What changed in this filing

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Item 1. Business

2024-02-29 compared with 2023-03-13 · 1047 added, 924 removed, 331 unchanged (86% of the section changed)

Kayne Anderson BDC, Inc.

was formed as a Delaware corporation to make

investments in middle-market companies and commenced operations on February 5, 2021.

was formed as a Delaware

corporation to make investments in middle-market companies and commenced operations on February 5, 2021.

We are an externally managed, closed-end, non-diversified management

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intend to qualify, annually, as a RIC under Subchapter M of the Code.

We are managed by KA Credit Advisors, LLC

(the “Advisor”) which is an indirect subsidiary of Kayne Anderson Capital Advisors, L.P.

(“KACALP” or “Kayne

The Advisor is registered with the Securities and Exchange Commission (“SEC”) as an investment advisor under

the Investment Advisory Act of 1940, as amended.

Subject to the overall supervision of the Company’s board of directors (the “Board”),

the Advisor is responsible for originating prospective investments, conducting research and due diligence investigations on potential

investments, analyzing investment opportunities, negotiating and structuring investments, determining the value of the investments and

monitoring its investments and portfolio companies on an ongoing basis.

The Board consists of seven directors, four of whom are independent.

Investment Objective and Strategy

We are a business development company (“BDC”)

that invests primarily in first lien senior secured loans, with a secondary focus on unitranche and split-lien loans to middle market

We are managed by our investment advisor KA Credit Advisors, LLC (the “Advisor”), an indirect controlled subsidiary

of Kayne Anderson Capital Advisors, L.P.

(“Kayne Anderson”), a prominent alternative investment management firm, focused on

real estate, credit, infrastructure/energy and growth capital.

Our Advisor is registered with the United States Securities and Exchange

Commission (the “SEC”) under the Investment Advisers Act of 1940, as amended (the “Advisers Act”).

We generally intend to distribute, out of assets

legally available for distribution, 90% to 100% of our available earnings, on a quarterly or annual basis, as determined by our Board

of Directors (the “Board”) in its sole discretion.

The distributions we pay to our stockholders in a year may exceed our taxable

income for that year and, accordingly, a portion of such distributions equal to such excess of distributions over taxable income may constitute

a return of invested capital for federal income tax purposes.

Such a return of capital (i.e., a distribution that represents a return

of an investor’s original investment) would be nontaxable to the stockholder and would reduce its basis in its shares.

income tax related to the portion of such distributions treated as return of capital would be deferred until any subsequent sale of shares

of common stock.

The specific tax characteristics of our distributions will be reported to stockholders after the end of the calendar

Investment Objective, Principal Strategy

and Investment Structures

Our investment objective is to generate current

income and, to a lesser extent, capital appreciation primarily through debt investments in middle-market companies.

We define “middle-market

companies” as U.S.-based companies that, in general, generate between $10 million and $150 million of annual earnings

before interest, taxes, depreciation and amortization, or EBITDA.

We refer to companies that generate between $10 million and $50 million

of annual EBITDA as “core middle-market companies” and companies that generate between $50 million and $150 million

of annual EBITDA as “upper middle-market companies.”

We intend to achieve our investment objective by investing primarily

in first lien senior secured, unitranche and split-lien loans (collectively, “secured middle market loans”) to privately held

middle-market companies.

Similar to first lien senior secured loans, unitranche loans typically have a first lien on all assets of the

borrower, but provide leverage at levels similar to a combination of first lien and second lien and/or subordinated loans.

loans are loans that otherwise satisfy the criteria of a first lien loan but which have been structured with a credit facility that is

senior in right of payment with respect to working capital assets of the borrower and a term loan that is collateralized by all other

assets of the borrower.

Depending on market conditions, we expect that at least 90% of our portfolio (including investments purchased

with proceeds from borrowings) will be invested in secured middle market loans.

It is anticipated that most of these investments will

be in core middle market companies, with the remainder in upper middle market companies.

The remaining 10% of our portfolio may be invested

in higher-returning investments, including, but not limited to, equity securities purchased in conjunction with secured middle market

loans and other opportunistic investments (collectively “Opportunistic Investments”), including junior debt, real estate debt

and infrastructure credit investments.

We expect that the secured middle market loans we invest in will generally have stated maturities

of no more than six years.

We intend to execute on our investment objective by (1) accessing

the established loan sourcing channels developed by Kayne Anderson’s middle market private credit team, which includes an extensive

network of private equity firms, other middle-market lenders, financial advisors and intermediaries, and management teams, (2) selecting

investments within our middle-market company focus, (3) implementing Kayne Anderson’s middle market private credit team’s

proven underwriting process, and (4) drawing upon the experience and resources of our Advisor’s investment team and the broader

Kayne Anderson network.

We believe our Advisor’s disciplined

approach to origination, credit analysis, portfolio construction and risk management should allow us to achieve attractive risk-adjusted

returns while preserving investor capital.

We anticipate the portfolio will be comprised of a broad mix of loans, with diversity among

investment size, industry focus and geography.

The Advisor’s team of professionals will conduct in-depth due diligence on prospective

investments during the underwriting process and will be heavily involved in structuring the credit terms of each investment.

Once an investment

has been made, our Advisor will closely monitor portfolio investments and take a proactive approach identifying and addressing sector

or company specific risks.

The Advisor maintains a regular dialogue with portfolio company management teams (as well as their financial

sponsors, where applicable), reviews detailed operating and financial results on a regular basis (typically monthly or quarterly) and

monitors current and projected liquidity needs, in addition to other portfolio management activities.

income and, to a lesser extent, capital appreciation.

Nearly all of our debt investments are in middle market companies.

We define “middle

market companies” as companies that, in general, generate between $10 million and $150 million of annual EBITDA.

Further, we refer

to companies that generate between $10 million and $50 million of annual EBITDA as “core middle market companies” and companies

that generate between $50 million and $150 million of annual EBITDA as “upper middle market companies.” We typically adjust

EBITDA for non-recurring and/or normalizing items to assess the financial performance of our borrowers over time.

We intend to achieve our investment objective

by investing primarily in first lien senior secured loans, with a secondary focus on unitranche and split-lien loans to middle market

Under normal market conditions, we expect at least 90% of our portfolio (including investments purchased with proceeds from

borrowings under credit facilities and issuance of senior unsecured notes) to be invested in first lien senior secured, unitranche and

split-lien loans.

Our investment decisions are made on a case-by-case basis.

We expect that a majority of these debt investments will

be made in core middle market companies and will generally have stated maturities of three to six years.

We expect that the loans in which

we principally invest will be to companies that have principal business activities in the United States.

The Advisor executes on our investment objective

by (1) accessing the established loan sourcing channels developed by Kayne Anderson’s middle market private credit platform (“KAPC”

or “Kayne Anderson Private Credit”), which includes an extensive network of private equity firms, other middle market lenders,

financial advisors, intermediaries and management teams, (2) selecting investments within our middle market company focus, (3) implementing

KAPC’s underwriting process and (4) drawing upon its experience and resources and the broader Kayne Anderson network.

KAPC was established

in 2011 and manages (directly and through affiliates) assets under management (“AUM”) of approximately $6.5 billion related

to middle market private credit as of December 31, 2023.

See “ Risk Factors—Risks Relating to Our Business and Structure—We

depend upon our Advisor and Administrator for our success and upon their access to the investment professionals and partners of Kayne

Anderson and its affiliates.

Any inability of the Advisor or the Administrator to maintain or develop these relationships, or the failure

of these relationships to generate investment opportunities, could adversely affect our business.”

We intend to principally invest in the following

types of debt securities:

Typically senior on a lien basis to the other liabilities in the issuer’s capital structure with a first priority

lien against substantially all assets of the borrower and often including a pledge of the capital stock of the business.

interest ranks above the security interest of second lien lenders on those assets.

These securities are typically floating rate investments

priced with a spread to the reference rate (typically SOFR);

Split-lien debt :

Typically includes (i) a first lien on fixed and intangible assets of the borrower and often including a pledge of the capital stock

of the business and (ii) a second lien on working capital assets.

Used in conjunction with an asset based lender who has a first

lien on the borrower’s working capital assets.

These securities are typically floating rate investments priced with a spread

to the reference rate (typically SOFR).

Unitranche debt :

Combines features of first lien, second lien and subordinated debt, generally in a first lien position.

These securities can generally

be thought of as first lien investments beyond what may otherwise be considered “typical” first lien leverage levels,

effectively representing a greater portion of the overall capitalization of the underlying business.

These securities are typically

structured as floating rate investments priced with a spread to the reference rate (typically SOFR).

Senior secured debt often has restrictive covenants

for the purpose of pursuing principal protection and repayment before junior creditors as covenants provide opportunities for lenders

to take action following a covenant breach.

The loans in which we principally invest have financial maintenance covenants, which require

borrowers to maintain certain financial performance criteria and financial ratios on a monthly or quarterly basis.

Subject to our Advisor’s discretion, based

on its belief about the pace and amount of investment activity in middle market companies, a portion of our portfolio may be comprised

of liquid credit investments (i.e., broadly syndicated loans).

The percentage of our portfolio allocated to the liquid investment strategy

will be at the discretion of our Advisor.

See “ Risk Factors—Risks Relating to Our Investments—We are subject to risks

associated with our investment and trading of liquid credit (i.e., broadly syndicated loans).”

Investment Portfolio

Our portfolio is currently comprised of a broad

mix of loans, with diversity among investment size and industry focus.

The Advisor’s team of professionals conducts due diligence

on prospective investments during the underwriting process and is involved in structuring the credit terms of substantially all of our

Once an investment has been made, our Advisor closely monitors portfolio investments and takes a proactive approach identifying

and addressing sector or company specific risks.

The Advisor maintains a regular dialogue with portfolio company management teams (as

well as their owners, the majority of whom are private equity firms, where applicable), reviews detailed operating and financial results

on a regular basis (typically monthly or quarterly) and monitors current and projected liquidity needs, in addition to other portfolio

management activities.

There are no assurances that we will achieve our investment objectives.

Listed below are our top ten portfolio companies

and industries represented as a percentage of total long-term investments as of December 31, 2023:

Portfolio Company

($ in millions)

Percentage of

AIDC Intermediate Co 2, LLC (Peak Technologies)

Genuine Cable Group, LLC

Trading companies & distributors

American Equipment Holdings LLC

Commercial services & supplies

IF&P Foods, LLC (FreshEdge)

Food products

BR PJK Produce, LLC (Keany)

Food products

American Soccer Company, Incorporated (SCORE)

Textiles, apparel & luxury goods

Improving Acquisition LLC

Vitesse Systems Parent, LLC

Aerospace & defense

CGI Automated Manufacturing, LLC

Trading companies & distributors

Fastener Distribution Holdings, LLC

Aerospace & defense

As a BDC, at least 70% of our assets must be the

type of “qualifying” assets listed in Section 55(a) of the 1940 Act, as described herein, which are generally privately-offered

securities issued by U.S.

private or thinly-traded companies.

We may also invest up to 30% of our portfolio opportunistically in “non-qualifying”

portfolio investments.

As of December 31, 2023, 4.8% of the Company’s total assets were in non-qualifying investments.

Market Opportunity

The universe of middle market companies consists

of nearly 200,000 potential borrowers that we believe will continue to require access to debt capital to refinance existing debt, support

growth and finance acquisitions.

Together, these businesses represent approximately one-third of the U.S.

private sector GDP making them

equivalent to the size of the third largest economy in the world on a standalone basis and employing approximately 48 million people.

middle market includes businesses held

under an array of ownership structures including publicly and privately held companies, those held in trusts, sole proprietorships, etc.

These businesses are also, broadly speaking, geographically diverse and span almost all industries.

Middle market companies outperformed

through the financial crisis (i.e., the 2007–2010 period) by adding 2.2 million jobs across major industry sectors and U.S.

demonstrating their importance to the overall health of the U.S.

More than three-quarters of middle market companies demonstrated

revenue growth in 2021 as compared to the prior year, and while the COVID rebound was not as strong as the rebound exhibited by the S&P

500 Index, the downturn also was not as severe.

Further, there is a large amount of uninvested capital held by private

equity funds focused on investing in middle market businesses.

We expect these private equity firms will continue to pursue acquisitions

and to seek to fund a portion of these transactions with debt.

We believe that our investments represent attractive

opportunities as these investments (i) generate what we believe are attractive yields (based on our Advisor’s assessment of the

relative risk profile of these investments), (ii) make interest payments to us and (iii) typically rank ahead of other debt instruments

in the borrower’s capital structure (97.1% of our portfolio consisted of first lien senior secured loans as of December 31, 2023),

as described above in “—Investment Objective, Principal Strategy and Investment Structures ”.

Long-Term Demand Drivers in the U.S.

We expect that a number of factors will continue

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future, including:

(i) primary market opportunities driven by a significant amount of unspent middle market private equity capital, (ii)

opportunities driven by a large need for the refinancing or restructuring of existing debt of healthy companies and (iii) supplemental

and growth capital opportunities.

Meanwhile, the supply of capital to middle market borrowers is relatively constrained due to (i) a long-term

regulatory trend that has nearly eliminated bank participation in leveraged finance due to stricter federal leveraged lending guidelines,

(ii) consolidation of commercial banks over the last two decades, which has caused banks to abandon the middle market as they move up-market

to service larger clients, (iii) the continued up-market movement of select competitors that historically participated in middle market

financings and which now participate mostly in upper-middle market financings as target hold-sizes have increased and (iv) direct lending

increasing share relative to broadly syndicated deals and mezzanine financings.

Further, current economic and geopolitical

concerns have created a market dislocation in certain segments of lending markets globally with a lack of available capital to finance

transaction activity.

We believe this has created a substantial enhancement of the relative risk-reward profile for non-liquid private

credit markets as an asset class, particularly for managers with a track record of investing through potentially uncertain economic times.

First, inflationary concerns in the United

States have led the U.S.

Federal Reserve to substantially increase rates, which have driven an increase in reference rates (e.g., LIBOR

or SOFR) underpinning the pricing structure of floating rate securities from under 1.0% at year-end 2021 to over 4.50% (3-month SOFR)

as of December 2022.

This increase in reference rates inures to the benefit of lenders, increasing returns to investors.

(i) the sheer scale of the U.S.

middle market and (ii) a significant amount of un-invested middle market private equity

The universe of U.S.

middle market companies (as

defined by the National Center for the Middle Market and including all businesses with revenues from $10.0 million to $1.0 billion) consists

of nearly 200,000 potential borrowers, a substantial portion of which we believe will continue to require access to debt capital to refinance

existing debt, support growth and finance acquisitions.

Together, these businesses represent approximately one-third of the U.S.

sector gross domestic product (“GDP”) making them equivalent to the size of the third largest economy in the world on a standalone

National Center for The Middle Market’s Mid-Year 2023 Middle Market Indicator ).

Private equity firms investing in these businesses

held more than $1.5 trillion in un-invested capital (“dry powder”) as of November 2023.

We expect these private equity firms

will continue to pursue acquisitions and will seek to fund a portion of these transactions with debt.

Long-Term Shift to Private, Non-Bank Financings

Middle Market

We believe that the supply of capital to middle

market borrowers and private equity firms acquiring these businesses has shifted substantially to private, non-bank lenders such as ourselves

due to (i) a long-term regulatory trend that has significantly reduced bank participation in leveraged finance due to stricter federal

leveraged lending guidelines, (ii) consolidation of commercial banks over the last two decades and (iii) direct lending increasing share

relative to broadly syndicated financings.

We believe that some of this shift away from banks and broadly syndicated financings can be

attributed to borrowers valuing specific qualities of non-bank lenders including:

(i) a focus on ongoing partnership as opposed to transactional

arrangements, (ii) more sophisticated underwriting and originations teams and (iii) a lack of reliability exhibited by banks and more

liquid market segments during periods of distress.

For instance, the number of commercial banks in

the United States decreased from 8,315 commercial banks as of December 31, 2000 to 4,136 commercial banks as of December 31, 2022.

Federal Deposit Insurance Corporation, Annual Historical Bank Data ).

In addition, the middle market leveraged-buy-out financing share

was 67.1% via syndicated markets and 32.9% via direct markets at 2014 compared to 27.7% via syndicated markets and 72.3% via direct markets

Refinitiv LPC’s 2Q ‘23 Sponsored Middle Market Private Deals Analysis – July 2023 ).

In sum, we believe there is (a) a substantial

demand for loans, and (b) a substantial marketplace shift towards private, non-bank lenders.

We anticipate that these trends should benefit

direct lenders such as ourselves.

Current Environment Favorable for Direct Lenders

Multiple factors have created what we believe

is a favorable environment for deploying capital into the private credit market which we operate.

First, inflationary concerns in the United States

have led the U.S.

Federal Reserve to substantially increase rates, which have driven an increase in reference rates, which inure to the

benefit of lenders invested in floating rate securities, increasing returns to investors.

Second, global economic considerations (e.g.,

the risk of a near-term recessionary environment) driven in part by (i) the aforementioned inflationary environment and the U.S.

Reserve’s response thereto, (ii) continued supply chain constraints globally and (iii) uncertainty associated with the Russian /

Ukrainian conflict have created an environment in which lending institutions broadly have moderated activity.

Most of this pull back has

occurred in the upper-middle and large syndicated markets.

Regardless, there has been a trickle-down effect of (a) increased opportunities

for middle-market lenders to participate in larger transactions at attractive terms and (b) a general shift toward more lender-friendly

terms inclusive of more conservative structures, increased economics and tightening of documentation.

While uncertainty associated with each of

the above factors exists, we believe that, in the hands of a team with experience managing capital through multiple historical economic

cycles, today’s climate represents an opportune time to generate attractive risk-adjusted returns relative to nearly any asset class.

In addition to commanding higher pricing, principally due to illiquidity, directly negotiated middle market financings generally provide

for more favorable terms to lenders than broadly syndicated loans, including more conservative leverage ratios, stronger covenants and

reporting packages, better call protection, and more restrictive change-of-control provisions.

The credit investments that we hold in our portfolio generate what

we believe are attractive yields, make quarterly interest payments to holders and typically rank ahead of other debt instruments in the

borrower’s capital structure.

The vast majority of our credit investments are expected to be floating rate loans, providing a natural

hedge against inflation in a higher interest rate environment.

As a result of Kayne Anderson’s middle-market private credit team’s

focus on lending at more conservative debt multiples than the broader market and to businesses that exhibit limited cyclicality, we believe

that operating results for the Company’s portfolio investments will have minimal correlation to price changes in the broader equity

This lack of correlation to the broader equity markets, combined with attractive yields on senior debt investments and downside

protection as a result of our secured middle-market loans’ seniority in such company’s capital structure, are some of the

reasons we find private credit investments to be compelling for our portfolio.

We compete with a number of BDCs and investment funds (both public

and private), commercial and investments banks, commercial financing companies and, to the extent they provide an alternative form of

financing, private equity and hedge funds.

Many of our competitors are substantially larger and have considerably greater financial and

marketing resources than we do.

We believe we are able to compete with these entities primarily on the basis of the experience and contacts

of our management team, our responsive and efficient investment analysis and decision-making processes, the investment terms we offer,

and our model of investing in companies participating in industries which we know well.

We believe that some of our competitors may make loans with interest

rates that will be lower than the rates that we offer.

We do not seek to compete solely on the interest rates that we offer to potential

the risk or perceived risk of a near-term recessionary environment) have created an environment in which lending institutions broadly

have moderated activity.

This moderation has reduced competition from traditional financing sources and created significant opportunities

for lenders in these markets.

Third, we believe that recent and potential near-to-medium-term

turbulence in the regional banking market (such as that experienced in the first half of 2023) will likely lead to further depressed participation

in commercial lending by these institutions, reducing potential competition in private markets.

Middle Market Attractiveness

We believe that lending to middle market companies

(particularly in senior-focused portions of the capital structure) presents a compelling investment opportunity.

First, senior debt investments are made at the

top of the capital structure and are repaid before unsecured creditors and equity investors.

Additionally, the types of investments in

which we participate will typically include anywhere from one to five lenders in a given debt financing thereby potentially limiting consensus

risk, which is important for swift action and potential recovery to lenders in distressed scenarios.

Second, we believe that these markets are underserved

by traditional banking sources.

We believe that this lack of financing sources leads middle market companies to offer attractive (i) economic

terms such as pricing, fees and prepayment premiums and (ii) structural terms such as stricter covenants and more fulsome collateral packages

than debt investments in public or much larger private companies.

Competitive Strengths

Our Advisor utilizes KAPC’s direct lending

platform to pursue investment opportunities.

The leadership team of KAPC has invested in the middle market across multiple platforms (e.g.,

not only as part of KAPC) and economic cycles, working directly together as a team for the better part of three decades.

This experience

over multiple decades allows KAPC to focus on transactions in markets where it has substantial experience and where it can bring its expertise

in negotiating and structuring investments.

Other specific competitive strengths of KAPC which inure to the benefit of KBDC include:

Core Middle Market Debt Platform .

We have benefited and expect to continue to benefit from our relationship with KAPC’s large direct lending platform through our

Since its inception through December 31, 2023, KAPC has deployed nearly $10.7 billion of capital across 359 investments in 181

portfolio companies.

For additional information concerning competitive risks, see “ Item 1A – Risk Factors.

Investment Advisor

Our investment activities are managed by our

Advisor, an investment advisor that is registered with the SEC under the Investment Advisers Act of 1940, as amended (the “Advisers

Act”), under an investment advisory agreement between us and the Advisor (the “Investment Advisory Agreement”).

Advisor is responsible for originating prospective investments, conducting research and due diligence investigations on potential investments,

analyzing investment opportunities, negotiating and structuring investments and monitoring our investments and portfolio companies on

an ongoing basis.

While we do not have any employees, the Advisor and its affiliates have a team of approximately 41 investment professionals

who are primarily focused on private credit investments and liquid credit investments.

The investment team is supported by a team of finance,

legal, compliance, operations and administrative professionals.

The Advisor’s investment committee has overall responsibility

for evaluating and approving the Company’s investments, and its portfolio allocations, subject to the oversight of our Board of

The investment committee review process is intended to bring the diverse experience and perspectives of the investment committee

members to the analysis and consideration of every investment.

Our Advisor (or an affiliate thereof) has been lead agent or co-agent in approximately 75% of investments since the

inception of KAPC.

Experienced Credit Investors with Long Track

Core middle market direct lending is led by Ken Leonard (Co-CEO of the Company), Doug Goodwillie (Co-CEO of the Company) and

Andy Marek (Managing Partner of KAPC), who have a combined 90+ years of lending experience, having collectively completed transactions

representing over $15.0 billion in underwritten middle market loan commitments across multiple credit cycles since 2000.

These three individuals

are primarily responsible for the day-to-day operations of KAPC and have worked together directly since 2002 while Ken Leonard and Andy

Marek have worked together since the late 1980’s.

Ken Leonard and Doug Goodwillie are primarily responsible for the day-to-day operations

The Advisor’s investment committee consists

of four members (Terry Quinn, Paul Blank, Doug Goodwillie and Ken Leonard) with average experience in credit investing in excess of 30

The Advisor’s investment committee has overall responsibility for evaluating and unanimously approving the Company’s

investments and portfolio allocations, subject to the oversight of our Board.

Sourcing Advantage and Well-Established Direct

Relationship Model.

We believe that KAPC’s relationship-based sourcing model provides strong access to proprietary transaction

flow, allowing us to be highly selective in the transactions that we pursue.

For the period 2021 through June 30, 2023, approximately

66% of opportunities sourced by our Advisor and 86% of opportunities executed by our Advisor were done so without the presence of a financial

intermediary, a fact pattern placing specific emphasis on long-term relationships, reputation and certainty of execution with transaction

counterparties.

Importantly, we believe (based on KAPC’s experience) that our existing portfolio will continue to be an engine of

new investment opportunities and will support investment flows even when broader M&A markets may have slowed.

We believe that our direct sourcing model creates

repeat business and sticky relationships.

Under this model, since inception, (i) greater than 90% of KAPC’s investments are in companies

sponsored by private equity firms (approximately 99% of the Company’s investments as of December 31, 2023), (ii) approximately 56%

of KAPC’s investments were made with repeat private equity sponsors and (iii) nearly 100 private equity sponsors have partnered

with KAPC to provide debt financing to their portfolio companies.

Focus on Investing in Core Middle Market .

With extensive market knowledge and experience, we believe we are well positioned to capitalize on the current market conditions in which

many middle market companies and private equity sponsors need trusted sources of financing.

Value-Lending Philosophy .

avoid high-growth markets as, in our management’s experience, that growth profile attracts substantial capital formation and, in

turn, new competition, leading to the potential for longer-term uncertainty and industry upheaval.

Disciplined Diligence Processes, Regimented

Portfolio Monitoring and Active Management .

Our Advisor completes substantial hands-on diligence throughout its investment process,

which is centered around addressing a potential portfolio company’s industry trends, competitive dynamics, customer base, economic

drivers, historical financial performance, financial projections, other factors such as legal and environmental assessments as well as

the strengths and weaknesses of management and / or the private equity sponsor or ownership.

We target a lead or co-lead agent role in

a majority of our investments (KAPC has been lead or co-lead agent in approximately 75% of investments since inception), typically enabling

us to lead the diligence, documentation and workout processes.

Since inception, KAPC has reported realized loss rates of approximately

0.1% of average outstanding investments on an annualized basis.

We compete with a number of BDCs and investment

funds (both public and private), commercial and investments banks, commercial financing companies and, to the extent they provide an alternative

form of financing, private equity and hedge funds.

Many of our competitors are substantially larger and have considerably greater financial

and marketing resources than we do.

We believe we are able to compete with these entities primarily on the basis of the experience and

contacts of our management team, our responsive and efficient investment analysis and decision-making processes, the investment terms

we offer, and our model of investing in companies participating in industries which we know well.

We believe that some of our competitors may

make loans with interest rates that will be lower than the rates that we offer.

We do not seek to compete solely on the interest rates

that we offer to potential portfolio companies.

For additional information concerning competitive risks, see “ Item 1A –

Risk Factors.

Corporate Structure

We are a Delaware corporation

and commenced operations on February 5, 2021.

The following chart depicts our ownership structure:

From time to time we may

form wholly-owned subsidiaries to facilitate our normal course of business investing activities.

Kayne Anderson, Kayne Anderson Private Credit

and The Advisor

Kayne Anderson

Founded in 1984, Kayne Anderson is a prominent

alternative investment management firm which is registered with the SEC under the Advisers Act, focused on real estate, credit, infrastructure/energy

and growth capital.

Kayne Anderson provides corporate and management services (such as information technology, human resources, compliance

and legal services) to the Advisor.

As of December 31, 2023, investment vehicles managed

or advised by Kayne Anderson had over $34 billion in assets under management (“AUM”) for institutional investors, family offices,

high net worth and retail clients.

Kayne Anderson has over 330 professionals located across five offices across the U.S.

approximately 140 investment professionals, approximately 35 of which are dedicated to credit investing.

Kayne Anderson Private Credit

KAPC is Kayne Anderson’s line of business

focused on private credit that operates various fund vehicles targeting middle market first lien senior secured, unitranche, and split-lien

KAPC was established in 2011 and manages (indirectly through affiliates) AUM of approximately $6.5 billion related to middle

market private credit as of December 31, 2023.

KAPC’s integrated and scaled platform combines

direct loan origination, strong fundamental credit analysis and relative-value perspective.

The Advisor – KA Credit Advisors,

Our investment activities are managed by our Advisor,

an indirect controlled subsidiary of Kayne Anderson, and the Advisor operates within KAPC’s line of business.

The Advisor is an

investment advisor registered with the SEC under the Advisers Act pursuant to the Investment Advisory Agreement.

In accordance with the

Advisors Act, our Advisor is responsible for originating prospective investments, conducting research and due diligence investigations

on potential investments, analyzing investment opportunities, negotiating and structuring investments and monitoring our investments and

portfolio companies on an ongoing basis.

The Advisor benefits from the scale and resources of Kayne Anderson and specifically KAPC.

The Advisor executes on our investment objective

by (1) accessing the established loan sourcing channels developed by KAPC, which includes an extensive network of private equity firms,

other middle market lenders, financial advisors, intermediaries and management teams, (2) selecting investments within our middle market

company focus, (3) implementing KAPC’s underwriting process and (4) drawing upon its experience and resources and the broader Kayne

Anderson network.

The Advisor’s investment committee has overall

responsibility for evaluating and unanimously approving the Company’s investments, and its portfolio allocations, subject to the

oversight of our Board.

The investment committee review process is intended to bring the diverse experience and perspectives of the investment

committee members to the analysis and consideration of every investment.

The investment committee currently consists of Terrence J.

Chairman of Kayne Anderson;

Vice Chairman of Kayne Anderson;

Blank, President and Chief Operating Officer of Kayne Anderson;

Baker, Jr., Co-Head of

Liquid Energy Infrastructure at Kayne Anderson;

Goodwillie, Co-Head of Private Credit at Kayne Anderson;

Goodwillie, Co-Head

of Private Credit at Kayne Anderson;

and Kenneth B.

Leonard, Co-Head of Private Credit at Kayne Anderson.

The investment committee also determines appropriate investment sizing

and mandates ongoing monitoring requirements.

The investment committee also

determines appropriate investment sizing and mandates ongoing monitoring requirements.

Goodwillie and Kenneth B.

Leonard, each a Co-Chief Investment Officer

of the Company, are jointly and primarily responsible for the day-to-day management of the Company’s portfolio.

In addition to reviewing investments, the

investment committee meetings serve as a forum to discuss credit views and outlooks.

The investment committee also reviews potential

transactions and deal flow on a regular basis.

Members of the deal team are encouraged to share information and views on credit with

the committee early in their analysis.

We believe this process improves the quality of the analysis and enables deal team members to

work more efficiently.

The Administrator

Our Advisor also serves as our administrator.

Pursuant to an administration

agreement (the “Administration Agreement”), our Administrator is responsible for providing or overseeing the performance of

our required administrative services and professional services rendered by others, which will include (but not limited to), accounting,

payment of our expenses, legal, compliance, operations, technology and investor relations, preparation and filing of our tax returns,

and preparation of financial reports provided to our stockholders and filed with the SEC.

About Kayne Anderson Capital Advisors,

Founded in 1984, Kayne Anderson is a leading

alternative investment management firm which is registered with the SEC under the Advisers Act, focused on real estate, credit, infrastructure/energy,

renewables and growth capital.

Kayne Anderson’s investment philosophy is to pursue niches, with an emphasis on cash flow, where

its knowledge and sourcing advantages enable it to deliver above average, risk-adjusted investment returns.

As responsible stewards of

capital, Kayne Anderson’s investment philosophy extends to promoting responsible investment practices and sustainable business practices

to create long-term value for its investors.

As of December 31, 2022, investment vehicles managed or advised

by Kayne Anderson had over $32 billion in assets under management for institutional investors, family offices, high net worth and

retail clients.

Kayne Anderson has 335 professionals located across five offices across the U.S.

The firm has approximately 140 investment

professionals, 41 of which are dedicated to credit investing.

Kayne Anderson’s credit platform operates

various fund vehicles that pursue investment opportunities across several investment strategies.

As of December 31, 2022, the platform

managed over $9 billion in credit assets across three main strategies:

middle-market private credit (targeting senior secured loans, unitranche

loans and opportunistic credit investments),

liquid credit (investing in broadly syndicated leveraged loans and

high yield bonds), and

real estate private credit (targeting debt investments secured by real

estate assets).

This integrated and scaled platform combines

direct origination, strong fundamental credit analysis and relative-value perspective.

Leonard, each

a Co-Chief Executive Officer of the Company, are jointly and primarily responsible for the day-to-day management of the Company’s

In addition to reviewing investments, the investment

committee meetings serve as a forum to discuss credit views and outlooks.

The investment committee also reviews potential transactions

and deal flow on a regular basis.

Members of the investment team are encouraged to share information and views on credit with the committee

early in their analysis.

We believe this process improves the quality of the analysis and enables investment team members to work more

We make investments alongside certain entities

and accounts advised by our Advisor and its affiliates.

Under the 1940 Act, we are prohibited from knowingly participating in certain

joint transactions with our affiliates without the prior approval of the independent directors and, in some cases, prior approval by the

However, we generally make investments alongside affiliated entities and accounts pursuant to exemptive relief granted by the SEC

to us, our Advisor, and certain of our affiliates on August 10, 2023.

Pursuant to such exemptive relief, and subject to certain conditions,

we are permitted to co-invest in the same security with our affiliates in a manner that is consistent with our investment objective, investment

strategy, regulatory consideration and other relevant factors.

If opportunities arise that would otherwise be appropriate for us and an

affiliate to purchase different securities in the same issuer, our Advisor will need to decide which account will proceed with such investment.

Our Advisor’s investment allocation policy incorporates the conditions of exemptive relief to seek to ensure that investment opportunities

are allocated in a manner that is fair and equitable.

See “ Risk Factors — Risks Relating to Our Business and Structure

— We generally may make investments that could give rise to a conflict of interest and our ability to enter into transactions with

our affiliates will be restricted .”

The principal executive offices of our Advisor

are located at 717 Texas Avenue, Suite 2200, Houston, Texas, 77002.

Private Offerings

We conduct private offerings of our Common

Stock to investors in reliance on exemptions from the registration requirements of the Securities Act of 1933, as amended (the “Securities

At the closing of any private offering, each investor will make a capital commitment (a “Capital Commitment”)

to purchase shares of our Common Stock (“Shares”) pursuant to a subscription agreement (the “Subscription Agreement”)

We conduct private offerings

of our Common Stock to investors in reliance on exemptions from the registration requirements of the Securities Act of 1933, as amended

(the “Securities Act”).

At the closing of any private offering, each investor will make a capital commitment (a “Capital

Commitment”) to purchase shares of our common stock pursuant to a subscription agreement (the “Subscription Agreement”)

entered into with us.

Investors will be required to fund drawdowns to purchase Shares up to the amount of their respective Capital Commitments

each time we deliver a notice to the investors.

All purchases will generally be made pro rata in accordance with the investors’

Capital Commitments, at a per-Share price as determined by our Board of Directors as of a date that is immediately prior to

the date of the applicable drawdown.

The per-Share price will be at least equal to net asset value, or NAV, per share in accordance

with the limitations under Section 23 of the 1940 Act.

Following our initial closing of the private

offering on February 5, 2021 (the “Initial Closing”) and prior to any Liquidity Event (as defined below), our investment

adviser may, in its sole discretion, permit additional closings of the private offering.

A “Liquidity Event” is defined as

(a) an initial public offering of our Shares (the “Initial Public Offering”) or the listing of our Shares on an exchange

(together with the Initial Public Offering, an “Exchange Listing”), (b) the sale of the Company or (c) a disposition

of the Company’s investments and distribution of the net proceeds (after repayment of borrowed funds or other forms of leverage)

to the Company’s investors.

Our initial private offering of Shares was

conducted in reliance on Regulation D under the Securities Act (“Regulation D”).

Investors in our initial private offering

were required to be “accredited investors” as defined in Regulation D of the Securities Act.

The criteria required of Regulation

D may not apply to investors in subsequent offerings.

We are targeting approximately $900 million in commitments, which

may be more or less than this amount (the “Initial Capital Raise”), and we intend to complete this offering in 2023.

our Initial Closing, each investor was required to make purchases of Shares (each, a “Catch-up Purchase”) on one

or more dates to be determined by us.

The aggregate purchase amount of any Catch-up Purchase will be equal to an amount necessary

to ensure that, upon payment of the aggregate purchase amount, such investor will have contributed the same percentage of its Capital

Commitment to us as all investors whose subscriptions were accepted at previous closings.

Catch-up Purchases will be made at

a per-Share price as determined by our Board of Directors prior to the date of the applicable drawdown, or such other date as

may be required to comply with the provisions of the 1940 Act.

In order to more fairly allocate organizational expenses among all of our

stockholders, investors subscribing after the initial drawdown will be required to pay a price per Share above net asset value reflecting

a variety of factors, including, without limitation, the total amount of our organizational and other expenses.

As of March 9, 2023, we had entered into subscription

agreements with investors for an aggregate capital commitment of $832.3 million to purchase shares of common stock ($264.6 million is

Investors will be required to fund drawdowns to purchase shares of common stock up to the amount of their respective

Capital Commitments each time we deliver a notice to the investors.

All purchases will generally be made pro rata in accordance with the

investors’ Capital Commitments, at a per-share price as determined by our Board of Directors as of a date that is immediately

prior to the date of the applicable drawdown.

The per-share price will be at least equal to net asset value, or NAV, per share

in accordance with the limitations under Section 23 of the 1940 Act.

Following our initial closing of the private offering on February 5,

2021 (the “Initial Closing”) and prior to any Liquidity Event (as defined below), our investment adviser may, in its sole

discretion, permit additional closings of the private offering.

A “Liquidity Event” is defined as (a) an initial public

offering of our shares of common stock (the “Initial Public Offering”) or the listing of our shares of common stock on an

exchange (together with the Initial Public Offering, an “Exchange Listing”), (b) the sale of the Company or (c) a disposition

of the Company’s investments and distribution of the net proceeds (after repayment of borrowings under credit facilities and issuances

of senior unsecured notes) to the Company’s investors.

Our initial private offering

of shares of common stock was conducted in reliance on Regulation D under the Securities Act (“Regulation D”).

our initial private offering were required to be “accredited investors” as defined in Regulation D of the Securities Act.

The criteria required of Regulation D may not apply to investors in subsequent offerings.

Following our Initial

Closing, each investor was required to make purchases of shares of common stock (each, a “Catch-up Purchase”) on

one or more dates to be determined by us.

The aggregate purchase amount of any Catch-up Purchase will be equal to an amount

necessary to ensure that, upon payment of the aggregate purchase amount, such investor will have contributed the same percentage of its

Capital Commitment to us as all investors whose subscriptions were accepted at previous closings.

Catch-up Purchases will be

made at a per-share price as determined by our Board of Directors prior to the date of the applicable drawdown, or such other

date as may be required to comply with the provisions of the 1940 Act.

In order to more fairly allocate organizational expenses among

all of our stockholders, investors subscribing after the initial drawdown will be required to pay a price per share above net asset value

reflecting a variety of factors, including, without limitation, the total amount of our organizational and other expenses.

On December 5, 2023, the Company completed its final close of subscription

agreements with investors.

As of February 22, 2024, we had entered into subscription agreements with investors for an aggregate capital

commitment of $1.047 billion to purchase shares of common stock ($269.9 million is undrawn).

We conducted the following private offerings

of our common stock associated with these subscription agreements during the year ended December 31, 2023.

Capital call notice date

Capital notice date

Common Stock issue date

shares issued

($ in millions)

January 13, 2022

January 24, 2022

July 12, 2022

March 23, 2023

April 4, 2023

July 28, 2023

October 20, 2022

October 31, 2022

November 28, 2022

December 9, 2022

August 8, 2023

Total common stock issued

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Upon the earlier of (a) December

2024 or (b) an Exchange Listing (the “Commitment Period”), investors will be released from any further obligation to

purchase additional Shares with respect to a Capital Commitment.

If we have not otherwise completed an Exchange Listing by December

31, 2024, we may, subject to shareholder approval, extend the Commitment Period by an additional two years.

During the Commitment Period,

no investor will be permitted to sell, assign, transfer or otherwise dispose of its Shares or Capital Commitment unless we provide our

prior written consent and the transfer is otherwise made in accordance with applicable law.

Once we have completed the Exchange Listing,

each investor will be released from any further obligation to purchase additional Shares with respect to a Capital Commitment.

have not otherwise completed an Exchange Listing and the Commitment Period has ended (including extensions, if any), each investor will

be released from any further obligation to purchase additional Shares with respect to a Capital Commitment, except to the extent necessary

to (a) pay our expenses, including management fees, any amounts that may become due under any borrowings or other financings or

similar obligations and any other liabilities, contingent or otherwise, in each case to the extent they relate to the Commitment Period,

(b) complete investments in any transactions for which there are binding written agreements as of the end of the Commitment Period

(including investments that are funded in phases), (c) fund follow-on investments made in existing portfolio companies that,

in the aggregate, do not exceed 20% of total commitments, (d) fund obligations under any guarantee or indemnity made by us during

the Commitment Period and/or (e) fund any defaulted commitments.

31, 2024 or (b) an Exchange Listing (the “Commitment Period”), investors will be released from any further obligation

to purchase additional shares of common stock with respect to a Capital Commitment.

If we have not otherwise completed an Exchange

Listing by December 31, 2024, we may, subject to shareholder approval, extend the Commitment Period by an additional two years.

the Commitment Period, no investor will be permitted to sell, assign, transfer or otherwise dispose of its shares of common stock or Capital

Commitment unless we provide our prior written consent and the transfer is otherwise made in accordance with applicable law.

Once we have completed

the Exchange Listing, each investor will be released from any further obligation to purchase additional shares of common stock with respect

to a Capital Commitment.

If we have not otherwise completed an Exchange Listing and the Commitment Period has ended (including extensions,

if any), each investor will be released from any further obligation to purchase additional shares of common stock with respect to a Capital

Commitment, except to the extent necessary to (a) pay our expenses, including management fees, any amounts that may become due under

any borrowings or other financings or similar obligations and any other liabilities, contingent or otherwise, in each case to the extent

they relate to the Commitment Period, (b) complete investments in any transactions for which there are binding written agreements

as of the end of the Commitment Period (including investments that are funded in phases), (c) fund follow-on investments made

in existing portfolio companies that, in the aggregate, do not exceed 20% of total commitments, (d) fund obligations under any guarantee

or indemnity made by us during the Commitment Period and/or (e) fund any defaulted commitments.

As part of certain credit facilities, the

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Our term is perpetual.

However, we intend to seek an Exchange Listing

after we have substantially invested the proceeds from our Initial Capital Raise and as soon as market conditions warrant.

not consummated an Exchange Listing or some other type of Liquidity Event by December 31, 2026, our Board of Directors (to the extent

consistent with its fiduciary duties and subject to any necessary stockholder approvals and applicable requirements of the 1940 Act) will

direct the Company to cease making new investments and will direct the Advisor to commence the orderly disposition of investments (the

“Wind Down Period”).

The Company shall be allowed to make follow-on investments during the Wind Down Period if such

investments are approved by our Board of Directors, subject to the 20% limit that applies after the Commitment Period.

Existing investments

will be disposed of in an orderly manner and the proceeds of such dispositions promptly distributed to the Company’s investors or

used to satisfy any amounts owed under any borrowed funds or other forms of leverage (the “Company Liquidation”).

If any investments

made by the Company are also investments made by any other investment account managed by the Advisor or any affiliate of the Advisor,

such investments shall be disposed of at the same time and on the same terms as such other investment account.

However, we intend to seek an Exchange Listing after we have substantially invested the proceeds from our Initial Capital Raise and as

soon as market conditions warrant.

If we have not consummated an Exchange Listing or some other type of Liquidity Event by December 31,

2026, our Board of Directors (to the extent consistent with its fiduciary duties and subject to any necessary stockholder approvals and

applicable requirements of the 1940 Act) will direct the Company to cease making new investments and will direct the Advisor to commence

the orderly disposition of investments (the “Wind Down Period”).

The Company shall be allowed to make follow-on investments

during the Wind Down Period if such investments are approved by our Board of Directors, subject to the 20% limit that applies after the

Commitment Period.

Existing investments will be disposed of in an orderly manner and the proceeds of such dispositions promptly distributed

to the Company’s investors or used to satisfy any amounts owed under any borrowings under credit facilities and issuances of senior

unsecured notes (the “Company Liquidation”).

If any investments made by the Company are also investments made by any other

investment account managed by the Advisor or any affiliate of the Advisor, such investments shall be disposed of at the same time and

on the same terms as such other investment account.

Shareholder Agreements

We entered into several agreements (collectively, the “Shareholder

Agreements”) with investors who participate in our private offering during our Initial Capital Raise (each an “Initial Investor”).

The Initial Investors are granted the right to invest in our investment advisor.

Upon completion of our Initial Capital Raise, we anticipate

that the initial investors will own approximately 34.5% of our investment advisor.

We entered into several

agreements (collectively, the “Shareholder Agreements”) with investors who participate in our private offering during our

Initial Capital Raise (each an “Initial Investor”).

The Initial Investors are granted the right to invest in our Advisor.

Upon the completion of our Initial Capital Raise, investors own approximately 39% of our Advisor.

Investment Advisory Agreement

On February 5, 2021, we entered into the Investment Advisory Agreement

with our Advisor.

Pursuant to the Investment Advisory Agreement with our Advisor, we will pay our Advisor a fee for investment advisory

and management services consisting of two components — a base management fee and an incentive fee.

Our Advisor may, from time-to-time,

grant waivers on our obligations, including waivers of the base management fee and/or incentive fee, under the Investment Advisory Agreement.

The Investment Advisory Agreement may be terminated by either party with 60 days’ written notice.

On November 8, 2022, the Board

of Directors extended the term of the Investment Advisory Agreement until March 15, 2023.

On February 5, 2021, we entered into an Investment

Advisory Agreement with our Advisor.

Pursuant to the Investment Advisory Agreement, we pay our Advisor a fee for investment advisory and

management services consisting of two components—a base management fee and an incentive fee.

The Advisor may, from time-to-time,

grant waivers on our obligations, including waivers of the base management fee and/or incentive fee, pursuance to Section 3(c) of the

Investment Advisory Agreement.

Any base management fee or incentive fee so waived will not be subject to recoupment by the Advisor.

Investment Advisory Agreement may be terminated by either party with 60 days’ written notice.

On March 7, 2023, our Board approved

a one-year renewal of the Investment Advisory Agreement through March 15, 2024.

Base Management Fee

Prior to an Exchange Listing, the base management

fee is calculated at an annual rate of 0.90% of the fair market value of our investments including, in each case, assets purchased with

borrowed funds or other forms of leverage, but excluding cash, U.S.

government securities and commercial paper instruments maturing within

one year of purchase.

After an Exchange Listing, the base management fee will be calculated at an annual rate of 1.50% of the

fair market value of our investments.

However, following an Exchange Listing, if borrowed funds or other forms of leverage utilized to

finance our investments is greater than a debt-to-equity ratio of 1.0x, the base management fee will be 1.00% of

the fair market value of the portion of our investments financed with borrowed funds or other forms of leverage above a 1.0x debt-to-equity ratio.

For services rendered under the Investment

Advisory Agreement, the base management fee is payable quarterly in arrears and calculated based on the average value, at the end of

the two most recently completed calendar quarters, of our fair market value of investments, including, in each case, assets purchased

with borrowed funds or other forms of leverage, but excluding cash, U.S.

government securities and commercial paper instruments maturing

within one year of purchase.

Prior to an Exchange

Listing, the base management fee is calculated at an annual rate of 0.90% of the fair market value of our investments including, in each

case, assets purchased with borrowings under credit facilities and issuances of senior unsecured notes, but excluding cash, U.S.

securities and commercial paper instruments maturing within one year of purchase.

For services rendered

under the Investment Advisory Agreement, the base management fee is payable quarterly in arrears and calculated based on the average value,

at the end of the two most recently completed calendar quarters, of our fair market value of investments, including, in each case, assets

purchased with borrowings under credit facilities and issuances of senior unsecured notes, but excluding cash, U.S.

government securities

and commercial paper instruments maturing within one year of purchase.

Base management fees for any partial quarter are appropriately pro-rated.

Incentive Fee

We will also pay the

Advisor an incentive fee.

The incentive fee will consist of two parts—an incentive fee on income and an incentive fee on capital

Described in more detail below, these components of the incentive fee will be largely independent of each other with the result

that one component may be payable even if the other is not.

Incentive Fee on

The incentive fee based

on income (the “income incentive fee”) is determined and paid quarterly in arrears in cash.

Our quarterly pre-incentive fee

net investment income must exceed a preferred return of 1.50% of the our NAV at the end of the immediately preceding calendar quarter

(6.0% annualized but not compounded) (the “Hurdle Amount”) in order for us to receive an income incentive fee.

incentive fee is calculated as follows:

Prior to an Exchange Listing :

100% of our pre-incentive fee

net investment income for the immediately preceding calendar quarter in excess of 1.50% of our NAV at the end of the immediately

preceding calendar quarter until the Advisor has received 10% of the total pre-incentive fee net income for that calendar quarter

and, for pre-incentive fee net investment income in excess of 1.6667%, 10% of all remaining pre-incentive fee net

investment income for that quarter.

After an Exchange Listing :

100% of our pre-incentive fee

net investment income for the immediately preceding calendar quarter in excess of 1.50% of our NAV at the end of the immediately

preceding calendar quarter until the Advisor has received 15% of the total pre-incentive fee net income for that calendar

quarter and, for pre-incentive fee net investment income in excess of 1.7647%, 15% of all remaining pre-incentive fee

net investment income for that quarter.

The following are graphical

representations of the calculations of the income incentive fee:

We will also pay the Advisor an incentive

The incentive fee will consist of two parts—an incentive fee on income and an incentive fee on capital gains.

more detail below, these components of the incentive fee will be largely independent of each other with the result that one component

may be payable even if the other is not.

Incentive Fee on Income

The incentive fee based on income (the “income

incentive fee”) is determined and paid quarterly in arrears in cash (subject to the limitations described in “ Payment of

Incentive Fees ” below).

Our quarterly pre-incentive fee net investment income must exceed a return of 1.50% of our net asset

value (“NAV”) at the end of the immediately preceding calendar quarter (6.0% annualized but not compounded) (the “Hurdle

Amount”) in order for us to receive an income incentive fee.

Prior to an Exchange Listing, the income incentive fee is calculated

100% of our pre-incentive fee net investment income for the immediately preceding calendar quarter in excess of

1.50% of our NAV at the end of the immediately preceding calendar quarter until the Advisor has received 10% of the total pre-incentive

fee net income for that calendar quarter and, for pre-incentive fee net investment income in excess of 1.6667%, 10% of all remaining

pre-incentive fee net investment income for that quarter.

The following is a graphical representation

of the calculations of the income incentive fee:

Quarterly Incentive

2 unchanged sentences

Prior to an Exchange

as a percentage of the value of net assets)

(expressed as a percentage

of the value of net assets)

Pre-Incentive Fee Net Investment Income

Quarterly Incentive Fee

Incentive Fee on

Pre-Incentive Fee

Net Investment Income

to an Exchange Listing

as a percentage of the value of net assets)

Pre-incentive fee net investment income

Quarterly Incentive Fee

Pre-incentive fee net investment income is defined as interest

income, dividend income and any other cash or non-cash income accrued during the calendar quarter, minus operating expenses

for the quarter, including the base management fee, expenses payable under the Administration Agreement, any interest expense and distributions

paid on any issued and outstanding debt or preferred stock, but excluding the incentive fee.

Pre-incentive fee net investment

income does not include any expense support payments and/or any reimbursement by us of expense support payments, nor any realized capital

gains, realized capital losses or unrealized capital appreciation or depreciation.

Incentive Fee on

Capital Gains

The incentive fee on

capital gains (the “capital gains incentive fee”) will be calculated and payable in arrears in cash as follows:

Prior to an Exchange Listing :

10% of our realized capital gains, if any, on a cumulative basis from formation through the earlier

of (a) the day before an Exchange Listing, (b) upon consummation of a Liquidity Event or (c) upon

the termination of the Investment Advisory Agreement, computed net of all realized capital losses and

unrealized capital depreciation on a cumulative basis.

For the purpose of computing the capital gain

incentive fee, the calculation methodology will look through derivative financial instruments or swaps

as if we owned the reference assets directly.

After an Exchange Listing :

15% of our realized capital gains,

if any, on a cumulative basis from formation through the end of a given calendar year or upon termination of the Investment Advisory

Agreement, 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.

Payment of Incentive

is defined as interest income, dividend income and any other cash or non-cash income accrued during the calendar quarter, minus

operating expenses for the quarter, including the base management fee, expenses payable under the Administration Agreement, any interest

expense and distributions paid on any issued and outstanding debt or preferred stock, but excluding the incentive fee.

Pre-incentive fee

net investment income does not include any

realized capital gains, realized capital losses or unrealized capital appreciation or depreciation.

Incentive Fee on Capital Gains

Prior to an Exchange

Listing, any incentive fees earned by the Advisor shall accrue as earned but only become payable in cash to the Advisor upon consummation

of an Exchange Listing.

To the extent we do not complete an Exchange Listing, the incentive fees will be payable to the Advisor (a) upon

consummation of a sale of us or (b) once substantially all the proceeds from our Liquidation payable to our stockholders have been

distributed to such stockholders.

Listing, the incentive fee on capital gains (the “capital gains incentive fee”) will be calculated and payable in arrears

in cash as follows:

10% of our realized capital gains, if any, on a cumulative basis from formation through the earlier of (a) the

day before an Exchange Listing, (b) upon consummation of a Liquidity Event or (c) upon the termination of the Investment Advisory

Agreement, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis.

For the purpose of computing

the capital gain incentive fee, the calculation methodology will look through derivative financial instruments or swaps as if we owned

the reference assets directly.

Payment of Incentive Fees

Prior to an Exchange Listing, any incentive

fees earned by the Advisor shall accrue as earned but only become payable in cash to the Advisor upon consummation of an Exchange Listing.

As of December 31, 2023, the Company had incurred incentive fees of $14.2 million that will become payable upon consummation of an Exchange

To the extent we do not complete an Exchange Listing, the incentive fees will be payable to the Advisor (a) upon consummation

of a sale of us or (b) once substantially all the proceeds from our Liquidation payable to our stockholders have been distributed

to such stockholders.

Administration Agreement

On February 5, 2021, we entered into an Administration Agreement

with our Advisor, which will serve as our Administrator and will provide or oversee the performance of our required administrative services

and professional services rendered by others, which will include (but not limited to), accounting, payment of our expenses, legal, compliance,

operations, technology and investor relations, preparation and filing of our tax returns, and preparation of financial reports provided

to our stockholders and filed with the SEC.

On November 8, 2022, the Board of Directors extended the term of the Administration Agreement

until March 15, 2023.

We reimburse the Administrator for its costs and expenses incurred

in performing its obligations under the Administration Agreement, which may include, after completion of our Exchange Listing, our allocable

portion of office facilities, overhead, and compensation paid to or compensatory distributions received by our officers (while not currently

doing so, including our Chief Compliance Officer and Chief Financial Officer) and their respective staff who provide services to us.

we reimburse the Administrator for its expenses, we will indirectly bear such cost.

The Administration Agreement may be terminated by

either party with 60 days’ written notice.

Our Administrator engaged U.S.

Global Fund Services under a sub-administration agreement to assist the Administrator in performing certain of its

administrative duties.

The Administrator may enter into additional sub-administration agreements with third-parties to perform other

administrative and professional services on behalf of the Administrator.

On February 5, 2021, we entered into an administration

agreement the (“Administration Agreement”) with its Advisor, which serves as its administrator (the “Administrator”)

and will provide or oversee the performance of its required administrative services and professional services rendered by others, which

will include (but are not limited to), accounting, payment of our expenses, legal, compliance, operations, technology and investor relations,

preparation and filing of its tax returns, and preparation of financial reports provided to its stockholders and filed with the SEC.

March 7, 2023, the Board approved a one-year renewal of the Administration Agreement through March 15, 2024.

We will reimburse the Administrator for its costs

and expenses incurred in performing its obligations under the Administration Agreement, which may include its allocable portion of office

facilities, overhead, and compensation paid to or compensatory distributions received by its officers (including our Chief Compliance

Officer and Chief Financial Officer) and its respective staff who provide services to the Company.

As the Company reimburses the Administrator

for its expenses, such costs (including the costs of sub-administrators) will be ultimately borne by common stockholders.

The Administrator

does not receive compensation from the Company other than reimbursement of its expenses.

The Administration Agreement may be terminated

by either party with 60 days’ written notice.

Since the inception of the Company, the Administrator

has engaged sub-administrators to assist the Administrator in performing certain of its administrative duties.

During this period, the

Administrator has not sought reimbursement of its expenses other than expenses incurred by the sub-administrators.

On March 28, 2023,

the Administrator engaged Ultimus Fund Solutions, LLC under a sub-administration agreement.

Under the terms of the sub-administration

agreement, Ultimus Fund Solutions, LLC will provide fund administration and fund accounting services.

The Company pays fees to Ultimus

Fund Solutions, LLC, which constitute reimbursable expenses under the Administration Agreement.

The Administrator may enter into additional

sub-administration agreements with third-parties to perform other administrative and professional services on behalf of the Administrator.

Risk Management

Broad Diversification.

diversify our investments by company, asset type, investment size, industry and geography within the U.S.

Furthermore, we must meet certain

diversification tests in order to qualify as a RIC for U.S.

diversify our investments by company, asset type, investment size and industry focus.

Furthermore, we must meet certain diversification

tests in order to qualify as a RIC for U.S.

federal income tax purposes (the “Diversification Tests”).

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Federal Income Tax Considerations .”

against interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts subject to the

requirements of the 1940 Act and to applicable CFTC regulations.

While hedging activities may insulate us against adverse changes in

interest rates, they may also limit our ability to participate in benefits of such changes with respect to our portfolio of investments.

The Advisor will claim relief from CFTC registration and regulation as a commodity pool operator with respect to our operations, with

the result that we will be limited in our ability to use futures contracts or options on futures contracts or engage in swap transactions.

Specifically, we will be subject to strict limitations on using such derivatives other than for hedging purposes, whereby the use of

derivatives not used solely for hedging purposes is generally limited to situations where (i) the aggregate initial margin and premiums

required to establish such positions do not exceed five percent of the liquidation value of our portfolio, after taking into account

unrealized profits and unrealized losses on any such contracts we have entered into;

or (ii) the aggregate net notional value of

such derivatives does not exceed 100% of the liquidation value of our portfolio.

We may hedge against

interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts subject to the requirements

of the 1940 Act and to applicable CFTC regulations.

While hedging activities may insulate us against adverse changes in interest rates,

they may also limit our ability to participate in benefits of such changes with respect to our portfolio of investments.

The Advisor will

claim relief from CFTC registration and regulation as a commodity pool operator with respect to our operations, with the result that we

will be limited in our ability to use futures contracts or options on futures contracts or engage in swap transactions.

Specifically,

we will be subject to strict limitations on using such derivatives other than for hedging purposes, whereby the use of derivatives not

used solely for hedging purposes is generally limited to situations where (i) the aggregate initial margin and premiums required

to establish such positions do not exceed five percent of the liquidation value of our portfolio, after taking into account unrealized

profits and unrealized losses on any such contracts we have entered into;

or (ii) the aggregate net notional value of such derivatives

does not exceed 100% of the liquidation value of our portfolio.

Regulation as a Business Development Company

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registered investment companies under a regime designed to encourage lending to U.S.-based small and mid-sized businesses.

Unlike many similar types of investment vehicles that are restricted to being private entities, the stock of a BDC is permitted to trade

in the public equity markets.

many similar types of investment vehicles that are restricted to being private entities, the stock of a BDC is permitted to trade in the

public equity markets.

BDCs are also eligible to elect to be treated as a RIC under Subchapter M of the Code.

A RIC typically

does not incur significant entity-level income taxes, because it is generally entitled to deduct distributions made to its stockholders.

A RIC typically does not

incur significant entity-level income taxes, because it is generally entitled to deduct distributions made to its stockholders.

Qualifying Assets

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of qualifying assets relevant to our proposed business are the following:

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;

an investment company (other than a small business investment company wholly owned by the

BDC) or a company that would be an investment company but for certain exclusions under the

either of the following:

not have any class of securities listed on a national securities exchange or has any class

of securities listed on a national securities exchange subject to a $250 million market

capitalization maximum;

controlled by a BDC or a group of companies including a BDC, the BDC actually exercises a

controlling influence over the management or policies of the eligible portfolio company,

and, as a result, the BDC has an affiliated person who is a director of the eligible portfolio

Securities of any eligible portfolio company which

Securities purchased in a private transaction from

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.

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.

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.

(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:

is organized under the laws of, and has its principal place of business in, the United States;

is not an investment company (other than a small business investment company wholly owned by the BDC) or a company that would be an investment company but for certain exclusions under the 1940 Act;

satisfies either of the following:

does not have any class of securities listed on a national securities exchange or has any class of securities listed on a national securities exchange subject to a $250 million market capitalization maximum;

is controlled by a BDC or a group of companies including a BDC, the BDC actually exercises a controlling influence over the management or policies of the eligible portfolio company, and, as a result, the BDC has an affiliated person who is a director of the eligible portfolio company.

Securities of any eligible portfolio company which we control.

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.

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.

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.

Cash, cash equivalents, U.S.

government securities or high-quality

debt securities maturing in one year or less from the time of investment.

We may invest up to 30% of our portfolio

opportunistically in “non-qualifying assets.”

Managerial Assistance to Portfolio

government securities or high-quality debt securities maturing in one year or less from the time of investment.

We may invest up to 30% of our portfolio opportunistically in “non-qualifying assets.”

Managerial Assistance to Portfolio Companies

In addition, a BDC must be organized and have

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assets,” as described above, our investments may consist of cash, cash equivalents, U.S.

government securities or high-quality

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.

government securities or high-quality 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.

Senior Securities and Indebtedness

We will be permitted, under specified conditions,

to issue multiple classes of indebtedness and one class of stock senior to our Shares if our asset coverage, as defined in the 1940 Act,

is at least equal to 150% immediately after each such issuance.

As defined in the 1940 Act, asset coverage of 150% means that for every

$100 of net assets we hold, we may raise $200 from borrowing and issuing senior securities.

We currently intend to target asset coverage

of 200% to 180% (which equates to a debt-to-equity ratio of 1.0x to 1.25x) but may alter this target based on market conditions.

In addition, while any senior securities remain outstanding, we must 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

We may also borrow amounts up to 5% of the value of our total assets for temporary or emergency purposes without regard to

asset coverage.

Regulations governing our operations as a BDC will affect our ability to raise, and the method of raising, additional

capital, which may expose us to risks.

We will be permitted,

under specified conditions, to issue multiple classes of indebtedness and one class of stock senior to our shares of common stock if our

asset coverage, as defined in the 1940 Act, is at least equal to 150% immediately after each such issuance.

As defined in the 1940 Act,

asset coverage of 150% means that for every $100 of net assets we hold, we may raise $200 from borrowing and issuing senior securities.

We currently intend to target asset coverage of 200% to 180% (which equates to a debt-to-equity ratio of 1.0x to 1.25x) but

may alter this target based on market conditions.

In addition, while any senior securities remain outstanding, we must 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

or emergency purposes without regard to asset coverage.

Regulations governing our operations as a BDC will affect our ability to raise,

and the method of raising, additional capital, which may expose us to risks.

Codes of Ethics

We and our Advisor have adopted a code of ethics pursuant to Rule 17j-1 under

the 1940 Act that establishes procedures for personal investments and restricts certain personal securities transactions.

Personnel subject

to the joint code may invest in securities for their personal investment accounts, including securities that may be purchased or held

by us, so long as such investments are made in accordance with the code’s requirements.

In addition, we have adopted a code of ethics

applicable to our Principal Executive Officer, Principal Accounting Officer and senior financial officers pursuant to Section 406 of the

Sarbanes-Oxley Act of 2022.

You may review or download the codes of ethics from the SEC’s Edgar database as part of our filings

under www.sec.gov, or by written request to the following:

Chief Compliance Officer, Kayne Anderson, 811 Main Street, 14 th Floor,

Houston, TX 77002.

We and our Advisor have adopted a code of

ethics pursuant to Rule 17j-1 under the 1940 Act that establishes procedures for personal investments and restricts certain

personal securities transactions.

Personnel subject to the joint code may invest in securities for their personal investment accounts,

including securities that may be purchased or held by us, so long as such investments are made in accordance with the code’s requirements.

In addition, we have adopted a code of ethics applicable to our Principal Executive Officer, Principal Accounting Officer and senior financial

officers pursuant to Section 406 of the Sarbanes-Oxley Act of 2022.

You may review or download the codes of ethics from the SEC’s

Edgar database as part of our filings under www.sec.gov, or by written request to the following:

Chief Compliance Officer, Kayne Anderson,

717 Texas Avenue, Suite 2200, Houston, TX 77002.

Compliance Policies and Procedures

We make investments alongside certain entities and accounts advised

by our Advisor and its affiliates.

Under the 1940 Act, we are prohibited from knowingly participating in certain joint transactions with

our affiliates without the prior approval of the independent directors and, in some cases, prior approval by the SEC.

However, we generally

make investments alongside affiliated entities and accounts pursuant to exemptive relief granted by the SEC to us, our Advisor, and certain

of our affiliates on January 7, 2020.

Pursuant to such exemptive relief, and subject to certain conditions, we are permitted to co-invest in

the same security with our affiliates in a manner that is consistent with our investment objective, investment strategy, regulatory consideration

and other relevant factors.

If opportunities arise that would otherwise be appropriate for us and an affiliate to purchase different securities

in the same issuer, our Advisor will need to decide which account will proceed with such investment.

Our Advisor’s investment allocation

policy incorporates the conditions of exemptive relief to seek to ensure that investment opportunities are allocated in a manner that

is fair and equitable.

We make investments alongside certain entities

and accounts advised by our Advisor and its affiliates.

Under the 1940 Act, we are prohibited from knowingly participating in certain

joint transactions with our affiliates without the prior approval of the independent directors and, in some cases, prior approval by the

However, we generally make investments alongside affiliated entities and accounts pursuant to exemptive relief granted by the SEC

to us, our Advisor, and certain of our affiliates on August 10, 2023.

Pursuant to such exemptive relief, and subject to certain conditions,

we are permitted to co-invest in the same security with our affiliates in a manner that is consistent with our investment objective,

investment strategy, regulatory consideration and other relevant factors.

If opportunities arise that would otherwise be appropriate for

us and an affiliate to purchase different securities in the same issuer, our Advisor will need to decide which account will proceed with

such investment.

Our Advisor’s investment allocation policy incorporates the conditions of exemptive relief to seek to ensure that

investment opportunities are allocated in a manner that is fair and equitable.

We will be periodically examined by the SEC

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bond issued by a reputable fidelity insurance company to protect us against larceny and embezzlement.

Furthermore, as a BDC, we will

be 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.

Furthermore, as a BDC, we will be

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.

We and our Advisor have adopted and implemented

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The Sarbanes-Oxley Act of 2002, as amended,

or the Sarbanes-Oxley Act, imposes a variety of regulatory requirements on companies with a class of securities registered under the

Exchange Act and their insiders.

or the Sarbanes-Oxley Act, imposes a variety of regulatory requirements on companies with a class of securities registered under the Exchange

Act and their insiders.

Many of these requirements affect us.

pursuant to Rule 13a-14 under the Exchange Act our principal

executive officer and principal financial officer must certify the accuracy of the financial statements contained in our periodic

pursuant to Item 307 under Regulation S-K under the Securities

Act our periodic reports must disclose our conclusions about the effectiveness of our disclosure controls and procedures;

pursuant to Rule 13a-15 of the Exchange Act, our management

must prepare an annual report regarding its assessment of our internal control over financial reporting and (once we cease to be

an emerging growth company under the JOBS Act, or if later, for the year following our first annual report required to be filed with

the SEC as a public company) must obtain an audit of the effectiveness of internal control over financial reporting performed by

its independent registered public accounting firm;

pursuant to Item 308 of Regulation S-K under the Securities

Act and Rule 13a-15 under the Exchange 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.

to Rule 13a-14 under the Exchange Act our principal executive officer and principal financial officer must certify the accuracy

of the financial statements contained in our periodic reports;

to Item 307 under Regulation S-K under the Securities Act our periodic reports must disclose our conclusions about the effectiveness

of our disclosure controls and procedures;

to Rule 13a-15 of the Exchange Act, our management must prepare an annual report regarding its assessment of our internal control

over financial reporting and (once we cease to be an emerging growth company under the JOBS Act, or if later, for the year following

our first annual report required to be filed with the SEC as a public company) must obtain an audit of the effectiveness of internal

control over financial reporting performed by its independent registered public accounting firm;

to Item 308 of Regulation S-K under the Securities Act and Rule 13a-15 under the Exchange 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 requires us to review

our current policies and procedures to determine whether we comply with the Sarbanes-Oxley Act and the regulations promulgated under

We will continue to monitor our compliance with all regulations that are adopted under the Sarbanes-Oxley Act and will take

actions necessary to ensure that we comply with that act in the future.

We currently are and expect to remain an

“emerging growth company,” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”), until the

the last day of the fiscal year ending after the fifth anniversary

of an Exchange Listing occurs;

the end of the fiscal year in which our total annual gross revenues

first exceed $1.07 billion;

the date on which we have, during the prior three-year period, issued

more than $1.0 billion in non-convertible debt;

the last day of a fiscal year in which we (1) have an aggregate

worldwide market value of our Shares held by non-affiliates of $700 million or more, computed at the end of each fiscal

year as of the last business day of our most recently completed second fiscal quarter and (2) have been an Exchange Act reporting

company for at least one year (and filed at least one annual report under the Exchange Act).

our current policies and procedures to determine whether we comply with the Sarbanes-Oxley Act and the regulations promulgated under such

We will continue to monitor our compliance with all regulations that are adopted under the Sarbanes-Oxley Act and will take actions

necessary to ensure that we comply with that act in the future.

We currently are and expect to remain an “emerging

growth company,” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”), until the earliest of:

last day of the fiscal year ending after the fifth anniversary of an Exchange Listing occurs;

end of the fiscal year in which our total annual gross revenues first exceed $1.07 billion;

date on which we have, during the prior three-year period, issued more than $1.0 billion in non-convertible debt;

the last day of a fiscal year in which we (1) have an aggregate worldwide market value of our shares of common stock held by non-affiliates of $700 million or more, computed at the end of each fiscal year as of the last business day of our most recently completed second fiscal quarter and (2) have been an Exchange Act reporting company for at least one year (and filed at least one annual report under the Exchange Act).

Under the JOBS Act and the Dodd-Frank Wall

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Commodities Exchange Act

The Commodity Futures Trading Commission

(“CFTC”) and the SEC have issued final rules establishing that certain swap transactions are subject to CFTC regulation.

Engaging in such swap transactions may cause us to fall within the definition of “commodity pool” under the Commodity Exchange

Act and related CFTC regulations.

The Advisor will rely on an exclusion from the definition of a CPO under CFTC Rule 4.5 because of our

limited trading in commodity interests, and the Advisor will operate us as if we were not registered as a CPO, so that unlike a registered

CPO, with respect to us, the Advisor is not required to deliver a Disclosure Document or an Annual Report (as those terms are used in

the CFTC’s rules) to shareholders.

The Commodity Futures Trading Commission (“CFTC”)

and the SEC have issued final rules establishing that certain swap transactions are subject to CFTC regulation.

Engaging in such swap

transactions may cause us to fall within the definition of “commodity pool” under the Commodity Exchange Act and related CFTC

The Advisor will rely on an exclusion from the definition of a CPO under CFTC Rule 4.5 because of our limited trading in

commodity interests, and the Advisor will operate us as if we were not registered as a CPO, so that unlike a registered CPO, with respect

to us, the Advisor is not required to deliver a Disclosure Document or an Annual Report (as those terms are used in the CFTC’s rules)

to shareholders.

Proxy Voting Policies and Procedures

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stockholders.

These policies and procedures for voting

proxies for our investment advisory clients are intended to comply with Section 206 of, and Rule 206(4)-6 under, the Advisers

These policies and procedures for voting proxies

for our investment advisory clients are intended to comply with Section 206 of, and Rule 206(4)-6 under, the Advisers Act.

We will vote proxies relating to our portfolio

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interest, we will require that:

(1) anyone involved in the decision making process disclose to our chief compliance officer 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 (2) 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.

(1) anyone involved in the decision making process disclose to our chief compliance officer 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 (2) 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:

KA Credit Advisors, LLC, 811 Main Street, 14th Floor, Houston, TX

KA Credit Advisors, LLC, 717 Texas Avenue, Suite 2200, Houston, TX

77002, Attention:

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Any compensation paid for services relating to our financial reporting and

compliance functions will be paid by our Administrator, subject to reimbursement by us of an allocable portion of office facilities,

overhead, and compensation paid to or compensatory distributions received by our officers (including our Chief Compliance Officer and

Chief Financial Officer) and their respective staff who provide services to us.

As we reimburse the Administrator for its expenses, we

will indirectly bear such cost.

Our Administrator engaged U.S.

Fund Services under a sub-administration agreement to assist the Administrator in performing certain of its administrative

The Administrator may enter into additional sub-administration agreements with third-parties to perform other administrative

and professional services on behalf of the Administrator.

We will pay the fees associated with such functions on a direct basis without

profit to our Administrator.

compliance functions will be paid by our Administrator, subject to reimbursement by us of an allocable portion of office facilities, overhead,

and compensation paid to or compensatory distributions received by our officers (including our Chief Compliance Officer and Chief Financial

Officer) and their respective staff who provide services to us.

As we reimburse the Administrator for its expenses, we will indirectly

bear such cost.

Our Administrator engaged Ultimus Fund Solutions,

LLC under a sub-administration agreement to assist the Administrator in performing certain of its administrative duties.

Administrator may enter into additional sub-administration agreements with third-parties to perform other administrative and

professional services on behalf of the Administrator.

We will pay the fees associated with such functions on a direct basis without profit

to our Administrator.

Privacy Principles

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The following information is provided to help you

understand what personal information we collect, how we protect that information and why, in certain cases, we may share information

with select other parties.

understand what personal information we collect, how we protect that information and why, in certain cases, we may share information with

select other parties.

We do not disclose any non-public personal

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information about our stockholders to employees of our Advisor and its affiliates with a legitimate business need for the information.

We will maintain physical, electronic and procedural safeguards designed to protect the non-public personal information of

our stockholders.

We will maintain physical, electronic and procedural safeguards designed to protect the non-public personal information of our

stockholders.

Reporting Obligations

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public reference room may be obtained by calling the SEC at (202) 551-8090 or (800) SEC-0330.

The reference

to our website and the SEC’s website is an inactive textual reference only, and the information should not be considered a part

of this Form 10-K.

The reference to

our website and the SEC’s website is an inactive textual reference only, and the information should not be considered a part of

this Form 10-K.

Material U.S.

Federal Income Tax Considerations

The following discussion is a general summary

of the material U.S.

federal income tax considerations applicable to us and to an investment in our Shares.

This summary does not purport

to be a complete description of the U.S.

federal income tax considerations applicable to such an investment.

For example, we have not

described certain considerations that may be relevant to certain types of holders subject to special treatment under U.S.

federal income

tax laws, including persons who hold our common stock as part of a straddle or hedging, integrated or constructive sale transaction,

stockholders subject to the alternative minimum tax, tax-exempt organizations, insurance companies, brokers or dealers

in securities, traders in securities that elect to mark-to-market their securities holdings, pension plans and trusts,

persons that have a functional currency (as defined in Section 985 of the Code) other than the U.S.

expatriates, regulated

investment companies, real estate investment trusts, personal holding companies, persons who acquire an interest in the Company in connection

with the performance of services and financial institutions.

Such persons should consult with their own tax advisers as to the U.S.

income tax consequences of an investment in our Shares, which may differ substantially from those described herein.

This summary assumes

that investors hold our Shares as capital assets (within the meaning of Section 1221 of the Code).

The discussion is based upon the Code, Treasury

regulations, and administrative and judicial interpretations, each as of the date of the filing of this annual report on Form 10-K and

all of which are subject to change, possibly retroactively, which could affect the continuing validity of this discussion.

sought and will not seek any ruling from the Internal Revenue Service, or the IRS, regarding any offering of our Shares.

does not discuss any aspects of U.S.

The following discussion

is a general summary of the material U.S.

federal income tax considerations applicable to us and to an investment in our shares of common

This summary does not purport to be a complete description of the U.S.

federal income tax considerations applicable to such an

For example, we have not described certain considerations that may be relevant to certain types of holders subject to special

treatment under U.S.

federal income tax laws, including persons who hold our common stock as part of a straddle or hedging, integrated

or constructive sale transaction, stockholders subject to the alternative minimum tax, tax-exempt organizations, insurance

companies, brokers or dealers in securities, traders in securities that elect to mark-to-market their securities holdings,

pension plans and trusts, persons that have a functional currency (as defined in Section 985 of the Code) other than the U.S.

expatriates, regulated investment companies, real estate investment trusts, personal holding companies, persons who acquire an interest

in the Company in connection with the performance of services and financial institutions.

Such persons should consult with their own tax

advisers as to the U.S.

federal income tax consequences of an investment in our shares of common stock, which may differ substantially

from those described herein.

This summary assumes that investors hold our shares of common stock as capital assets (within the meaning

of Section 1221 of the Code).

The discussion is based

upon the Code, Treasury regulations, and administrative and judicial interpretations, each as of the date of the filing of this annual

report on Form 10-K and all of which are subject to change, possibly retroactively, which could affect the continuing validity

of this discussion.

We have not sought and will not seek any ruling from the Internal Revenue Service, or the IRS, regarding any offering

of our shares of common stock.

This summary does not discuss any aspects of U.S.

estate or gift tax or foreign, state or local tax.

It does not discuss the special treatment under

federal income tax laws that could result if we invested in tax-exempt securities or certain other investment

For purposes of this discussion, references to “dividends” are to dividends within the meaning of the U.S.

income tax laws and associated regulations and may include amounts subject to treatment as a return of capital under section 19(a) of

the 1940 Act.

A return of capital distribution is a return to stockholders of a portion of their original investment in the Company and

does not represent income or capital gains.

stockholder” is a beneficial

owner of our Shares that is for U.S.

does not discuss the special treatment under U.S.

federal income tax laws that could result if we invested in tax-exempt securities or

certain other investment assets.

For purposes of this discussion, references to “dividends” are to dividends within the meaning

federal income tax laws and associated regulations and may include amounts subject to treatment as a return of capital under

section 19(a) of the 1940 Act.

A return of capital distribution is a return to stockholders of a portion of their original investment

in the Company and does not represent income or capital gains.

is a beneficial owner of our shares of common stock that is for U.S.

federal income tax purposes:

a citizen or individual resident of the United States;

a corporation, or other entity treated as a corporation for U.S.

income tax purposes, created or organized in or under the laws of the United States or any state thereof or the District of Columbia;

an estate, the income of which is subject to U.S.

federal income taxation

regardless of its source;

a trust if either a U.S.

court can exercise primary supervision over

its administration and one or more U.S.

persons have the authority to control all of its substantial decisions or the trust was in

existence on August 20, 1996, was treated as a U.S.

person prior to that date, and has made a valid election to be treated as

citizen or individual resident of the United States;

corporation, or other entity treated as a corporation for U.S.

federal income tax purposes, created or organized in or under the laws

of the United States or any state thereof or the District of Columbia;

estate, the income of which is subject to U.S.

federal income taxation regardless of its source;

trust if either a U.S.

court can exercise primary supervision over its administration and one or more U.S.

persons have the authority

to control all of its substantial decisions or the trust was in existence on August 20, 1996, was treated as a U.S.

to that date, and has made a valid election to be treated as a U.S.

stockholder” is

a beneficial owner of our Shares that is neither a U.S.

a beneficial owner of our shares of common stock that is neither a U.S.

stockholder nor a partnership for U.S.

federal income tax purposes.

If a partnership (including an entity treated

as a partnership for U.S.

federal income tax purposes) holds Shares, the tax treatment of a partner in the partnership will generally

depend upon the status of the partner and the activities of the partnership.

A prospective investor that is a partner in a partnership

that will hold Shares should consult its tax advisors with respect to the purchase, ownership and disposition of Shares.

Tax matters are very complicated and the

tax consequences to an investor of an investment in our Shares will depend on the facts of his, her or its particular situation.

investors to consult their own tax advisors regarding the specific consequences of such an investment, including tax reporting requirements,

the applicability of U.S.

federal, state, local and foreign tax laws, eligibility for the benefits of any applicable tax treaty, and

the effect of any possible changes in the tax laws.

If a partnership (including

an entity treated as a partnership for U.S.

federal income tax purposes) holds shares of common stock, the tax treatment of a partner

in the partnership will generally depend upon the status of the partner and the activities of the partnership.

A prospective investor

that is a partner in a partnership that will hold shares of common stock should consult its tax advisors with respect to the purchase,

ownership and disposition of shares of common stock.

Tax matters are very

complicated and the tax consequences to an investor of an investment in our shares of common stock will depend on the facts of his, her

or its particular situation.

We encourage investors to consult their own tax advisors regarding the specific consequences of such an investment,

including tax reporting requirements, the applicability of U.S.

federal, state, local and foreign tax laws, eligibility for the benefits

of any applicable tax treaty, and the effect of any possible changes in the tax laws.

Election to Be Taxed as a RIC

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Although not required

for us to maintain our RIC tax status, in order to preclude the imposition of a 4% nondeductible federal excise tax imposed on RICs,

we must distribute to our stockholders in respect of each calendar year dividends of an amount at least equal to the sum of (1) 98% of

our net ordinary income (taking into account certain deferrals and elections) for the calendar year, (2) 98.2% of the excess (if any)

of our realized capital gains over our realized capital losses, or capital gain net income (adjusted for certain ordinary losses), generally

for us to maintain our RIC tax status, in order to preclude the imposition of a 4% nondeductible federal excise tax imposed on RICs, we

must distribute to our stockholders in respect of each calendar year dividends of an amount at least equal to the sum of (1) 98% of our

net ordinary income (taking into account certain deferrals and elections) for the calendar year, (2) 98.2% of the excess (if any) of our

realized capital gains over our realized capital losses, or capital gain net income (adjusted for certain ordinary losses), generally

for the one-year period ending on October 31 of the calendar year and (3) the sum of any net ordinary income

plus capital gains net income for preceding years that were not distributed during such years and on which we paid no federal income

tax (the “Excise Tax Avoidance Requirement”).

plus capital gains net income for preceding years that were not distributed during such years and on which we paid no federal income tax

(the “Excise Tax Avoidance Requirement”).

Taxation as a RIC

qualify as a RIC;

satisfy the Annual Distribution Requirement;

then we will not be subject

federal income tax on the portion of our investment company taxable income and net capital gain, defined as net long-term

capital gains in excess of net short-term capital losses, we distribute to stockholders.

the Annual Distribution Requirement;

then we will not be subject to U.S.

income tax on the portion of our investment company taxable income and net capital gain, defined as net long-term capital gains in excess

of net short-term capital losses, we distribute to stockholders.

As a RIC, we will be subject to U.S.

income tax at regular corporate rates on any net income or net capital gain not distributed (or deemed distributed) as dividends

to our stockholders.

federal income tax at regular corporate

rates on any net income or net capital gain not distributed (or deemed distributed) as dividends to our stockholders.

In order to qualify as a RIC for U.S.

income tax purposes, we must, among other things:

have in effect an election to be treated as a BDC under the 1940 Act

at all times during each taxable year;

derive in each taxable year at least 90% of our gross income from dividends,

interest, payments with respect to certain securities loans, gains from the sale of stock or other securities, or other income derived

with respect to our business of investing in such stock or securities, or currencies, other income derived with respect to its business

of investing in such stock, securities or currencies and net income derived from interests in “qualified publicly traded partnerships”

(partnerships that are traded on an established securities market or tradable on a secondary market, other than partnerships that

derive 90% of their income from interest, dividends and other permitted RIC income) (the “90% Income Test”);

diversify our holdings so that at the end of each quarter of the taxable

at least 50% of the value of our assets consists of cash, cash equivalents,

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;

no more than 25% of the value of our assets is invested in the securities,

other than U.S.

government securities or securities of other RICs, of one issuer or 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 in the

securities of one or more qualified publicly traded partnerships.

in effect an election to be treated as a BDC under the 1940 Act at all times during each taxable year;

in each taxable year at least 90% of our gross income from dividends, interest, payments with respect to certain securities loans, gains

from the sale of stock or other securities, or other income derived with respect to our business of investing in such stock or securities,

or currencies, other income derived with respect to its business of investing in such stock, securities or currencies and net income

derived from interests in “qualified publicly traded partnerships” (partnerships that are traded on an established securities

market or tradable on a secondary market, other than partnerships that derive 90% of their income from interest, dividends and other

permitted RIC income) (the “90% Income Test”);

our holdings so that at the end of each quarter of the taxable year:

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;

more than 25% of the value of our assets is invested in the securities, other than U.S.

government securities or securities of other

RICs, of one issuer or 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 in the securities of one or more qualified publicly traded partnerships.

We may be required to recognize taxable income

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even though we will not have received the corresponding cash amount.

We may invest in partnerships, including

qualified publicly traded partnerships, which may result in our being subject to state, local or foreign income, franchise or other tax

In addition, as a RIC, we are subject to

ordinary income and capital gain distribution requirements under U.S.

We may invest in partnerships, including qualified

publicly traded partnerships, which may result in our being subject to state, local or foreign income, franchise or other tax liabilities.

In addition, as a RIC, we are subject to ordinary

income and capital gain distribution requirements under U.S.

federal excise tax rules for each calendar year (as discussed above).

If we do not meet the required distributions, we will be subject to a 4% nondeductible federal excise tax on the undistributed amount.

The failure to meet U.S.

we do not meet the required distributions, we will be subject to a 4% nondeductible federal excise tax on the undistributed amount.

failure to meet U.S.

federal excise tax distribution requirements will not cause us to lose our RIC status.

Although we currently

intend to make sufficient distributions each taxable year to satisfy the U.S.

federal excise tax requirements, under certain circumstances,

we may choose to retain taxable income or capital gains in excess of current year distributions into the next tax year in an amount less

Although we currently intend

to make sufficient distributions each taxable year to satisfy the U.S.

federal excise tax requirements, under certain circumstances, we

may choose to retain taxable income or capital gains in excess of current year distributions into the next tax year in an amount less

than what would trigger payments of federal income tax under Subchapter M of the Code.

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constitute qualified dividend income as non-qualified dividend income, (2) treat dividends that would otherwise

be eligible for the corporate dividends received deduction as ineligible for such treatment, (3) disallow, suspend or otherwise

limit the allowance of certain losses or deductions, (4) convert lower-taxed long-term capital gain into higher-taxed short-term

capital gain or ordinary income, (5) convert an ordinary loss or a deduction into a capital loss (the deductibility of which is

more limited), (6) cause us to recognize income or gain without a corresponding receipt of cash, (7) adversely affect the time as

to when a purchase or sale of stock or securities is deemed to occur, (8) adversely alter the characterization of certain complex

financial transactions and (9) produce income that will not be qualifying income for purposes of the 90% Income Test.

to monitor our transactions and may make certain tax elections to mitigate the effect of these provisions and prevent our ability to

be subject to tax as a RIC.

be eligible for the corporate dividends received deduction as ineligible for such treatment, (3) disallow, suspend or otherwise limit

the allowance of certain losses or deductions, (4) convert lower-taxed long-term capital gain into higher-taxed short-term capital

gain or ordinary income, (5) convert an ordinary loss or a deduction into a capital loss (the deductibility of which is more limited),

(6) cause us to recognize income or gain without a corresponding receipt of cash, (7) adversely affect the time as to when a purchase

or sale of stock or securities is deemed to occur, (8) adversely alter the characterization of certain complex financial transactions

and (9) produce income that will not be qualifying income for purposes of the 90% Income Test.

We intend to monitor our transactions

and may make certain tax elections to mitigate the effect of these provisions and prevent our ability to be subject to tax as a RIC.

Gain or loss realized by us from warrants

3 unchanged sentences

so, we are authorized to borrow funds and to sell assets in order to satisfy distribution requirements.

However, under the 1940 Act,

we are not permitted to make distributions to our stockholders while our debt obligations and other senior securities are outstanding

unless certain “asset coverage” tests are met.

However, under the 1940 Act, we

are not permitted to make distributions to our stockholders while our debt obligations and other senior securities are outstanding unless

certain “asset coverage” tests are met.

See “ Item 1.

Business — Regulation as a Business Development

Company — Senior Securities and Indebtedness .” Moreover, our ability to dispose of assets to meet our distribution

requirements may be limited by (1) the illiquid nature of our portfolio and/or (2) other requirements relating to our qualification

as a RIC, including the Diversification Tests.

If we dispose of assets in order to meet the Annual Distribution Requirement or the Excise

Tax Avoidance Requirement, we may make such dispositions at times that, from an investment standpoint, are not advantageous.

Business — Regulation as a Business Development Company — Senior

Securities and Indebtedness .” Moreover, our ability to dispose of assets to meet our distribution requirements may be limited

by (1) the illiquid nature of our portfolio and/or (2) other requirements relating to our qualification as a RIC, including

the Diversification Tests.

If we dispose of assets in order to meet the Annual Distribution Requirement or the Excise Tax Avoidance Requirement,

we may make such dispositions at times that, from an investment standpoint, are not advantageous.

Some of the income and fees that we may recognize,

15 unchanged sentences

Test or the Diversification Tests.

Should failure occur, not only would all

our taxable income be subject to tax at regular corporate rates, we would not be able to deduct dividend distributions to

stockholders, nor would they be required to be made.

Distributions, including distributions of net long-term capital gain, would

generally be taxable to our stockholders as ordinary dividend income to the extent of our current and accumulated earnings and

Subject to certain limitations under the Code, certain corporate stockholders would be eligible to claim a dividends

received deduction with respect to such dividends and non-corporate stockholders would generally be able to

treat such dividends as “qualified dividend income,” which is subject to reduced rates of U.S.

Should failure occur, not only would all our

taxable income be subject to tax at regular corporate rates, we would not be able to deduct dividend distributions to stockholders, nor

would they be required to be made.

Distributions, including distributions of net long-term capital gain, would generally be taxable to

our stockholders as ordinary dividend income to the extent of our current and accumulated earnings and profits.

Subject to certain limitations

under the Code, certain corporate stockholders would be eligible to claim a dividends received deduction with respect to such dividends

and non-corporate stockholders would generally be able to treat such dividends as “qualified dividend income,” which is subject

to reduced rates of U.S.

federal income tax.

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.

If we fail to

qualify as a RIC, we may be subject to regular corporate tax on any net built-in gains with respect to certain

of our assets (i.e., the excess of the aggregate gains, including items of income, over aggregate losses that would have been

realized with respect to such assets if we had been liquidated) that we elect to recognize on requalification or when recognized

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.

If we fail to qualify as a RIC, we may be subject to regular corporate tax on any net built-in gains with

respect to certain of our assets (i.e., the excess of the aggregate gains, including items of income, over aggregate losses that would

have been realized with respect to such assets if we had been liquidated) that we elect to recognize on requalification or when recognized

over the next five taxable years.

The remainder of this discussion assumes

that we qualify as a RIC and have satisfied the Annual Distribution Requirement for each taxable year.

The remainder of this discussion assumes that

we qualify as a RIC and have satisfied the Annual Distribution Requirement for each taxable year.

Taxation of U.S.

Distributions by us generally are taxable

Distributions by us generally

are taxable to U.S.

stockholders as ordinary income or capital gains.

Distributions of our “investment company taxable income” (which

is, generally, our net ordinary income plus net short-term capital gains in excess of net long-term capital losses) will be taxable as

ordinary income to U.S.

Distributions of our “investment company taxable income”

(which is, generally, our net ordinary income plus net short-term capital gains in excess of net long-term capital losses) will be taxable

as ordinary income to U.S.

stockholders to the extent of our current or accumulated earnings and profits, whether paid in cash or reinvested

in additional Shares.

To the extent such distributions paid by us to non-corporate stockholders (including individuals)

are attributable to dividends from U.S.

corporations and certain qualified foreign corporations and if certain holding period requirements

are met, such distributions generally will be treated as qualified dividend income and generally eligible for a maximum U.S.

tax rate of either 15% or 20%, depending on whether the individual stockholder’s income exceeds certain threshold amounts, and

if other applicable requirements are met, such distributions generally will be eligible for the corporate dividends received deduction

in additional shares of common stock.

To the extent such distributions paid by us to non-corporate stockholders (including

individuals) are attributable to dividends from U.S.

corporations and certain qualified foreign corporations and if certain holding period

requirements are met, such distributions generally will be treated as qualified dividend income and generally eligible for a maximum U.S.

federal tax rate of either 15% or 20%, depending on whether the individual stockholder’s income exceeds certain threshold amounts,

and if other applicable requirements are met, such distributions generally will be eligible for the corporate dividends received deduction

to the extent such dividends have been paid by a U.S.

3 unchanged sentences

applicable to non-corporate stockholders as well as will not be eligible for the corporate dividends received deduction.

Distributions of our net capital gains (which

is generally our realized net long-term capital gains in excess of realized net short-term capital losses) properly reported by us as

“capital gain dividends” will be taxable to a U.S.

stockholder as long-term capital gains (currently generally at a maximum

rate of either 15% or 20%, depending on whether the individual stockholder’s income exceeds certain threshold amounts) in the case

of individuals, trusts or estates, regardless of the U.S.

stockholder’s holding period for his, her or its Shares and regardless

of whether paid in cash or reinvested in additional Shares.

Distributions in excess of our earnings and profits first will reduce a U.S.

stockholder’s adjusted tax basis in such stockholder’s Shares and, after the adjusted basis is reduced to zero, will constitute

capital gains to such U.S.

Stockholders receiving dividends or distributions in the form of additional Shares purchased

in the market should be treated for U.S.

federal income tax purposes as receiving a distribution in an amount equal to the amount of

money that the stockholders receiving cash dividends or distributions will receive, and should have a cost basis in the shares received

equal to such amount.

Stockholders receiving dividends in newly issued Shares will be treated as receiving a distribution equal to the

value of the shares received and should have a cost basis of such amount.

Although we currently intend to distribute

any net capital gains at least annually, we may in the future decide to retain some or all of our net capital gains but designate the

retained amount as a “deemed distribution.” In that case, among other consequences, we will pay tax on the retained amount,

stockholder will be required to include their share of the deemed distribution in income as if it had been distributed to the

Distributions of our

net capital gains (which is generally our realized net long-term capital gains in excess of realized net short-term capital losses) properly

reported by us as “capital gain dividends” will be taxable to a U.S.

stockholder as long-term capital gains (currently generally

at a maximum rate of either 15% or 20%, depending on whether the individual stockholder’s income exceeds certain threshold amounts)

in the case of individuals, trusts or estates, regardless of the U.S.

stockholder’s holding period for his, her or its shares of

common stock and regardless of whether paid in cash or reinvested in additional shares of common stock.

Distributions in excess of our

earnings and profits first will reduce a U.S.

stockholder’s adjusted tax basis in such stockholder’s shares of common stock

and, after the adjusted basis is reduced to zero, will constitute capital gains to such U.S.

Stockholders receiving dividends

or distributions in the form of additional shares of common stock purchased in the market should be treated for U.S.

federal income tax

purposes as receiving a distribution in an amount equal to the amount of money that the stockholders receiving cash dividends or distributions

will receive, and should have a cost basis in the shares received equal to such amount.

Stockholders receiving dividends in newly issued

shares of common stock will be treated as receiving a distribution equal to the value of the shares received and should have a cost basis

of such amount.

Although we currently

intend to distribute any net capital gains at least annually, we may in the future decide to retain some or all of our net capital gains

but designate the retained amount as a “deemed distribution.” In that case, among other consequences, we will pay tax on the

retained amount, each U.S.

stockholder will be required to include their share of the deemed distribution in income as if it had been

distributed to the U.S.

stockholder, and the U.S.

stockholder will be entitled to claim a credit or refund equal to their allocable share of the tax paid

on the deemed distribution by us.

stockholder will be entitled to claim a credit or refund equal to their allocable share

of the tax paid on the deemed distribution by us.

The amount of the deemed distribution net of such tax will be added to the U.S.

stockholder’s

tax basis for their Shares.

Since we expect to pay tax on any retained net capital gains at our regular corporate tax rate, and since

that rate is in excess of the maximum rate currently payable by individuals on long-term capital gains, the amount of tax that individual

stockholders will be treated as having paid and for which they will receive a credit or refund will exceed the tax they owe on the retained

net capital gain.

tax basis for their shares of common stock.

Since we expect to pay tax on any retained net capital gains at our regular corporate tax

rate, and since that rate is in excess of the maximum rate currently payable by individuals on long-term capital gains, the amount of

tax that individual stockholders will be treated as having paid and for which they will receive a credit or refund will exceed the tax

they owe on the retained net capital gain.

Such excess generally may be claimed as a credit against the U.S.

stockholder’s other U.S.

federal income tax

obligations or may be refunded to the extent it exceeds a stockholder’s liability for U.S.

federal income tax.

A stockholder that

is not subject to U.S.

stockholder’s other

federal income tax obligations or may be refunded to the extent it exceeds a stockholder’s liability for U.S.

federal income

A stockholder that is not subject to U.S.

federal income tax or otherwise required to file a U.S.

federal income tax return would be required to file a

federal income tax return would

be required to file a U.S.

federal income tax return on the appropriate form in order to claim a refund for the taxes we paid.

In order to utilize the deemed

distribution approach, we must provide written notice to our stockholders prior to the expiration of 60 days after the close of the relevant

taxable year.

to utilize the deemed distribution approach, we must provide written notice to our stockholders prior to the expiration of 60 days after

the close of the relevant taxable year.

We cannot treat any of our investment company taxable income as a “deemed distribution.”

11 unchanged sentences

was declared.

With respect to the reinvestment of dividends,

Shareholder owns Shares registered in its own name, the U.S.

Shareholder will have all cash distributions automatically reinvested

in additional Shares unless the U.S.

Shareholder opts out of the reinvestment of dividends by delivering a written notice to our dividend

paying agent prior to the record date of the next dividend or distribution.

Any distributions reinvested will nevertheless remain taxable

Shareholder will have an adjusted basis in the additional Shares purchased through the reinvestment

equal to the amount of the reinvested distribution.

The additional Shares will have a new holding period commencing on the day following

the day on which the shares are credited to the U.S.

Shareholder’s account.

If an investor purchases Shares shortly before

the record date of a distribution, the price of the Shares will include the value of the distribution and the investor will be subject

to tax on the distribution even though it represents a return of their investment.

A stockholder generally will recognize taxable

gain or loss if the stockholder sells or otherwise disposes of their Shares.

Any gain arising from such sale or disposition generally

will be treated as long-term capital gain or loss if the stockholder has held their Shares for more than one year.

Otherwise, it would

be classified as short-term capital gain or loss.

However, any capital loss arising from the sale or disposition of Shares held for six

months or less will be treated as long-term capital loss to the extent of the amount of capital gain dividends received, or undistributed

capital gain deemed received, with respect to such Shares.

In addition, all or a portion of any loss recognized upon a disposition of

Shares may be disallowed if other Shares are purchased (whether through reinvestment of distributions or otherwise) within 30 days before

or after the disposition.

In such a case, the basis of Shares acquired will be increased to reflect the disallowed loss.

In general, individual U.S.

are subject to a maximum U.S.

With respect to the reinvestment

of dividends, if a U.S.

Shareholder owns shares of common stock registered in its own name, the U.S.

Shareholder will have all cash distributions

automatically reinvested in additional shares of common stock unless the U.S.

Shareholder opts out of the reinvestment of dividends by

delivering a written notice to our dividend paying agent prior to the record date of the next dividend or distribution.

Any distributions

reinvested will nevertheless remain taxable to the U.S.

Shareholder will have an adjusted basis in the additional

shares of common stock purchased through the reinvestment equal to the amount of the reinvested distribution.

The additional shares of

common stock will have a new holding period commencing on the day following the day on which the shares are credited to the U.S.

Shareholder’s

If an investor purchases

shares of common stock shortly before the record date of a distribution, the price of the shares of common stock will include the value

of the distribution and the investor will be subject to tax on the distribution even though it represents a return of their investment.

A stockholder generally

will recognize taxable gain or loss if the stockholder sells or otherwise disposes of their shares of common stock.

Any gain arising from

such sale or disposition generally will be treated as long-term capital gain or loss if the stockholder has held their shares of common

stock for more than one year.

Otherwise, it would be classified as short-term capital gain or loss.

However, any capital loss arising

from the sale or disposition of shares of common stock held for six months or less will be treated as long-term capital loss to the extent

of the amount of capital gain dividends received, or undistributed capital gain deemed received, with respect to such shares of common

In addition, all or a portion of any loss recognized upon a disposition of shares of common stock may be disallowed if other shares

of common stock are purchased (whether through reinvestment of distributions or otherwise) within 30 days before or after the disposition.

In such a case, the basis of shares of common stock acquired will be increased to reflect the disallowed loss.

In general, individual

stockholders are subject to a maximum U.S.

federal income tax rate of either 15% or 20% (depending on whether the individual U.S.

stockholder’s

income exceeds certain threshold amounts) on their net capital gain, i.e., the excess of realized net long-term capital gain over realized

net short-term capital loss for a taxable year, including a long-term capital gain derived from an investment in our Shares.

is lower than the maximum federal income tax rate on ordinary taxable income currently payable by individuals.

stockholder’s income exceeds certain threshold amounts) on their net capital gain, i.e., the excess of realized net long-term capital

gain over realized net short-term capital loss for a taxable year, including a long-term capital gain derived from an investment in our

shares of common stock.

Such rate is lower than the maximum federal income tax rate on ordinary taxable income currently payable by individuals.

Corporate U.S.

currently are subject to U.S.

federal income tax on net capital gain at the maximum 21% rate also applied to ordinary income.

Non-corporate stockholders incurring

net capital losses for a tax year (i.e., net capital losses in excess of net capital gains) generally may deduct up to $3,000 of such

losses against their ordinary income each tax year;

any net capital losses of a non-corporate stockholder in excess

of $3,000 generally may be carried forward and used in subsequent tax years as provided in the Code.

Corporate stockholders generally

may not deduct any net capital losses for a tax year, but may carry back such losses for three tax years or carry forward such losses

for five tax years.

We will send to each of our U.S.

stockholders,

as promptly as possible after the end of each calendar year, a notice detailing, on a per share and per distribution basis, the amounts

includible in such U.S.

stockholder’s taxable income for such year as ordinary income and as long-term capital gain.

stockholders currently are subject to U.S.

federal income tax on net capital gain at the maximum 21% rate also applied

to ordinary income.

Non-corporate stockholders incurring net capital losses for a tax year (i.e., net capital losses

in excess of net capital gains) generally may deduct up to $3,000 of such losses against their ordinary income each tax year;

capital losses of a non-corporate stockholder in excess of $3,000 generally may be carried forward and used in subsequent

tax years as provided in the Code.

Corporate stockholders generally may not deduct any net capital losses for a tax year, but may carry

back such losses for three tax years or carry forward such losses for five tax years.

We will send to each

stockholders, as promptly as possible after the end of each calendar year, a notice detailing, on a per share and per distribution

basis, the amounts includible in such U.S.

stockholder’s taxable income for such year as ordinary income and as long-term capital

In addition, the U.S.

federal tax status of each calendar year’s distributions generally will be reported to the IRS.

Distributions may also

be subject to additional state, local and foreign taxes depending on a U.S.

Distributions

may also be subject to additional state, local and foreign taxes depending on a U.S.

stockholder’s particular situation.

Dividends distributed

by us generally will not be eligible for the dividends-received deduction or the lower tax rates applicable to certain qualified dividends.

Until and unless we are treated as a “publicly offered regulated

investment company” (within the meaning of Section 67 of the Code) as a result of either (1) Shares and our preferred

stock collectively being held by at least 500 persons at all times during a taxable year, (2) our Shares being continuously offered

pursuant to a public offering (within the meaning of Section 4 of the Securities Act) or (3) Shares being treated as regularly

traded on an established securities market for any taxable year, for purposes of computing the taxable income of U.S.

stockholders that

are individuals, trusts or estates, (1) our earnings will be computed without taking into account such U.S.

stockholders’ allocable

shares of the management and incentive fees paid to our investment advisor and certain of our other expenses, (2) each such U.S.

stockholder will be treated as having received or accrued a dividend from us in the amount of such U.S.

stockholder’s allocable

share of these fees and expenses for such taxable year, (3) each such U.S.

stockholder will be treated as having paid or incurred

stockholder’s allocable share of these fees and expenses for the calendar year and (4) each such U.S.

distributed by us generally will not be eligible for the dividends-received deduction or the lower tax rates applicable to certain qualified

Until and unless we are

treated as a “publicly offered regulated investment company” (within the meaning of Section 67 of the Code) as a result

of either (1) shares of common stock and our preferred stock collectively being held by at least 500 persons at all times during

a taxable year, (2) our shares of common stock being continuously offered pursuant to a public offering (within the meaning of Section 4

of the Securities Act) or (3) shares of common stock being treated as regularly traded on an established securities market for any

taxable year, for purposes of computing the taxable income of U.S.

stockholders that are individuals, trusts or estates, (1) our

earnings will be computed without taking into account such U.S.

stockholders’ allocable shares of the management and incentive fees

paid to our investment advisor and certain of our other expenses, (2) each such U.S.

stockholder will be treated as having received

or accrued a dividend from us in the amount of such U.S.

stockholder’s allocable share of these fees and expenses for such taxable

year, (3) each such U.S.

stockholder will be treated as having paid or incurred such U.S.

stockholder’s allocable share of

these fees and expenses for the calendar year and (4) each such U.S.

stockholder’s allocable share of these fees and expenses

may be treated as miscellaneous itemized deductions by such U.S.

Miscellaneous itemized deductions are generally not

deductible by a U.S.

stockholder that is an individual, trust or estate through 2025 and beginning in 2026 and deductible only to

the extent that the aggregate of such U.S.

stockholder’s miscellaneous itemized deductions exceeds 2% of such U.S.

stockholder’s

allocable share of these fees and expenses may be treated as miscellaneous itemized deductions by such U.S.

Miscellaneous

itemized deductions are generally not deductible by a U.S.

stockholder that is an individual, trust or estate through 2025 and beginning

in 2026 and deductible only to the extent that the aggregate of such U.S.

stockholder’s miscellaneous itemized deductions exceeds

2% of such U.S.

stockholder’s adjusted gross income for U.S.

adjusted gross income for U.S.

federal income tax purposes.

Miscellaneous itemized deductions are not

deductible at any time for purposes of the alternative minimum tax for individuals and will be subject an annual cap for income tax purposes

for individuals beginning in 2026.

Backup withholding, currently at a rate

of 24%, may be applicable to all taxable distributions to any non-corporate U.S.

stockholder (1) who fails to

furnish us with a correct taxpayer identification number or a certificate that such stockholder is exempt from backup withholding or

(2) with respect to whom the IRS notifies us that such stockholder has failed to properly report certain interest and dividend

income to the IRS and to respond to notices to that effect.

An individual’s taxpayer identification number is his or her

social security number.

Any amount withheld under backup withholding is allowed as a credit against the U.S.

stockholder’s

federal income tax liability and may entitle such stockholder to a refund, provided that proper information is timely provided

stockholder recognizes a loss with

respect to Shares of $2 million or more for an individual stockholder or $10 million or more for a corporate stockholder, the

stockholder must file with the IRS a disclosure statement on Form 8886.

Direct stockholders of portfolio securities are in many cases

exempted from this reporting requirement, but under current guidance, stockholders of a RIC are not exempted.

The fact that a loss is

reportable under these regulations does not affect the legal determination of whether the taxpayer’s treatment of the loss is proper.

stockholders should consult their tax advisors to determine the applicability of these regulations in light of their specific circumstances.

Shareholder that is a tax-exempt organization

Miscellaneous itemized deductions are not deductible at any time for

purposes of the alternative minimum tax for individuals and will be subject an annual cap for income tax purposes for individuals beginning

Backup withholding, currently at a rate of

24%, may be applicable to all taxable distributions to any non-corporate U.S.

stockholder (1) who fails to furnish us with

a correct taxpayer identification number or a certificate that such stockholder is exempt from backup withholding or (2) with respect

to whom the IRS notifies us that such stockholder has failed to properly report certain interest and dividend income to the IRS and to

respond to notices to that effect.

An individual’s taxpayer identification number is his or her social security number.

withheld under backup withholding is allowed as a credit against the U.S.

stockholder’s U.S.

federal income tax liability and may

entitle such stockholder to a refund, provided that proper information is timely provided to the IRS.

recognizes a loss with respect to shares of common stock of $2 million or more for an individual stockholder or $10 million

or more for a corporate stockholder, the stockholder must file with the IRS a disclosure statement on Form 8886.

Direct stockholders of

portfolio securities are in many cases exempted from this reporting requirement, but under current guidance, stockholders of a RIC are

not exempted.

The fact that a loss is reportable under these regulations does not affect the legal determination of whether the taxpayer’s

treatment of the loss is proper.

stockholders should consult their tax advisors to determine the applicability of these regulations

in light of their specific circumstances.

Shareholder that

is a tax-exempt organization for U.S.

federal income tax purposes and therefore generally exempt from U.S.

federal income taxation may nevertheless be subject to taxation

to the extent that it is considered to derive unrelated business taxable income (“UBTI”).

The direct conduct by a tax-exempt

federal income taxation may

nevertheless be subject to taxation to the extent that it is considered to derive unrelated business taxable income (“UBTI”).

The direct conduct by a tax-exempt U.S.

Shareholder of the activities we propose to conduct could give rise to UBTI.

However, a BDC (and RIC) is a corporation for U.S.

income tax purposes and its business activities generally will not be attributed to its shareholders for purposes of determining their

treatment under current law.

However, a BDC (and

RIC) is a corporation for U.S.

federal income tax purposes and its business activities generally will not be attributed to its shareholders

for purposes of determining their treatment under current law.

Therefore, a tax-exempt U.S.

Shareholder generally should not be subject to U.S.

taxation solely as a result

of the shareholder’s ownership of our Shares and receipt of dividends with respect to such common stock.

Moreover, under current

law, if we incur indebtedness, such indebtedness will not be attributed to a tax-exempt U.S.

Shareholder generally should not be subject

taxation solely as a result of the shareholder’s ownership of our shares of common stock and receipt of dividends with respect

to such common stock.

Moreover, under current law, if we incur indebtedness, such indebtedness will not be attributed to a tax-exempt

Therefore, a tax-exempt U.S.

Shareholder should not be treated as earning income from “debt-financed property” and dividends we pay should not be treated

as “unrelated debt-financed income” solely as a result of indebtedness that we incur.

Legislation has been introduced in Congress

in the past, and may be introduced again in the future, which would change the treatment of “blocker” investment vehicles

interposed between tax-exempt investors and non-qualifying investments if enacted.

In the event that any such proposals were to be adopted

and applied to BDCs (and RICs), the treatment of dividends payable to tax-exempt investors could be adversely affected.

In addition, special

rules would apply if we were to invest in certain real estate mortgage investment conduits, which we do not currently plan to do, that

could result in a tax-exempt U.S.

Shareholder should not be treated as earning income from “debt-financed property”

and dividends we pay should not be treated as “unrelated debt-financed income” solely as a result of indebtedness that we

Legislation has been introduced in Congress in the past, and may be introduced again in the future, which would change the treatment

of “blocker” investment vehicles interposed between tax-exempt investors and non-qualifying investments if enacted.

event that any such proposals were to be adopted and applied to BDCs (and RICs), the treatment of dividends payable to tax-exempt investors

could be adversely affected.

In addition, special rules would apply if we were to invest in certain real estate mortgage investment conduits,

which we do not currently plan to do, that could result in a tax-exempt U.S.

Shareholder recognizing income that would be treated as UBTI.

An additional 3.8% federal tax is imposed

on certain net investment income (including ordinary dividends and capital gain distributions received from us and net gains from redemptions

or other taxable dispositions of our shares) of U.S.

individuals, estates and trusts to the extent that such person’s “modified

adjusted gross income” (in the case of an individual) or “adjusted gross income” (in the case of an estate or trust)

exceed certain threshold amounts.

An additional 3.8% federal

tax is imposed on certain net investment income (including ordinary dividends and capital gain distributions received from us and net

gains from redemptions or other taxable dispositions of our shares) of U.S.

individuals, estates and trusts to the extent that such person’s

“modified adjusted gross income” (in the case of an individual) or “adjusted gross income” (in the case of an

estate or trust) exceed certain threshold amounts.

Taxation of Non-U.S.

The following discussion only applies to certain

The following discussion

only applies to certain non-U.S.

stockholders.

Whether an investment in the Shares is appropriate for a non-U.S.

stockholder will depend upon that person’s

particular circumstances.

An investment in the Shares by a non-U.S.

stockholder may have adverse tax consequences.

should consult their tax advisors before investing in our Shares.

Subject to the discussion below, distributions

of our “investment company taxable income” to non-U.S.

stockholders (including interest income, net short-term capital gain

or foreign-source dividend and interest income, which generally would be free of withholding if paid to non-U.S.

stockholders directly)

will be subject to withholding of U.S.

federal tax at a 30% rate (or lower rate provided by an applicable treaty) to the extent of our

current and accumulated earnings and profits unless the distributions are effectively connected with a U.S.

trade or business of the non-U.S.

Whether an investment in the shares of common stock is appropriate for a non-U.S.

will depend upon that person’s particular circumstances.

An investment in the shares of common stock by a non-U.S.

stockholder may

have adverse tax consequences.

stockholders should consult their tax advisors before investing in our shares of common stock.

Subject to the discussion

below, distributions of our “investment company taxable income” to non-U.S.

stockholders (including interest income, net short-term

capital gain or foreign-source dividend and interest income, which generally would be free of withholding if paid to non-U.S.

directly) will be subject to withholding of U.S.

federal tax at a 30% rate (or lower rate provided by an applicable treaty) to the extent

of our current and accumulated earnings and profits unless the distributions are effectively connected with a U.S.

trade or business of

stockholder (and, if treaty applies, are attributable to a U.S.

permanent establishment of the non-U.S.

stockholder), in which case the

distributions will generally be subject to U.S.

stockholder), in

which case the distributions will generally be subject to U.S.

federal income tax at the rates applicable to U.S.

In that case, we will not

be required to withhold U.S.

In that case,

we will not be required to withhold U.S.

federal tax if the non-U.S.

stockholder complies with applicable certification and disclosure requirements

such as providing IRS Form W-8ECI).

stockholder complies with applicable certification and disclosure

requirements such as providing IRS Form W-8ECI).

Special certification requirements apply to a non-U.S.

stockholder that is a foreign partnership or

a foreign trust, and such entities are urged to consult their own tax advisors.

stockholder that is a foreign

partnership or a foreign trust, and such entities are urged to consult their own tax advisors.

Certain properly reported dividends received

14 unchanged sentences

short-term capital gains, or treat such dividends, in whole or in part, as ineligible for this exemption from withholding.

Actual or deemed distributions of our net

capital gains to a non-U.S.

Actual or deemed distributions

of our net capital gains to a non-U.S.

stockholder, and gains realized by a non-U.S.

stockholder upon the sale of our Shares, will not be subject

stockholder upon the sale of our shares of common

stock, will not be subject to U.S.

federal withholding tax and generally will not be subject to U.S.

federal income tax unless the distributions or gains, as the

case may be, are effectively connected with a U.S.

federal income tax unless the distributions

or gains, as the case may be, are effectively connected with a U.S.

trade or business of the non-U.S.

stockholder and, if an income tax treaty applies,

are attributable to a permanent establishment maintained by the non-U.S.

stockholder in the United States or, in the case of an individual

stockholder, the stockholder is present in the United States for 183 days or more during the year of the sale or capital gain

dividend and certain other conditions are met.

If we distribute our net capital gains in

the form of deemed rather than actual distributions (which we may do in the future), a non-U.S.

stockholder will be entitled to a U.S.

federal income tax credit or tax refund equal to the stockholder’s allocable share of the tax we pay on the capital gains deemed

to have been distributed.

stockholder and, if an income tax

treaty applies, are attributable to a permanent establishment maintained by the non-U.S.

stockholder in the United States or, in the case

of an individual non-U.S.

stockholder, the stockholder is present in the United States for 183 days or more during the year of the sale

or capital gain dividend and certain other conditions are met.

If we distribute our

net capital gains in the form of deemed rather than actual distributions (which we may do in the future), a non-U.S.

stockholder will

be entitled to a U.S.

federal income tax credit or tax refund equal to the stockholder’s allocable share of the tax we pay on the

capital gains deemed to have been distributed.

In order to obtain the refund, the non-U.S.

stockholder must obtain a U.S.

taxpayer identification number and

taxpayer identification

number and file a U.S.

federal income tax return even if the non-U.S.

stockholder would not otherwise be required to obtain a U.S.

taxpayer identification

number or file a U.S.

identification number or file a U.S.

federal income tax return.

For a corporate non-U.S.

stockholder, distributions (both actual and deemed), and gains

realized upon the sale of our Shares that are effectively connected with a U.S.

trade or business may, under certain circumstances, be

subject to an additional “branch profits tax” at a 30% rate (or at a lower rate if provided for by an applicable treaty).

stockholder who is a non-resident

alien individual, and who is otherwise subject to withholding of U.S.

federal income tax, may be subject to information reporting and

backup withholding of U.S.

stockholder, distributions (both actual and deemed),

and gains realized upon the sale of our shares of common stock that are effectively connected with a U.S.

trade or business may, under

certain circumstances, be subject to an additional “branch profits tax” at a 30% rate (or at a lower rate if provided for

by an applicable treaty).

who is a non-resident alien individual, and who is otherwise subject to withholding of U.S.

federal income tax, may be subject to information

reporting and backup withholding of U.S.

federal income tax on dividends unless the non-U.S.

stockholder provides us or the dividend paying agent with

nonresident withholding tax certification (e.g., an IRS Form W-8BEN, IRS Form W-8BEN-E, or an acceptable substitute form) or otherwise

meets documentary evidence requirements for establishing that it is a non-U.S.

stockholder or otherwise establishes an exemption from

backup withholding.

stockholder provides us or the dividend paying

agent with a U.S.

nonresident withholding tax certification (e.g., an IRS Form W-8BEN, IRS Form W-8BEN-E, or an acceptable substitute

form) or otherwise meets documentary evidence requirements for establishing that it is a non-U.S.

stockholder or otherwise establishes

an exemption from backup withholding.

Withholding of U.S.

tax (at a 30% rate) is

required by the Foreign Account Tax Compliance Act, or FATCA, provisions of the Code with respect to payments of dividends made to certain non-U.S.

entities that

fail to comply (or be deemed compliant) with extensive new reporting and withholding requirements designed to inform the U.S.

of the Treasury of U.S.-owned foreign investment accounts.

(at a 30% rate) is required by the Foreign Account Tax Compliance Act, or FATCA, provisions of the Code with respect to payments of dividends

made to certain non-U.S.

entities that fail to comply (or be deemed compliant) with extensive new reporting and withholding

requirements designed to inform the U.S.

Department of the Treasury of U.S.-owned foreign investment accounts.

Under proposed U.S.

Treasury regulations, which may be relied upon until final

Treasury regulations are published, there is no FATCA withholding on gross proceeds from the sale of disposition of Shares or on

certain capital gain distributions.

Stockholders may be requested to provide additional information to enable the applicable withholding

agent to determine whether withholding is required.

regulations, which may be relied upon until final U.S.

Treasury regulations are published, there is no FATCA withholding on gross proceeds

from the sale of disposition of shares of common stock or on certain capital gain distributions.

Stockholders may be requested to provide

additional information to enable the applicable withholding agent to determine whether withholding is required.

An investment in shares by a non-U.S.

4 unchanged sentences

federal estate tax, withholding tax, and state, local and foreign tax consequences of acquiring, owning

or disposing of our Shares.

or disposing of our shares of common stock.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business