What changed in this filing

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Item 1. Business

2025-03-03 compared with 2024-02-29 · 866 added, 898 removed, 480 unchanged (79% 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.

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

investment company that has elected to be regulated as a BDC under the 1940 Act.

Anderson BDC, Inc.

is a Delaware corporation formed to make investments in middle-market companies and commenced operations on February 5,

We are an externally managed, closed-end, non-diversified management investment company that has elected to be regulated

as a BDC under the 1940 Act.

In addition, for U.S.

federal income tax purposes, we

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

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”).

federal income tax purposes, we intend to qualify, annually, as a RIC under Subchapter

M of the Code.

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 private middle market companies.

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.

Our Advisor operates within Kayne Anderson’s middle market private credit platform

(“KAPC” or “Kayne Anderson Private Credit”).

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”).

May 24, 2024, we completed our initial public offering (“IPO”), issuing 6,000,000 shares of common stock at a public offering

price of $16.63 per share.

Net of underwriting fees and offering expenses, we received net cash proceeds of $92.4 million.

The Company’s

common stock began trading on the New York Stock Exchange (“NYSE”) under the ticker symbol “KBDC” on May 22,

We generally intend to distribute, out of assets

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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 have nearly all of our debt investments in private middle market companies.

We use “private” to refer to companies that are not traded on a securities exchange and define “middle market companies”

as companies that, in general, generate between $10 million and $150 million of annual earnings before interest, taxes, depreciation and

amortization, or 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 companies.

market conditions, we expect at least 90% of our portfolio (including investments purchased with proceeds from borrowings under credit

facilities and issuances of senior unsecured notes) to be invested in first lien senior secured, unitranche and split-lien loans.

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

We expect the remainder of our portfolio to be invested in second-lien loans, subordinated

debt or equity securities (including those purchased in conjunction with other cred investments).

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 are located in the United States.

We determine the location of

a company as being in the United States by (i) such company being organized under the laws of one of the states in the United States;

or (ii) during its most recent fiscal year, such company derived at least 50% of its revenues or profits from goods produced

or sold, investments made, or services performed in the United States or has at least 50% of its assets in the United States.

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.

KAPC was established in 2011 and manages (directly and through affiliates)

assets under management (“AUM”) of approximately $7.1 billion related to middle market private credit as of December 31,

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,” and “ — Risks

Relating to Our Investments — Limitations of investment due diligence expose us to investment risk.”

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);

First lien debt :

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.

The security 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).

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.

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).

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.

We do not expect to principally invest in “covenant-lite” loans;

we use the term “covenant

lite” to refer generally to loans that do not have a customary set of financial maintenance covenants.

Subject to our Advisor’s discretion, based

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

invest in debt that is typically not rated by any rating agency, but we believe that if such investments were rated, they would be below

investment grade, which are sometimes referred to as “high yield bonds” or “junk bonds.” See “ Risk Factors — Risks

Relating to Our Investments — We invest in highly leveraged companies, which could cause us to lose all or a part of

our investment in those companies,” In addition, we have a maturity policy between three to six years for our debt

See “ Risk Factors — Risks Relating to Our Investments — Our portfolio

companies may be unable to repay or refinance outstanding principal on their loans at or prior to maturity.”

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.

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 our private middle market investments.

Once an investment has been made, our Advisor closely monitors each portfolio

investment and takes a proactive approach to identify and address sector or company specific risks.

The Advisor seeks to maintain 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.

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Percentage of

AIDC Intermediate Co 2, LLC (Peak Technologies)

Genuine Cable Group, LLC

Silk Holdings III Corp.

Personal care products

Dusk Acquisition II Corporation (Motors & Armatures, Inc.

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

M2S Group Intermediate Holdings, Inc.

Containers & packaging

American Equipment Holdings LLC

Commercial services & supplies

Vitesse Systems Parent, LLC

Aerospace & defense

CGI Automated Manufacturing, LLC

IF&P Foods, LLC (FreshEdge)

Food products

AIDC Intermediate Co 2, LLC (Peak Technologies)

Trading companies & distributors

Fastener Distribution Holdings, LLC

Aerospace & defense

Genuine Cable Group, LLC

Trading companies & distributors

Improving Acquisition LLC

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

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Market Opportunity

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 ”.

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 (98.0% of our portfolio consisted of first lien

senior secured loans as of December 31, 2024), as described above in “—Investment Objective, Principal Strategy and Investment

Structures ”.

Long-Term Demand Drivers in the U.S.

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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 ).

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.

private sector gross domestic product (“GDP”) making them equivalent to the size of the

third largest economy in the world on a standalone basis.

National Center for The Middle Market’s Mid-Year 2024 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.

held more than $1.5 trillion in un-invested capital (“dry powder”) as of February 2025.

We expect these private equity firms

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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

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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 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

intend to have nearly all of our debt investments in private middle market companies.

We believe that lending to middle market companies

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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.

Our Advisor utilizes KAPC’s direct lending platform

to pursue investment opportunities.

The leadership team of KAPC has invested this 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.

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

We have benefited and expect to continue to benefit from our relationship with KAPC’s

large direct lending platform through our Advisor.

Since its inception through December 31, 2024, KAPC has deployed nearly $12.7 billion

of capital across 426 investments in 207 portfolio companies.

Our Advisor (or an affiliate thereof) has been lead agent or co-agent in

approximately 76% of investments since the inception of KAPC.

Credit Investors with Long Track Record .

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 $17.2 billion in underwritten middle market loan commitments across multiple credit cycles since

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 of KBDC.

The Advisor’s investment committee consists

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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.

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 December 31, 2024 (and excluding investments in broadly syndicated loans), approximately 63% of opportunities sourced by

our Advisor and 88% 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.

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.

Under this model, since inception (and excluding investments in broadly syndicated loans), (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, 2024), (ii) approximately 58% of KAPC’s investments were made with repeat private equity sponsors

and (iii) over 110 private equity sponsors have partnered with KAPC to provide debt financing to their portfolio companies.

Focus on Investing in Core Middle Market .

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0.2% 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

We compete with a number of BDCs and investment funds

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

form of financing, private equity and hedge funds.

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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.

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

Corporate Structure

We are a Delaware corporation

and commenced operations on February 5, 2021.

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.

From time to time we may form wholly-owned subsidiaries to facilitate our normal course of business investing activities.

Between February 2021 and December 2023, we

executed subscription agreements with investors on sixteen occasions as part of one continuous private placement offering obligating

those investors to purchase shares of common stock representing total aggregate capital commitments of $1.047 billion.

execution of the subscription agreements were effected as part of one continuous private placement offering exempt from the

registration requirements of the Securities Act pursuant to Section 4(a)(2) thereunder.

Pursuant to the private placement

offering that began on February 5, 2021, we called capital under the terms of those subscription agreements, and we issued

shares of common stock to investors on thirteen funding occasions between February 2021 and April 2024 in an aggregate amount

of $1.047 billion.

On March 22, 2024, we delivered the final

capital drawdown notice to our stockholders relating to the sale of shares of common stock in the private placement.

Following this

capital call, we did not have any remaining undrawn capital commitments and the investors’ obligations to purchase additional shares

of common stock were exhausted.

This final capital drawdown notice completed our pre-initial public offering capital raise private

placement offering exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”),

pursuant to Section 4(a)(2) thereunder.

Public Offering

May 24, 2024, we completed our initial public offering (“IPO”), issuing 6,000,000 shares of our common stock at

a public offering price of $16.63 per share.

Net of underwriting fees and offering expenses, we received net cash proceeds, before offering

expenses, of $92.4 million.

The Company’s common stock began trading on the New York Stock Exchange (“NYSE”) under the

ticker symbol “KBDC” on May 22, 2024.

Stock Repurchase Plan

On May 21, 2024, the Company entered into a share

repurchase plan, or the Company 10b5-1 Plan, to acquire up to $100 million in the aggregate of the Company’s Common Stock at prices

below the Company’s net asset value per share over a specified period, in accordance with the guidelines specified in Rule 10b5-1

and Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

The Company 10b5-1 Plan was approved

by the Board of Directors on March 6, 2024.

Our 10b5-1 Plan requires Morgan Stanley Corporation as the Company’s agent, to repurchase

Common Stock on its behalf when the market price per share is below the most recently reported net asset value per share (including any

updates, corrections or adjustments publicly announced by the Company to any previously announced net asset value per share, including

any distributions declared).

Under the Company 10b5-1 Plan, the volume of purchases would be expected to increase as the price of the

Company’s Common Stock declines, subject to volume restrictions.

The timing and amount of any share repurchases will depend on the

terms and conditions of the Company 10b5-1 Plan, the market price of the Company’s Common Stock and trading volumes, and no assurance

can be given that Common Stock be repurchased in any particular amount or at all.

The repurchase of shares pursuant to the Company 10b5-1

Plan is intended to satisfy the conditions of Rule 10b5-1 and Rule 10b-18 under the Exchange Act, and will otherwise be subject to applicable

law, including Regulation M, which may prohibit repurchases under certain circumstances.

The Company 10b5-1 Plan commenced beginning 60

calendar days following the end of the “restricted period” under Regulation M and will terminate upon the earliest to occur

of (i) the close of business on May 24, 2025, (ii) the end of the trading day on which the aggregate purchase price for all shares purchased

under the Company 10b5-1 Plan equals $100 million and (iii) the occurrence of certain other events described in the Company 10b5-1 Plan.

The “restricted period” under Regulation

M ended upon the closing of the Company’s IPO and, therefore, the Common Stock repurchases described above began on July 23, 2024.

During the year ended December 31, 2024, the Company repurchased 94,613

shares under our 10b5-1 Plan for a total of $1.5 million.

Kayne Anderson, Kayne Anderson Private Credit

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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.

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 and infrastructure/energy.

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

to the Advisor.

of December 31, 2024, investment vehicles managed or advised by Kayne Anderson had over $36 billion in assets under management (“AUM”)

for institutional investors, family offices, high net worth and retail clients.

Kayne Anderson has approximately 350 professionals located

across five offices across the U.S.

The firm has approximately 150 investment professionals, approximately 33 of whom 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 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 loans.

KAPC was established in 2011 and manages (indirectly through affiliates) AUM of approximately $7.1 billion related to middle market private

credit as of December 31, 2024.

KAPC’s integrated and scaled platform combines

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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.

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.

While we do not have any employees, the Advisor and its affiliates have a team of approximately 33 investment

professionals who are primarily focused on credit investments.

The investment team is supported by a team of finance, legal, compliance,

operations and administrative professionals.

The Advisor executes on our investment objective

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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.

Vice Chairman of Kayne Anderson;

Blank, President and Chief Operating Officer of Kayne Anderson;

Goodwillie, Co-Head

of Private Credit at Kayne Anderson;

The Advisor’s investment committee review process is intended to bring the diverse experience and perspectives

of the Advisor’s investment committee members to the analysis and consideration of every investment.

The Advisor’s investment

committee currently consists of Terrence J.

Quinn, Vice Chairman of Kayne Anderson and Vice Chair of the Company;

Blank, President

and Chief Operating Officer of Kayne Anderson;

Goodwillie, Co-Head of Private Credit at Kayne Anderson and Co-Chief Executive

Officer of the Company;

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.

Leonard, Co-Head of Private Credit at Kayne Anderson and Co-Chief Executive Officer of the Company.

The Advisor’s investment committee also determines appropriate investment sizing and mandates ongoing monitoring requirements.

Goodwillie and Kenneth B.

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

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 portfolio.

In addition to reviewing investments, the Advisor’s

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

The Advisor’s 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 efficiently.

We make investments alongside certain entities

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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 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 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 notice date

Common Stock issue date

($ in millions)

March 23, 2023

April 4, 2023

July 28, 2023

August 8, 2023

Total common stock issued

Commitment Period

Upon the earlier of (a) December

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

right to make capital calls of stockholders may be pledged as collateral to a lender, which will be able to call for capital contributions

upon the occurrence of an event of default under such credit facility.

To the extent such an event of default does occur, stockholders

could therefore be required to fund any shortfall up to their remaining Capital Commitments, without regard to the underlying value of

their investment.

Liquidity Event

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.

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 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 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.

March 6, 2024, the Company entered into an amended and restated investment advisory agreement with the Advisor (the “Amended

Investment Advisory Agreement”), which became effective when we closed our initial public offering (“IPO”).

Amended Investment Advisory Agreement, the base management fee calculated at an annual rate of 1.00% and the incentive fee on income is

subject to a twelve-quarter lookback quarterly hurdle rate of 1.50% and is subject to an Incentive Fee Cap (as defined below) based

on the Company’s Cumulative Pre-Incentive Fee Net Return (as defined below).

The cost of both the management fee and the incentive fee under the

Amended Investment Advisory Agreement are ultimately borne by common stockholders.

The Amended Investment Advisory Agreement was approved

by the Board on March 6, 2024.

Unless earlier terminated, the Amended Investment Advisory Agreement will renew automatically for

successive annual periods, provided that such continuance is specifically approved at least annually by our Board including a majority

of Independent Directors or the vote of a majority of our outstanding voting securities.

As discussed in more detail below,

on March 6, 2024, the Advisor entered into the Amended Investment Advisory Agreement (effective upon the closing of the IPO) to include

a three-year total return lookback feature on the income incentive fee.

This lookback feature provides that the Advisor’s income

incentive fee may be reduced if the Company’s portfolio experiences aggregate write-downs or net capital losses during the

applicable Trailing Twelve Quarters (as defined below).

On March 6, 2024, the Advisor also entered into a fee waiver agreement (the

“Fee Waiver Agreement”) for the waivers of (i) the income incentive fee for three calendar quarters commencing in the

calendar quarter the IPO was completed and (ii) a portion of the base management fee for one year following the completion of the

The Fee Waiver Agreement became effective upon the closing of the IPO.

Amounts waived by the Advisor pursuant to the Fee

Waiver Agreement are not subject to recoupment by the Advisor.

The waivers of the base management fee and incentive income fee pursuant

to the Fee Waiver Agreement may only be terminated by the Board and may not be terminated by the Advisor.

The Fee Waiver Agreement is

contractual in nature.

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

upon the closing of the IPO, the base management fee pursuant to the Amended Investment Advisory Agreement is calculated at an annual

rate of 1.00% of the fair market value of the Company’s investments.

Since the IPO occurred on a date other than the first day

of a calendar quarter, the base management fee was calculated for such calendar quarter at a weighted rate based on the fee rates applicable

before and after the closing of the IPO based on the number of days in such calendar quarter before and after the closing of the

Pursuant to the Fee Waiver Agreement, effective upon the closing of the IPO, the Advisor entered into an agreement for the contractual

waiver of the base management fee at an annual rate of 0.25% for one year following the completion of the IPO.

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

of the Company’s fair market value of investments, at the end of the two most recently completed calendar quarters, 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.

Base management fees for any partial quarter will be

appropriately pro-rated.

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.

Company 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 gains.

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 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

Pre-Incentive Fee

Net Investment Income

Prior to an Exchange

(expressed as a percentage

of the value of net assets)

incentive fee based on income (the “income incentive fee”) under the Amended Investment Advisory Agreement is determined

and paid quarterly in arrears in cash (subject to the limitations described in “ Payment of Incentive Fees ”

Under the Amended Investment Advisory Agreement, the first part of the income

incentive fee is calculated and payable quarterly in arrears based on the Company’s pre-incentive fee net investment

income as defined in the Amended Investment Advisory Agreement.

Pre-incentive fee net investment income means, as the context

requires, either the dollar value of, or percentage rate of return on the value of, the Company’s net assets at the beginning

of each applicable calendar quarter from interest income, dividend income and any other income (including any other fees (other than

fees for providing managerial assistance), such as commitment, origination, structuring, diligence and consulting fees or other fees

that the Company receives from portfolio companies) accrued during the calendar quarter, minus the Company’s operating

expenses accrued for the quarter (including the management fee, expenses payable under the Administration Agreement (as defined

below), and any interest expense or fees on any credit facilities or senior unsecured notes and dividends paid on any issued and

outstanding preferred shares, but excluding the incentive fee).

Pre-incentive fee net investment income includes, in the case

of investments with a deferred interest feature (such as original issue discount, debt instruments with pay in kind

(“PIK”) interest and zero coupon securities), accrued income that the Company has not yet received in cash.

Pre-incentive fee net investment income excludes any realized capital gains, realized capital losses or unrealized capital

appreciation or depreciation.

the closing of the IPO, the Company is required to pay an income incentive fee of 15.0%, with a 1.50% quarterly hurdle and 100% catch-up.

Pursuant to the Fee Waiver Agreement, the Advisor waived its right to receive an income incentive fee during the three calendar quarters

commencing with the calendar quarter in which the IPO was completed and amounts waived by the Advisor pursuant to the Fee Waiver Agreement

are not subject to recoupment by the Advisor.

upon the closing of the IPO, the Company will pay the Advisor an income incentive fee based on its aggregate pre-incentive fee net

investment income (as described above), with respect to (i) the calendar quarter ending June 30, 2024 (the “First Calendar

Quarter”) and (ii) each subsequent calendar quarter, with the then, current calendar quarter and the eleven preceding calendar

quarters beginning with the calendar quarter after the First Calendar Quarter (or the appropriate portion thereof in the case of any of

the Company’s first eleven calendar quarters that commence after the First Calendar Quarter) (those calendar quarters after the

First Calendar Quarter, the “Trailing Twelve Quarters”).

the First Calendar Quarter, pre-incentive fee net investment income in respect of the First Calendar Quarter was compared to a hurdle

rate of 1.50% (6.00% annualized).

The income incentive fee for the First Calendar Quarter was determined as follows:

no income incentive fee is payable to the Advisor if the aggregate pre-incentive fee net investment income for the First Calendar Quarter does not exceed that hurdle rate;

100% of the aggregate pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds that hurdle rate, but is less than a quarterly rate of 1.6667% for the portion of the First Calendar Quarter before the IPO and a quarterly rate of 1.7647% for the portion of the First Calendar Quarter after the IPO, referred to the “catch-up.” The “catch-up” is meant to provide the Advisor with 10.0% of the Company’s pre-incentive fee net investment income for the portion of the First Calendar Quarter before the IPO and 15.0% for the balance of that First Calendar Quarter, as if the hurdle rate did not apply;

10.0% of the aggregate pre-incentive fee net investment income, if any, that exceeds a quarterly rate of 1.6667% for the portion of the First Calendar Quarter before the IPO and 15.0% of the aggregate pre-incentive fee net investment income, if any, that exceeds a quarterly rate of 1.7647% for the balance of the First Calendar Quarter.

with the calendar quarter beginning immediately after the First Calendar Quarter, subject to the Incentive Fee Cap (described below),

the pre-incentive fee net investment income in respect of the relevant Trailing Twelve Quarters is compared to a “Hurdle Rate”

equal to the product of (i) the hurdle rate of 1.50% per quarter (6.00% annualized) and (ii) the sum of our net assets at the

beginning of each applicable calendar quarter comprising the relevant Trailing Twelve Quarters.

The income incentive fee for each calendar

quarter will be determined as follows:

● no income incentive fee is payable to the Advisor in any

calendar quarter in which aggregate pre-incentive fee net investment income in respect of the relevant Trailing Twelve Quarters

does not exceed the Hurdle Rate;

● 100% of the aggregate pre-incentive fee net investment

income in respect of the Trailing Twelve Quarters with respect to that portion of such pre-incentive fee net investment income,

if any, that exceeds the Hurdle Rate, but is less than or equal to an amount, which we refer to as the “Catch-up Amount,”

determined on a quarterly basis by multiplying 1.7647% by the Company’s net asset value at the beginning of each applicable calendar

quarter comprising the relevant Trailing Twelve Quarters (after making appropriate adjustments to the Company’s net asset value

at the beginning of each applicable calendar quarter for all issuances by the Company of shares of its common stock, including issuances

pursuant to its dividend reinvestment plan, and distributions during the applicable calendar quarter);

● 15.0% of the aggregate pre-incentive fee net investment

income in respect of the Trailing Twelve Quarters that exceeds the Catch-up Amount.

with the quarter that begins immediately after the First Calendar Quarter, each income incentive fee became subject to an “Incentive

Fee Cap” that in respect of any calendar quarter is an amount equal to 15.0% of the Cumulative Pre-Incentive Fee Net Return

(as defined herein) during the Trailing Twelve Quarters less the aggregate income incentive fees that were paid to the Advisor in the

preceding eleven calendar quarters (or portion thereof) comprising the relevant Trailing Twelve

In the event the Incentive Fee Cap is zero or a negative value then no income incentive fee shall be payable and if the Incentive

Fee Cap is less than the amount of income incentive fee that would otherwise be payable, the amount of income incentive fee shall be

reduced to an amount equal to the Incentive Fee Cap.

Pre-Incentive Fee Net Return” means (x) with respect to the First Calendar Quarter, the sum of pre-incentive fee

net investment income in respect of the First Calendar Quarter, (y) with respect to the relevant Trailing Twelve Quarters, the pre-incentive fee

net investment income in respect of the relevant Trailing Twelve Quarters minus any Net Capital Loss (as defined below), if any, in respect

of the relevant Trailing Twelve Quarters.

If, in any quarter, the Incentive Fee Cap is zero or a negative value, the Company will pay

no income incentive fee to the Advisor for such quarter.

If, in any quarter, the Incentive Fee Cap for such quarter is a positive value

but is less than the income incentive fee that is payable to the Advisor for such quarter (before giving effect to the Incentive Fee Cap)

calculated as described above, the Company will pay an income incentive fee to the Advisor equal to the Incentive Fee Cap for such quarter.

If, in any quarter, the Incentive Fee Cap for such quarter is equal to or greater than the income incentive fee that is payable to the

Advisor for such quarter (before giving effect to the Incentive Fee Cap) calculated as described above, the Company will pay an income

incentive fee to the Advisor equal to the incentive fee calculated as described above for such quarter without regard to the Incentive

Capital Loss” in respect of a particular period means the difference, if positive, between (i) aggregate capital losses, whether

realized or unrealized, in such period and (ii) aggregate capital gains, whether realized or unrealized, in such period.

These calculations are prorated for

any period of less than three months and adjusted for any share issuances or repurchases during the relevant quarter.

will the amendments to the income incentive fee to include the three year income and total return lookback features allow the Advisor

to receive greater cumulative income incentive fees under the Amended Investment Advisory Agreement than it would have under the Investment

Advisory Agreement.

Amounts waived by the Advisor pursuant to the Fee Waiver Agreement are not subject to recoupment by the Advisor.

The following is a graphical representation of the calculations of

the income incentive fee:

Quarterly Incentive Fee on

Pre-Incentive Fee Net Investment Income

Prior to the IPO

(expressed as a percentage of the value of net

Pre-Incentive Fee Net Investment Income

Quarterly Incentive Fee

Quarterly Incentive Fee on

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

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

After to the IPO

(expressed as a percentage of the value of net assets)

Pre-Incentive Fee Net Investment Income

Quarterly Incentive Fee

Incentive Fee on Capital Gains

Prior to an Exchange

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.

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

● 15.0% of the Company’s 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 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.

Prior to the IPO, any incentive fees earned by the Advisor accrued

as earned but only became payable in cash to the Advisor upon closing of the IPO.

The Company incurred incentive fees on income of

$16.8 million that became payable upon closing of the IPO.

Administration Agreement

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

On February 5, 2021, we entered into an administration agreement (the

“Administration Agreement”) with our Advisor, which serves as our administrator (the “Administrator”) and provides

or oversees 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 our stockholders and filed with the SEC.

On February 19, 2025, the Board approved an additional one-year term

of the Administration Agreement through March 15, 2026.

We 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

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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,

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.

However, the Administrator has a contractual right to seek reimbursement

for its costs and expenses incurred in performing its obligations under the Administration Agreement and may do so in the future.

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.

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

Since March 28, 2023, the Company has

paid 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 and industry focus.

Furthermore, we must meet certain diversification

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

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”).

Business — Material U.S.

See “ Item 1.

— Material U.S.

Federal Income Tax Considerations .”

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Regulation as a Business Development Company

A BDC is a specialized investment vehicle

that elects to be regulated under the 1940 Act as an investment company but is generally subject to less onerous requirements than other

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

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.

A BDC is a specialized investment vehicle that

elects to be regulated under the 1940 Act as an investment company but is generally subject to less onerous requirements than other registered

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

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

Under the 1940 Act, a BDC may not acquire

any asset other than assets of the type listed in Section 55(a) of the 1940 Act, which are referred to as qualifying assets, unless,

Under the 1940 Act, a BDC may not acquire any

asset other than assets of the type listed in Section 55(a) of the 1940 Act, which are referred to as qualifying assets, unless,

at the time the acquisition is made, qualifying assets represent at least 70% of the BDC’s total assets.

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

(1) Securities

purchased in transactions not involving any public offering from the issuer of such securities, which issuer (subject to certain limited

exceptions) is an eligible portfolio company, or from any person who is, or has been during the preceding 13 months, an affiliated person

of an eligible portfolio company, or from any other person, subject to such rules as may be prescribed by the SEC.

An eligible portfolio

company is defined in the 1940 Act as any issuer which:

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 purchased in transactions not involving any public offering from the issuer of such securities, which issuer (subject to certain limited exceptions) is an eligible portfolio company, or from any person who is, or has been during the preceding 13 months, an affiliated person of an eligible portfolio company, or from any other person, subject to such rules as may be prescribed by the SEC.

An eligible portfolio company is defined in the 1940 Act as any issuer which:

(a) is organized under the laws

of, and has its principal place of business in, the United States;

(b) is not an investment company

(other than a small business investment company wholly owned by the BDC) or a company that would be an investment company but for certain

exclusions under the 1940 Act;

(i) 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;

(ii) 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.

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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 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.

We partially finance our investments with leverage

in the form of borrowings under credit facilities and issuances of senior unsecured notes.

We intend to further borrow under credit facilities

and/or issue senior unsecured notes in the future in order to finance our investments.

As of December 31, 2024, we had $858 million of

indebtedness outstanding under our credit facilities and senior unsecured notes.

See “ Risk Factors — Risks Relating

to Our Business and Structure — Provisions in our credit facilities and our senior unsecured notes contain various covenants,

which, if not complied with, could accelerate our repayment obligations under such facilities, thereby materially and adversely affecting

our liquidity, financial condition, results of operations and ability to pay distributions.

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.

We are required to meet an asset coverage ratio of total

assets (less total liabilities other than indebtedness) to total borrowings and other senior securities of at least 150%.

If this ratio

declines below 150%, we cannot incur additional leverage and could be required to sell a portion of our investments to repay some leverage

when it is disadvantageous to do so.

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,

717 Texas Avenue, Suite 2200, 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 2002.

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,

Compliance Policies and Procedures

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

We will be periodically examined by the SEC

for compliance with the 1940 Act.

We are required to provide and maintain a

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.

We will be periodically examined by the SEC for

compliance with the 1940 Act.

We are required to provide and maintain a 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.

We and our Advisor have adopted and implemented

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Sarbanes-Oxley Act

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

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.

Many of these requirements affect us.

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 such

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 reports;

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 must obtain an audit of the effectiveness of internal control over financial reporting performed by our 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.

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 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

Street Reform and Consumer Protection Act (“Dodd-Frank”), we are exempt from the provisions of Section 404(b) of the

Sarbanes-Oxley Act, which would require that our independent registered public accounting firm provide an attestation report on the effectiveness

of our internal control over financial reporting, until such time as we cease to be an emerging growth company and become an accelerated

filer as defined in Rule 12b-2 under the Exchange Act.

This may increase the risk that material weaknesses or other deficiencies

in our internal control over financial reporting go undetected.

Under the JOBS Act, emerging growth companies

can delay adopting new or revised accounting standards until such time as those standards apply to private companies.

We have made an

irrevocable election not to take advantage of this exemption from new or revised accounting standards.

We therefore are subject to the

same new or revised accounting standards as other public companies that are not emerging growth companies.

Commodities Exchange Act

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“our” and “us” refers to our Advisor.

An investment advisor registered under the

Advisers Act has a fiduciary duty to act solely in the best interests of its clients.

As part of this duty, we recognize that we must

vote the Company’s securities in a timely manner free of conflicts of interest and in the best interests of the Company and its

stockholders.

An investment advisor registered under the Advisers

Act has a fiduciary duty to act solely in the best interests of its clients.

As part of this duty, we recognize that we must vote the

Company’s securities in a timely manner free of conflicts of interest and in the best interests of the Company and its stockholders.

These policies and procedures for voting proxies

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Privacy Principles

We are committed to maintaining the privacy

of our investors and to safeguarding their non-public personal information.

The following information is provided to help you

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

select other parties.

We are committed to maintaining the privacy of

our investors and to safeguarding their non-public personal information.

The following information is provided to help you understand

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

other parties.

We do not disclose any non-public personal

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Reporting Obligations

As a BDC, we make available on our website

(www.kaynebdc.com) our annual reports on Form 10-K, quarterly reports on Form 10-Q and our current reports on Form 8-K.

As a BDC, we make available on our website (www.kaynebdc.com)

our annual reports on Form 10-K, quarterly reports on Form 10-Q and our current reports on Form 8-K.

and the public may also read and copy any materials we file with the SEC at the SEC’s Public Reference Room, 100 F Street, N.E.,

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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 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.

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 stock.

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

federal income tax considerations applicable to such an investment.

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.

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

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.

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.

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.

It does not discuss the special treatment

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 of common stock that is for U.S.

federal income tax purposes:

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.

a citizen or individual resident of the United States;

a 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;

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

federal income taxation regardless of its source;

trust if either a U.S.

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.

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

stockholder” is

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federal income tax purposes.

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.

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.

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

We intend to elect to be treated as a RIC

under Subchapter M of the Code.

We intend to elect to be treated as a RIC under

Subchapter M of the Code.

As a RIC, we generally will not have to pay corporate-level U.S.

federal income taxes on any net ordinary

income or capital gains that we timely distribute to our stockholders as dividends.

To qualify as a RIC, we must, among other things,

meet certain source-of-income and asset diversification requirements (as described below).

In addition, to qualify

for RIC treatment, we must distribute to our stockholders, for each taxable year, dividends of an amount at least equal to the sum of

90% of our “investment company taxable income,” which is generally our net ordinary income plus the excess of realized net

short-term capital gains over realized net long-term capital losses and determined without regard to any deduction for dividends paid,

and 90% of our net tax-exempt interest income, if any (the “Annual Distribution Requirement”).

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 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”).

federal income taxes on any net ordinary income

or capital gains that we timely distribute to our stockholders as dividends.

To qualify as a RIC, we must, among other things, meet certain source-of-income and asset

diversification requirements (as described below).

In addition, to qualify for RIC treatment, we must distribute to our stockholders,

for each taxable year, dividends of an amount at least equal to the sum of 90% of our “investment company taxable income,”

which is generally our net ordinary income plus the excess of realized net short-term capital gains over realized net long-term capital

losses and determined without regard to any deduction for dividends paid, and 90% of our net tax-exempt interest income, if

any (the “Annual Distribution Requirement”).

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 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”).

Taxation as a RIC

the Annual Distribution Requirement;

qualify as a RIC;

satisfy 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.

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.

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

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income tax purposes, we must, among other things:

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.

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 year:

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

government securities, securities of other RICs, and other securities if such other securities of any one issuer do not represent more than 5% of the value of our assets or more than 10% of the outstanding voting securities of the issuer;

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.

We may be required to recognize taxable income

24 unchanged sentences

on such income or capital gains.

A RIC is limited in its ability to deduct

expenses in excess of its investment company taxable income.

If our deductible expenses in a given taxable year exceed our investment

company taxable income, we may incur a net operating loss for that taxable year.

However, a RIC is not permitted to carry forward net

operating losses to subsequent taxable years and such net operating losses do not pass through to its stockholders.

In addition, deductible

expenses can be used only to offset investment company taxable income, not net capital gain.

A RIC may not use any net capital losses

(that is, the excess of realized capital losses over realized capital gains) to offset its investment company taxable income, but may

carry forward such net capital losses, and use them to offset future capital gains, indefinitely.

Due to these limits on deductibility

of expenses and net capital losses, we may for tax purposes have aggregate taxable income for several taxable years that we are required

to distribute and that is taxable to our stockholders even if such taxable income is greater than the net income we actually earn during

those taxable years.

A RIC is limited in its ability to deduct expenses

in excess of its investment company taxable income.

If our deductible expenses in a given taxable year exceed our investment company taxable

income, we may incur a net operating loss for that taxable year.

However, a RIC is not permitted to carry forward net operating losses

to subsequent taxable years and such net operating losses do not pass through to its stockholders.

In addition, deductible expenses can

be used only to offset investment company taxable income, not net capital gain.

A RIC may not use any net capital losses (that is, the

excess of realized capital losses over realized capital gains) to offset its investment company taxable income, but may carry forward

such net capital losses, and use them to offset future capital gains, indefinitely.

Due to these limits on deductibility of expenses and

net capital losses, we may for tax purposes have aggregate taxable income for several taxable years that we are required to distribute

and that is taxable to our stockholders even if such taxable income is greater than the net income we actually earn during those taxable

Any underwriting fees paid by us with respect

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could, depending upon the terms of the restructuring, cause us to incur unusable or nondeductible losses or recognize future non-cash taxable income.

Certain of our investment practices may be

subject to special and complex U.S.

Certain of our investment practices may be subject

to special and complex U.S.

federal income tax provisions that may, among other things, (1) treat dividends that would otherwise

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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

acquired by us as well as any loss attributable to the lapse of such warrants generally will be treated as capital gain or loss.

gain or loss generally will be long term or short term, depending on how long we held a particular warrant.

Although we do not presently expect to do

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

Gain or loss realized by us from warrants acquired

by us as well as any loss attributable to the lapse of such warrants generally will be treated as capital gain or loss.

Such gain or loss

generally will be long term or short term, depending on how long we held a particular warrant.

Although we do not presently expect to do 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.

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Failure to Qualify as a RIC

If we were unable to qualify for treatment

as a RIC and are unable to cure the failure, for example, by disposing of certain investments quickly or raising additional capital to

prevent the loss of RIC status, we would be subject to tax on all of our taxable income at regular corporate rates.

The Code provides

some relief from RIC disqualification due to failures to comply with the 90% Income Test and the Diversification Tests, although there

may be additional taxes due in such cases.

We cannot assure you that we would qualify for any such relief should we fail the 90% Income

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 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.

If we were unable to qualify for treatment as

a RIC and are unable to cure the failure, for example, by disposing of certain investments quickly or raising additional capital to prevent

the loss of RIC status, we would be subject to tax on all of our taxable income at regular corporate rates.

The Code provides some relief

from RIC disqualification due to failures to comply with the 90% Income Test and the Diversification Tests, although there may be additional

taxes due in such cases.

We cannot assure you that we would qualify for any such relief should we fail the 90% Income Test or the Diversification

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

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

over the next five taxable years.

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.

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

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Taxation of U.S.

Distributions by us generally

are taxable to U.S.

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.

stockholders to the extent of our current or accumulated earnings and profits, whether paid in cash or reinvested

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.

In this regard, it is anticipated that distributions paid by us will

generally not be attributable to dividends and, therefore, generally will not qualify for the preferential maximum U.S.

federal tax rate

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 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.

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

stockholders to the extent of our current or accumulated earnings and profits, whether paid in cash or reinvested 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.

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.

In this regard, it is anticipated that distributions paid by us will generally not

be attributable to dividends and, therefore, generally will not qualify for the preferential maximum U.S.

federal tax rate 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 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 will be entitled to claim a credit or refund equal to their allocable share of the tax paid on the deemed distribution

The amount of the deemed distribution net of such tax will be added to the U.S.

stockholder’s

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.

stockholder’s 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

Such excess generally may be claimed as a credit against the 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.

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

federal income tax or otherwise required to file a U.S.

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.

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.”

For purposes of determining (1) whether

the Annual Distribution Requirement is satisfied for any tax year and (2) the amount of capital gain dividends paid for that tax

year, we may, under certain circumstances, elect to treat a dividend that is paid during the following tax year as if it had been paid

during the tax year in question.

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.

cannot treat any of our investment company taxable income as a “deemed distribution.”

For purposes of determining (1) whether the

Annual Distribution Requirement is satisfied for any tax year and (2) the amount of capital gain dividends paid for that tax year,

we may, under certain circumstances, elect to treat a dividend that is paid during the following tax year as if it had been paid during

the tax year in question.

If we make such an election, the U.S.

stockholder will still be treated as receiving the dividend in

the tax year in which the distribution is made.

However, any dividend declared by us in October, November or December of any calendar

year, payable to stockholders of record on a specified date in such a month and actually paid during January of the following calendar

year, will be treated as if it had been received by our U.S.

stockholders on December 31 of the calendar year in which the dividend

was declared.

With respect to the reinvestment

of dividends, if a U.S.

stockholder will still be treated as receiving the dividend in the tax

year in which the distribution is made.

However, any dividend declared by us in October, November or December of any calendar year, payable

to stockholders of record on a specified date in such a month and actually paid during January of the following calendar year, will be

treated as if it had been received by our U.S.

stockholders on December 31 of the calendar year in which the dividend was declared.

With respect to the reinvestment of dividends,

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 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.

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

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.

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 stock.

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 U.S.

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 of common stock.

Such rate 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.

is lower than the maximum federal income tax rate on ordinary taxable income currently payable by individuals.

Corporate U.S.

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.

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.

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.

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

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

Dividends distributed

by us generally will not be eligible for the dividends-received deduction or the lower tax rates applicable to certain qualified dividends.

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

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

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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.

stockholder 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

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 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

Shareholder of the activities we propose to conduct could give rise to UBTI.

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

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

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.

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

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 generally should not be subject to U.S.

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.

under current law, if we incur indebtedness, such indebtedness will not be attributed to a tax-exempt U.S.

Therefore, a tax-exempt

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 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 non-U.S.

The following discussion only applies to certain

stockholders.

Whether an investment in the shares of common stock is appropriate for a non-U.S.

will depend upon that person’s particular circumstances.

stockholder 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.

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

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.

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.

Certain properly reported dividends received

by 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.

Certain properly reported dividends received by

stockholder generally are exempt from U.S.

12 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 of common

stock, will not be subject to U.S.

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 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.

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.

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 file a U.S.

taxpayer identification number and file a

federal income tax return even if the non-U.S.

stockholder would not otherwise be required to obtain a U.S.

identification number or file a U.S.

taxpayer 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 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.

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).

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.

federal income tax on dividends unless the non-U.S.

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.

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.

(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.

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.

Under proposed U.S.

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.

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 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.

6 unchanged sentences

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