What changed in this filing

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Item 1. Business

2022-03-01 compared with 2021-02-24 · 442 added, 431 removed, 652 unchanged (57% of the section changed)

Solar Capital Ltd.

(Solar, Solar Capital, the Company, we or our), a Maryland

SLR Investment Corp.

(the Company, SLRC, we or our) (f/k/a Solar Capital Ltd.), a Maryland

corporation formed in November 2007, is a closed-end, externally managed, non-diversified management investment company that has elected to be regulated as a business

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We invest primarily in leveraged

middle-market companies in the form of senior secured loans, stretch-senior loans, financing leases and to a lesser extent, unsecured loans and equity securities.

We define middle market to refer to companies with annual revenues

typically between $50 million and $1 billion.

Our investments in stretch-senior loans represent loans where the amount of senior debt of the portfolio company is larger than a traditional senior secured loan but is less than a unitranche

middle-market companies in the form of senior secured loans, financing leases and to a lesser extent, unsecured loans and equity securities.

We define middle market to refer to companies with annual revenues typically between

$50 million and $1 billion.

From time to time, we may also invest directly in the debt and equity of public companies that are thinly traded and such investments will not be limited to any minimum or maximum market capitalization.

In addition, we may invest in foreign

markets, including emerging markets.

addition, we may invest in foreign markets, including emerging markets.

Our business is focused primarily on the direct origination of investments through portfolio companies or their financial sponsors.

Our investments generally range between $5 million and $100 million

each, although we expect that this investment size will vary proportionately with the size of our capital base and/or with strategic initiatives.

Our investments generally range between

$5 million and $100 million each, although we expect that this investment size will vary proportionately with the size of our capital base and/or with strategic initiatives.

In addition, we may invest a portion of our portfolio in other types of investments, which we refer to as opportunistic investments, which are

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or a substantial amount of unpaid principal and interest due upon maturity.

Our investment activities are managed by Solar Capital

Partners, LLC (Solar Capital Partners or the Investment Adviser) and supervised by our board of directors, a majority of whom are non-interested, as such term is defined in the 1940

Solar Capital Management, LLC (Solar Capital Management) provides the administrative services necessary for us to operate.

Our investment activities are managed by SLR Capital

Partners, LLC (SLR Capital Partners or the Investment Adviser) and supervised by our board of directors (the Board or board of directors), a majority of whom are

non-interested, as such term is defined in section 2(a)(19) of the 1940 Act.

SLR Capital Management, LLC (SLR Capital Management) provides the administrative services necessary for us to operate.

As of December 31, 2021, our investment portfolio totaled $1.7 billion and our net asset value was $842.3 million.

portfolio was comprised of debt and equity investments in 106 portfolio companies.

During the fiscal year ended December 31, 2020,

we invested approximately $427 million in 40 portfolio companies.

Investments sold or prepaid during the fiscal year ended December 31, 2020 totaled approximately $363 million.

Solar Capital Partners

Solar Capital Partners, our investment adviser, is controlled and led by Michael S.

Gross, our Chairman and

Co-Chief Executive Officer, and Bruce Spohler, our Co-Chief Operating Officer and Chief Operating Officer.

On December 1, 2021, we entered into an Agreement

and Plan of Merger, or the Merger Agreement, with SLR Senior Investment Corp., a Maryland corporation (SUNS), Solstice Merger Sub, Inc., a Maryland corporation and a wholly-owned subsidiary of SLRC (Merger Sub), and, solely

for the limited purposes set

forth therein, SLR Capital Partners.

The Merger Agreement provides that, subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into SUNS, with SUNS

continuing as the surviving company and as our wholly-owned subsidiary (the Merger,) and, immediately thereafter, SUNS will merge with and into us, with us continuing as the surviving company (together with the Merger, the

See Item 7.

Managements Discussion and Analysis of Financial Condition and Results of OperationsMerger Agreement for further information regarding the Merger Agreement and the Mergers.

SLR Capital Partners

Partners, our investment adviser, is controlled and led by Michael S.

Gross, our Chairman and Co-Chief Executive Officer, and Bruce Spohler, our Co-Chief Operating

Officer and Chief Operating Officer.

They are supported by a team of investment professionals.

Solar Capital Partners investment team has extensive experience in leveraged lending and private equity, as well as significant contacts with financial sponsors.

In addition, at December 31, 2020, Solar Capital Partners serves as investment adviser to private funds and managed accounts as well as

to Solar Senior Capital Ltd.

(or Solar Senior), another publicly traded BDC that primarily invests directly and indirectly in leveraged, private middle market companies in the form of senior secured loans, including first lien and

stretch-senior debt instruments, and SCP Private Credit Income BDC LLC, an unlisted BDC that primarily invests in first lien and stretch first lien loans to upper middle market private leveraged companies.

Through December 31, 2020, the

investment team led by Messrs.

Gross and Spohler has invested approximately $10.0 billion in more than 400 different portfolio companies involving over 200 different financial sponsors.

SLR Capital Partners investment team has extensive experience in leveraged lending and private equity, as well as significant contacts with

financial sponsors.

In addition, at December 31, 2021, SLR Capital Partners serves as investment adviser to private funds and

managed accounts as well as to SLR Senior Investment Corp.

(or SLR Senior), another publicly traded BDC that primarily invests directly and indirectly in leveraged, private middle market companies in the form of senior secured loans,

including first lien debt instruments, SCP Private Credit Income BDC LLC, an unlisted BDC that primarily invests in first lien loans to upper middle market private leveraged companies and SLR HC BDC LLC, an unlisted BDC that primarily invests in

first lien healthcare cash flow loans and life science loans.

Through December 31, 2021, the investment team led by Messrs.

Gross and Spohler has invested approximately $12.5 billion in more than 450 different portfolio companies involving

over 200 different financial sponsors.

As of February 25, 2022, Mr.

Gross and Mr.

Spohler beneficially owned, either directly or indirectly, approximately 6.8% of our outstanding common stock.

has over 25 years of experience in the private equity, distressed debt and mezzanine i.e., actually or structurally subordinated lending businesses and has been involved in originating, structuring, negotiating, consummating and managing private

equity, distressed debt and mezzanine lending transactions.

Gross has over 25 years of experience in the private equity, distressed debt and mezzanine i.e., actually or structurally

subordinated lending businesses and has been involved in originating, structuring, negotiating, consummating and managing private equity, distressed debt and mezzanine lending transactions.

Prior to his current role as our Chairman, Co-Chief Executive Officer and President, Mr.

Gross founded Apollo Investment Corporation, a publicly

He served as its chairman from February 2004 to July 2006 and its chief executive officer from February 2004 to February 2006.

Under his management, Apollo Investment Corporation raised approximately $930 million in gross proceeds

in an initial public offering in April 2004, built a dedicated investment team and infrastructure and invested approximately $2.3 billion in over 65 companies in conjunction with 50 different private equity sponsors.

Gross is also a

founder and a former senior partner of Apollo Management, L.P., a leading private equity firm.

During his tenure at Apollo Management, L.P., Mr.

Gross was a member of the investment committee that was responsible for overseeing more than

$13 billion of investments in over 150 companies.

Gross also currently serves on the boards of directors of three public

companies, and in the past has served on the boards of directors of more than 20 public and private companies.

Gross founded Apollo Investment Corporation, a publicly traded BDC.

He served as its chairman from February 2004 to July 2006 and its chief executive officer from

February 2004 to February 2006.

Under his management, Apollo Investment Corporation raised approximately $930 million in gross proceeds in an initial public offering in April 2004, built a dedicated investment team and infrastructure and

invested approximately $2.3 billion in over 65 companies in conjunction with 50 different private equity sponsors.

Gross is also a founder and a former senior partner of Apollo Management, L.P., a leading private equity firm.

his tenure at Apollo Management, L.P., Mr.

Gross was a member of the investment committee that was responsible for overseeing more than $13 billion of investments in over 150 companies.

Gross also has served on the boards of directors of more than 20 public and private companies.

As a result, Mr.

Gross has developed an extensive network of private equity sponsor relationships as well as relationships with

management teams of public and private companies, investment bankers, attorneys and accountants that we believe should provide us with significant business opportunities.

developed an extensive network of private equity sponsor relationships as well as relationships with management teams of public and private companies, investment bankers, attorneys and accountants that we believe should provide us with significant

business opportunities.

We also rely on the over 25 years of experience of Mr.

Spohler, who has served as our Chief Operating Officer and a partner of Solar

Capital Partners since its inception and as Co-Chief Executive Officer since June 2019.

Spohler, who has served as our Chief Operating

Officer and a partner of SLR Capital Partners since its inception and as Co-Chief Executive Officer since June 2019.

Previously, Mr.

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He held numerous senior roles at CIBC World Markets, including serving on the U.S.

Management Committee, Global Executive Committee and the Deals Committee, which approves all of CIBC World Markets

Management Committee, Global Executive Committee and the Deals Committee,

which approves all of CIBC World Markets U.S.

corporate finance debt capital decisions.

Spohlers tenure, he was responsible for senior loan, high yield and mezzanine origination and execution, as well as CIBC World Markets below investment grade loan portfolio

in the United States.

Spohlers tenure, he was responsible for senior loan, high yield and mezzanine origination and execution, as well as CIBC World

Markets below investment grade loan portfolio in the United States.

As a co-head of U.S.

Leveraged Finance, Mr.

Spohler oversaw over 300 capital raising and merger and acquisition transactions, comprising over $40 billion in market

capitalization.

Solar Capital Partners senior investment professionals have been active participants in the primary and secondary

leveraged credit markets throughout their careers.

Spohler oversaw over 300 capital raising and merger and acquisition transactions,

comprising over $40 billion in market capitalization.

SLR Capital Partners senior investment professionals have been active participants in

the primary and secondary leveraged credit markets throughout their careers.

They have effectively managed portfolios of senior secured, distressed and mezzanine debt as well as other investment types.

The depth of their prior experience and credit market expertise has led

them through various stages of the economic cycle as well as several market disruptions.

Solar Capital Management

Pursuant to an administration agreement (the Administration Agreement), Solar Capital Management furnishes us with office

facilities, equipment and clerical, bookkeeping and record keeping services at such facilities.

Under the Administration Agreement, Solar Capital Management also performs, or oversees the performance of, our required administrative services, which

include, among other things, being responsible for the financial records which we are required to maintain and preparing reports to our stockholders.

In addition, Solar Capital Management assists us in determining and publishing our net asset value,

oversees the preparation and filing of our tax returns and the printing and dissemination of reports to our stockholders, and generally oversees the payment of our expenses and the performance of administrative and professional services rendered to

us by others.

Solar Capital Management also provides managerial assistance, if any, on our behalf to those portfolio companies that request such assistance.

License Agreement

We have entered into a

license agreement with Solar Capital Partners pursuant to which Solar Capital Partners has agreed to grant us a non-exclusive, royalty-free license to use the name Solar Capital. Under this

agreement, we have a right to use the Solar Capital name for so long as the Investment Advisory and Management Agreement with our investment adviser is in effect.

Other than with respect to this limited license, we will have no legal right to the

Solar Capital name.

The depth of their prior experience and credit

market expertise has led them through various stages of the economic cycle as well as several market disruptions.

SLR Capital Management

Pursuant to an administration agreement (the Administration Agreement), SLR Capital Management furnishes us with office facilities,

equipment and clerical, bookkeeping and record keeping services at such facilities.

Under the Administration Agreement, SLR Capital Management also performs, or oversees the performance of, our required administrative services, which include, among

other things, being responsible for the financial records which we are required to maintain and preparing reports to our stockholders.

In addition, SLR Capital Management assists us in determining and publishing our net asset value, oversees the

preparation and filing of our tax returns and the printing and dissemination of reports to our stockholders, and generally oversees the payment of our expenses and the performance of administrative and professional services rendered to us by others.

SLR Capital Management also provides managerial assistance, if any, on our behalf to those portfolio companies that request such assistance.

We have entered into a license agreement with SLR Capital Partners pursuant to which SLR Capital Partners has agreed to

grant us a non-exclusive, royalty-free license to use the names SLR and SOLAR.

Under this agreement, we have a right to use the SLR and SOLAR names for so long as the Investment

Advisory and Management Agreement with our investment adviser is in effect.

Other than with respect to this limited license, we will have no legal right to the SLR and SOLAR names.

Market Opportunity

Solar Capital invests directly and indirectly in leveraged middle-market companies, including in senior secured loans, stretch-senior loans and

to a lesser extent, unsecured loans and equity securities.

We believe that the size of this market, coupled with leveraged companies need for flexible sources of capital at attractive terms and rates, creates an attractive investment

environment for us.

The Company invests

directly and indirectly in leveraged middle-market companies, including in senior secured loans, and to a lesser extent, unsecured loans and equity securities.

We believe that the size of this market, coupled with leveraged companies need for

flexible sources of capital at attractive terms and rates, creates an attractive investment environment for us.

Middle-market companies continue to face increasing difficulty in accessing the capital markets.

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We believe this is because fewer institutions are able to invest in illiquid asset classes.

Therefore, we believe that there is an attractive opportunity to invest in leveraged

middle-market companies, including in senior secured loans, stretch-senior loans, unitranche loans and to a lesser extent, unsecured loans and equity securities, and that we are well positioned to serve this market.

Therefore, we believe that there is an attractive opportunity to invest in leveraged middle-market companies, including

in senior secured loans, unitranche loans and to a lesser extent, unsecured loans and equity securities, and that we are well positioned to serve this market.

Competitive Advantages and Strategy

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As managing partner, Mr.

Gross has principal management responsibility for Solar Capital Partners, to which he currently

Gross has principal management responsibility for SLR Capital Partners, to which he currently

dedicates substantially all of his time.

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Spohler, our Co-Chief Executive Officer,

Chief Operating Officer and a partner of Solar Capital Partners, has over 25 years of experience in evaluating and executing leverage finance transactions.

Chief Operating Officer and a partner of SLR Capital Partners, has over 25 years of experience in evaluating and executing leverage finance transactions.

Investment Capacity

from our public offerings and the Concurrent Private Placement, the borrowing capacity under the senior secured credit facility led by Citibank, N.A.

(the Credit Facility), our $50 million NEFPASS SPV credit facility (the

NEFPASS Facility), our $75 million of unsecured senior notes due 2023 (the 2023 Unsecured Notes), our $150 million of unsecured senior notes due 2022 (the 2022 Unsecured Notes), our $21 million of

unsecured senior notes due 2022 (the 2022 Tranche C Notes), our $125 million of unsecured notes due 2024 (the 2024 Unsecured Notes), our $75 million of unsecured notes due 2026 (the 2026 Unsecured

(the Credit Facility), our $75 million of unsecured senior notes due 2023 (the

2023 Unsecured Notes), our $150 million of unsecured senior notes due 2022 (the 2022 Unsecured Notes), our $21 million of unsecured senior notes due 2022 (the 2022 Tranche C Notes), our $125 million

of unsecured notes due 2024 (the 2024 Unsecured Notes), our $75 million of unsecured notes due 2026 (the 2026 Unsecured Notes), our $50 million of unsecured senior notes due 2027 (the 2027 Unsecured

Notes), the available capital at our significant subsidiaries and the expected repayments of existing portfolio company investments provide us with a substantial amount of capital available for deployment into new investment opportunities.

believe we are well positioned for the current marketplace.

Solar Capitals Limited Leverage

The Companys Limited Leverage

As of December 31, 2021, we had total outstanding borrowings of approximately $818.5 million.

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Proprietary Sourcing and Origination

We believe that Solar Capital Partners senior investment professionals longstanding relationships with financial sponsors,

commercial and investment banks, management teams and other financial intermediaries provide us with a strong pipeline of proprietary origination opportunities.

We believe that SLR Capital Partners senior investment professionals longstanding relationships with financial sponsors, commercial

and investment banks, management teams and other financial intermediaries provide us with a strong pipeline of proprietary origination opportunities.

We expect to continue leveraging the relationships Mr.

Gross established while

sourcing and originating investments at Apollo Investment Corporation (Apollo) as well as the financial sponsor relationships Mr.

Spohler developed while he was a co-head of CIBC World

Markets U.S.

Leveraged Finance Group.

Gross established while sourcing and

originating investments at Apollo Investment Corporation as well as the financial sponsor relationships Mr.

Spohler developed while he was a co-head of CIBC World Markets U.S.

Leveraged Finance

Versatile Transaction Structuring and Flexibility of Capital

We believe Solar Capital Partners senior investment teams broad expertise and ability to draw upon its extensive experience enable

us to identify, assess and structure investments successfully across all levels of a

companys capital structure and to manage potential risk and return at all stages of the economic cycle.

The attempt to manage risk does not imply low risk or no risk.

While we are subject

to significant regulation as a BDC, we are not subject to many of the regulatory limitations that govern traditional lending institutions such as banks.

As a result, we believe that we can be more flexible than such lending institutions in selecting

and structuring investments, adjusting investment criteria, transaction structures and, in some cases, the types of securities in which we invest.

We believe SLR Capital Partners senior investment teams broad expertise and ability to draw upon its extensive experience enable us

to identify, assess and structure investments successfully across all levels of a companys capital structure and to manage potential risk and return at all stages of the economic cycle.

The attempt to manage risk does not imply low risk or no

While we are subject to significant regulation as a BDC, we are not subject to many of the regulatory limitations that govern traditional lending institutions such as banks.

As a result, we believe that we can be more flexible than such

lending institutions in selecting and structuring investments, adjusting investment criteria, transaction structures and, in some cases, the types of securities in which we invest.

Emphasis on Achieving Strong Risk-Adjusted Returns

Solar Capital Partners uses a structured investment and risk management process that emphasizes research and analysis.

Solar Capital Partners

seeks to build our portfolio on a bottom-up basis, choosing and sizing individual positions based on their relative risk/reward profiles as a function of the associated downside risk, volatility,

SLR Capital Partners uses a structured investment and risk management process that emphasizes research and analysis.

SLR Capital Partners seeks

to build our portfolio on a bottom-up basis, choosing and sizing individual positions based on their relative risk/reward profiles as a function of the associated downside risk, volatility,

correlation with the existing portfolio and liquidity.

At the same time, Solar Capital Partners takes into consideration a variety of factors in managing our portfolio and imposes portfolio-based risk constraints promoting a more diverse portfolio

of investments and limiting issuer and industry concentration.

At the same time, SLR Capital Partners takes into consideration a variety of factors in managing our portfolio and imposes portfolio-based risk constraints promoting a more diverse portfolio of

investments and limiting issuer and industry concentration.

We do not pursue short-term origination targets.

We believe this approach enables us to build an attractive investment portfolio that meets our return and value criteria over the long

We believe this approach enables us to build an attractive investment portfolio that meets our return and value criteria over the long term.

We believe it is critical to conduct extensive due diligence on investment targets.

In evaluating new investments we, through Solar Capital Partners, conduct a rigorous due diligence process.

In evaluating new investments we, through SLR Capital Partners, conduct a rigorous due diligence process.

Dedication of Resources to Industries with Substantial Information Flow

We dedicate our investing resources to industries characterized by strong cash flow and in which Solar Capital Partners investment

We dedicate our investing resources to industries characterized by strong cash flow and in which SLR Capital Partners investment

professionals have deep investment experience.

As a result of their investment experience, Messrs.

Gross and Spohler, together with Solar Capital Partners other senior investment professionals, have long-term relationships with management

Gross and Spohler, together with SLR Capital Partners other senior investment professionals, have long-term relationships with management

consultants and management teams in the industries we target, as well as substantial information concerning those industries.

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the risks of our invested capital and enables us to be a better long-term partner for our portfolio companies.

Solar Capital seeks to create a diverse portfolio that includes senior secured loans, stretch-senior loans and to a lesser extent unsecured

loans and equity securities by investing approximately $5 million to $100 million of capital, on average, in the securities of leveraged companies, including middle-market companies.

We expect that this investment size will vary with the

size of our capital base and/or for strategic initiatives.

The Company seeks to create a diverse portfolio that includes senior secured loans, and to a lesser extent unsecured loans and equity

securities by investing approximately $5 million to $100 million of capital, on average, in the securities of leveraged companies, including middle-market companies.

We expect that this investment size will vary with the size of our

capital base and/or for strategic initiatives.

Structurally, unsecured loans usually rank subordinate in priority of payment to senior debt, such as senior bank debt.

As such, other creditors may rank senior to us in the event of

As such, other creditors may rank senior to us in the event of insolvency.

However, unsecured loans rank senior to common and preferred equity in a borrowers capital structure.

Due to its higher risk profile and often less restrictive covenants as compared to senior loans, unsecured loans generally earn a

higher return than senior secured loans.

In addition to senior secured loans, stretch-senior loans and unsecured loans, we may invest a

portion of our portfolio in opportunistic investments, which are not our primary focus, but are intended to enhance our returns

to our investors.

These investments may include direct investments in public companies that are not thinly traded and securities of leveraged companies located in select countries outside of the

United States.

Due to its higher risk profile and often less restrictive covenants as compared to senior loans, unsecured loans generally earn a higher

return than senior secured loans.

In addition to senior secured loans and unsecured loans, we may invest a portion of our

portfolio in opportunistic investments, which are not our primary focus, but are intended to enhance our returns to our investors.

These investments may include direct investments in public companies that are not thinly traded and securities of

leveraged companies located in select countries outside of the United States.

The securities that we invest in are typically rated below investment grade.

Securities rated below investment grade are speculative and are often referred to as leveraged loans, high yield or junk

securities, and may be considered high risk compared to debt instruments that are rated investment grade.

In addition, some of our debt investments will not fully amortize during their lifetime, which means that a borrower may be unable

to payoff its debt due to bankruptcy or other reasons and therefore we may write-off such debt investment prior to its scheduled maturity.

Upon such an occurrence, we may realize a loss or a substantial amount

of unpaid principal and interest due upon maturity.

Securities rated below investment grade are speculative and are often referred to as

leveraged loans, high yield or junk securities, and may be considered high risk compared to debt instruments that are rated investment grade.

In addition, some of our debt investments will not fully

amortize during their lifetime, which means that a borrower may be unable to payoff its debt due to bankruptcy or other reasons and therefore we may write-off such debt investment prior to its scheduled

Upon such an occurrence, we may realize a loss or a substantial amount of unpaid principal and interest due upon maturity.

We may invest up to 30% of our total assets in such opportunistic investments, including loans issued by non-U.S.

issuers, subject to compliance with our

regulatory obligations as a BDC under the 1940 Act.

issuers, subject to compliance with our regulatory obligations as a BDC under the 1940 Act.

We have and will continue to borrow funds to make investments.

As a result, we

will be exposed to the risks of leverage, which may be considered a speculative investment technique.

The use of leverage magnifies the potential for loss on amounts invested and therefore increases the risks associated with investing in our

In addition, the costs associated with our borrowings, including any increase in management fees payable to our investment adviser, Solar Capital Partners, will be borne by our common stockholders.

As a result, we will be exposed to the risks of leverage, which may be

considered a speculative investment technique.

The use of leverage magnifies the potential for loss on amounts invested and therefore increases the risks associated with investing in our securities.

In addition, the costs associated with our

borrowings, including any increase in management fees payable to our investment adviser, SLR Capital Partners, will be borne by our common stockholders.

Additionally, we may in the future seek to securitize our loans to generate cash for funding new investments.

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to currency fluctuations.

Our principal focus is to provide senior secured loans and stretch-senior loans to leveraged companies in a

variety of industries.

We generally seek to target companies that generate positive cash flows and/or have substantial assets that secure our loans.

We generally seek to invest in companies from the broad variety of industries in which our

investment adviser has direct expertise.

Our principal focus is to provide senior secured loans to leveraged companies in a variety of industries.

generally seek to target companies that generate positive cash flows and/or have substantial assets that secure our loans.

We generally seek to invest in companies from the broad variety of industries in which our investment adviser has direct

The following is a representative list of the industries in which we may invest:

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Air Freight &

Hotels, Restaurants & Leisure

Household & Personal

Asset Management

Automobiles

Auto Components

Auto Parts & Equipment

Biotechnology

Building Products

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Health Care Providers & Services

Health Care Technology

Restaurants & Leisure

Household & Personal Products

Industrial Conglomerates

Health Care

Conglomerates

Internet & Catalog Retail

Internet Services &

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Consumable Fuels

Foods & Meats

Paper & Forest Products

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We may invest, to the extent permitted by law, in the securities and instruments of other investment companies, including private funds.

may also participate in negotiated co-investment transactions with certain affiliates, each of whose investment adviser is Solar Capital Partners, or an investment adviser controlling, controlled by or under

common control with Solar Capital Partners and is registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the Advisers Act), in a manner consistent with our investment objective, positions, policies,

may also participate in negotiated co-investment transactions with certain affiliates, each of whose investment adviser is SLR Capital Partners, or an investment adviser controlling, controlled by or under

common control with SLR Capital Partners and is registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the Advisers Act), in a manner consistent with our investment objective, positions, policies,

strategies and restrictions as well as regulatory requirements and other pertinent factors, and pursuant to the conditions of the most recent exemptive order obtained from the SEC on June 13, 2017 (the Exemptive Order).

the Exemptive Order, we are permitted to co-invest with our affiliates if a required majority (as defined in Section 57(o) of the 1940 Act) of our independent directors make certain

conclusions in connection with a co-investment transaction, including, but not limited to,

that (1) the terms of the potential co-investment transaction, including the consideration to be paid, are reasonable and fair to us and our

stockholders and do not involve overreaching in respect of us or our stockholders on the part of any person concerned, and (2) the potential co-investment transaction is consistent with the

interests of our stockholders and is consistent with our then-current investment objective and strategies.

At December 31, 2020, our

portfolio consisted of 105 portfolio companies and was invested 18.8% in cash flow senior secured loans, 27.0% in asset-based senior secured loans / Crystal Financial LLC (Crystal), 14.2% in Kingsbridge Holdings LLC (KBH),

18.6% in equipment senior secured financings / NEF Holdings, LLC (NEF), and 21.4% in life science senior secured loans, in each case, measured at fair value.

We expect that our portfolio will continue to include primarily senior secured,

stretch-senior, financing leases and to a lesser extent, unsecured loans and equity securities.

In addition, we also expect to invest a portion of our portfolio in opportunistic investments, which are not our primary focus, but are intended to

enhance our risk-adjusted returns to stockholders.

These investments may include, but are not limited to, securities of public companies and debt and equity securities of companies located outside of the United States.

the Exemptive Order, we are permitted to co-invest with our affiliates if a required majority (as defined in Section 57(o) of the 1940 Act) of our independent directors make

certain conclusions in connection with a co-investment transaction, including, but not limited to, that (1) the terms of the

potential co-investment transaction, including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching in respect of us or our stockholders on

the part of any person concerned, and (2) the potential co-investment transaction is consistent with the interests of our stockholders and is consistent with our then-current investment

objective and strategies.

At December 31, 2021, our portfolio consisted of 106 portfolio companies and was invested 26.7% in cash

flow senior secured loans, 27.0% in asset-based senior secured loans / SLR Credit Solutions (SLR Credit), 13.5% in Kingsbridge Holdings LLC (KBH), 16.4% in equipment senior secured financings / SLR Equipment Finance

(SLR Equipment), and 16.4% in life science senior secured loans, in each case, measured at fair value.

We expect that our portfolio will continue to include primarily senior secured loans, financing leases and to a lesser extent,

unsecured loans and equity securities.

In addition, we also expect to invest a portion of our portfolio in opportunistic investments, which are not our primary focus, but are intended to enhance our risk-adjusted returns to stockholders.

investments may include, but are not limited to, securities of public companies and debt and equity securities of companies located outside of the United States.

While our primary investment objective is to maximize current income and capital appreciation through investments in U.S.

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Portfolio Company

Crystal Financial LLC*

SLR Credit Solutions*

Kingsbridge Holdings, LLC*

NEF Holdings, LLC*

GenMark Diagnostics, Inc.

SLR Equipment Finance*

Rubius Therapeutics, Inc.

KORE Wireless Group, Inc.

Varilease Finance, Inc.

PhyMed Management LLC

Cardiva Medical, Inc.

Pet Holdings ULC & Pet Supermarket Inc.

KORE Wireless Group, Inc.

Community Brands ParentCo, LLC

BridgeBio Pharma, Inc.

Foundation Consumer Brands, LLC

SOC Telemed, Inc.

Denotes investments in which we are deemed to exercise a controlling influence over the management or policies

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Health Care Equipment & Supplies

Commercial Services & Supplies

Specialty Retail

Biotechnology

Wireless Telecommunication Services

Communications Equipment

Personal Products

TOP TEN PORTFOLIO COMPANIES AND INDUSTRIES AS OF DECEMBER 31, 2020

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Crystal Financial LLC*

Kingsbridge Holdings, LLC*

NEF Holdings, LLC*

GenMark Diagnostics, Inc.

Falmouth Group Holdings Corp.

Rubius Therapeutics, Inc.

KORE Wireless Group, Inc.

Varilease Finance, Inc.

Kingsbridge Holdings, LLC

PhyMed Management LLC

MRI Software, Inc.

Equipment Operating Leases LLC*

Cardiva Medical, Inc.

Pet Holdings ULC & Pet Supermarket Inc.

Denotes investments in which we are deemed to exercise a controlling influence over the management or policies

of a company, as defined in the 1940 Act, due to beneficially owning, either directly or through one or more controlled companies, more than 25% of the outstanding voting securities of the investment.

Diversified Financial Services

Multi-Sector Holdings

Diversified Financial Services

Health Care Providers & Services

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Commercial Services & Supplies

Specialty Retail

Wireless Telecommunication Services

Communications Equipment

Set forth below is a brief description of each portfolio company in which we have made an investment that

represents greater than 5% of our total assets as of December 31, 2021.

Crystal Financial LLC

We currently hold Crystal Financial LLC is an independent commercial finance company that provides primarily senior secured loans for both

asset-based and cash flow financings to middle-market companies.

SLR Credit Solutions

We currently hold SLR Credit as an independent commercial finance company that provides primarily senior secured loans for both asset-based and

cash flow financings to middle-market companies.

Its team of experienced, responsive professionals has underwritten, closed and managed more than $20 billion in secured debt commitments across a wide range of industries.

December 31, 2020, Crystal Financial LLC had 30 funded commitments to 24 different issuers with total funded loans of approximately $404.1 million on total assets of $433.9 million.

Crystals competitors include other specialty

finance companies and small banks.

As with any lender, Crystal is exposed to interest rate risk, which it mostly mitigates by issuing loans with floating rates.

NEF Holdings, LLC

On July 31, 2017,

the Company completed the acquisition of NEF Holdings, which conducts its business through its wholly-owned subsidiary Nations Equipment Finance, LLC.

NEF Holdings is an independent equipment finance company that provides senior secured loans and

leases primarily to U.S.

As of December 31,

2021, SLR Credit had 22 funded commitments to 19 different issuers with total funded loans of approximately $287.4 million on total assets of $347.8 million.

SLR Credits competitors include other specialty finance companies and small

As with any lender, SLR Credit is exposed to interest rate risk, which it mostly mitigates by issuing loans with floating rates.

Equipment Finance

On July 31, 2017, the Company completed the acquisition of NEF Holdings, which conducts its business through

its wholly-owned subsidiary Nations Equipment Finance, LLC.

Effective February 25, 2021, Nations Equipment Finance, LLC and its related companies is doing business as SLR Equipment Finance.

SLR Equipment is an independent equipment finance

company that provides senior secured loans and leases primarily to U.S.

based companies.

The Company invested $209.9 million in cash to effect the transaction, of which $145.0 million was invested in

the equity of NEF Holdings through our wholly-owned consolidated taxable subsidiary NEFCORP LLC and our wholly-owned consolidated subsidiary NEFPASS LLC and $64.9 million was used to

purchase certain leases and loans held by NEF Holdings through NEFPASS LLC.

At July 31, 2017, NEF Holdings also had two securitizations outstanding, with an issued note balance of $94.6 million, which were later redeemed in 2018.

December 31, 2020, NEF had 138 funded equipment-backed leases and loans to 61 different customers with a total net investment in leases and loans of approximately $188.5 million on total assets of $263.4 million.

The Company invested $209.9 million in cash to effect the transaction, of which

$145.0 million was invested in the equity of SLR Equipment through our wholly-owned consolidated taxable subsidiary NEFCORP LLC and our wholly-owned consolidated subsidiary NEFPASS LLC and

$64.9 million was used to purchase certain leases and loans held by SLR Equipment through NEFPASS LLC.

As of December 31, 2021, SLR Equipment had 135 funded equipment-backed leases and loans to 61 different customers with a total net

investment in leases and loans of approximately $211.0 million on total assets of $264.0 million.

Kingsbridge Holdings, LLC

November 3, 2020, the Company acquired 87.5% of Kingsbridge Holdings, LLC (KBH) through KBH Topco LLC (KBHT), a newly formed Delaware corporation.

KBH is a residual focused independent

mid-ticket lessor of equipment primarily to U.S.

On November 3, 2020, the Company acquired 87.5% of Kingsbridge Holdings, LLC (KBH) through KBH Topco LLC (KBHT), a

newly formed Delaware corporation.

KBH is a residual focused independent mid-ticket lessor of equipment primarily to U.S.

investment grade companies.

The Company invested $216.6 million to effect the transaction, of which $136.6 million was invested to acquire 87.5% of

KBHTs equity and $80.0 million in KBHs debt.

The Company invested $216.6 million to effect the

transaction, of which $136.6 million was invested to acquire 87.5% of KBHTs equity and $80.0 million in KBHs debt.

The existing management team of KBH committed to continue to lead KBH after the transaction.

Post the transaction, the Company owns 87.5% of KBHT equity and the KBH management team owns the

remaining 12.5% of KBHTs equity.

transaction, the Company owns 87.5% of KBHT equity and the KBH management team owns the remaining 12.5% of KBHTs equity.

As of December 31, 2021, KBHT had total assets of $738.4 million.

Investment Selection Process

Solar Capital Partners is committed to and utilizes a value-oriented investment philosophy with a focus on the preservation of capital

and a commitment to managing downside exposure.

Partners is committed to and utilizes a value-oriented investment philosophy with a focus on the preservation of capital and a commitment to managing downside exposure.

Portfolio Company Characteristics

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Stable Earnings and Strong Free Cash Flow.

We seek to invest in companies who have demonstrated stable earnings through economic cycles.

We seek to invest in companies who have demonstrated stable earnings

through economic cycles.

We target companies that can de-lever through consistent generation of cash flows rather than relying solely on growth to service and repay our loans.

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We believe that investing in these sponsors portfolio companies enables us to benefit from their direct involvement and due diligence.

Solar Capitals investment team works in concert with sponsors to proactively manage investment opportunities by acting as a partner

throughout the investment process.

SLR Capital Partners investment team works in concert with sponsors to proactively manage investment opportunities by acting as a

partner throughout the investment process.

We actively focus on the middle-market financial sponsor community, with a particular focus on the upper-end of the middle-market (sponsors with equity funds of

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We also expect to evaluate the private equity sponsor making the investment.

Further, due to Solar Capital Partners considerable repeat

Further, due to SLR Capital Partners considerable repeat

business with sponsors, we have direct experience with the management teams of many sponsors.

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Upon the completion of due diligence and a decision to proceed with an investment in a company, the investment professionals leading the

investment present the investment opportunity to Solar Capital Partners investment committee, which then determines whether to pursue the potential investment.

investment present the investment opportunity to SLR Capital Partners investment committee, which then determines whether to pursue the potential investment.

Additional due diligence with respect to any investment may be conducted on our

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Investment Committee

All new investments are required to be approved by a consensus of the investment committee of Solar Capital

All new investments are required to be approved by a consensus of the investment committee of SLR Capital

Partners, which is led by Messrs.

Gross and Spohler.

The members of Solar Capital Partners investment committee receive no compensation from us.

Such members may be employees or partners of Solar Capital Partners and may receive compensation

or profit distributions from Solar Capital Partners.

The members of SLR Capital Partners investment committee receive no compensation from us.

Such members may be employees or partners of SLR Capital Partners and may receive compensation or

profit distributions from SLR Capital Partners.

Investment Structure

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companys capital structure.

Solar Capital seeks to create a diverse portfolio that includes senior secured loans,

stretch-senior loans and to a lesser extent, unsecured loans and equity securities by investing approximately $5 million to $100 million of capital.

With respect to our senior secured loans, we seek to obtain security interests in the

assets of our portfolio companies that serve as collateral in support of the repayment of these loans.

This collateral may take the form of first or second priority liens on the assets of a portfolio company.

We structure our unsecured loans primarily subordinated loans that provide for relatively high, fixed or floating interest rates that provide

us with significant current interest income.

These loans typically have interest-only payments in the early years, with amortization of principal, if any, deferred to the later years of the unsecured loans.

In some cases, we may enter into loans

that, by their terms, convert into equity or additional debt securities or defer payments of interest for the first few years after our investment.

Also, in some cases our unsecured loans may be collateralized by a subordinated lien on some or all

of the assets of the borrower.

The Company seeks to create a diverse portfolio that includes senior secured loans and to a lesser

extent, unsecured loans and equity securities by investing approximately $5 million to $100 million of capital.

respect to our senior secured loans, we seek to obtain security interests in the assets of our portfolio companies that serve as collateral in support of the repayment of these loans.

collateral may take the form of first or second priority liens on the assets of a portfolio company.

We structure our unsecured loans

primarily subordinated loans that provide for relatively high, fixed or floating interest rates that provide us with significant current interest income.

These loans typically have interest-only payments in the early years, with amortization of

principal, if any, deferred to the later years of the unsecured loans.

In some cases, we may enter into loans that, by their terms, convert into equity or additional debt securities or defer payments of interest for the first few years after our

Also, in some cases our unsecured loans may be collateralized by a subordinated lien on some or all of the assets of the borrower.

Typically, our senior secured and unsecured loans have final maturities of five to ten years.

expect that our portfolio companies often may repay these loans early, generally within three to four years from the date of initial investment.

In some cases and when available, we seek to structure these loans with prepayment premiums to capture

foregone interest.

In the case of our senior secured and unsecured loan investments, we tailor the terms of the investment to the facts

and circumstances of the transaction and the prospective portfolio company, negotiating a structure that protects our rights and manages our risk while creating incentives for the portfolio company to achieve its business plan and improve its

profitability.

For example, in addition to seeking a senior or fulcrum position in the capital structure of our portfolio companies, we will seek to limit the downside potential of our investments by:

However, we expect that our portfolio companies

often may repay these loans early, generally within three to four years from the date of initial investment.

In some cases and when available, we seek to structure these loans with prepayment premiums to capture foregone interest.

In the case of our senior secured and unsecured loan investments, we tailor the terms of the investment to the facts and circumstances of the

transaction and the prospective portfolio company, negotiating a structure that protects our rights and manages our risk while creating incentives for the portfolio company to achieve its business plan and improve its profitability.

For example, in

addition to seeking a senior or fulcrum position in the capital structure of our portfolio companies, we will seek to limit the downside potential of our investments by:

requiring a total return on our investments (including both interest and potential capital appreciation) that

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Ongoing Relationships with Portfolio Companies

Solar Capital Partners monitors our portfolio companies on an ongoing basis.

Solar Capital Partners monitors the financial trends

of each portfolio company to determine if it is meeting its business plan and to assess the appropriate course of action for each company.

Solar Capital Partners has several methods of evaluating and monitoring the performance and

fair value of our investments, which include the following:

SLR Capital Partners monitors our portfolio companies on an ongoing basis.

SLR Capital Partners monitors the financial trends of

each portfolio company to determine if it is meeting its business plan and to assess the appropriate course of action for each company.

SLR Capital Partners has several methods of evaluating and monitoring the performance and fair value of our investments, which include the

Assessment of success in adhering to each portfolio companys business plan and compliance with covenants;

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sponsor, to discuss financial position, requirements and accomplishments;

Comparisons to other Solar Capital invested portfolio companies in the industry, if any;

Comparisons to other SLR invested portfolio companies in the industry, if any;

Attendance at and participation in board meetings;

Review of monthly and quarterly financial statements and financial projections for portfolio companies.

In addition to various risk management and monitoring tools, Solar Capital Partners also uses an investment rating

system to characterize and monitor our expected level of returns on each investment in our portfolio.

We use an investment rating scale

In addition to various risk management and monitoring tools, SLR Capital Partners also uses an investment rating system

to characterize and monitor our expected level of returns on each investment in our portfolio.

We use an investment rating scale of 1 to

The following is a description of the conditions associated with each investment rating:

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The investment is performing well below expectations and is not anticipated to be repaid in full

Solar Capital Partners monitors and, when appropriate, changes the investment ratings assigned to each

SLR Capital Partners monitors and, when appropriate, changes the investment ratings assigned to each

investment in our portfolio.

As of December 31, 2021 and December 31, 2020 the weighted average investment rating on the fair market value of our portfolio was a 2.

In connection with our valuation process, Solar Capital Partners reviews

In connection with our valuation process, SLR Capital Partners reviews

these investment ratings on a quarterly basis.

Valuation Procedures

We conduct the valuation of our assets, pursuant to which our net asset value is determined, at all times consistent with GAAP, and the 1940

We conduct the valuation of our assets, pursuant to which our net asset value is determined, at all times consistent with U.S.

accepted accounting principles (GAAP), and the 1940 Act.

Our valuation procedures are set forth in more detail below:

Under procedures established by our board of directors (the

Board), we value investments, including certain senior secured debt, subordinated debt and other debt securities with maturities greater than 60 days, for which market quotations are readily available, at such market quotations (unless

they are deemed not to represent fair value).

We attempt to obtain market quotations from at least two brokers or dealers (if available, otherwise from a principal market maker or a primary market dealer or other independent pricing service).

utilize mid-market pricing as a practical expedient for fair value unless a different point within the range is more representative.

If and when market quotations are deemed not to represent fair value, we may

utilize independent third-party valuation firms to assist us in determining the fair value of material assets.

procedures established by the Board, we value investments, including certain senior secured debt, subordinated debt and other debt securities with maturities greater than 60 days, for which market quotations are readily available, at such market

quotations (unless they are deemed not to represent fair value).

We attempt to obtain market quotations from at least two brokers or dealers (if available, otherwise from a principal market maker or a primary market dealer or other independent

pricing service).

We utilize mid-market pricing as a practical expedient for fair value unless a different point within the range is more representative.

If and when market quotations are deemed not to

represent fair value, we may utilize independent third-party valuation firms to assist us in determining the fair value of material assets.

Accordingly, such investments go through our multi-step valuation process as described below.

In each case, independent valuation firms

consider observable market inputs together with significant unobservable inputs in arriving at their

valuation recommendations.

Debt investments with maturities of 60 days or less shall each be valued at cost plus accreted discount, or minus amortized premium, which is expected to approximate

fair value, unless such valuation, in the judgment of the Investment Adviser, does not represent fair value, in which case such investments shall be valued at fair value as determined in good faith by or under the direction of our Board.

that are not publicly traded or whose market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of our Board.

Such determination of fair values involves subjective judgments and

With respect to investments for which market quotations are not readily available or when such market quotations are deemed

not to represent fair value, our Board has approved a multi-step valuation process each quarter, as described below:

In each case,

independent valuation firms consider observable market inputs together with significant unobservable inputs in arriving at their valuation recommendations.

Debt investments with maturities of 60 days or less shall each be valued at cost plus

accreted discount, or minus amortized premium, which is expected to approximate fair value, unless such valuation, in the judgment of the Investment Adviser, does not represent fair value, in which case such investments shall be valued at fair value

as determined in good faith by or under the direction of the Board.

Investments that are not publicly traded or whose market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of the

Such determination of fair values involves subjective judgments and estimates.

With respect to investments for which market quotations are not readily available or when

such market quotations are deemed not to represent fair value, the Board has approved a multi-step valuation process each quarter, as described below:

our quarterly valuation process begins with each portfolio company or investment being initially valued by the

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preliminary valuation conclusions are then documented and discussed with senior management of the Investment

independent valuation firms engaged by our Board conduct independent appraisals and review the Investment

independent valuation firms engaged by the Board conduct independent appraisals and review the Investment

Advisers preliminary valuations and make their own independent assessment for all material assets;

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Company at the measurement date.

Quoted prices for similar assets or liabilities in active

markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or other observable inputs other than quoted prices.

Quoted prices for similar assets or liabilities in active markets, or

quoted prices for identical or similar assets or liabilities in markets that are not active, or other observable inputs other than quoted prices.

Unobservable inputs for the asset or liability.

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exercise of judgment is based in part on our knowledge of the asset class and our prior experience.

Determination of fair value involves

subjective judgments and estimates.

Accordingly, the notes to our consolidated financial statements express the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on our consolidated financial

competitors provide financing to middle-market companies and include other business development companies, commercial and investment banks, commercial financing companies and, to the extent they provide an alternative form of financing, private

equity funds.

Determination of fair value involves subjective judgments and estimates.

Accordingly, the

notes to our consolidated financial statements express the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on our consolidated financial statements.

Our primary competitors

provide financing to middle-market companies and include other business development companies, commercial and investment banks, commercial financing companies and, to the extent they provide an alternative form of financing, private equity funds.

Additionally, alternative investment vehicles, such as hedge funds, frequently invest in middle-market companies.

As a result, competition for investment opportunities at middle-market companies can be intense.

While many middle-market

companies were previously able to raise senior debt financing through traditional large financial institutions, we believe this approach to financing will become more difficult as implementation of U.S.

and international financial reforms limits the

capacity of large financial institutions to hold non-investment grade leveraged loans on their balance sheets.

While many middle-market companies

were previously able to raise senior debt financing through traditional large financial institutions, we believe this approach to financing will become more difficult as implementation of U.S.

and international financial reforms limits the capacity

of large financial institutions to hold non-investment grade leveraged loans on their balance sheets.

We believe that many of these financial institutions have

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We use the industry information available to Messrs.

Gross and Spohler and the other investment professionals of Solar Capital Partners to assess

investment risks and determine appropriate pricing for our investments in portfolio companies.

Gross and Spohler and the other investment professionals of SLR Capital Partners to assess investment

risks and determine appropriate pricing for our investments in portfolio companies.

In addition, we believe that the relationships of Messrs.

Gross and Spohler and the other investment professionals of our investment adviser enable

us to learn about, and compete effectively for, financing opportunities with attractive leveraged companies in the industries in which we seek to invest.

We do not currently have any

Gross, our Chairman and Co-Chief Executive Officer and President, and Mr.

Spohler, our Co-Chief Executive Officer and Chief Operating Officer

and board member, are managing members and senior investment professionals of, and have financial and controlling interests in, Solar Capital Partners.

Gross and Spohler and the other investment professionals of our investment adviser enable us to learn

about, and compete effectively for, financing opportunities with attractive leveraged companies in the industries in which we seek to invest.

We do not currently have any employees.

Gross, our Chairman and Co-Chief Executive

Officer and President, and Mr.

Spohler, our Co-Chief Executive Officer and Chief Operating Officer and board member, are managing members and senior investment professionals of, and have financial and

controlling interests in, SLR Capital Partners.

In addition, Mr.

Peteka, our Chief Financial Officer, Treasurer and Secretary serves as the

Chief Financial Officer for Solar Capital Partners.

Guy Talarico, our Chief Compliance Officer, is the Chief Executive Officer of Alaric Compliance Services, LLC, and performs his functions as our Chief Compliance Officer under the terms of an

agreement between Solar Capital Management and Alaric Compliance Services, LLC.

Solar Capital Management has retained Mr.

Talarico and Alaric Compliance Services, LLC pursuant to its obligations under our Administration Agreement.

day-to-day investment operations are managed by Solar Capital Partners.

Based upon its needs, Solar Capital Partners may hire additional investment professionals.

addition, we will reimburse Solar Capital Management for the allocable portion of overhead and other expenses incurred by it in performing its obligations under the Administration Agreement, including rent, and the allocable portion of the cost of

the companys chief compliance officer and chief financial officer and their respective staffs.

Peteka, our Chief Financial Officer, Treasurer and Secretary serves as the Chief Financial Officer for SLR Capital Partners.

Guy Talarico, our Chief Compliance Officer, is a

Senior Managing Director of Foreside Consulting Services, LLC, and performs his functions as our Chief Compliance Officer under the terms of an agreement between SLR Capital Management and Foreside Consulting Services, LLC.

SLR Capital Management

has retained Mr.

Talarico and Foreside Consulting Services, LLC pursuant to its obligations under our Administration Agreement.

Our day-to-day investment operations are managed by SLR Capital Partners.

Based upon its needs, SLR Capital Partners may hire additional investment professionals.

In addition, we

will reimburse SLR Capital Management for the allocable portion of overhead and other expenses incurred by it in performing its obligations under the Administration Agreement, including rent, and the allocable portion of the cost of the

companys chief compliance officer and chief financial officer and their respective staffs.

Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act of 2002 imposes a wide variety of new regulatory requirements on publicly-held companies and their insiders.

these requirements affect us.

The Sarbanes-Oxley Act of 2002 imposes a wide variety of regulatory requirements on publicly-held companies and their insiders.

Many of these

requirements affect us.

pursuant to Rule 13a-14 of the Securites Exchange Act of 1934 (the

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involved in the conduct of such persons office.

As a BDC, we are required to meet an asset coverage ratio, reflecting the value of our total

assets to our total senior securities, which include all of our borrowings and any preferred stock we may issue in the future, of at least 150%.

We may also be prohibited under the 1940 Act from knowingly participating in certain transactions with

our affiliates without the prior approval of our directors who are not interested persons and, in some cases, prior approval by the SEC.

As a BDC, we are required to meet an asset coverage ratio, reflecting the value of

our total assets to our total senior securities, which include all of our borrowings and any preferred stock we may issue in the future, of at least 150%.

We may also be prohibited under the 1940 Act from knowingly participating in certain

transactions with our affiliates without the prior approval of our directors who are not interested persons and, in some cases, prior approval by the SEC.

We are generally not able to issue and sell our common stock at a price below net asset value per share without annual stockholder approval.

We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the then-current net asset value of our common stock if our board of directors determines that such sale is in our best interests

and the best interests of our stockholders, and our stockholders approve such sale.

At our Annual Meeting of Stockholders on October 6, 2020, our stockholders approved a proposal authorizing us to sell up to 25% of our common stock at a price

below our then-current asset value per share, subject to the approval by our board of directors for the offering.

This authorization expires on the earlier of October 6, 2021 and the date of our 2021 Annual Meeting of Stockholders.

we may generally issue new shares of our common stock at a price below net asset value in rights offerings to existing stockholders, in payment of dividends and in certain other limited circumstances.

As a BDC, we were substantially limited in our ability to co-invest in privately negotiated

transactions with affiliated funds until we obtained an exemptive order from the SEC.

The most recent exemptive order, received on June 13, 2017 (the Exemptive Order), permits us to participate in negotiated co-investment transactions with certain affiliates, each of whose investment adviser is an investment adviser that controls, is controlled by or is under common control with Solar Capital Partners and is registered

as an investment adviser under the Advisers Act, in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors, and pursuant to the conditions to

the Exemptive Order.

If we are unable to rely on the Exemptive Order for a particular opportunity, such opportunity will be allocated first to the entity whose investment strategy is the most consistent with the opportunity being allocated, and

second, if the terms of the opportunity are consistent with more than one entitys investment strategy, on an alternating basis.

Although our investment professionals will endeavor to allocate investment opportunities in a fair and equitable

manner, we and our common stockholders could be adversely affected to the extent investment opportunities are allocated among us and other investment vehicles managed or sponsored by, or affiliated with, our executive officers, directors and members

of our investment adviser.

We will be periodically examined by the SEC for compliance with the federal securities laws, including the

We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the then-current net asset value of our common stock if the Board

determines that such sale is in our best interests and the best interests of our stockholders, and our stockholders approve such sale.

At our Annual Meeting of Stockholders on October 27,

2021, our stockholders approved a proposal authorizing us to sell up to 25% of our common stock at a price below our then-current asset value per share, subject to the approval by our board of directors for the offering.

This authorization expires

on the earlier of October 27, 2022 and the date of our 2022 Annual Meeting of Stockholders.

In addition, we may generally issue new shares of our common stock at a price below net asset value in rights offerings to existing stockholders, in

payment of dividends and in certain other limited circumstances.

As a BDC, we were substantially limited in our ability to co-invest in privately negotiated transactions with affiliated funds until we obtained an exemptive order from the SEC.

The most recent exemptive order, received on June 13, 2017 (the Exemptive

Order), permits us to participate in negotiated co-investment transactions with certain affiliates, each of whose investment adviser is an investment adviser that controls, is controlled by or is under

common control with SLR Capital Partners and is registered as an investment adviser under the Advisers Act, in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and

other pertinent factors, and pursuant to the conditions to the Exemptive Order.

If we are unable to rely on the Exemptive Order for a particular opportunity, such opportunity will be allocated first to the entity whose investment strategy is the

most consistent with the opportunity being allocated, and second, if the terms of the opportunity are consistent with more than one entitys investment strategy, on an alternating basis.

Although our investment professionals will endeavor to

allocate investment opportunities in a fair and equitable manner, we and our common stockholders could be adversely affected to the extent investment opportunities are allocated among us and other investment vehicles managed or sponsored by, or

affiliated with, our executive officers, directors and members of our investment adviser.

We will be periodically examined by the SEC for

compliance with the federal securities laws, including the 1940 Act.

Qualifying Assets

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The principal categories of qualifying assets relevant to our business are the following:

(1) Securities purchased in transactions not involving any public offering from the issuer of such securities, which issuer (subject to

certain limited exceptions) is an eligible portfolio company, or from any person who is, or has been during the preceding 13 months, an affiliated person of an eligible portfolio company, or from any other person, subject to such rules as may be

prescribed by the SEC.

(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

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);

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);

satisfies any of the following:

does not have any class of securities that is traded on a national securities exchange;

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than $2.0 million.

(2) Securities of any eligible portfolio company which we control, which, as defined by the 1940 Act, is presumed

to exist where a BDC beneficially owns more than 25% of the outstanding voting securities of the portfolio company.

(3) Securities

purchased in a private transaction from a U.S.

issuer that is not an investment company or from an affiliated person of the issuer, or in transactions incident thereto, if the issuer is in bankruptcy and subject to reorganization or if the issuer,

immediately prior to the purchase of its securities, was unable to meet its obligations as they came due without material assistance other than conventional lending or financing arrangements.

(4) Securities of an eligible portfolio company purchased from any person in a private transaction if there is no ready market for such

securities and we already own 60% of the outstanding equity of the eligible portfolio company.

(5) Securities received in exchange for or

distributed on or with respect to securities described in (1) through (4) above, or pursuant to the exercise of warrants or rights relating to such securities.

(2) Securities of any eligible portfolio company which we control, which, as defined by the

1940 Act, is presumed to exist where a BDC beneficially owns more than 25% of the outstanding voting securities of the portfolio company.

(3) Securities purchased in a private transaction from a U.S.

issuer that is not an investment company or from an affiliated person of the

issuer, or in transactions incident thereto, if the issuer is in bankruptcy and subject to reorganization or if the issuer, immediately prior to the purchase of its securities, was unable to meet its obligations as they came due without material

assistance other than conventional lending or financing arrangements.

(4) Securities of an eligible portfolio company purchased from any

person in a private transaction if there is no ready market for such securities and we already own 60% of the outstanding equity of the eligible portfolio company.

(5) Securities received in exchange for or distributed on or with respect to securities described in (1) through (4) above, or

pursuant to the exercise of warrants or rights relating to such securities.

(6) Cash, cash equivalents, U.S.

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

(7) Office furniture and equipment, interests in real estate and leasehold improvements and facilities maintained to conduct

the business operations of the BDC, deferred organization and operating expenses, and other noninvestment assets necessary and appropriate to its operations as a BDC, including notes of indebtedness of directors, officers, employees, and general

partners held by a BDC as payment for securities of such company issued in connection with an executive compensation plan described in Section 57(j) of the 1940 Act.

Under Section 55(b) of the 1940 Act, the value of a BDCs assets shall be determined as of the date of the most recent financial

statements filed by such company with the SEC pursuant to Section 13 of the 1934 Act, and shall be determined no less frequently than annually.

government securities or

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

(7) Office furniture and equipment, interests in

real estate and leasehold improvements and facilities maintained to conduct the business operations of the BDC, deferred organization and operating expenses, and other noninvestment assets necessary and appropriate to its operations as a BDC,

including notes of indebtedness of directors, officers, employees, and general partners held by a BDC as payment for securities of such company issued in connection with an executive compensation plan described in Section 57(j) of the 1940 Act.

Under Section 55(b) of the 1940 Act, the value of a BDCs assets shall be determined as of the date of the most recent

financial statements filed by such company with the SEC pursuant to Section 13 of the 1934 Act, and shall be determined no less frequently than annually.

Significant Managerial Assistance to Portfolio Companies

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also receive fees for these services.

Solar Capital Management provides such managerial assistance, if any, on our behalf to portfolio companies that request this assistance.

SLR Capital Management provides such managerial assistance, if any, on our behalf to portfolio companies that request this assistance.

Temporary Investments

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federal income tax purposes.

Thus, we do not intend to enter into repurchase agreements with a single counterparty in excess of this limit.

investment adviser will monitor the creditworthiness of the counterparties with which we enter into repurchase agreement transactions.

we do not intend to enter into repurchase agreements with a single counterparty in excess of this limit.

Our investment adviser will monitor the creditworthiness of the counterparties with which

we enter into repurchase agreement transactions.

Senior Securities

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Code of Ethics

and Solar Capital Partners have each adopted a code of ethics pursuant to Rule 17j-1 under the 1940 Act and Rule 204A-1 under the Advisers Act, respectively, that

and SLR Capital Partners have each adopted a code of ethics pursuant to Rule 17j-1 under the 1940 Act and Rule 204A-1 under the Advisers Act, respectively, that

establishes procedures for personal investments and restricts certain transactions by our personnel.

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The guidelines are reviewed periodically by the adviser and our non-interested directors, and, accordingly, are subject to change.

As an investment adviser registered under the Advisers Act, Solar Capital Partners has a

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

As an investment adviser registered under the Advisers Act, SLR Capital Partners has a fiduciary duty to act solely in the best interests of

As part of this duty, it recognizes that it must vote securities held by its clients in a timely manner free of conflicts of interest.

These policies and procedures for voting

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

Our investment adviser votes proxies relating to our portfolio securities in the best interest of our stockholders.

Solar Capital Partners

reviews on a case-by-case basis each proposal submitted for a proxy vote to determine its impact on our investments.

Although it generally votes against proposals that

may have a negative impact on our investments, it may vote for such a proposal if there exists compelling long-term reasons to do so.

The proxy voting decisions of our investment adviser are made by the senior investment professionals who are

responsible for monitoring each of our investments.

To ensure that our vote is not the product of a conflict of interest, it requires that:

(i) anyone involved in the decision making process disclose to a managing member of Solar Capital

Partners any potential conflict that he or she is aware of and any contact that he or she has had with any interested party regarding a proxy vote;

and (ii) employees involved in the decision making process or vote administration are prohibited

from revealing how we intend to vote on a proposal in order to reduce any attempted influence from interested parties.

You may obtain

information about how we voted proxies by making a written request for proxy voting information to:

Solar Capital Partners, LLC, 500 Park Avenue, New York, NY 10022.

These policies and procedures for voting proxies for investment advisory clients are intended to

comply with Section 206 of, and Rule 206(4)-6 under, the Advisers Act.

Our investment

adviser votes proxies relating to our portfolio securities in the best interest of our stockholders.

SLR Capital Partners reviews on a case-by-case basis each proposal

submitted for a proxy vote to determine its impact on our investments.

Although it generally votes against proposals that may have a negative impact on our investments, it may vote for such a proposal if there exists compelling long-term reasons to

The proxy voting decisions of our investment adviser are made by the senior investment professionals who are responsible for monitoring each of our investments.

To ensure that our vote is not the product of a conflict of interest, it requires

(i) anyone involved in the decision making process disclose to a managing member of SLR Capital Partners any potential conflict that he or she is aware of and any contact that he or she has had with

any interested party regarding a proxy vote;

and (ii) employees involved in the decision making process or vote administration are prohibited from revealing how we intend to vote on a

proposal in order to reduce any attempted influence from interested parties.

You may obtain information about how we voted proxies by

making a written request for proxy voting information to:

SLR Capital Partners, LLC, 500 Park Avenue, New York, NY 10022.

Privacy Principles

We are committed to

maintaining the privacy of our stockholders and to safeguarding their non-public personal information.

The following information is provided to help you understand what personal information we may have access

to, how we protect that information and why, in certain cases, we may share such information with select other parties.

Generally, we do

not receive any non-public personal information relating to our stockholders, although certain non-public personal information of our stockholders may become available

We do not disclose any non-public personal information about our stockholders or former stockholders to anyone, except as permitted by law or as is necessary in order to service stockholder accounts

(for example, through a transfer agent or proxy solicitor).

We restrict access to non-public

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

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

We are committed to maintaining the privacy of our stockholders and to safeguarding their non-public

personal information.

The following information is provided to help you understand what personal information we may have access to, how we protect that information and why, in certain cases, we may share such information with select other parties.

Generally, we do not receive any non-public personal information relating to our stockholders,

although certain non-public personal information of our stockholders may become available to us.

We do not disclose any non-public personal information about our

stockholders or former stockholders to anyone, except as permitted by law or as is necessary in order to service stockholder accounts (for example, through a transfer agent or proxy solicitor).

We restrict access to non-public personal information about our stockholders to employees of our

investment adviser and its affiliates with a legitimate business need for the information.

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

our stockholders.

Taxation as a Regulated Investment Company

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We will be subject to a 4% nondeductible U.S.

federal excise tax on certain undistributed

income unless we distribute in a timely manner an amount at least equal to the sum of (1) 98% of our ordinary income for each calendar year, (2) 98.2% of our capital gain net income for the one-year

period ending October 31 in that calendar year and (3) any ordinary income and net capital gains that we recognized in preceding years, but were not distributed during such years, and on which we paid no U.S.

federal income tax (the

Excise Tax Avoidance Requirement).

federal excise tax on certain undistributed income unless we distribute in a timely manner an amount at least equal to the sum of (1) 98% of our ordinary income for each calendar year, (2) 98.2% of our capital gain net income for the one-year period ending October 31 in that calendar year and (3) any ordinary income and net capital gains that we recognized in preceding years, but were not distributed during such years, and on which we

federal income tax (the Excise Tax Avoidance Requirement).

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

federal income tax purposes, we must, among other

federal income

tax purposes, we must, among other things:

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

derive in each taxable year at least 90% of our gross income from (a) dividends, interest, payments with

respect to certain securities loans, gains from the sale of stock or other securities or currencies, or other income derived with respect to our business of investing in such stock, securities or currencies and (b) net income derived from an

interest in a qualified publicly traded partnership; and

respect to certain securities loans, gains from the sale of stock or other securities or currencies, or

other income derived with respect to our business of investing in such stock, securities or currencies and (b) net income derived from an interest in a qualified publicly traded

partnership; and

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

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recognize taxable income in circumstances in which we do not receive cash.

For example, if we hold debt obligations that are treated under applicable tax rules as having original issue discount (such as debt instruments with payment-in-kind (PIK) interest or, in certain cases, increasing interest rates or debt instruments issued with warrants), we must include in income each year a

For example, if we hold debt obligations that are treated under applicable tax rules as having original issue discount (such as debt instruments with payment-in-kind (PIK) income or, in certain cases, increasing interest rates or debt instruments issued with warrants), we must include in income each year a

portion of the original issue discount that accrues over the life of the obligation, regardless of whether cash representing such income is received by us in the same taxable year.

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our transactions and may make certain tax elections in order to mitigate the potential adverse effect of these provisions.

Gain or loss realized by us from the sale or exchange of warrants acquired by us as well as

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

The treatment of such gain or loss as long-term or short-term will depend on how long we held a particular warrant.

Upon the exercise of a warrant

acquired by us, our tax basis in the stock purchased under the warrant will equal the sum of the amount paid for the warrant plus the strike price paid on the exercise of the warrant.

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

The treatment of such gain or loss as long-term or short-term will

depend on how long we held a particular warrant.

Upon the exercise of a warrant acquired by us, our tax basis in the stock purchased under the warrant will equal the sum of the amount paid for the warrant plus the strike price paid on the exercise

of the warrant.

Failure to Qualify as a Regulated Investment Company

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We would not be able to deduct distributions to stockholders, nor would they be required to be made.

Such distributions would be taxable to our stockholders as dividends and, provided certain holding period and other

requirements were met, could qualify for treatment as qualified dividend income in the hands of non-corporate stockholders (and thus eligible for the current 20% maximum rate) to the extent of our

current and accumulated earnings and profits.

Subject to certain limitations under the Code, corporate distributees would be eligible for the dividends received deduction.

Distributions in excess of our current and accumulated earnings and profits

would be treated first as a return of capital to the extent of the stockholders tax basis, and any remaining distributions would be treated as a capital gain.

To requalify as a RIC in a subsequent taxable year, we would be required to satisfy

the RIC qualification requirements for that year and dispose of any earnings and profits from any year in which we failed to qualify as a RIC.

Subject to a limited exception applicable to RICs that qualified as such under Subchapter M of the Code

for at least one year prior to disqualification and that requalify as a RIC no later than the second year following the non-qualifying year, we could be subject to tax on any unrealized net built-in gains in the assets held by us during the period in which we failed to qualify as a RIC that are recognized within the subsequent 5 years, unless we made a special election to pay corporate-level U.S.

federal income tax on such built-in gain at the time of our requalification as a RIC.

Such distributions would be taxable to our stockholders as dividends and,

provided certain holding period and other requirements were met, could qualify for treatment as qualified dividend income in the hands of

non-corporate stockholders (and thus eligible for the current 20% maximum rate) to the extent of our current and accumulated earnings and profits.

Subject to certain limitations under the Code, corporate

distributees would be eligible for the dividends received deduction.

Distributions in excess of our current and accumulated earnings and profits would be treated first as a return of capital to the extent of the stockholders tax basis, and any

remaining distributions would be treated as a capital gain.

To requalify as a RIC in a subsequent taxable year, we would be required to satisfy the RIC qualification requirements for that year and dispose of any earnings and profits from any year in

which we failed to qualify as a RIC.

Subject to a limited exception applicable to RICs that qualified as such under Subchapter M of the Code for at least one year prior to disqualification and that requalify as a RIC no later than the second year

following the non-qualifying year, we could be subject to tax on any unrealized net built-in gains in the assets held by us during the period in which we failed to

qualify as a RIC that are recognized within the subsequent 5 years, unless we made a special election to pay corporate-level U.S.

federal income tax on such built-in gain at the time of our

requalification as a RIC.

Investment Advisory Fees

Pursuant to an investment advisory and management agreement (the Advisory Agreement), we have agreed to pay Solar Capital

Partners a fee for investment advisory and management services consisting of two components a base management fee and a performance-based incentive fee.

The base management fee is determined by taking the average value of Solar Capitals gross assets at the end of the two

most recently completed calendar quarters calculated at an annual rate of 1.75% on gross assets up to 200% of the Companys total net assets as of the immediately preceding quarter end and 1.00% on gross assets that exceed 200% of the

Companys total net assets as of the immediately preceding quarter end.

For purposes of computing the base management fee, gross assets exclude temporary assets acquired at the end of each fiscal quarter for purposes of preserving investment

flexibility in the next fiscal quarter.

Pursuant to an investment advisory and management agreement (the Advisory Agreement), we have agreed to pay SLR Capital Partners a

fee for investment advisory and management services consisting of two components a base management fee and a performance-based incentive fee.

The base management fee is determined by taking the average value of the Companys gross assets at the end of the two most recently

completed calendar quarters calculated at an annual rate of 1.75% on gross assets up to 200% of the Companys total net assets as of the immediately preceding quarter end and 1.00% on gross assets that exceed 200% of the Companys total

net assets as of the immediately preceding quarter end.

For purposes of computing the base management fee, gross assets exclude temporary assets acquired at the end of each fiscal quarter for purposes of preserving investment flexibility in the next

fiscal quarter.

Temporary assets include, but are not limited to, U.S.

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dividend income and any other income (including any other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring, diligence and consulting fees or other fees that we receive from portfolio companies)

accrued during the calendar quarter, minus our operating expenses for the quarter (including the base management fee, expenses payable under the Administration Agreement to Solar Capital Management, and any interest expense and dividend paid on any

accrued during the calendar quarter, minus our operating expenses for the quarter (including the base management fee, expenses payable under the Administration Agreement to SLR Capital Management, and any interest expense and dividend paid on any

issued and outstanding preferred stock, but excluding the performance-based incentive fee).

Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such

as original issue discount, debt instruments with pay in kind interest and zero coupon securities), accrued income that we have not yet received in cash.

Pre-incentive fee net investment income does not

include any realized capital gains, computed net of all realized capital losses or unrealized capital

appreciation or depreciation.

Pre-incentive fee net investment income, expressed as a rate of return on the value of our net assets at the end of the

immediately preceding calendar quarter, is compared to a hurdle of 1.75% per quarter (7.00% annualized).

Our net investment income used to calculate this part of the incentive fee is also included in the amount of our gross assets used to

calculate the 1.75% base management fee.

We pay Solar Capital Partners an incentive fee with respect to our pre-incentive fee net investment income in each calendar quarter as follows:

as original issue discount, debt instruments with pay in kind income and zero coupon securities), accrued income that we have not yet received in cash.

Pre-incentive fee net investment income does not include

any realized capital gains, computed net of all realized capital losses or unrealized capital appreciation or depreciation.

Pre-incentive fee net investment income, expressed as a rate of return on the value

of our net assets at the end of the immediately preceding calendar quarter, is compared to a hurdle of 1.75% per quarter (7.00% annualized).

Our net investment income used to calculate this part of the incentive fee is also included in the

amount of our gross assets used to calculate the 1.75% base management fee.

We pay SLR Capital Partners an incentive fee with respect to our pre-incentive fee net investment income in each calendar quarter as

no performance-based incentive fee in any calendar quarter in which our

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100% of our pre-incentive fee net investment income with respect to that

portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle but is less than 2.1875% in any calendar quarter (8.75% annualized).

We refer to this portion of our pre-incentive fee net investment income (which exceeds the hurdle but is less than 2.1875%) as the catch-up. The

catch-up is meant to provide our investment adviser with 20% of our pre-incentive fee net investment income as if a hurdle did not apply if this net

investment income exceeds 2.1875% in any calendar quarter;

portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle but is less than 2.1875% in any calendar

quarter (8.75% annualized).

We refer to this portion of our pre-incentive fee net investment income (which exceeds the hurdle but is less than 2.1875%) as

the catch-up. The catch-up is meant to provide our investment adviser with 20% of our pre-incentive fee

net investment income as if a hurdle did not apply if this net investment income exceeds 2.1875% in any calendar quarter;

20% of the amount of our pre-incentive fee net investment income, if any,

that exceeds 2.1875% in any calendar quarter (8.75% annualized) is payable to Solar Capital Partners (once the hurdle is reached and the catch-up is achieved, 20% of all pre-incentive fee investment income

thereafter is allocated to Solar Capital Partners).

The following is a graphical representation of the calculation of

the income-related portion of the performance-based incentive fee:

that exceeds 2.1875% in any calendar quarter (8.75% annualized) is payable to SLR Capital Partners (once the hurdle is reached and the catch-up is achieved, 20% of all

pre-incentive fee investment income thereafter is allocated to SLR Capital Partners).

The following is a graphical representation of the calculation of the income-related portion of the performance-based incentive fee:

Quarterly Incentive Fee Based on Net Investment Income

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Percentage of pre-incentive fee net investment income

allocated to Solar Capital Partners

allocated to SLR Capital Partners

These calculations are appropriately pro-rated for any period of less than three months.

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(investment income (management fee + other expenses)) =

Pre-incentive net investment income does not exceed hurdle rate, therefore there is no incentive fee.

Pre-incentive net investment income does not exceed hurdle rate, therefore there is no

incentive fee.

Alternative 2:

Investment income (including interest, dividends, fees, etc.) = 2.70%

Investment income (including

interest, dividends, fees, etc.) = 2.70%

Hurdle rate (1) = 1.75%

Management fee (2) = 0.4375%

Other expenses (legal, accounting, custodian, transfer agent, etc.) (3) = 0.20%

Other expenses (legal, accounting, custodian, transfer agent,

etc.) (3) = 0.20%

Pre-incentive fee net investment income

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= 100% ×

(2.0625% 1.75%)

Alternative 3:

Investment income

(including interest, dividends, fees, etc.) = 3.00%

Investment income (including

interest, dividends, fees, etc.) = 3.00%

Hurdle rate (1) = 1.75%

Management fee (2) = 0.4375%

Other expenses (legal, accounting, custodian, transfer agent, etc.) (3) = 0.20%

Other expenses (legal, accounting, custodian, transfer agent,

etc.) (3) = 0.20%

Pre-incentive fee net investment income

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pre-incentive fee net investment income, subject to catch-up (4)

Incentive fee = 100%

Incentive fee = 100% ×

catch-up + (20% ×

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$1.4 million capital gains incentive fee (1)

$6.4 million (20% multiplied by $32 million ($35 million cumulative realized capital gains

less $3 million unrealized capital depreciation)) less $5 million capital gains fee received in Year 2

$6.4 million (20% multiplied by $32 million ($35 million cumulative realized capital gains less $3 million

unrealized capital depreciation)) less $5 million capital gains fee received in Year 2

$5 million (20% multiplied by $25 million (cumulative realized capital gains of $35 million less realized capital losses of $10 million)) less

$6.4 million cumulative capital gains fee paid in Year 2 and Year 3

As illustrated in Year 3 of Alternative 2 above, if Solar Capital were to be wound up on a date other than

December 31 of any year, Solar Capital may have paid aggregate capital gain incentive fees that are more than the amount of such fees that would be payable if Solar Capital had been wound up on December 31 of such year.

As illustrated in Year 3 of Alternative 2 above, if SLR Capital were to be wound up on a date other than

December 31 of any year, SLR Capital may have paid aggregate capital gain incentive fees that are more than the amount of such fees that would be payable if SLR Capital had been wound up on December 31 of such year.

Payment of Our Expenses

All investment professionals of the investment adviser and their respective staffs, when and to the extent engaged in providing investment

advisory and management services, and the compensation and routine overhead expenses of such personnel allocable to such services, are provided and paid for by Solar Capital Partners.

advisory and management services, and the compensation and routine overhead expenses of such personnel allocable to such services, are provided and paid for by SLR Capital Partners.

We bear all other costs and expenses of our operations and

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state securities laws;

all other expenses incurred by either Solar Capital Management or us in connection with administering our

business, including payments under the Administration Agreement that will be based upon our allocable portion of overhead and other expenses incurred by Solar Capital Management in performing its obligations under the Administration Agreement,

including rent, the fees and expenses associated with performing compliance functions, and our allocable portion of the costs of compensation and related expenses of our chief compliance officer and our chief financial officer and their respective

all other expenses incurred by either SLR Capital Management or us in connection with administering our business,

including payments under the Administration Agreement that will be based upon our allocable portion of overhead and other expenses incurred by SLR Capital Management in performing its obligations under the Administration Agreement, including rent,

the fees and expenses associated with performing compliance functions, and our allocable portion of the costs of compensation and related expenses of our chief compliance officer and our chief financial officer and their respective staffs.

Available Information

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The address of that site is (http://www.sec.gov) .

Our internet address is www.solarcapltd.com .

We make available free of charge on our website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

Information contained on our website is not incorporated by

reference into this annual report on Form 10-K, and you should not consider information contained on our website to be part of this annual report on Form 10-K.

Our internet address is

www.SLRinvestmentcorp.com .

We make available free of charge on our website our annual report on Form 10-K, quarterly reports on Form 10-Q, current

reports on Form 8-K and amendments to those reports as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

Information contained on our website is

not incorporated by reference into this annual report on Form 10-K, and you should not consider information contained on our website to be part of this annual report on

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