gross
186,195
74,497
Deferred non-refundable fees collected
(767 )
(3 )
Deferred initial direct costs paid
760
220
186,188
74,714
Allowance for credit losses on secured loans
(3,105)
(1,171)
Total secured loans, net
$
183,083
$
73,543
NEF Holdings, LLC and Subsidiaries
Notes to the Consolidated Financial Statements (continued)
(In Thousands)
17
3. Financing Receivables (continued)
Aggregate scheduled payments, contractual maturities including guaranteed residuals and unguaranteed residuals by year on the fixed and floating rate secured loans and direct finance leases at December 31, 2024, are as
follows:
2025
2026
2027
2028
2029
Thereafter
Total
Secured loans:
Fixed Rate
$
52,060 $
35,151 $
31,550 $
21,883 $
13,810 $
11,715 $
166,169
Floating Rate
10,402
4,340
815
570
633
1,760
18,520
Direct Finance Leases
50,474
46,006
30,470
25,608
13,286
4,841
170,685
Total
$
112,936 $
85,497 $
62,835 $
48,061 $
27,729 $
18,316 $
355,374
4. Allowance for Credit Losses on Financing Receivables
Allowance for credit losses on financing receivables was as follows for the years ended:
2024
Direct Finance
Leases
Secured
Loans
Total
Balance at beginning of year
$
2,246 $
1,171
$
3,417
General provision for credit losses
218
1,938
2,156
Specific provision for credit losses
-
-
-
Charge offs
-
-
-
Foreign currency translation adjustments
-
(4 )
(4 )
Balance at end of year
$
2,464 $
3,105
$
5,569
2023
Direct Finance
Leases
Secured
Loans
Total
Balance at beginning of year
$
3,460
$
1,436 $
4,896
General provision for credit losses
445
(267 )
178
Specific provision for credit losses
-
-
-
Charge offs
(1,659 )
-
(1,659 )
Foreign currency translation adjustments
-
2
2
Balance at end of year
$
2,246
$
1,171 $
3,417
As of December 31, 2024 and December 31, 2023, the Company maintained a general allowance for credit losses of $5,569 and $3,417, respectively. As of December 31, 2024 and December 31, 2023, the Company
maintained an allowance for credit losses on specifically identified accounts of $0 and $0 on financing receivables of $0 and $0, respectively. The Company has no material off balance sheet credit exposures at December
31, 2024 and December 31, 2023 which would require additional allowances for credit losses.
NEF Holdings, LLC and Subsidiaries
Notes to the Consolidated Financial Statements (continued)
(In Thousands)
18
5. Fixed Assets, net
At December 31, 2024 and December 31, 2023, fixed assets, net consists of the following:
2024
2023
Leasehold improvements
$
153
$
153
Furniture and fixtures
141
141
Computers
44
47
Office equipment
39
45
Software
33
46
Fixed assets, gross
410
432
Accumulated depreciation
(185)
(154 )
Fixed assets, net
$
225
$
278
Depreciation and amortization expense related to fixed assets totaled $71 and $75 for the years ended December 31, 2024 and December 31, 2023, respectively. For the years ending 2025, 2026, 2027 and thereafter, the
Company will recognize annual amortization expense related to software of $7, $6, $5, and $4, respectively.
6. Senior Secured Credit Facility
Senior secured credit facility consists of the following at December 31, 2024 and December 31, 2023:
2024
2023
2024 senior secured credit facility, principal
$
260,974 $
-
Prior senior secured credit facility, principal
-
137,178
Accrued interest payable
1,375
950
Unamortized deferred financing costs
(1,866 )
(57)
Total senior secured credit facility, net
$
260,483 $
138,071
At December 31, 2023, Fund I maintained a revolving credit facility (the “Prior Facility”) which consists of two separate revolvers, one for U.S. dollars and one for Canadian dollars (“CAD”). The Prior Facility had a
contractual maturity date of July 31, 2023, with the principal payable in full at maturity, but was extended to January 31, 2024. At December 31, 2023, the total availability on the U.S. dollar revolver was $147,620 and the
total availability on Canadian dollar revolver was the lesser of CAD 6,000 and the U.S. dollar equivalent of $4,528. In connection with the extension of the Prior Facility, interest was adjusted to one month term Secured
Overnight Financing Rate (“SOFR”) plus an applicable margin ranging from 2.65% to 2.90%, based on Fund I’s leverage ratio. All assets of Fund I were pledged as collateral under the Facility. Fund I was also required to
pay a 0.375% per annum unused line fee. The Prior Facility required Fund I and the Company to maintain certain periodic financial covenants surrounding capitalization, cash flow and default, delinquency and charge-off
ratios. The Company provided a limited guaranty to the Prior Facility for all interest, fees and expenses that cannot otherwise be charged to Fund I.
Fund I entered into a new senior secured revolving credit facility (the “2024 Facility”) on January 31, 2024. The total commitment of the 2024 Facility is $350,000, in which the lender is the administrative agent with a
commitment of $200,000, and a participating lender with a commitment of $150,000. The commitment termination date on the facility is January 2026. However, there is an option to extend the termination date by another
364 days to January 2027.
NEF Holdings, LLC and Subsidiaries
Notes to the Consolidated Financial Statements (continued)
(In Thousands)
19
6. Senior Secured Credit Facility (continued)
The 2024 Facility also consists of two separate revolvers, one for U.S. dollars and one for Canadian dollars. As at December 31, 2024, the amount drawn down on the 2024 Facility was USD $260,000 and CAD 1,400 and
the U.S dollar equivalent of $974. The interest rate on the 2024 Facility is based on SOFR plus an applicable margin of 1.76% (includes a credit adjustment spread of 0.11%) for all USD borrowings. For all CAD
borrowings, the interest rate is based on Canadian Overnight Repo Rate Average (“CORRA”) plus an applicable margin of 2.05% (includes a credit adjustment spread of 0.3%)
Per the terms of the 2024 Facility, the Company has to pay an unused line fee, which ranges from 0.25% to 0.45%, depending on the utilization of the 2024 Facility. The unused line fee is 0.45% if the utilization is less than
33% of the overall facility commitment and is 0.25% if the utilization is greater than 66% of the overall facility commitment.
All assets of Fund I are pledged as collateral under the 2024 Facility. The 2024 Facility requires Fund I and the Company to maintain certain periodic financial covenants surrounding capitalization, cash flow and default,
delinquency and charge-off ratios. The Company provides a limited guaranty to the 2024 Facility for all interest, fees and expenses that cannot otherwise be charged to Fund I.
7. Employee Compensation and Benefit Plans
As of December 31, 2024, the Company employed personnel at its headquarters in Wilton, Connecticut and remotely throughout the United States. Employee compensation and benefits are comprised of base salaries,
discretionary bonuses, health care benefits, employer 401(k) contributions and payroll taxes. As a part of their employment agreements, certain members of senior management are eligible for an annual bonus amount,
which is calculated as a percentage of their annual salaries, based on certain financial performance metrics, as described in their employment agreements.
Effective August 1, 2017, the Company formed a Long-Term Incentive Plan (“LTIP”) that provides for an annual bonus pool to certain members of senior management based on the Company achieving certain performance
criteria.
The Company sponsors a 401(k) plan, where the Company contributes a defined percentage of employees’ annual earnings up to the maximum annual contribution amount as determined by the Internal Revenue Service.
8. Fair Value of Financial Instruments
FASB ASC 820, Fair Value Measurements (“ASC 820”), establishes a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect
market data obtained from independent sources, while unobservable inputs reflect management’s market assumptions.
These two types of inputs create the following fair value hierarchy:
Level 1 – Quoted prices for identical instruments in active markets.
Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, such as interest rates and foreign exchange rates that are observable at commonly quoted intervals. Financial
assets utilizing Level 2 inputs include interest rate caps.
Level 3 – Unobservable inputs.
NEF Holdings, LLC and Subsidiaries
Notes to the Consolidated Financial Statements (continued)
(In Thousands)
20
8. Fair Value of Financial Instruments (continued)
As of December 31, 2024 and December 31, 2023, the Company measured its interest rate hedges at fair value. Total fair value of such derivative instruments as of December 31, 2024 and December 31, 2023 was $1 and
$452, respectively, which was classified as Level 2 in the fair value hierarchy by the Company. The fair value of interest rate caps and collars are measured using discounted cash flow calculations based on observable inputs
from the relevant interest/exchange rate curves in effect at December 31, 2024 and 2023.
ASC 820 also requires that the Company disclose estimated fair values for its financial instruments. No quoted market exists for the Company’s financial instruments. Therefore, fair value estimates are based on judgments,
risk characteristics of various financial instruments and other factors. Changes in these assumptions could significantly affect the estimates.
The Company estimates the carrying amounts of cash approximated its fair values as of December 31, 2024 and December 31, 2023. Since there is no liquid secondary market for the Company’s financing receivables, the
Company estimates the fair value of its secured loans and net investment in direct finance leases by comparing the average yield of the portfolio to recent issuances of similar loans and leases. As of December 31, 2024 and
December 31, 2023 the the Company estimated the fair value of its financial liabilities based on the terms of its senior secured credit facility, (see note 6), and recent transactions of loans from affiliate.
The carrying amount and estimated fair values of the Company’s financial instruments at December 31, 2024 and December 31, 2023 were as follows:
2024
2023
Fair
Value Level
Carrying
Amount
Estimated
Fair Value
Carrying Amount
Estimated
Fair Value
Financial assets:
Cash and restricted cash
Level 1
$
6,324 $
6,324 $
13,860 $
13,860
Net investment in direct finance leases
Level 3
141,856
142,044
130,131
129,717
Secured loans, net
Level 3
183,084
181,706
73,543
72,455
Total financing receivables, net of allowances
324,940
323,750
203,674
202,172
Financial liabilities:
Senior secured credit facility, net
Level 2
$
260,483 $
260,483 $
138,071 $
137,254
Loans from Affiliate
Level 2
13,582
13,646
14,734
14,764
NEF Holdings, LLC and Subsidiaries
Notes to the Consolidated Financial Statements (continued)
(In Thousands)
21
9. Concentration of Credit Risk
Financing receivables subject the Company to credit risk. The Company monitors its portfolios by evaluating each of the customer’s financial condition and collateral. The Company’s maximum exposure to credit risk at
December 31, 2024 and December 31, 2023, without considering the underlying collateral, is represented by the carrying value of the financing receivables in the consolidated balance sheets. The Company monitors its
financing receivables for geographic concentrations.
The following table reflects such concentrations as of December 31, 2024 and December 31, 2023:
Geographic Concentration
2024
2023
Texas
$
68,507
Texas
$
51,616
Massachusetts
27,091
Colorado
18,710
Louisiana
26,864
New York
18,097
Connecticut
22,599
Louisiana
12,212
Illinois
20,943
Missouri
11,782
Pennsylvania
20,047
Pennsylvania
11,521
New York
19,951
California
9,600
Colorado
14,359
Massachusetts
7,232
Georgia
11,725
Connecticut
7,118
California
9,856
Michigan
7,068
Arizona
8,829
Tennessee
6,249
Tennessee
8,201
Kentucky
6,202
Alabama
7,550
Florida
5,636
Other U.S. states / Canada
63,986
Other U.S. states / Canada
34,048
Total financing receivables, gross
$
330,508
Total financing receivables, gross
$
207,091
The amount and type of collateral required depends on an assessment of the credit risk of the counterparty. Guidelines are implemented regarding the acceptability of types of collateral and valuation parameters. Typically,
the Company obtains access to collateral either through direct ownership or by a first lien security interest.
The Company also monitors its financing receivables for collateral concentrations. The following tables reflect such concentrations as of December 31, 2024 and December 31, 2023:
Collateral Concentrations
2024
2023
Truck
$
31,973
Crane
$
18,951
Forklift
27,506
Barge rigs
17,943
Crane
22,697
Package sorting equipment
17,845
Tractor
21,356
Truck
17,671
Barge Rig
17,883
Tractor
16,005
Package Sorting Equipment
16,708
Loader
11,325
Excavator
16,295
Flight simulator
9,603
All other
176,090
All other
97,748
Total financing receivables, gross
$
330,508
Total financing receivables, gross
$
207,091
At December 31, 2024 and December 31, 2023, the Company had financing receivables outstanding to one customer that approximated 5% and 9%, respectively, of total financing receivables for each period.
NEF Holdings, LLC and Subsidiaries
Notes to the Consolidated Financial Statements (continued)
(In Thousands)
22
10. Contingencies and Commitments
As of December 31, 2024, the Company had a U.S. and a Canadian revolver financing arrangement with a total outstanding balance of $3,149 and CAD 886, respectively, which are included in financing receivables, net in
the consolidated balance sheets. As of December 31, 2023, the Company had a U.S. and a Canadian revolver financing arrangement with a total outstanding balance of $3,419 and CAD 600, respectively, which are included
in financing receivables, net in the consolidated balance sheets. The Company’s maximum commitments under the U.S. and Canadian revolvers were $4,000 and CAD 1,500, respectively, for both years ending December
31, 2024 and December 31, 2023.
11. Members’ Capital
At December 31, 2024 and December 31, 2023, NEFCORP owns 100 Class A units and NEFPASS owns 100 Class B units, which represent the entire capital of the Company.
12. Subsequent Events
The Company has evaluated subsequent events through February 13, 2025, the issuing date of the consolidated financial statements.
KBH Topco, LLC
Consolidated Financial Statements and
Independent Auditor’s Report
December 31, 2024 and 2023
KBH TOPCO, LLC
TABLE OF CONTENTS
Page
INDEPENDENT AUDITOR’S REPORT 1 - 2
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets 3
Consolidated Statements of Comprehensive Income 4
Consolidated Statements of Members’ Equity 5
Consolidated Statements of Cash Flows 6
Notes to the Consolidated Financial Statements 7 - 19
INDEPENDENT AUDITOR’S REPORT
To the Management of
KBH Topco, LLC
Opinion
We have audited the accompanying consolidated financial statements of KBH Topco, LLC, which comprise the consolidated balance sheets as of December 31, 2024 and 2023, and the related consolidated statements of
comprehensive income, members’ equity, and cash flows for the years then ended, and the related notes to the consolidated financial statements.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of KBH Topco, LLC as of December 31, 2024 and 2023, and the results of its operations
and its cash flows for the years then ended, in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Consolidated Financial Statements section of our report. We are required to be independent of KBH Topco, LLC and to meet our other ethical responsibilities in accordance with the relevant ethical
requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and for the
design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events considered in the aggregate, that raise substantial doubt about KBH Topco, LLC’s ability to
continue as a going concern within one year after the date that the consolidated financial statements are available to be issued.
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards
will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the
judgment made by a reasonable user based on the consolidated financial statements.
Page 2
In performing an audit in accordance with generally accepted auditing standards, we:
oExercise professional judgment and maintain professional skepticism throughout the audit.
oIdentify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures
include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
oObtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of KBH Topco, LLC’s internal control. Accordingly, no such opinion is expressed.
oEvaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated
financial statements.
oConclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about KBH Topco, LLC’s ability to continue as a going concern for a reasonable period
of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters
that we identified during the audit.
/s/ FGMK, LLC
Bannockburn, Illinois
February 21, 2025
Page 3
KBH TOPCO, LLC
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2024 AND 2023
Page 4
KBH TOPCO, LLC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 2024 AND 2023
Page 5
KBH TOPCO, LLC
CONSOLIDATED STATEMENTS OF MEMBERS’ EQUITY
YEARS ENDED DECEMBER 31, 2024 AND 2023
Page 6
KBH TOPCO, LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2024 AND 2023
Page 7
KBH TOPCO, LLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Financial Reporting. The accompanying consolidated financial statements include the accounts of KBH Topco, LLC, a Delaware limited liability company (“KBHT”) formed on
October 29, 2020, and its wholly-owned subsidiaries (each organized as either a Nevada limited liability company or a Delaware limited liability company), collectively referred to as the “Company.” All significant
intercompany accounts and transactions have been eliminated in consolidation. In November 2020, 87.50% of the Company was acquired by SLR Investment Corp. f/k/a Solar Capital Ltd. (“SLR”). In March 2024,
as per the terms of the original purchase agreement, SLR acquired an additional 3.125% of the Company. As of December 31, 2024, SLR owns 90.63% of the Company.
Description of Business. The Company leases, rents, sells, manages, and remarkets technology, industrial, healthcare, and other general equipment and software. Their customers are located throughout the
United States, Canada, France, Spain, and Italy.
Management Estimates and Assumptions. The preparation of these consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”)
requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could materially differ from those
estimates. Significant estimates and assumptions are used for, but not limited to: (1) estimated useful lives and residual values of equipment under operating, sales-type and direct finance leases; (2) classification
of leases; (3) impairment of equipment under operating leases; (4) impairment of goodwill; (5) revenue recognition; (6) allowance for credit losses; and (7) valuation of net deferred income tax assets or liabilities.
Future events and their effects cannot be predicted with certainty; accordingly, accounting estimates require the exercise of judgment. Accounting estimates used in the preparation of these consolidated financial
statements change as new events occur, as more experience is acquired, as additional information is obtained, and as the operating environment changes.
Cash and Cash Equivalents. The Company considers all liquid investments with original maturities of three months or less to be cash equivalents. Cash and cash equivalents are deposited at banking institutions
which management believes have strong credit ratings. The Company regularly maintains cash balances that exceed the Federal Deposit Insurance Corporation regulatory insurance limits.
Leases – Lessor. Leases not classified as a sales-type or direct finance lease are classified as operating leases. If a lease meets one or more of the following five criteria at lease commencement, the lease is
classified as a sales-type lease:
•The lease transfers ownership of the underlying asset to the lessee by the end of the lease term;
•The lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise;
•The lease term is for a major part of the remaining estimated economic life of the underlying asset;
•The present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all of the fair value of the
underlying asset; or
•The underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease.
When none of the sales-type lease criteria have been met, leases are classified as operating leases unless both of the following criteria are met, in which case the lessor shall classify the leases as direct finance
leases: (1) the present value of the sum of the lease payments and any residual value guaranteed by the lessee and/or third party unrelated to the lessor equals or exceeds substantially all of the fair value of the
underlying asset and (2) it is probable that the lessor will collect the lease payments plus any amount necessary to satisfy a residual value guarantee.
(Continued)
Page 8
KBH TOPCO, LLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Leases – Lessor (Concluded). Residual Values – The estimated residual values of equipment at the end of the useful life are recorded at the inception of each lease. The estimated residual values vary as a
percentage of the original equipment cost and depend upon the equipment type. Residual values for sales-type and direct finance leases are recorded at their net present value and the unearned income is
amortized over the life of the lease using the effective interest method. The residual values for operating leases are included in the leased equipment’s net book value. The Company manages and evaluates
residual value risk by performing periodic reviews and any impairment, other than temporary, is recorded in the period in which the impairment is determined. No upward revision of residual values is made
subsequent to lease inception.
Property taxes paid by the lessor which are reimbursed by the lessee are considered to be lessor costs of owning the asset and are recorded gross with revenue in other income and expense in selling, general and
administrative expenses. The Company elected a lessor accounting policy to exclude sales taxes and other similar taxes on lease revenue-producing transactions collected from the lessee from revenue and
expenses.
Leases – Lessee. Operating lease right-of-use assets and operating lease liabilities are recognized at the present value of the future lease payments, generally for the base non-cancelable lease term, at the lease
commencement date for each lease. The Company has elected a policy to use a risk-free rate as the discount rate used to determine the present value of the future lease payments because the interest rate implicit
in most of the Company’s leases is not readily determinable. The Company’s lease agreements may contain lease and non-lease components. Variable lease payments are not included in the measurement of the
right-of-use asset and lease liability, and they are recognized as lease expense is incurred.
Leases may contain options to renew or terminate lease terms. The exercise of these lease options is generally at the Company’s sole discretion and included in the right-of-use asset and lease liability. The
Company elected to apply the short-term lease measurement and recognition exemption to its leases where applicable.
Variable lease payments predominantly relate to variable operating expenses including common area maintenance, property taxes and other operating expenses. The Company records the amortization of the
right-of-use asset and the interest accretion on the lease liability for operating leases as a component of selling, general, and administrative expenses in the statement of comprehensive income.
When lease agreements provide allowances for leasehold improvements, the Company assesses whether it is the owner of the leasehold improvements for accounting purposes. When the Company concludes
that it is the owner, it capitalizes the leasehold improvement assets and recognizes the related amortization expense on a straight-line basis over the lesser of the related lease term, including renewals that are
reasonably assured of being exercised, or the estimated useful life of the asset. Additionally, the Company recognizes the amounts of allowances to be received from the lessor as a reduction of the lease liability
and the associated right-of-use asset. When the Company concludes that it is not the owner, the payments that the Company makes towards the leasehold improvements are accounted for as a component of the
lease payments.
Revenue Recognition. The Company recognizes revenue in accordance with the following accounting standards: (1) FASB ASC 842, Leases, (2) FASB ASC 860, Transfers and Servicing, and (3) FASB ASC 606, Revenue
from Contracts with Customers.
Revenue from Leasing Transactions under FASB ASC 842 – The Company accounts for certain leasing revenues in accordance with FASB ASC 842. The accounting for revenue is different depending on the type of
lease.
For sales-type and direct finance leases, the Company records the net investment in leases, which consists of the sum of the minimum lease payments, initial direct costs, and unguaranteed residual value for
sales-type leases and guaranteed residual value for direct finance leases (gross investment) less the unearned income. Revenue for sales-type and direct finance leases is recognized as the unearned income is
amortized over the life of the lease using the effective interest method. For operating leases, rental amounts are accrued on a straight-line basis over the lease term and are recognized as leasing revenue.
Page 9
KBH TOPCO, LLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 1 – DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue Recognition (Continued). Leasing revenues consist of rentals due under operating leases and the amortization of unearned income on sales-type and direct finance leases. Equipment under operating
leases is recorded at cost and depreciated on a straight-line basis over the useful life.
Revenue from the Transfer of Financial Assets under FASB ASC 860 - The Company enters into arrangements to transfer the contractual payments due under sales-type and direct finance leases, which are
accounted for in accordance with FASB ASC 860. These transfers are accounted for as either a pledge of collateral in a secured borrowing or a sale. For transfers accounted for as a secured borrowing, the
corresponding investments serve as collateral for recourse and non-recourse notes payable. For transfers accounted for as sales, the Company derecognizes the carrying value of the asset transferred plus any
liability and recognizes a net gain or loss on the sale, which are presented as transfers of financial assets in the consolidated statements of comprehensive income.
Revenue from Sales of Equipment, Software and Services under FASB ASC 606 - Under FASB ASC 606, revenue is recognized when the Company satisfies its performance obligations, in an amount that reflects the
consideration the Company expects to be entitled to in exchange for those goods or services.
Revenue from contracts with customers is measured based on the consideration specified in the contract with the customer, and excludes any sales incentives and amounts collected on behalf of third parties.
Contracts with customers may include multiple promises that are distinct performance obligations. For such arrangements, the Company allocates the transaction price to each performance obligation based on its
relative standalone selling price. A performance obligation is a promise in a contract to transfer a distinct good or service to a customer. The Company recognizes revenue when it satisfies a performance
obligation by transferring control over a product or service to a customer. The amount of revenue recognized reflects the consideration the Company expects to be entitled to in exchange for such goods or
services. After completion of the performance obligation, the Company has an unconditional right to consideration as outlined in the contract.
Service Revenues - The Company maintains service contracts for maintenance and repair services to customers for the customer owned equipment. The Company’s arrangement is typically a single
performance obligation comprised of a series of distinct services that are substantially the same and that have the same pattern of transfer. The Company typically recognizes sales from these services on a
straight-line basis over the period services are provided. Payments are typically due within 30 days after an invoice is sent to the customer. Invoices for services are typically sent in advance.
Equipment and Software Sales - The Company sells equipment and software to both current lessees and third parties for leased equipment, brokerage of equipment, and lease transaction sales. Sales
revenue is recorded at the amount of gross consideration received. Revenue is recognized at a point in time when the Company satisfies its performance obligations. Payments are typically due upon
receipt of the invoice. Invoices for equipment and software sales are typically sent in advance.
The Company has adopted certain practical expedients under FASB ASC 606 with significant items disclosed herein. The Company has elected to apply the portfolio approach practical expedient allowed under
FASB ASC 606 to evaluate contracts with customers that share the same revenue recognition patterns as the result of evaluating them as a group will have substantially the same result as evaluating them
individually.
(Continued)
NOTE 1 – DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Page 10
KBH TOPCO, LLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Revenue Recognition (Concluded). Disaggregation of Revenue - The table below summarizes the Company’s revenues as presented in the consolidated statement of comprehensive income for the year ended
December 31, 2024 by revenue type and by the applicable accounting standard:
Year Ended December 31, 2024
FASB ASC 842
FASB ASC 860
FASB ASC 606
Total
Operating lease revenues
$ 155,969,576
$ -
$ -
$ 155,969,576
Sales-type and direct finance lease revenues
43,660,380
-
-
43,660,380
Sales of equipment and software
-
-
130,492,202
130,492,202
Transfers of financial assets
-
4,967,700
-
4,967,700
Service revenues
-
-
1,656,169
1,656,169
Other income
3,977,021
-
598,355
4,575,376
Total revenue
$ 203,606,977
$ 4,967,700
$ 132,746,726
$ 341,321,403
Total revenue subject to FASB ASC 606 recognized at a point in time and over time was $ 131,090,557 and $ 1,656,169, respectively, for the year ended December 31, 2024.
The table below summarizes the Company’s revenues as presented in the consolidated statement of comprehensive income for the year ended December 31, 2023 by revenue type and by the applicable
accounting standard:
Year Ended December 31, 2023
FASB ASC 842
FASB ASC 860
FASB ASC 606
Total
Operating lease revenues
$ 168,262,215
$ -
$ -
$ 168,262,215
Sales-type and direct finance lease revenues
12,841,348
-
-
12,841,348
Sales of equipment and software
-
-
134,690,606
134,690,606
Transfers of financial assets
-
4,501,729
-
4,501,729
Service revenues
-
-
1,562,161
1,562,161
Other income
5,060,610
-
444,046
5,504,656
Total revenue
$ 186,164,173
$ 4,501,729
$ 136,696,813
$ 327,362,715
Total revenue subject to FASB ASC 606 recognized at a point in time and over time was $ 135,134,652 and $ 1,562,161, respectively, for the year ended December 31, 2023.
Accounts Receivable. Accounts receivable represent customer obligations, which include base monthly, quarterly, and annual rentals due under the terms of each respective customer’s lease and equipment sales.
The carrying amount of accounts receivable is reduced by an allowance for credit losses. Gross accounts receivable were $27,067,325, $37,812,925 and $15,814,867 as of December 31, 2024, December 31, 2023
and January 1, 2023, respectively.
(Continued)
Page 11
KBH TOPCO, LLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Allowance for Credit Losses. The Company’s allowance for credit losses represents the estimate of expected credit losses related to accounts receivable and investment in sales-type and direct finance leases. The
Company pools its accounts receivable and investment in sales-type and direct finance leases based on similar risk characteristics, such as geographic location, business channel, and other account data. To
estimate the allowance for credit losses, the Company leverages information on historical losses, asset-specific risk characteristics, current conditions, overall credit quality of the lessees, and reasonable and
supportable forecasts of future conditions. Account balances are written off against the allowance when the Company deems the amount is uncollectible. The allowance for credit losses related to accounts
receivable was $ 442,772, $ 435,564 and $ 162,739 as of December 31, 2024, December 31, 2023 and January 1, 2023, respectively. There was no allowance for credit losses related to investment in sales-type
and direct finance leases.
Depreciation and Amortization. Depreciation provisions for revenue-producing equipment are computed using the straight-line method over the related useful life of the equipment, after giving effect to an
estimated residual value. The estimated useful lives and residual values determined by the Company may have a material effect on the gain or loss of equipment held for sale in the year of disposition due to the
uncertainty of future market conditions. For other equipment used in operations, depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets, ranging
from approximately three to eight years and was $ 217,486 and $ 202,590 for the years ended December 31, 2024 and 2023, respectively, and included in selling, general and administrative expenses.
Goodwill. Goodwill represents the excess of the consideration paid over the estimated fair value of the net assets acquired in a business combination. The Company performs an annual impairment test for
goodwill at the entity level. There were no impairment charges or triggering events for the years ended December 31, 2024 or 2023.
Foreign Operations. The functional currencies for the consolidated foreign operations are the Canadian dollar and Euro. The translation of the applicable foreign currencies into U.S. dollars is performed for
monetary balance sheet accounts using current exchange rates in effect at the balance sheet date and for revenue and expense accounts using a weighted average exchange rate during the period. Nonmonetary
balance sheet accounts and related revenue, expense, gain and loss accounts are remeasured using historical rates to produce the same results as if the items had been initially recorded in U.S. dollars. The gains
or losses resulting from such translation of the Canadian dollar and Euro are included as a component of accumulated other comprehensive income in members’ equity. Assets located outside the United States
and subject to foreign currency denominated transactions totaled $13,135,782 and $9,821,459 as of December 31, 2024 and 2023, respectively.
Income Taxes. The Company was formed as a limited liability company and elected to be taxed as a C-Corporation. Deferred income taxes are provided using the liability method whereby deferred income tax
assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred income tax liabilities are recognized for taxable temporary differences. Temporary
differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred income tax assets are reduced by a valuation allowance when, in the opinion of management, it
is more likely than not that some portion or all of the deferred income tax assets will not be realized. Deferred income tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates at
the date of enactment. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred income tax assets and liabilities.
KBHT’s wholly-owned subsidiaries are disregarded entities for income tax purposes. Their operations are combined with the operations of KBHT and reported together in one income tax return.
Fair Value Measurements. Fair value accounting guidance defines fair value, establishes a framework for measuring fair value under GAAP, and expands disclosures about fair value measurements for both
financial and non-financial assets. It also provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy
Page 12
KBH TOPCO, LLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements).
(Continued)
NOTE 1 – DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Concluded)
Fair Value Measurements (Concluded). The three levels of the fair value hierarchy are described as follows:
Level 1. Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.
Level 2. Inputs to the valuation methodology include the following:
•Quoted prices for similar assets or liabilities in active markets;
•Quoted prices for identical or similar assets or liabilities in inactive markets;
•Inputs other than quoted prices that are observable for the asset or liability;
•Inputs that are derived principally from, or corroborated by, observable market data by correlation or other means.
If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability.
Level 3. Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to
maximize the use of observable inputs and minimize the use of unobservable inputs.
Certain assets are measured at fair value on a nonrecurring basis subsequent to initial recognition. These assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments only
under certain circumstances, as GAAP does not permit the recording of unrealized appreciation of equipment held for sale and leased equipment.
In certain circumstances, these assets were written down to estimated fair value when it is determined that net realizable value is below cost. Adjustments to write down certain equipment held for sale and
leased equipment to their net realizable value totaled approximately $11,155,000 and $10,121,000 for the years ended December 31, 2024 and 2023, respectively, and are included within cost of goods and
services sold on the consolidated statements of comprehensive income. Equipment held for sale totaled approximately $7,300,000 as December 31, 2024 and 2023, respectively, and is included within inventory,
prepaid expenses, deposits and other assets on the consolidated balance sheets.
Recent Accounting Pronouncements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), to enhance disclosures related to income taxes, including specific thresholds for inclusion within
the tabular disclosure of income tax rate reconciliation and specified information about income taxes paid. This update is effective for fiscal years beginning after December 15, 2025, with early adoption
permitted. Management is currently evaluating this standard.
NOTE 2 – INVESTMENT IN SALES-TYPE AND DIRECT FINANCE LEASES, NET
The investment in sales-type and direct finance leases consisted of the following as of December 31:
2024
2023
Minimum lease payments
$ 257,675,874
$ 207,187,336
Estimated residual value
77,031,450
40,196,048
Subtotal
334,707,324
247,383,384
Less: Unearned lease income
66,805,039
54,232,638
Page 13
KBH TOPCO, LLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Investment in sales-type and direct finance leases, net
$267,902,285
$193,150,746
As of December 31, 2024 and 2023, there were $16,367,737 and $28,493,846 of investment in sales-type and direct finance leases in leased equipment accounts payable, respectively.
Page 14
KBH TOPCO, LLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 – EQUIPMENT UNDER OPERATING LEASES
Approximate equipment under operating leases consisted of the following as of December 31:
2024
2023
Estimated Useful Life
(months)
Estimate Residual
Value
Industrial
$ 438,018,000
$ 396,115,000
120
10%
Technology
163,826,000
197,611,000
72
3%
Healthcare
70,872,000
55,466,000
96
10%
672,716,000
649,192,000
Less: Accumulated depreciation
205,185,000
184,363,000
$ 467,531,000
$ 464,829,000
NOTE 4 – FUTURE MINIMUM LEASE PAYMENTS TO BE RECEIVED
Approximate future minimum lease payments to be received under the terms of the non-cancelable operating, sales-type and direct finance leases as of December 31, 2024 were as follows:
Year Ending December 31
Sales-type and direct
finance
Operating
Total
2025
$136,555,000
$ 92,556,000
$229,111,000
2026
50,990,000
70,447,000
121,437,000
2027
30,264,000
49,728,000
79,992,000
2028
20,068,000
31,535,000
51,603,000
2029
10,986,000
15,806,000
26,792,000
Thereafter
8,813,000
566,000
9,379,000
Total minimum lease payments
257,676,000
$260,638,000
$518,314,000
Less: Unearned Income
66,805,000
Sales-type and direct finance lease receivable, at present value
$ 190,871,000
NOTE 5 – DEBT
Secured Borrowings. The Company enters into arrangements to transfer the contractual payments due under sales-type, direct finance and operating leases. Due to the rights retained on certain lease
participations sold, the Company is deemed to have retained effective control over these leases and therefore these transfers are accounted for as secured borrowings. As of December 31, 2024, the Company
has secured borrowing agreements totaling $ 17,118,003 of which $951,673 was recourse and $ 16,166,330 was non-recourse. As of December 31, 2023, secured borrowing agreements totaled $ 33,964,128 of
which $ 2,565,988 was recourse and $ 31,398,140 was non-recourse. These secured borrowing agreements have various maturity dates through 2026 and interest rates ranging from 3.20% and 5.28%. The
investment in sales-type and direct finance leases and the equipment under operating leases pledged under these secured borrowing agreements were $287,035 and $37,117,695, respectively, as of December
31, 2024 and $599,204 and $55,555,542, respectively, as of December 31, 2023.
Page 15
KBH TOPCO, LLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Page 16
KBH TOPCO, LLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 – DEBT (Continued)
Secured Borrowings (Concluded). Principal payments on secured borrowings as of December 31, 2024 were due as follows:
Year Ending December 31
Amount
2025
$ 14,237,435
2026
2,880,568
$ 17,118,003
Notes Payable - Recourse. The Company has recourse borrowing arrangements with various financial institutions with $ 170,132,612 and $ 151,240,882 of recourse debt outstanding as of December 31, 2024 and
2023, respectively. Various rate structures for each line pricing exist, based upon either the U.S. prime rate (7.50% at December 31, 2024, “Prime”) plus a spread, or based upon 30-day Secured Overnight
Financing Rate (“SOFR”) plus a spread, or the like term swap rate for the investment period, plus 2.50% to 4.50%. Borrowings are collateralized by either a first lien on the equipment and assignment of rent or a
second lien on the equipment representing the leased equipment’s residual values.
Under a $30,000,000 facility, maturing in August 2025, principal payments are determined by the maturities of the underlying equipment leases, of which $24,830,729 and $19,351,128 was outstanding as
ofDecember 31, 2024 and 2023, respectively. Balances are priced at Prime plus 1.50%, with a floor of 5.00%. Outstanding balances as of December 31, 2024 were due between January 2025 and September 2029.
The debt agreement includes covenants for minimum tangible net worth and leverage. Additionally, there is a $2,000,000 guidance facility available for lease equipment residual values, where the financial
institution has been assigned rents under notes payable non-recourse, of which $551,903 and $663,456 was outstanding as of December 31, 2024 and 2023, respectively.
Under a $65,000,000 facility maturing in October 2026, secured by a first lien on the equipment, with principal payments due based on the following schedule: the first two months of borrowing are interest only,
after which 1.00% of the original principal is due on the first of each month, and then at six months from the date of the individual borrowing for the purchase of the equipment, the remaining principal balance is
due. On this facility, $ 57,747,216 and $ 36,268,984 was outstanding as of December 31, 2024 and 2023, respectively. The debt agreement includes covenants for minimum tangible net worth.
Under a $50,000,000 facility maturing in November 2027, principal payments are due based on the following schedule: the first two months of borrowing are interest only, after which 1.00% of the original
principal is due on the first of each month, and then at six months from the date of the individual borrowing for the purchase of the equipment, the remaining principal balance is due. On this facility, $36,223,469
and $35,075,304 was outstanding as of December 31, 2024 and 2023, respectively. Additionally, $10,000,000 of this facility is able to be used for borrowings on a term basis, secured by a second lien on the
equipment representing the leased equipment’s residual values, of which $4,260,951 and $4,553,140 was outstanding as of December 31, 2024 and 2023, respectively. The debt agreement includes covenants for
minimum tangible net worth.
Under a $27,000,000 facility, subject to annual review, borrowings are collateralized by either a first lien on the equipment and assignment of rents or a second lien on the equipment representing the leased
equipment’s residual values subject to a cap on residuals of $8,000,000. On this facility, $1,554,456 and $1,887,946 was outstanding as of December 31, 2024 and 2023, respectively. Outstanding balances as of
December 31, 2024 were due between January 2025 and June 2028.
Under an additional facility, borrowings are collateralized by a combination of first lien on the equipment and assignment of rents and a second lien on the equipment representing the leased equipment’s residual
values. On this facility, $ 327,532 and $ 362,743 was outstanding as of December 31, 2024 and 2023, respectively. Outstanding balances as of December 31, 2024 were due between January 2025 and May
2027.
(Continued)
Page 17
KBH TOPCO, LLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 – DEBT (Continued)
Notes Payable - Recourse (Continued). Under a $10,000,000 facility, subject to annual review, borrowings are collateralized by a combination of first lien on the equipment and assignment of rents and a second
lien on the equipment representing the leased equipment’s residual values. Rates are determined at the time of discounting based on the underlying lease term. On this facility, $ 2,670,753 and $ 3,483,057 was
outstanding as of December 31, 2024 and 2023, respectively. Outstanding balances as of December 31, 2024 were due between January 2025 and May 2028.
Under a $15,000,000 facility, subject to annual review, borrowings are collateralized by a combination of first lien on the equipment and assignment of rents and a second lien on the equipment representing the
leased equipment’s residual values. On this facility, $6,968,779 and $7,140,817 was outstanding as of December 31, 2024 and 2023, respectively. Additionally, $9,000,000 of this facility is able to be used for
borrowings collateralized by the Company’s equipment leases with a subsidiary, secured by both the rental stream and equipment residual values. On this portion of the facility, $ 3,958,712 and $ 3,974,649 was
outstanding as of December 31, 2024 and 2023, respectively. Outstanding balances as of December 31, 2024 were due between January 2025 and December 2028. The facility includes covenants for minimum
net worth.
Under a $4,000,000 facility, subject to annual review, borrowings are collateralized by a combination of first lien on the equipment and assignment of rents and a second lien on the equipment representing the
leased equipment’s residual values. On this facility, $2,707,138 and $2,365,787 was outstanding as of December 31, 2024 and 2023, respectively. Outstanding balances as of December 31, 2024 were due
between January 2025 and December 2028.
Under an additional facility, the Company has borrowed either funding against lease stream payments or equity residual in equipment. The periodic payments are determined by the underlying equipment lease
streams and/or residual values of equipment, with both interest rate and principal payments being determined at the time of line draw by the financial institution. Rates on borrowings from this facility range
from 200 to 450 basis points over the like term swap rate at the time of borrowing, with $3,048,517 and $5,368,251 outstanding as of December 31, 2024 and 2023, respectively. Borrowings for equity residuals
are priced at 2.00% over the corresponding non-recourse stream rate for the underlying transaction. Outstanding balances as of December 31, 2024 were due between January 2025 and March 2028. There are
additional loans with this financial institution of which $281,580 and $308,397 was outstanding as of December 31, 2024 and 2023, respectively.
Under a $1,500,000 guidance facility, subject to annual review, $190,321 and $-0- was outstanding as of December 31, 2024 and 2023, respectively. Outstanding balances as of December 31, 2024 were due in
November 2027.
The Company has a borrowing arrangement collateralized by a first lien on the equipment and assignment of rents on a pool of lease transactions totaling $135,219,647 and $110,782,280 outstanding as of
December 31, 2024 and 2023, respectively, at a borrowing rate ranging from 3.25% to 7.13%. Of the total transactions, $18,467,801 and $21,362,208 as of December 31, 2024 and 2023, respectively, is secured
on a recourse basis for a portion of the equipment’s residual values. The recourse portion of this transaction will amortize with cash flow from residual values. Management estimates that this obligation will fully
amortize by March 2031. An additional $13,000,000 was provided on a recourse basis at 5.52% of which $6,342,755 and $9,075,015 was outstanding as of December 31, 2024 and 2023, respectively.
(Continued)
Page 18
KBH TOPCO, LLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 – DEBT (Concluded)
Notes Payable - Recourse (Concluded). Principal payments on recourse notes payable as of December 31, 2024 were due as follows:
Year Ending December 31
Amount
2025
$125,201,788
2026
15,376,088
2027
9,062,461
2028
8,344,402
2029
9,112,640
Thereafter
3,035,233
$170,132,612
Notes Payable - Non-Recourse. Non-recourse notes payable are collateralized by the assignment of rent and the equipment value under lease. The financial institutions and a related party have a first lien on the
underlying leased equipment with no further recourse against the Company in the event of default by lessee. Interest rates range from 1.5% to 12.0%. Under these arrangements, each lease is financed under a
separate borrowing. Non-recourse debt and related interest expense is paid by funds from assigned committed term lease payments with various financial institutions. The outstanding balance was $
405,420,684 and $ 335,684,049 as of December 31, 2024 and 2023, respectively, of which $ 18,083,413 and $ 21,976,624 with an average interest rate of 9.00% was due to a related party under common control
as of December 31, 2024 and 2023, respectively.
Principal payments on non-recourse notes payable as of December 31, 2024 were due as follows:
Year Ending December 31
Amount
2025
$144,334,336
2026
100,139,372
2027
70,594,854
2028
50,067,560
2029
29,015,010
Thereafter
11,269,552
$405,420,684
Senior Secured Debt - Related-Party. The Company has a recourse senior secured debt facility with SLR. The facility was amended in 2024 to allow the Company to borrow up to $100,500,000. The interest rate
on the facility is SOFR plus 7.00%. Interest payments are due quarterly until maturity in December 2027. The debt is collateralized by a subordinated lien on the Company’s leased assets and the Company’s
outstanding rollover equity interests. The debt agreement includes covenants for minimum tangible net worth and leverage. The outstanding balance including accrued interest was $ 100,500,000 and $
96,000,000 as of December 31, 2024 and 2023, respectively. Related-party interest expense was approximately $ 12,085,000 and $ 10,224,000 for the years ended December 31, 2024 and 2023, respectively.
Page 19
KBH TOPCO, LLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 – MEMBERS’ EQUITY
All members of the Company have the same rights, preferences, and privileges. Profits, losses, and distributions are allocated in accordance with the Operating Agreement.
The Company has two classes of units: Common units and Preferred units. There were no Preferred units issued and outstanding as of December 31, 2024 and 2023.
NOTE 7 – OPERATING LEASES
The Company leases various facilities under the terms of non-cancelable operating leases which expire from February 2025 through July 2028 which call for monthly rental payments ranging from approximately
$2,000 to $30,000 per month. The Company does not believe it will exercise the options to extend the leases. The office leases generally require the Company to pay taxes, insurance, utilities, and maintenance
costs in addition to base rent.
The components of lease expense were as follows for the years ended December 31:
2024
2023
Fixed operating lease cost
$ 1,132,135
$ 1,130,177
Variable and short-term lease costs
388,328
300,922
Total lease expense
$ 1,520,463
$ 1,431,099
Other information related to lease was as follows for the years ended December 31:
2024
2023
Weighted-average remaining lease term (in years)
3.12
3.96
Weighted-average discount rate
3.34%
3.26%
Cash flows related to leases were as follows for the years ended December 31:
2024
2023
Cash flows from operating activities:
Cash paid for amounts included in the measurement of operating lease liabilities
$ 1,124,746
$ 1,101,453
Supplemental disclosure of cash flow information:
Right-of-use assets obtained in exchange for operating lease obligations
$ -
$ 1,101,349
(Continued)
Page 20
KBH TOPCO, LLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 – OPERATING LEASES (Concluded)
Approximate future maturities of lease liabilities under non-cancelable operating leases were as follows as of December 31, 2024:
Year Ending December 31
Amount
2025
$ 1,014,000
2026
947,000
2027
879,000
2028
241,000
3,081,000
Less: Imputed interest
160,000
$ 2,921,000
NOTE 8 – INCOME TAXES
A reconciliation of the statutory federal income tax rate and effective rate of the provision for income taxes is as follows:
December 31, 2024
December 31, 2023
Federal statutory rate
21.00%
21.00%
State income taxes, net of federal benefit
1.07
5.05
Deferred true up
14.25
(0.05)
Permanent items
0.24
0.52
Effective tax rate
36.56%
26.52%
The income tax provision consisted of the following components for the years ended December 31:
2024
2023
Deferred
$ 7,321,366
$ 2,982,373
Current
39,915
290,138
$ 7,361,281
$ 3,272,511
The Company’s deferred income tax assets and liabilities consisted of the following components as of December 31:
2024
2023
Deferred income tax asset (liability)
Depreciation and amortization
$(131,244,171)
$(23,416,416)
Intangible assets
37,261,670
(10,812,995)
Allowance for credit losses
117,939
112,407
Interest expense carryforward
23,511,683
3,372,581
Net operating loss
50,412,017
18,124,927
Net deferred income tax liability
$19,940,862)
$(12,619,496)
(Continued)
Page 21
KBH TOPCO, LLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 – INCOME TAXES (Concluded)
The Company has a pre-tax net operating loss (“NOL”) carryforward of $182,158,885 for Federal tax purposes as of December 31, 2024. The Company has apportioned after-tax state NOLs of up to $83,949,287 as
of December 31, 2024 with the earliest expiration date in 2040.
In the normal course of business, the Company is subject to examinations by federal, foreign, and state and local jurisdictions, where applicable. There are currently no pending tax examinations. The Company’s
tax years are currently open under statute are from 2021 to the present.
NOTE 9 – MAJOR CUSTOMERS
Two customers of which are either investment grade rated or a large corporate company comprised of approximately 25% of revenue for the year ended December 31, 2024. One large corporate customer is the
lessee under sales-type, direct finance and operating leases of approximately 12% of total assets as of December 31, 2024. One large corporate customer is the lessee under sales-type, direct finance and
operating leases of approximately 14% of total assets as of December 31, 2023.
One customer has a subsidiary that is also a co-lessee that is undergoing bankruptcy proceedings, and as a result, is in default for breach of a master lease agreement and numerous equipment subleases. There is
approximately $25,517,000 and $50,255,000 of investment in sales-type and direct finance leases, net and equipment under operating leases, net relating to leases with the subsidiary as of December 31, 2024,
respectively. There is approximately $55,329,000 and $8,910,000 of non-recourse and recourse debt outstanding related to these leases as of December 31, 2024, respectively. Management believes the
Company will be successful in recovering the full amounts due from the customer under these leases.
NOTE 10 – LITIGATION
From time to time, the Company is subject to litigation arising in the ordinary course of business. It is the opinion of the Company’s management that any claims pending are either covered by insurance or that
there is no material exposure to the Company in connection with any proceedings.
NOTE 11 – SUBSEQUENT EVENTS
Management has evaluated all known subsequent events from December 31, 2024 through February 21, 2025, the date the accompanying consolidated financial statements were available to be issued and is not
aware of any material subsequent events occurring during this period.
Exhibit 99.4
Gemino Healthcare Finance, LLC
d/b/a SLR Healthcare ABL
Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
Gemino Healthcare Finance, LLC d/b/a SLR Healthcare ABL
Table of Contents
Years Ended December 31, 2024 and 2023
Page
Independent Auditors’ Report
1
Consolidated Financial Statements
Consolidated Balance Sheets
3
Consolidated Statements of Operations
4
Consolidated Statements of Changes in Members’ Equity
5
Consolidated Statements of Cash Flows
6
Notes to Consolidated Financial Statements
7
1
Independent Auditors' Report
To the Board of Managers of
Gemino Healthcare Finance, LLC
Opinion
We have audited the consolidated financial statements of Gemino Healthcare Finance, LLC and Subsidiary d/b/a SLR Healthcare ABL (the Company), which comprise the consolidated balance sheets as
of December 31, 2024 and 2023, and the related consolidated statements of operations, changes in members' equity and cash flows for the years then ended, and the related notes to the consolidated
financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023 and the results of its
operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America (GAAP).
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the
Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in
accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with GAAP, and for the design, implementation and maintenance of internal
control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the
Company's ability to continue as a going concern within one year after the date that the financial statements are available to be issued.
Baker Tilly Advisory Group, LP and Baker Tilly US, LLP, trading as Baker Tilly, are members of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Baker Tilly US, LLP is a
licensed CPA firm that provides assurance services to its clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services to their clients and are not licensed CPA firms.
2
Auditors' Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with
GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the
aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.
In performing an audit in accordance with GAAS, we:
•Exercise professional judgment and maintain professional skepticism throughout the audit.
•Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks.
Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
•Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the Company's internal control. Accordingly, no such opinion is expressed.
•Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the
consolidated financial statements.
•Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a
reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings and certain internal control-
related matters that we identified during the audit.
Philadelphia, Pennsylvania
February 14, 2025
See notes to consolidated financial statements
3
Gemino Healthcare Finance, LLC d/b/a SLR Healthcare ABL
Consolidated Balance Sheets
December 31, 2024 and 2023
2024
2023
Assets
Assets
Cash and cash equivalents
$
74,128
$
38,417
Loans receivable, net
130,206,967
111,264,256
Accrued interest receivable
1,879,344
1,456,919
Goodwill
5,663,531
5,663,531
Furniture and equipment, net
49,342
34,642
Other assets
620,408
105,652
Total assets
$
138,493,720
$
118,563,417
Liabilities and Members' Equity
Liabilities
Credit facility, net
$
98,294,491
$
83,101,563
Loan from affiliate
4,000,000
-
Accounts payable and accrued expenses
4,802,079
4,158,427
Dividend payable
1,500,000
1,495,058
Total liabilities
108,596,570
88,755,048
Members' Equity
Units, $1,000 par value, issued and outstanding 35,259
32,808,874
32,808,874
Accumulated deficit
(2,911,724)
(3,000,505)
Total members' equity
29,897,150
29,808,369
Total liabilities and members' equity
$
138,493,720
$
118,563,417
See notes to consolidated financial statements
4
Gemino Healthcare Finance, LLC d/b/a SLR Healthcare ABL
Consolidated Statements of Operations
Years Ended December 31, 2024 and 2023
2024
2023
Interest income:
Interest income
$
15,622,066 $
13,610,602
Interest expense
8,386,456
6,498,804
Net interest income
7,235,610
7,111,798
Provision for credit losses
102,125
81,159
Net interest income after provision for credit losses
7,133,485
7,030,639
Other income
4,347,599
4,275,023
Operating expenses:
Compensation and benefits
4,459,792
4,896,205
Depreciation and amortization
23,080
21,193
General and administrative
1,409,431
930,490
Total operating expenses
5,892,303
5,847,888
Net income
$
5,588,781 $
5,457,774
See notes to consolidated financial statements
5
Gemino Healthcare Finance, LLC d/b/a SLR Healthcare ABL
Consolidated Statements of Changes in Members' Equity
Years Ended December 31, 2024 and 2023
Balance at December 31, 2022
$
28,608,255
Cumulative effect of adopting new accounting standard (see Note 2)
429,211
Capital distributions
(5,465 )
Dividends declared
(4,681,406 )
Net income
5,457,774
Balance at December 31, 2023
29,808,369
Dividends declared
(5,500,000 )
Net income
5,588,781
Balance at December 31, 2024
$
29,897,150
See notes to consolidated financial statements
6
Gemino Healthcare Finance, LLC d/b/a SLR Healthcare ABL
Consolidated Statements of Cash Flows
Years Ended December 31, 2024 and 2023
2024
2023
Cash Flows from Operating Activities
Net income
$
5,588,781
$
5,457,774
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation
23,080
21,193
Amortization of deferred origination fees and costs
(528,677)
(614,190)
Amortization of debt issuance costs
813,232
526,642
Provision for credit losses
102,125
81,159
Changes in assets and liabilities:
Increase in accrued interest receivable
(422,425)
(275,455)
(Increase) decrease in other assets
(514,756)
16,054
Increase in deferred origination fees and costs
606,696
718,061
Increase in accounts payable and accrued expenses
643,652
1,229,316
Net cash provided by operating activities
6,311,708
7,160,554
Cash Flows from Investing Activities
Increase in loans receivable
(19,122,855)
(18,636,916)
Purchase of furniture and equipment
(37,780)
(20,110)
Net cash used in investing activities
(19,160,635)
(18,657,026)
Cash Flows from Financing Activities
Proceeds from credit facility
14,900,000
7,700,000
Proceeds from loan from affiliate
4,000,000
-
Debt issuance costs
(520,304)
(1,764,106)
Dividends paid
(5,495,058)
(3,715,377)
Capital distributions
-
(5,465)
Net cash provided by financing activities
12,884,638
2,215,052
Net increase (decrease) in cash and cash equivalents
35,711
(9,281,420)
Cash and cash equivalents, beginning of the year
38,417
9,319,837
Cash and cash equivalents, end of the year
$
74,128
$
38,417
Supplemental Disclosure of Cash Flow Information
Interest paid
$
7,582,667
$
5,808,623
7
Gemino Healthcare Finance, LLC d/b/a SLR Healthcare ABL
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
1.Description of Business
Gemino Healthcare Finance, LLC is a Delaware limited liability company formed in December 2006. In February 2021, the Company filed a d/b/a in the name of SLR Healthcare ABL (“SLR
Healthcare”). SLR Healthcare is a commercial finance company that originates, underwrites and manages primarily secured, asset-based loans for small and mid-sized companies operating
across the U.S. in the healthcare industry. SLR Healthcare’s loans are primarily in the form of revolving lines of credit, secured by accounts receivable of the borrowers. The accounts receivable
serving as collateral are primarily third party obligations from government payers, such as Medicare or Medicaid, and commercial insurers.
In certain cases, SLR Healthcare may provide senior term loan financing, including real estate financing to qualified borrowers in addition to a revolving line of credit. Senior term loans, including
real estate loans are typically secured by accounts receivable and all other assets of the borrowers, such as inventory, equipment and real estate.
Gemino Healthcare Funding, LLC (“Gemino Funding”) is a wholly-owned special purpose limited liability company that purchases and holds certain eligible loans and related property from SLR
Healthcare (collectively, the “Company”).
On September 30, 2013, SLR Senior Investment Corp. formerly known as Solar Senior Capital Ltd. (“SLR Senior”), a Maryland corporation, acquired a controlling interest in SLR Healthcare. On
April 1, 2022, SLR Senior merged with the surviving affiliated entity, SLR Investment Corp. (“SLR Investment”), a Maryland corporation. The remaining interest of SLR Healthcare is held by the
management team of SLR Healthcare.
2.Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of SLR Healthcare and Gemino Funding. All significant intercompany balances have been eliminated in consolidation.
Use of Estimates
The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States of America (“GAAP”) requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and to report
amounts of revenues and expenses during the reporting period. Actual results could differ materially from these estimates. The allowance for credit losses represents an estimate that is particularly
susceptible to material change.
Cash and Cash Equivalents
Cash and cash equivalents include funds deposited with financial institutions and short-term, liquid investments in money market accounts with original maturities of three months or less.
Loans Receivable
Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their outstanding unpaid principal balances less the
allowance for credit losses and any deferred fees or costs.
Commitment terms of the Company’s financing agreements generally range from two to five years with interest charged on a floating rate basis. Funding under revolving loan commitments is
subject to the Company’s estimation of the value of the accounts receivable pledged as collateral.
Gemino Healthcare Finance, LLC d/b/a SLR Healthcare ABL
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
8
2.Summary of Significant Accounting Policies continued
Revenue Recognition
Income on loans receivable is recognized using the simple interest method. Revolving loan origination fees and costs are deferred and amortized on a straight-line basis over the terms of the
related loan commitments as an adjustment to interest income on loans. Term loan origination fees and costs are deferred and amortized using either the effective interest method or the straight-
line method over the life of the loan as an adjustment to interest income. The straight-line method may be used for term loan facilities when it approximates the effective interest method. Other
fees, such as unused balance and collateral monitoring fees, are recognized when the services are provided. Termination fees are recognized when a loan is terminated. These other fees are
included in other income.
The accrual of interest on loans is discontinued at the time the loan is 90 days delinquent unless the loan is adequately secured. Typically, loans are placed on non-accrual or charged off at an
earlier date if collection of principal or interest is considered doubtful. When a loan is placed on non-accrual status, all interest previously accrued, but not collected, is reversed against current
interest income and all future proceeds received will generally be applied against principal or interest, in the judgment of management. Loans are returned to accrual status when all principal and
interest amounts contractually due are reasonably assured.
Impaired Loans
A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due in accordance with the contractual terms of
the loan agreement. Loans are evaluated for impairment by the Company based on an ongoing analysis of each borrower’s repayment capacity, the value of the collateral support and the strength
of any guarantees. Loans identified as impaired are further evaluated to determine the estimated extent of impairment.
Allowance for Credit Losses
Effective January 1, 2023, the Company adopted FASB Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326). ASU 2016-13 requires a current
expected credit loss (“CECL”) measurement to estimate the allowance for credit losses replacing the estimate of probable credit losses inherent in the loan portfolio. The Company adopted ASU
2016-13 using the modified retrospective method. Upon adoption, the Company recognized an overall decrease in the allowance for credit losses of approximately $429,000 as a cumulative effect
adjustment from a change in accounting policies, which increased Members’ equity.
The allowance for credit losses reflects the Company’s current estimate of potential credit losses in the loan portfolio at year end. The CECL methodology is based on relevant information about
past events, including, but not limited to, historical loss experience, current portfolio composition, market conditions and reasonable and supportable forecasts that affect the collectability of the
reported loan balances for the duration of each respective loan. Increases and decreases to the allowance for credit losses are recorded through the Provision for credit losses in the Consolidated
Statements of Operations.
The Company’s portfolio currently consists of revolving lines of credit. All loans in the Company’s portfolio are individually evaluated when determining the risk rating for each loan. A lower internal
risk rating represents less risk while a higher internal risk rating represents more risk. Credit risk ratings for each borrower are established based on certain qualitative and quantitative factors
including an assessment of management and strategy, historical and projected repayment capacity, collateral coverage and performance, financial condition and sponsorship, strength of
guarantees and any contingencies.
Gemino Healthcare Finance, LLC d/b/a SLR Healthcare ABL
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
9
2.Summary of Significant Accounting Policies continued
The allowance for credit losses on loans classified as “Pass” is assessed using historical loss experience, the expected weighted-average remaining maturity of the portfolio, adjusted for expected
prepayments, and a qualitative economic view. The Company also reviews trends in the weighted-average risk of the portfolio to determine whether risk characteristics of the current portfolio,
relative to the historical portfolio, could signal a greater risk of expected loss. In accordance with CECL, the Company’s allowance for credit losses may be adjusted to reflect management’s
assessment of current and future economic conditions that may impact the performance of each borrower. The assessment includes, but is not limited to, unemployment rates, interest rates,
expectations of inflation and/or recession, as well as various other macroeconomic factors that could impact the likelihood of potential credit losses during a loan’s anticipated term.
Specific allowances for credit losses are generally applied to certain loans classified as “Substandard.” Generally, these loans are deemed to be impaired and are typically measured based on a
comparison of the recorded carrying value of the loan to the present value of the loan’s expected cash flow using the loan’s effective interest rate, the loan’s estimated market price or the
estimated fair value of the underlying collateral, if the loan is collateral-dependent combined with the strength of any guarantee arrangements. Specific allowances are recorded when the
discounted cash flows, collateral value, or aggregate market price of the impaired loan is lower than the carrying value of that loan.
Loans are charged off when collection is questionable and when the Company can no longer justify maintaining the loan as an asset on the consolidated balance sheets. Loans qualify for charge
off when, after thorough analysis, all possible sources of collection are determined to be insufficient to repay the loan. These include impairment of potential future cash flow, value of collateral
and/or financial strength of guarantors. Recoveries of previous charge-offs are recorded when received. For the years ended December 31, 2024 and 2023, there were no recoveries of previous
charge-offs.
Goodwill
Goodwill arose from the acquisition of the Company on September 30, 2013 (Note 1). Goodwill represents the excess of the purchase price over the fair value of those acquired net assets.
Goodwill is not amortized, but instead is reviewed for impairment annually typically in December of each year or more frequently upon the occurrence of certain events or substantive changes in
circumstances. The Company assesses goodwill for impairment by comparing the carrying value of the Company to its fair value. The Company has the option to perform a qualitative assessment
to determine if an impairment is more likely than not to have occurred. If the conclusion is supported that it is more likely than not that the fair value is less than its carrying amount, then the
Company would need to perform a quantitative impairment test. If the conclusion cannot be supported, or if the Company does not elect to do the qualitative assessment, then the Company will
perform a quantitative assessment. If a quantitative goodwill impairment assessment is performed, the Company utilizes a combination of market and income valuation approaches. No impairment
of goodwill resulted for the years ended December 31, 2024 and 2023, respectively.
Furniture and Equipment
Furniture and equipment are recorded at cost, net of accumulated depreciation, and are depreciated on a straight-line basis over their estimated useful lives ranging from three to five years.
Debt Issuance Costs
The Company reports origination and other costs related to debt issuances as a direct deduction from the carrying amount of the debt liability. These expenses are deferred and amortized using
either the effective interest method or the straight-line method over the stated life as an adjustment to interest expense. The straight-line method may be used on revolving facilities when it
approximates the effective interest method.
Gemino Healthcare Finance, LLC d/b/a SLR Healthcare ABL
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
10
2.Summary of Significant Accounting Policies continued
Income Taxes
The Company is not subject to federal or state income taxes. Members of the Company have elected to report the taxable income or loss on their individual tax returns. Accordingly, no provision
for income taxes has been recorded in the accompanying consolidated financial statements.
The Company applies authoritative guidance relating to the accounting for uncertain tax positions. Accordingly, a provision for uncertain tax positions and related penalties and interest is
recognized when it is more-likely-than-not, based on the technical merits, that the tax position will not be realized or sustained upon examination by the appropriate taxing authority. Management
determined there were no tax uncertainties that met the recognition threshold in 2024 and 2023.
The Company files both federal and state income tax returns. The Company remains subject to examination by taxing authorities for the years 2021 and after.
Employee Retention Credit
The Employee Retention Credit (“ERC”) under the Coronavirus Aid, Relief and Economic Security (“CARES”) Act, as amended, provides eligible employers a refundable tax credit against the
employer’s share of payroll taxes on a percentage of qualified wages paid after March 12, 2020 and before October 1, 2021, subject to certain maximum amounts per employee. The Company
determined that it qualified for the ERC, amended its previously filed payroll tax returns and received refunds during 2024. The Company has elected to account for the ERC in accordance with
FASB ASC 410, Asset Retirement and Environmental Obligations, to recognize the credits when received. Accordingly, the Company has recognized an expense reduction within the
Compensation and benefits line item in its Consolidated Statement of Operations for the year ended December 31, 2024.
3.Loans Receivable
The following table shows the composition of loans receivable, net as of December 31, 2024 and 2023:
2024
2023
Revolving loans receivable
$
131,958,610
$
112,835,755
Less allowance for credit losses
(707,876)
(605,751)
Less deferred origination fees and costs, net
(1,043,767 )
(965,748)
Loans receivable, net
$
130,206,967
$
111,264,256
4.Allowance for Credit Losses and Recorded Investment in Loans Receivable
The following table summarizes the activity in the allowance for credit losses for revolving loans for the respective years ended December 31, 2024 and 2023:
2024
2023
Beginning balance
$
605,751
$
953,803
Cumulative effect of adopting ASU 2016-13
-
(429,211)
Provision for credit losses
102,125
81,159
Ending balance
$
707,876
$
605,751
Collectively evaluated for impairment
$
707,876
$
605,751
Individually evaluated for impairment
$
-
$
-
Gemino Healthcare Finance, LLC d/b/a SLR Healthcare ABL
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
11
4.Allowance for Credit Losses and Recorded Investment in Loans Receivable continued
The following table presents revolving loans collectively and individually evaluated for impairment at December 31, 2024 and 2023:
2024
2023
Revolving loans
$
131,958,610
$
112,835,755
Collectively evaluated for impairment
$
131,958,610
$
112,835,755
Individually evaluated for impairment
$
-
$
-
There were no revolving loans that were past due or were on non-accrual at December 31, 2024 and 2023, respectively.
Credit Quality Indicators
The following table summarizes the loan portfolio by the Company’s internal credit rating (scale: 1 to 7) as of December 31, 2024 and 2023: Loans with a rating of 4 or better generally pose
minimal risk to the Company as they exhibit, among other things, one or more of the following attributes: (1) secured collateral position; (2) satisfactory cash flows; and (3) history of timely payment
of debt obligations. Loans credit rated below 4 are considered “watchlist” loans; an overall degree of risk exists with these loans that warrants management’s review each quarter.
December 31,
2024
2023
Rated 4 or better
$
131,958,610
$
107,346,528
Rated 5
-
5,489,227
Total revolving loans
$
131,958,610
$
112,835,755
5.Furniture and Equipment
Furniture and equipment are comprised of the following at December 31, 2024 and 2023:
2024
2023
Computer software and equipment
$
194,727
$
156,947
Furniture and fixtures
41,032
41,032
Leasehold improvement
21,551
21,551
Total
257,310
219,530
Less accumulated depreciation
(207,968)
(184,888)
Furniture and equipment, net
$
49,342
$
34,642
Depreciation expense was $23,080 and $21,193 for the years ended December 31, 2024 and 2023, respectively.
Gemino Healthcare Finance, LLC d/b/a SLR Healthcare ABL
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
12
6.Debt
Credit Facility. On May 27, 2016, the Company entered into a four-year, non-recourse $125,000,000 secured revolving credit facility. Effective with amendments dated August 24, 2023 and
September 19, 2024, the credit facility was increased to $150,000,000 and $160,000,000, respectively, which is expandable to $200,000,000 under its accordion feature. The maturity date of the
credit facility is March 31, 2026. Under the terms of the credit facility, the Company is required to comply with various covenants, including financial and reporting requirements and other customary
requirements for similar credit facilities. The credit facility also includes usual and customary events of default for credit facilities of this nature.
Amounts available to borrow under the credit facility are also subject to compliance with a borrowing base that applies different advance rates to different types of assets in the Company’s portfolio
that are pledged as collateral. As of December 31, 2024 and 2023, there were principal borrowings of $99,600,000 and $84,700,000 outstanding, respectively, under the credit facility which is
collateralized by eligible loans and related securities.
Interest on the credit facility accrues at a variable rate per annum of one-month Term Secured Overnight Financing Rate (“SOFR”) plus 2.35% and one-month Term SOFR plus 2.85%,
respectively, approximating 6.71% and 8.21% at December 31, 2024 and 2023, respectively. The Company also pays other customary loan fees for the credit facility.
The credit facility amount in the consolidated balance sheets is comprised of the following at December 31, 2024 and 2023:
2024
2023
Principal borrowings
$
99,600,000
$
84,700,000
Unamortized debt issuance costs
(1,305,509 )
(1,598,437 )
Credit facility, net
$
98,294,491
$
83,101,563
Loan from Affiliate – Related Party. On December 31, 2024, SLR Healthcare entered into a $4,000,000 revolving loan agreement with SLR Investment. The interest rate on the facility is three-
month Term SOFR plus 6.50%. Interest payments are due quarterly until maturity in December 2025. The outstanding principal balance was $4,000,000 as of December 31, 2024.
7.Commitments, Contingencies and Concentrations
At December 31, 2024 and 2023, the Company has committed facilities to its borrowers totaling approximately $288,250,000 and $255,000,000, respectively, of which approximately $156,291,000
and $142,164,000, respectively, was unused. Borrowers may borrow up to the lesser of (i) the committed facility or (ii) the underlying collateral value multiplied by the advance rate. Of the unused
committed facility amount at December 31, 2024 and 2023, borrowers could borrow up to approximately $64,865,000 and $53,284,000, respectively. As of December 31, 2024 and 2023, the
Company had sufficient cash available and/or availability under its credit facility to fund its commitments.
From time to time, the Company is subject to litigation arising in the ordinary course of business. It is the opinion of the Company’s management that there is no material exposure to any claims
pending in connection with any proceedings.
At December 31, 2024 and 2023, the Company had one loan approximating 21% and 24% of the total loans receivable, respectively.
8.Employee Benefit Plans
The Company sponsors a 401(k) savings plan, where the Company contributes a defined percentage of employees’ earnings up to the maximum contribution amount as determined by the Internal
Revenue Service.
The Company formed a Long-Term Incentive Plan (“LTIP”) that provides for an annual bonus pool to employees based on the Company achieving certain performance criteria.
Gemino Healthcare Finance, LLC d/b/a SLR Healthcare ABL
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
13
9.Fair Value Disclosure
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly
transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:
Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are
observable or can be corroborated by observable market data.
Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.
The following information should not be interpreted as an estimate of the fair value of the entire Company, since a fair value calculation is only provided for a limited portion of the Company’s
assets and liabilities. Assets and liabilities measured at fair value on a recurring basis are summarized in the table below at December 31, 2024 and 2023.
2024
Carrying Value
Fair Value
Financial assets:
Cash and cash equivalents (Level 1)
$
74,128
$
74,128
Loans receivable, net (Level 3)
130,206,967
131,250,734
Financial liabilities:
Credit facility, net (Level 2)
98,294,491
99,600,000
Loan from affiliate (Level 2)
4,000,000
4,000,000
2023
Carrying Value
Fair Value
Financial assets:
Cash and cash equivalents (Level 1)
$
38,417
$
38,417
Loans receivable, net (Level 3)
111,264,256
112,230,004
Financial liabilities:
Credit facility, net (Level 2)
83,101,563
84,700,000
10.Subsequent Events
The Company evaluated subsequent events for recognition or disclosure through February 14, 2025, which was the date the consolidated financial statements were available to be issued.
North Mill Holdco LLC
and Subsidiaries
(A Delaware Limited Liability Company)
Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
North Mill Holdco LLC and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
Page(s)
Independent Auditors’ Report
1-2
Consolidated Financial Statements
Consolidated Balance Sheets
3
Consolidated Statements of Operations
4
Consolidated Statements of Changes in Members’ Equity
5
Consolidated Statements of Cash Flows
6
Notes to Consolidated Financial Statements
7-15
1
Independent Auditors' Report
To the Audit Committee of
North Mill Holdco LLC and Subsidiaries
Opinion
We have audited the consolidated financial statements of North Mill Holdco LLC and Subsidiaries (the Company), which comprise the consolidated balance sheets as of December 31, 2024, and the
related consolidated statements of operations, members’ equity and cash flows for the years then ended, and the related notes to the consolidated financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations
and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the
Auditors' Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in
accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Other Matter
The financial statements of the Company for the year ended December 31, 2023 were audited by another auditor, who expressed an unmodified opinion on those statements on February 23, 2024.
Responsibilities of Management for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America,
and for the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the
Company's ability to continue as a going concern within one year after the date that the financial statements are available to be issued.
2
Auditors' Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with
GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the
aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.
In performing an audit in accordance with GAAS, we:
•Exercise professional judgment and maintain professional skepticism throughout the audit.
•Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks.
Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
•Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the Company's internal control. Accordingly, no such opinion is expressed.
•Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the
consolidated financial statements.
•Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a
reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings and certain internal control-
related matters that we identified during the audit.
Philadelphia, Pennsylvania
February 12, 2025
3
North Mill Holdco LLC and Subsidiaries
Consolidated Balance Sheets
December 31, 2024 and 2023
2024
2023
Assets:
Cash and cash equivalents
$
15,876,966
$
20,229,478
Finance receivables:
Loans receivable
169,439,798
168,427,831
Less: Unearned fee income
(39,691 )
(103,286)
169,400,107
168,324,545
Accounts receivable
318,962,336
105,113,189
Less: allowance for uncollectible finance receivables
(2,861,153 )
(2,328,391 )
Finance receivables, net
485,501,290
271,109,343
Accrued interest receivable
2,270,511
2,158,775
Other assets
621,987
335,799
Furniture and equipment, net
714,884
604,124
Goodwill
19,242,729
19,242,729
Right-of-use asset
2,848,724
1,654,855
Total assets
$
527,077,091
$
315,335,103
Liabilities and Members' Equity:
Credit facility payable, net of issuance costs (Note 7)
$
230,608,319
$
222,061,862
Due to factoring clients
174,789,928
25,073,717
Accounts payable and accrued expenses
24,295,595
4,928,206
Lease liability
2,848,724
1,654,855
Total liabilities
432,542,566
253,718,640
Commitments and Contingencies (Note 8)
Members' Equity
94,534,525
61,616,463
Total liabilities and members' equity
$
527,077,091
$
315,335,103
4
North Mill Holdco LLC and Subsidiaries
Consolidated Statements of Operations
Years Ended December 31, 2024 and 2023
2024
2023
Net interest income:
Interest and finance charges
$
40,569,447 $
33,700,679
Interest expense
16,119,927
15,047,895
Net interest income
24,449,520
18,652,784
Service fees and other finance charges
5,321,529
4,442,246
Net interest and other non-interest income
29,771,049
23,095,030
Provision (credit) for uncollectible finance receivables
479,725
(453,120)
Net interest income after provision (credit) for
uncollectible finance receivables
29,291,324
23,548,150
Operating expenses:
Compensation and benefits
16,102,962
12,384,594
Acquisition expenses
1,490,294
-
General and administrative expenses
2,772,032
3,266,764
Legal and professional fees
379,829
439,601
Total operating expenses
20,745,117
16,090,959
Other income (loss):
Impairment of goodwill
-
(16,945,000)
Bargain purchase gain (Note 3)
1,903,881
-
Total other income (loss), net
1,903,881
(16,945,000)
Net income (loss)
$
10,450,088 $
(9,487,809 )
5
North Mill Holdco LLC and Subsidiaries
Consolidated Statements of Changes in Members' Equity
Years Ended December 31, 2024 and 2023
Balance, December 31, 2022
$
79,265,946
Cumulative effect of adopting new accounting standard (Note 2)
(1,085,173)
Net loss
(9,487,809)
Distributions to members
(7,076,501)
Balance, December 31, 2023
61,616,463
Member contributions
30,000,000
Net income
10,450,088
Distributions to members
(7,532,026)
Balance, December 31, 2024
$
94,534,525
6
North Mill Holdco LLC and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended December 31, 2024 and 2023
2024
2023
Cash flows from operating activities:
Net income (loss)
$
10,450,088 $
(9,487,809 )
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Provision (credit) for uncollectible finance receivables
479,725
(453,120)
Depreciation
206,370
182,428
Amortization of deferred debt issuance costs
514,268
495,283
Bargain purchase gain (Note 3)
(1,903,881 )
-
Impairment of goodwill
-
16,945,000
Changes in assets and liabilities, net of acquisition related amounts:
(Increase) decrease in:
Accrued interest receivable
(111,736)
(423,616)
Other assets
(286,188)
(78,884 )
Increase (decrease) in:
Unearned fee income
(63,595 )
(181,354)
Accounts payable and accrued expenses
4,795,010
1,526,741
Due to factoring clients
(4,989,077 )
(9,126,335 )
Net cash provided by (used in) operating activities
9,090,984
(601,666)
Cash flows from investing activities:
Decrease in finance receivables, net
65,429,209
12,326,922
Acquisition of Hollywood BC, net of cash acquired
(109,055,738 )
-
Purchases of furniture and equipment
(317,130)
(241,215)
Net cash (used in) provided by investing activities
(43,943,659)
12,085,707
Cash flows from financing activities:
Net borrowings from credit facility payable
8,117,189
8,491,955
Member contributions
30,000,000
-
Payment of debt issuance costs
(85,000 )
(66,984 )
Distributions to members
(7,532,026 )
(7,076,501 )
Net cash provided by financing activities
30,500,163
1,348,470
Net change in cash, cash equivalents, and restricted cash
(4,352,512 )
12,832,511
Cash, cash equivalents, and restricted cash at beginning of year
20,229,478
7,396,967
Cash, cash equivalents and restricted cash at end of year
$
15,876,966
$
20,229,478
Supplemental disclosure of cash flow information:
Cash paid for interest
$
15,401,870
$
14,027,175
Deferred acquisition consideration payable
$
14,572,379
$
-
Supplemental disclosure of non-cash financing activities:
Right-of-use asset and lease liability
$
-
$
1,451,570
North Mill Holdco LLC and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
7
Note 1. Nature of the Business
The operations of North Mill Holdco LLC (“Holdco”) and Subsidiaries (collectively, the “Company”) consist primarily of those financial activities common to the commercial asset-based finance industry.
Holdco, a subsidiary of SLR Investment Corp. (“SLRC”), was formed on May 17, 2019 in connection with the acquisition of Summit Financial Resources, LLC (“Summit”). As of December 31, 2024,
Holdco has majority ownership of two subsidiaries, North Mill Capital LLC (“NMC”) and Summit.
NMC was formed as a single-member Delaware limited liability company on August 18, 2010 and commenced operations on October 29, 2010. SLRC acquired a controlling interest in NMC on October
20, 2017. SLRC contributed its interests in NMC to Holdco on June 28, 2019. As of December 31, 2024, NMC has two wholly-owned subsidiaries, PrinSource Capital Companies, LLC (“PrinSource”) and
SLR Digital Finance LLC (“Digital Finance”).
NMC is a specialty finance company based in New Jersey that is engaged in providing asset-based commercial financing to small and medium-sized businesses. NMC’s core business is providing and
servicing loans ranging from $200,000 to $40,000,000 secured by assets such as accounts receivable, inventory, and equipment.
Borrowers are located throughout the United States. PrinSource, based in Minnesota, was acquired by NMC on December 30, 2011. Prinsource provides working capital financing solutions primarily
through invoice factoring. Digital Finance, based in Los Angeles, was acquired by NMC on June 3, 2021. Digital Finance provides factoring and asset-based loans to companies in the ad tech and media
spaces.
Summit, based in Salt Lake City, was acquired by Holdco on June 28, 2019. Summit provides accounts receivable factoring to clients across various industries. Hollywood BC AcquisitionCo LLC
(“Hollywood”), a wholly owned subsidiary of Summit, was formed on August 26, 2024. Through its ownership in Hollywood, Holdco acquired an asset-based factoring portfolio from Webster Bank, N.A.
effective September 27, 2024 (Note 3).
Note 2: Summary of Significant Accounting Policies
Significant accounting policies are as follows:
Basis of accounting: The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.
GAAP”).
Principles of consolidation: The consolidated financial statements include the accounts of Holdco and its subsidiaries. All material intercompany accounts and transactions have been eliminated in
consolidation.
Reclassification: Certain prior period amounts have been reclassified to conform to the current period presentation.
Revenue recognition: The Company recognizes interest and fee income in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 310,
Receivables. Interest income is recognized as earned based on the terms of the underlying credit agreement. Fees received for the origination of loans are deferred and amortized into income over the
contractual lives of the loans and annual fees received for loans are deferred and amortized into income over a twelve-month period using the straight-line method, which approximates the effective
interest rate method. Unamortized amounts are recognized as income at the time that loans are paid in full. Interest income on finance receivable is recognized using the interest method. Interest and fee
income are accrued based on the outstanding receivable balance and charged monthly to the receivable balance as earned, except in instances that a reasonable doubt exists as to the collectability of
interest, in which case the accrual of income may be suspended.
Service fees and other finance charges include wire transfer fees, field examination charges, late reporting fees and other items charged to borrowers. These items are recognized as income in the
statements of operations as charged.
North Mill Holdco LLC and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
8
Note 2: Summary of Significant Accounting Policies…continued
Cash: The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash includes all deposits held at banks. Deposits in
excess of amounts insured by the Federal Deposit Insurance Corporation (“FDIC”) are exposed to loss in the event of nonperformance by the institution. The Company has had cash deposits in excess of
the FDIC insurance coverage and has not experienced any losses on such accounts.
Loans receivable: The Company’s loan portfolio consists of asset based loans. The loans are further classified as either performing or non-performing. The Company provides asset-based financing
primarily in the form of revolving credit facilities collateralized by the borrower’s assets, including, but not limited to, accounts receivable, inventory, equipment and general intangibles. The loan terms are
generally one to three years and management has the intention and ability to hold until maturity or payoff. Provisions for credit losses for finance receivables are charged to operations in amounts
sufficient to maintain the allowance for uncollectible finance receivables at an amount considered adequate to cover the estimated losses of principal and accrued interest in the existing loan portfolio.
The Company’s charge-off policy is based on a loan-by-loan review of all receivables. Management periodically evaluates the adequacy of the allowance for uncollectible finance receivables by reviewing
credit loss experience, change in size and character of credit risks, the value of collateral and general economic conditions. Receivables are charged off against the allowance when management
determines that there is insufficient collateral to support the loan and believes that it is no longer probable that principal and/or interest payments will be collected.
Accounts receivable: Accounts receivable consist of factored receivables including factored receivables specifically for digital media companies sourced by Digital Finance. As of December 31, 2024
and 2023, the factored receivables portfolio totals $318,962,336 and $105,113,189, respectively. Accounts receivable are stated at cost, net of an allowance for uncollectible finance receivables.
Allowance for credit losses: On January 1, 2023, the Company adopted Accounting Standards Update (“ASU”) 2016-13 Financial Instruments – Credit Losses (Topic 326): Measurement of Credit
Losses on Financial Instruments, as amended, which replaced the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”)
methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan and accounts receivables. The
method utilized by the Company to estimate expected credit losses is the weighted average maturity (“WARM”) methodology which contemplates expected losses at a pool-level, utilizing historic loss
information. During the year ended December 31, 2023, there was an adjustment to retained earnings of $1,085,173 as a result of the adoption of ASC 326.
The cumulative loss rate used as the basis for the estimate of credit losses for uncollectible finance receivables is comprised of the Company’s historical loss experience from 2010 to 2024.
In accordance with CECL, the Company’s allowance for credit losses may be adjusted to reflect management’s assessment of current and future economic conditions that may impact the performance of
the borrowers, historical charge-offs, trends in loan volumes, industry concentrations including providing working capital facilities to digital media companies, the weighted average maturity of the loan
portfolio, and the likelihood of funding unfunded commitments.
When the Company determines that there is insufficient collateral to support an outstanding loan or account receivable balance and believes it is no longer probable that principal and/or interest
payments will be collected, the Company will generally place the loan on non-accrual status. When placed on non-accrual, specific allowances for credit losses are generally applied. The specific
allowance is measured based on a comparison of the recorded carrying value of the loan to the present value of the loan’s expected cash flow using the loan’s effective interest rate, the loan’s estimated
market price, or the estimated fair value of the underlying collateral, if the loan is collateral-dependent. Uncollectible receivables are charged off against the allowance at the earlier of either the
substantial completion of the liquidation of assets securing the loan, or when senior management deems the loan to be permanently impaired. Non-accrual receivables may be restored to accrual status if
past due principal and interest are paid in cash, and, in management’s judgment, are likely to continue.
North Mill Holdco LLC and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
9
Note 2: Summary of Significant Accounting Policies…continued
Allowance for credit losses…continued: The Company also maintains an allowance on unfunded commitments. The methodology for determining the allowance for unfunded commitments is
consistent with the methodology used for determining the allowance for credit losses, with the exception that the allowance is only applied against the portion of the unfunded commitment expected to be
drawn upon. At December 31, 2024, an allowance of $16,677 was recorded relating to these commitments.
Loan participations: The Company enters into participation funding arrangements with third-party lending institutions, whereby those institutions participate in loans originated by the Company. These
arrangements are used by the Company to manage risk associated with loans and accounts receivable that may potentially exceed funding limits. Transfers of financial assets are accounted for as sales
when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when: the assets have been isolated from the Company – put presumptively beyond the
reach of the transferor and its creditors, even in bankruptcy or other receivership; the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or
exchange the transferred assets; and the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to
unilaterally cause the holder to return specific assets, other than through a cleanup call.
Furniture and equipment, net: Furniture and equipment is recorded at cost and stated net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated lives
of the assets, which is generally three to five years for equipment, ten years for furniture and fixtures, and the shorter of the remaining lease term or the asset’s estimated useful life for leasehold
improvements.
Debt issuance costs: Debt issuance costs represent fees and other direct incremental costs incurred in connection with the Company’s revolving credit facility. Such costs are capitalized and recorded
as a reduction to the revolving credit facility on the accompanying consolidated balance sheets. These costs are amortized using the straight-line method into earnings as interest expense ratably over
the contractual term of the facility.
Impairment of long-lived assets: The Company reviews long-lived assets, including furniture and equipment and intangible assets, for impairment whenever events or changes in business
circumstances indicate that the carrying amount of the assets may not be fully recoverable. An impairment loss is recognized when undiscounted future cash flows expected to result from the use of the
asset and its eventual disposition is less than the carrying amount. No impairments have occurred in 2024 or 2023.
Goodwill: Goodwill represents the excess of consideration paid for an acquired business over the fair value of the related assets acquired and liabilities assumed. The Company is required to assess its
goodwill for impairment annually, or more frequently if events or changes in circumstances indicate impairment may have occurred.
The Company has elected to perform a qualitative assessment to determine if an impairment is more likely than not to have occurred. If the conclusion is supported that it is not more likely than not that
the fair value of a reporting unit is less than its carrying amount, then the Company would not need to perform a quantitative impairment test. If the conclusion cannot be supported, or if the Company
does not elect to do the qualitative assessment, then the Company will perform a quantitative assessment. If a quantitative goodwill impairment assessment is performed, the Company utilizes a
combination of market and income valuation approaches. If the fair value of a reporting unit is less than its carrying value, an impairment loss is recorded to the extent that the fair value of the reporting
unit is less than its carrying value. No impairment charge was recorded for the year ended December 31, 2024. For the year ended December 31, 2023, the Company recorded an impairment charge
totaling $16,945,000. The impairment charge was caused by the measurement of discounting cash flows of future earnings resulting in a value less than the Company’s carrying value as the estimated
growth in the loan portfolio and corresponding revenues were not sufficient to support its current carrying value.
North Mill Holdco LLC and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
10
Note 2: Summary of Significant Accounting Policies…continued
Income taxes: No provision has been made for income taxes, if any, as these are the obligation of the members. The Company files income tax returns as a partnership in the U.S. federal jurisdiction
and in various state jurisdictions.
The Company applies the provisions set forth in Accounting for Uncertainty in Income Taxes (ASC 740-10). ASC 740-10 provides a comprehensive model for the recognition, measurement and
disclosure of uncertain income tax positions. The Company recognizes the tax effect of certain tax positions when it is more likely than not that the tax position will be sustained upon examination, based
solely on the technical merits of the tax position. As of December 31, 2024, the Company does not have any uncertain tax positions that meet the recognition or measurement criteria of ASC 740-10.
Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and
expenses during the reporting period. Actual results could differ materially from those estimates.
Leases: The Company recognizes and measures its leases in accordance with FASB ASC 842, Leases. The Company is a lessee in several non-cancellable operating leases for office space. The
Company determines if an arrangement is a lease, or contains a lease, at inception of a contract and when the terms of an existing contract are changed. The Company recognizes a right- of- use (ROU)
asset and a lease liability asset, initially and subsequently, based on the present value of its future lease payments. The discount rate is the implicit rate, if it is readily determinable, or otherwise the
Company uses its incremental borrowing rate. The implicit rates of the Company’s leases are not readily determinable and accordingly, the Company uses an incremental borrowing rate based on the
information available at the commencement date for all leases. The Company’s incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an
amount equal to the lease payments under similar terms and in a similar economic environment. The ROU asset is subsequently measured throughout the lease term at the amount of the remeasured
lease liability (i.e., present value of the remaining lease payments), plus unamortized initial direct costs, plus (minus) any prepared (accrued) lease payments, less the unamortized balance of lease
incentives received, and any impairment recognized.
Subsequent events: The Company has evaluated subsequent events through February 14, 2025, the date which the financial statements were available to be issued.
Note 3. Acquisition
On September 27, 2024, the Company acquired 100% of an asset-based factoring portfolio and its related operations from Webster Bank, N.A. The total purchase price of $127,497,653 was
calculated based on the estimated average net funds employed in the acquired portfolio prior to the acquisition, plus a premium, less certain adjustments, as described in the purchase
agreement. Of the $127,497,653 purchase price, $112,925,274 was paid in cash on the closing date and the remaining $14,572,379 is deferred until 2025 and is recorded as a component of
accounts payable and accrued expenses on the accompanying consolidated balance sheet for the year ended December 31, 2024. The acquisition was accounted for as a business
combination in accordance with FASB ASC 805, Business Combinations. Accordingly, the assets acquired and liabilities assumed were recorded at their respective fair values as of the
acquisition date.
Assets Acquired
Accounts receivable
$
280,237,286
Cash
3,869,537
$
284,106,823
Liabilities Assumed
Due to factoring clients
$
154,705,288
North Mill Holdco LLC and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
11
Note 3. Acquisition…continued
The acquisition date fair value of the assets acquired less liabilities assumed was less than the purchase price. This resulted in a bargain purchase gain totaling $1,903,881, which is recorded on the
consolidated statement of operations for the year ended December 31, 2024.
Acquisition related costs totaling $1,490,294, including legal, professional and other expenses, are recorded as acquisition expenses on the consolidated statement of operations and are not included in
the purchase price.
Note 4. Fair Value of Financial Instruments
FASB ASC 820, Fair Value Measurements (“ASC 820”), establishes a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable.
Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect management’s market assumptions.
These inputs create the following fair value hierarchy:
Level 1 – Quoted prices for identical instruments in active markets.
Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, such as interest rates and foreign exchange rates that are observable at commonly quoted
intervals.
Level 3 – Unobservable inputs.
ASC 820 also requires that the Company disclose estimated fair values for its financial instruments. No quoted market exists for the Company’s financial instruments. Therefore, fair market estimates are
based on judgments, risk characteristics of various financial instruments and other factors. Changes in these assumptions could significantly affect the estimates.
Management estimates that the carrying value of cash and accrued interest receivable approximates its fair value at both December 31, 2024 and 2023. Since there is no liquid secondary market for the
Company’s financing receivables, management estimates the fair value of its secured loans by comparing the average yield of the portfolio to recent issuances of similar loans. The inputs used to
measure the fair value of secured loans and credit facility payable are considered Level 3 under the fair value hierarchy described above.
The carrying amount and estimated fair values of the Company’s financial instruments at December 31, 2024 and 2023 are as follows:
December 31, 2024
Fair Value Measurements
Carrying
Amount
Estimated
Fair Value
Level 1
Level 2
Level 3
Financial assets:
Loans receivable, net of allowance
$
166,939,597 $
166,939,597 $
- $
- $
166,939,597
Accounts receivable, net of allowance
318,561,693
318,561,693
-
-
318,561,693
Financial liabilities:
Credit facility payable, net of issuance costs
230,608,319
230,608,319
-
-
230,608,319
December 31, 2023
Fair Value Measurements
Carrying
Amount
Estimated
Fair Value
Level 1
Level 2
Level 3
Financial assets:
Loans receivable, net of allowance
$
166,218,761 $
166,218,761 $
- $
- $
166,939,597
Accounts receivable, net of allowance
104,890,582
104,890,582
-
-
104,890,582
Financial liabilities:
Credit facility payable, net of issuance costs
222,061,862
222,061,862
-
-
222,061,862
North Mill Holdco LLC and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
12
Note 5. Loans and Accounts Receivable and Allowance for Uncollected Finance Receivables
Loans receivable at December 31, 2024 and 2023 consist of revolving lines of credit to commercial customers that range from one to three years and are secured by accounts receivable, inventory and
equipment. Commitments to borrowers are dependent on the borrowing base and are generally limited to 85% of the collateral being presented.
Changes in the allowance for credit losses for loans receivable and accounts receivable are as follows:
Loans
Receivable
Accounts
Receivable
Total
Balance, December 31, 2022, prior to
adoption of ASC 326
$
1,726,973
$
107,088
$
1,834,061
Impact of adopting ASC 326 (Note 2)
896,474
188,699
1,085,173
Provision (credit) for uncollectible finance
receivables
(379,941)
(73,180)
(453,121)
Net (charge offs) recoveries
(137,722)
-
(137,722)
Balance, December 31, 2023
2,105,784
222,607
2,328,391
Provision (credit) for uncollectible finance
receivables
301,690
178,035
479,725
Net (charge offs) recoveries
53,037
-
53,037
Balance, December 31, 2024
$
2,460,511 $
400,642 $
2,861,153
The Company has implemented and adheres to an internal review system and credit loss allowance methodology designed to provide for the detection of problem receivables and an adequate allowance
to cover credit losses. At least quarterly, a risk rating is assigned to individual balances. Management assigns a higher risk rating when they determine that their credit exposure has increased.
Management assigns these risk ratings based on a number of factors including, but not limited to, the profitability, cash flow position, tangible net worth, strength of collateral performance and coverage,
the probability of a loss being realized and results of internal audits and verifications related to each specific receivable.
The Company’s credit risk rating system has nine grades, with each grade corresponding to a progressively greater risk of default. Risk ratings of (1) through (6) are performing categories and risk
ratings of (7) through (9) are non- performing categories. Non-performing credits are: a (7) rated credit has a potential weakness which, if uncorrected, may result in a deterioration of the repayment
prospects or inadequately protect the Company’s credit position at some time in the future; (8) rated credits are credits that have a well-defined weakness or weaknesses that jeopardize the full
repayment of the debt or make collection or liquidation in full highly questionable and improbable, when considering existing facts, conditions, and values. Credits rated (9) are considered uncollectible
and of such little value that their continuance as assets is not warranted.
Loans receivable that are classified as performing loans total $169,439,798 and $168,427,831 at December 31, 2024 and 2023, respectively. There were no loans receivable classified as non-performing
at December 31, 2024 and 2023.
North Mill Holdco LLC and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
13
Note 5. Loans and Accounts Receivable and Allowance for Uncollected Finance Receivables…continued
Accounts receivable that are classified as performing total $318,962,336 and $105,113,189 at December 31, 2024 and 2023, respectively. There were no accounts receivable classified as non-
performing at December 31, 2024 and 2023. The following table presents the net book value of the Company’s finance receivables as of December 31, 2024 and 2023, by year of origination, type of
receivable and risk classification.
December 31, 2024
Net Book Value of Finance Receivables by Year of Origination
2024
2023
2022
2021
Prior
Revolving
Loans
Amortized Cost
Basis
Total
Loans receivable
Performing
$
- $
- $
- $
- $
- $
169,400,107 $
169,400,107
Non-performing
-
-
-
-
-
-
-
Total loans receivable
-
-
-
-
-
169,400,107
169,400,107
Accounts receivable
Performing
$
13,173,778
70,093,043
20,234,320
9,653,964
205,807,231
-
318,962,336
Non-performing
-
-
-
-
-
-
-
Total accounts receivable
13,173,778
70,093,043
20,234,320
9,653,964
205,807,231
-
318,962,336
Total finance receivables
$
13,173,778 $
70,093,043 $
20,234,320 $
9,653,964 $
205,807,231 $
169,400,107
488,362,443
Allowance for credit losses
(2,861,153)
Finance receivables, net
$
485,501,290
December 31, 2023
Net Book Value of Finance Receivables by Year of Origination
2023
2022
2021
Prior
Revolving
Loans
Amortized Cost
Basis
Total
Loans receivable
Performing
$
- $
- $
- $
- $
168,324,545 $
168,324,545
Non-performing
-
-
-
-
-
-
Total loans receivable
-
-
-
-
168,324,545
168,324,545
Accounts receivable
Performing
8,309,198
9,549,677
16,465,555
70,788,758
-
105,113,189
Non-performing
-
-
-
-
-
-
Total accounts receivable
8,309,198
9,549,677
16,465,555
70,788,758
-
105,113,189
Total finance receivables
$
8,309,198 $
9,549,677 $
16,465,555 $
70,788,758 $
168,324,545
273,437,734
Allowance for credit losses
(2,328,391)
Finance receivables, net
$
271,109,343
The Company typically classifies all loans as held to maturity.
A finance receivable is considered non-performing when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments in accordance with
the contractual terms of the receivable. Factors considered in determining non-performing loans and accounts receivable include payment status, collateral value and the probability of collecting
payments when due. The significance of payment delays and/or shortfalls is determined on a case-by-case basis. All circumstances surrounding the receivable are taken into account. Such factors
include the length of the delinquency, the underlying reasons and the borrower’s prior payment record. These factors are considered on a receivable-by-receivable basis.
Accrued interest receivable totals $2,270,511 and $2,158,775 at December 31, 2024 and 2023 and is reported on the consolidated balance sheets. The accrual of accrued interest is in accordance with
the non-accrual policy as stated in Note 2.
The Company did not have any loans or accounts receivable that are non-performing, modified, or past due 30 days or more as of December 31, 2024 and 2023.
North Mill Holdco LLC and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
14
Note 6. Furniture and Equipment, net
Furniture and equipment consists of the following at December 31, 2024 and 2023:
December 31,
2024
2023
Furniture and fixtures
$
728,493 $
457,122
Equipment
2,097,032
2,054,073
Leasehold improvements
136,069
133,269
2,961,594
2,644,464
Less: Accumulated depreciation
(2,246,710)
(2,040,340)
$
714,884 $
604,124
Depreciation expense was $206,370 and $182,428 for the years ended December 31, 2024 and 2023 and is included as a component of General and administrative expenses on the accompanying
consolidated statements of operations.
Note 7. Credit Facility Payable
The Company has entered into a $325,307,000 credit facility which expires November 13, 2025. Borrowings are secured by substantially all of the Company’s assets. Interest on borrowings under the
facility is payable monthly and is based on the SOFR plus an applicable margin, as defined. The interest rate was 6.65 percent at December 31, 2024 and 7.69 percent at December 31, 2023.
Outstanding borrowings under the credit facility are generally limited to 85 percent of eligible receivables, less any reserves established by the bank, as defined. The Company is required to maintain
specified financial ratios and to comply with other customary covenants. The balance outstanding under this credit facility totals $231,034,349 at December 31, 2023 and $222,917,160 at December 31,
2023. The credit facility payable totaling $230,608,319 and $222,061,862 at December 31, 2024 and 2023, respectively, consists of the following:
December 31,
2024
2023
Outstanding borrowings
$
231,034,349 $
222,917,160
Less: debt issuance costs, net of accumulated amortization of $2,741,909 and
$2,227,641,
respectively
(426,030)
(855,298)
Credit facility payable, net
$
230,608,319 $
222,061,862
Total interest expense related to the credit facility totaled $15,347,341 and $14,314,816 for the years ended December 31, 2024 and 2023, respectively, and is included as a component of interest
expense on the accompanying consolidated statements of operations.
Note 8. Commitments
Employment agreements: The Company has entered into service agreements with certain members of management. Annual base compensation due under these agreements is included in
personnel expenses in the consolidated statements of operations. The annual base compensation is subject to review and adjustment by the Company. The employees are also eligible to receive
bonus compensation at the discretion of the Board of Managers. The agreements can be terminated by either the Company or the employees at any time upon written notice. Certain additional
amounts may be paid to the employees, contingent upon the circumstances surrounding the termination, as defined in the service agreements.
North Mill Holdco LLC and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2024 and 2023
15
Note 8. Commitments…continued
Operating leases: The Company rents its office space under non-cancelable operating leases that expire through 2033. A right-of-use asset and lease liability totaling $2,848,724 and $1,654,855 at
December 31, 2024 and December 31, 2023, respectively, have been recorded on the consolidated balance sheets. The increase in the right-of-use asset and lease liability during 2024 is the result of
the Company extending two of its four lease agreements. The Company’s leases have a weighted average remaining lease term of 7.49 years and a weighted average discount rate of 2.67%.
As of December 31, 2024, future minimum lease commitments under the leases include:
Operating Lease
2025
$
596,649
2026
610,186
2027
497,153
2028
295,967
2029
302,636
Thereafter
838,626
Total lease payments
3,141,217
Less: interest expense
(292,493)
Lease liability balance
$
2,848,724
Rent expense was $661,048 and $677,446 for the years ended December 31, 2024 and 2023, respectively.
Unfunded Commitments: Commitments under loan and account receivable facilities aggregated $857,952,611 at December 31, 2024, of which $369,550,477 were unfunded. Advances relating to
these unfunded commitments were limited to those facilities with available collateral which totaled $242,309,619 at December 31, 2024. At December 31, 2023, total commitments were $610,948,740, of
which $337,407,720 were unfunded. Advances relating to these unfunded commitments were limited to those facilities with available collateral and totaled $78,759,635 at December 31, 2023.
Note 9. Related Party Transactions
NMC has sold participations in various loan agreements to SLRC and its affiliates. These transactions occur in the normal course of business.
Effective July 17, 2024, NMC and SLRC entered into a subordinated revolving loan and security agreement whereby SLRC committed to provide NMC with an $8,000,000 revolving loan facility. The
facility expires on May 13, 2026. Borrowings under the facility incur interest at a rate of SOFR plus 7.00%. There were no amounts outstanding on the revolving loan facility at December 31, 2024.
Interest expense incurred on the facility totals $24,831 during the year ended December 31, 2024 and is included as a component of interest expense on the consolidated statement of operations.
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
SLR Investment Corp.:
We have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (the PCAOB), the consolidated financial statements of SLR Investment Corp. and subsidiaries (the
Company) as of December 31, 2024 and 2023, and for each of the years in the three-year period ended December 31, 2024, and our report dated February 25, 2025 expressed an unqualified opinion on those consolidated
financial statements.
We have also previously audited, in accordance with the standards of the PCAOB, the consolidated statements of assets and liabilities of the Company, including the consolidated schedules of investments, as of December
31, 2022, 2021 and 2020 and the related consolidated statements of operations, changes in net assets, and cash flows for the years ended December 31, 2021 and 2020 (none of which is presented herein), and we expressed
unqualified opinions on those consolidated financial statements.
The senior securities information included in Part II, Item 7 of the Annual Report on Form 10-K of the Company for the year ended December 31, 2024, under the caption “Senior Securities” (the Senior Securities Table),
has been subjected to audit procedures performed in conjunction with the audit of the Company’s respective consolidated financial statements. The Senior Securities Table is the responsibility of the Company’s management.
Our audit procedures included determining whether the Senior Securities Table reconciles to the respective consolidated financial statements or the underlying accounting and other records, as applicable, and performing
procedures to test the completeness and accuracy of the information presented in the Senior Securities Table. In forming our opinion on the Senior Securities Table, we evaluated whether the Senior Securities Table,
including its form and content, is presented in conformity with the instructions to Form N-2. In our opinion, the Senior Securities Table is fairly stated, in all material respects, in relation to the respective consolidated
financial statements as a whole.
/s/ KPMG LLP
New York, New York
February 25, 2025