As filed with the Securities and Exchange Commission on October 6, 2016

File No. 000-55528
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Amendment No. 2

FORM 10

GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

Bain Capital Specialty Finance, Inc.
(Exact Name of Registrant as Specified in its Charter)

Delaware
 
81-2878769
(State or Other Jurisdiction of Incorporation or Organization)
 
(I.R.S. Employer Identification No.)
 
200 Clarendon Street, 37 th Floor, Boston, MA
 
02116
(Address of Principal Executive Offices)
 
(Zip Code)

(617) 516-2000
  (Registrant’s telephone number, including area code)

with copies to:

Richard Horowitz, Esq.
Dechert LLP
1095 Avenue of the Americas
New York, NY 10036
(212) 698-3500

Securities to be registered pursuant to Section 12(b) of the Act:

None

Securities to be registered pursuant to Section 12(g) of the Act:

Common Stock, par value $0.001 per share
(Title of class)

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “small reporting company” in Rule 12b-2 of the Exchange Act. (Check one)
 
Large accelerated filer  ☐
Accelerated filer  ☐
Non-accelerated filer  ☒
Smaller reporting company  ☐
(Do not check if a smaller reporting company)
 
TABLE OF CONTENTS

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EXPLANATORY NOTE

Bain Capital Specialty Finance, Inc.is filing this registration statement on Form 10 (the “Registration Statement”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), on a voluntary basis to permit it to file an election to be regulated as a business development company (a “BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”), to provide current public information to the investment community and to comply with applicable requirements for the potential of the quotation or listing of its securities on a national securities exchange in connection with an initial public offering of the Company’s common stock in the future. There can be no guarantee that a public offering will take place and investors should not rely on a public offering for liquidity; investors may not have access to the amount they invested until the completion of a public offering or the liquidation of the Company. In this Registration Statement, the “Company,” “we,” “us,” and “our” refer to Bain Capital Specialty Finance, Inc., unless otherwise specified.

Once this Registration Statement has been deemed effective, we will be subject to the requirements of Section 13(a) of the Exchange Act, including the rules and regulations promulgated thereunder, which will require us, among other things, to file annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, and we will be required to comply with all other obligations of the Exchange Act applicable to issuers filing registration statements pursuant to Section 12(g) of the Exchange Act.

Shortly after the effectiveness of this Registration Statement, we will file an election to be regulated as a BDC under the 1940 Act. Upon filing of such election, we will become subject to the 1940 Act requirements applicable to BDCs. Following such election, we will be classified as a non-diversified investment company, which means that we may invest a higher portion of our assets in the securities of a single issuer or a few issuers. If the filing of our election fails to occur, the Company will not hold a closing and will seek to wind down.

FORWARD-LOOKING STATEMENTS

Statements contained in this Registration Statement (including those relating to current and future market conditions and trends in respect thereof) that are not historical facts are based on current expectations, estimates, projections, opinions and/or beliefs of the Company, BCSF Advisors, LP (“BCSFA” or the “Advisor”) and/or Bain Capital Credit, LP and its affiliated advisers (collectively, “Bain Capital Credit”). Such statements involve known and unknown risks, uncertainties and other factors and undue reliance should not be placed thereon. Certain information contained in this Registration Statement constitutes “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “seek,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue,” “target,” or “believe” or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events or results or the actual performance of the Company may differ materially from those reflected or contemplated in such forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and are difficult to predict, that could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements including, without limitation, the risks, uncertainties and other factors we identify in the section entitled “Item 1A. Risk Factors” and elsewhere in this Registration Statement and in our filings with the Securities Exchange Commission (the “SEC”).

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, some of those assumptions are based on the work of third parties and any of those assumptions could prove to be inaccurate; as a result, the forward-looking statements based on those assumptions also could prove to be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Registration Statement should not be regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include those described or identified in the section entitled “Item 1A. Risk Factors” and elsewhere in this Registration Statement. Investors should not place undue reliance on these forward-looking statements, which apply only as of the date of this Registration Statement. We do not undertake any obligation to update or revise any forward-looking statements or any other information contained herein, except as required by applicable law. The safe harbor provisions of Section 21E of the Exchange Act, which preclude civil liability for certain forward-looking statements, do not apply to the forward-looking statements in this Registration Statement because we are an investment company.
 
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Item 1. Business

(a) General Development of Business

The Company was formed on October 5, 2015 as a Delaware corporation. We expect to enter into separate subscription agreements (each, a “Subscription Agreement”) with a number of investors providing for the private placement of the Company’s common stock (the “Private Offering”). Each investor will make a capital commitment to purchase shares of our common stock pursuant to the Subscription Agreement. Investors will be required to make capital contributions to purchase shares of the Company’s common stock each time the Company delivers a drawdown notice, which will be delivered at least 10 business days prior to the required funding date, in an aggregate amount not to exceed their respective capital commitments. See “ Item 1(c). Description of Business—The Private Offering .” We anticipate commencing our investment activities contemporaneously with the initial closing of the Private Offering, which is expected to occur shortly after the filing of the Company’s election to be treated as a BDC under the 1940 Act (the “Initial Closing”). See “ Item 1(c). Description of Business—The Private Offering .”

Shortly after the effectiveness of this Registration Statement, we intend to file with the SEC an election to be treated as a BDC under the 1940 Act. We also intend to elect to be treated for U.S. federal income tax purposes as a regulated investment company (a “RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). As a BDC and a RIC, we are required to comply with certain regulatory requirements. See “ Item 1(c). Description of Business—Regulation as a Public Business Development Company” and “Item 1(c). Description of Business—Certain U.S. Federal Income Tax Consequences .”

The common stock described herein has not been registered under the Securities Act of 1933, as amended (the “Securities Act”), the securities laws of any other state or the securities laws of any other jurisdiction. The shares of common stock will be offered and sold during the Private Offering (i) in the United States under the exemption provided by Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder, and other exemptions of similar import in the laws of the states and jurisdictions where the offering will be made, and (ii) outside of the United States in accordance with Regulation S of the Securities Act. Within the United States, shares of common stock are being offered solely to investors that are “accredited investors” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

(b) Financial Information about Industry Segments

Our operations comprise only a single reportable segment. See “ Item 2. Financial Information. ”

(c) Description of Business

General

We are a business development company.  Our primary focus is capitalizing on opportunities within our Senior Direct Lending Strategy which seeks to provide risk-adjusted returns and current income to investors by investing primarily in middle-market companies with between $10 million and $150 million in annual earnings before interest, taxes, depreciation and amortization (“EBITDA”). We intend to focus on senior investments with a first or second lien on collateral and strong structures and documentation intended to protect the lender. We may also invest in mezzanine debt and other junior securities and in secondary purchases of assets or portfolios, as described below. Investments are likely to include, among other things, (i) senior first lien, stretch senior, senior second lien, unitranche, (ii) mezzanine debt and other junior investments and (iii) secondary purchases of assets or portfolios that primarily consist of middle-market corporate debt. We may also invest, from time to time, in distressed debt, debtor-in-possession loans, structured products, structurally subordinate loans, investments with deferred interest features, zero-coupon securities and defaulted securities.  Our investments are subject to a number of risks. See “ Item 1A. Risk Factors—Risks Relating to Our Investments .”  Leverage is expected to be utilized to help the Company meet its investment objective. Any such leverage, if incurred, would be expected to increase the total capital available for investment by the Company.

We may invest in debt securities which are either rated below investment grade or not rated by any rating agency but, if they were rated, would be rated below investment grade. Below investment grade securities, which are often referred to as “junk,” have predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal. They may also be illiquid and difficult to value.
 
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As a BDC, we may also invest up to 30% of our portfolio opportunistically in “non-qualifying” portfolio investments, such as investments in non-U.S. companies, which may include investments in a “passive foreign investment company” (a “PFIC”). See “ Item 1(c). Description of Business—Regulation as a Business Development Company—Qualifying Assets and “ Item 1(c). Description of Business—Certain U.S. Federal Income Tax Consequences—Our Investments — General .”

Because we intend to be a BDC, and we intend to qualify as a RIC under the Code, our portfolio will be subject to diversification and other requirements. See “— Certain U.S. Federal Income Tax Consequences .”

We may borrow money from time to time within the levels permitted by the 1940 Act (which generally allows us to incur leverage for up to one-half of our assets). In determining whether to borrow money, we will analyze the maturity, covenant package and rate structure of the proposed borrowings as well as the risks of such borrowings compared to our investment outlook. The use of borrowed funds or the proceeds of preferred stock offerings to make investments would have its own specific set of benefits and risks, and all of the costs of borrowing funds or issuing preferred stock would be borne by holders of our common stock. See “ Item 1A. Risk Factors—Risks Relating to Our Business and Structure—Financing Investments With Borrowed Money .”

The Investment Advisor

The Company’s investment activities will be managed by BCSF Advisors, LP (“BCSFA” or the “Advisor”), an investment adviser that is registered with the SEC under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). Our Advisor will be responsible for originating prospective investments, conducting research and due diligence investigations on potential investments, analyzing investment opportunities, negotiating and structuring our investments and monitoring our investments and portfolio companies on an ongoing basis. More information regarding the Advisor and its business activities can be found on its registration under Form ADV located on the Investment Adviser Registration Depository website of the SEC.

The Advisor has entered into a Resource Sharing Agreement (the “Resource Sharing Agreement”) with Bain Capital Credit, pursuant to which Bain Capital Credit will provide the Advisor with experienced investment professionals (including the members of the Advisor’s Credit Committee) and access to the resources of Bain Capital Credit so as to enable the Advisor to fulfill its obligations under the Investment Advisory Agreement. Through the Resource Sharing Agreement, the Advisor intends to capitalize on the significant deal origination, credit underwriting, due diligence, investment structuring, execution, portfolio management and monitoring experience of Bain Capital Credit’s investment professionals. There can be no assurance that Bain Capital Credit will perform its obligations under the Resource Sharing Agreement.  The Resource Sharing Agreement may be terminated by either party on 60 days’ notice, which if terminated may have a material adverse consequence on the Company’s operations. See “ Item 7. Certain Relationships and Related Transactions, and Director Independence .”

The Advisor will seek to achieve the Company’s investment objective by:

· Capitalizing on the significant experience and expertise of Bain Capital Credit’s 114-person total investment team, including its dedicated 25-person Private Credit Group, which is represented in Bain Capital Credit’s Boston, Chicago, New York, London and Melbourne offices; see “ Item 1(c). Description of Business—About Bain Capital Credit .”

· Applying Bain Capital Credit’s long-standing middle market direct lending investment strategy that spans over 16 years and has invested over $2.5 billion, of which $968 million has been invested within the 12-month period ending December 31, 2015 , in such opportunities;

· Leveraging Bain Capital Credit’s sourcing capabilities and extensive contacts with over 1,500 middle-market private equity sponsors, banks and financial intermediaries to drive differentiated deal flow and to enhance the security selection process;

· Utilizing Bain Capital Credit’s deep due diligence approach supported by its industry teams to evaluate investment opportunities; and
 
· Driving value through Bain Capital Credit’s dedicated Portfolio Group where appropriate through hands-on operational expertise.
 
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About Bain Capital Credit

Bain Capital Credit was established in 1998 and had approximately $30.4 billion in assets under management as of March 31, 2016. Bain Capital Credit currently has 114 professionals who actively monitor investments in over 500 companies. To date, Bain Capital Credit has invested across the credit products and fixed income universe, including performing and distressed bank loans, high yield bonds, debtor-in-possession loans, senior direct lending, mezzanine debt and other junior securities, structured products, credit-based equities and other investments. Bain Capital Credit has invested over $2.5 billion in Senior Direct Lending Strategy transactions since 1999 (of which $968 million has been invested within the 12-month period ending December 31, 2015) and has an extensive track record as a non-traditional lender in the middle market.

Bain Capital Credit and its affiliates manage a number of pooled investment vehicles that may compete with the Company for investment opportunities.  We may invest alongside Bain Capital Credit Funds (as defined below) in certain circumstances where doing so is consistent with our investment strategy, as well as applicable law and SEC staff interpretations. We and one or more other Affiliate Advisors (as defined below) submitted an exemptive application to the SEC to permit greater flexibility to negotiate the terms of co-investments if our Board determines that it would be advantageous for us to co-invest with Related Funds (as defined below) in certain circumstances where doing so is consistent with our investment strategy, as well as applicable law and SEC staff interpretations. There can be no assurance if and when the SEC will grant such relief.

In addition, in the absence of exemptive relief granted for each investment by the SEC, we will not be permitted to invest in securities of an issuer where entities advised by Bain Capital Credit or other Affiliate Advisors have invested in different securities of that issuer. See “ Item 7(c). Certain Relationships and Related Transactions, and Director Independence—Transactions with Related Persons; Review, Approval or Ratification of Transaction with Related Persons—Investments Alongside Bain Capital Credit Funds and/or Related Funds .”

Bain Capital Credit is a wholly-owned subsidiary of Bain Capital, LP (“Bain Capital”) and the Advisor is a majority-owned subsidiary of Bain Capital Credit. As a diversified private investment firm, Bain Capital and its affiliates, including Bain Capital Credit and the Advisor, engage in a broad range of activities, including investment activities for their own account and for the account of other investment funds or accounts, and provide investment banking, advisory, management and other services to funds and operating companies.

The Board of Directors

Our business and affairs are managed under the direction of our Board of Directors (the “Board”). Our Board consists of five members, three of whom are not “interested persons” of the Company, the Advisor or their respective affiliates as defined in Section 2(a)(19) of the 1940 Act. We refer to these individuals as our “Independent Directors.” The Independent Directors compose a majority of our Board. Our Board elects our officers, who serve at the discretion of our Board. The responsibilities of our Board include quarterly determinations of fair value of our assets, corporate governance activities, oversight of our financing arrangements and oversight of our investment activities.

Investment Advisory Agreement; Administration Agreement

Our investment activities will be managed by our Advisor, which will be responsible for originating prospective investments, conducting research and due diligence investigations on potential investments, analyzing investment opportunities, negotiating and structuring our investments and monitoring our investments and portfolio companies on an ongoing basis. We have entered into an investment advisory agreement (the “Investment Advisory Agreement”) with the Advisor, pursuant to which we have agreed to pay the Advisor a base management fee and an incentive fee for its services. The cost of both the base management fee and the incentive fee will ultimately be borne by our stockholders.
 
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The base management fee is calculated at an annual rate of 1.5% of our gross assets, including assets purchased with borrowed funds or other forms of leverage but excluding cash and cash equivalents. For services rendered under the Investment Advisory Agreement, the base management fee is payable quarterly in arrears. The base management fee is calculated based on the average value of our gross assets at the end of the two most recently completed calendar quarters, and appropriately adjusted for any share issuances or repurchases during the current calendar quarter. Base management fees for any partial month or quarter will be appropriately pro-rated. For purposes of the Investment Advisory Agreement, cash equivalents means U.S. government securities and commercial paper instruments maturing within one year of purchase.

The Advisor, however, will agree to waive its right to receive management fees in excess of 0.75% of the aggregate gross assets excluding cash and cash equivalents (including capital drawn to pay the Company’s expenses) during any period prior to a Qualified IPO. A “Qualified IPO” is an initial public offering (“IPO”) of the Company’s common stock that results in an unaffiliated public float of at least the lower of (A) $75 million and (B) 15% of the aggregate capital commitments received prior to the date of such initial public offering. The Advisor will not be permitted to recoup any waived amounts at any time and the waiver agreement may only be modified or terminated prior to a Qualified IPO with the approval of the Board.   If a Qualified IPO does not occur, such fee waiver will remain in place through liquidation of the Company.

We will pay the Advisor an incentive fee. The incentive fee will consist of two parts—an incentive fee based on income and an incentive fee based on capital gains—which are described in more detail below.

The first part, the income incentive fee, will be calculated and payable quarterly in arrears and equals:

(a) 100% of the excess of our pre-incentive fee net investment income for the immediately preceding calendar quarter, over a preferred return of 1.5% per quarter (6% annualized) (the “Hurdle”), until the Advisor has received a “catch-up” equal to:

(i) 15% of the pre-incentive fee net investment income for the current quarter prior to a Qualified IPO, or

(ii) 17.5% of the pre-incentive fee net investment income for the current quarter after a Qualified IPO; and

(b) (i) 15% of all remaining pre-incentive fee net investment income above the “catch-up” prior to a Qualified IPO, or (ii) 17.5% of all remaining pre-incentive fee net investment income above the “catch-up” after a Qualified IPO.

The second part, the capital gains incentive fee, will be determined and payable in arrears as of the end of each fiscal year (or upon a Qualified IPO or termination of the Investment Advisory Agreement), and equals:

(a) prior to a Qualified IPO, 15% of the Company’s realized capital gains, if any, on a cumulative basis from inception through the end of the fiscal year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees (the “Cumulative Capital Gains”), or

(b) after a Qualified IPO, 17.5% of the Cumulative Capital Gains.

Pre-incentive fee net investment income means interest income, distribution 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 each calendar quarter, minus our operating expenses for such quarter (including the base management fee, expenses payable under the Administration Agreement and any interest expense and distributions paid on any issued and outstanding debt or preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as market discount, original issue discount (“OID”), debt instruments with payment-in-kind (“PIK”) interest, preferred stock with PIK dividends and zero coupon securities), accrued income that we have not yet received in cash. See “ Item 1A. Risk Factors—Risks Relating to Our Business and Structure—Incentive Fee Structure Relating to the Advisor .”
 
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Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. Because of the structure of the incentive fee, it is possible that we may pay an incentive fee in a quarter where we incur a loss. For example, if we receive pre-incentive fee net investment income in excess of the Hurdle rate for a quarter, we will pay the applicable incentive fee even if we have incurred a loss in that quarter due to realized and unrealized capital losses.

Pre-incentive fee net investment income will be compared to a “Hurdle Amount” equal to the product of (i) the “hurdle rate” of 1.5% per quarter (6% annualized) and (ii) the Company’s net assets (defined as total assets less indebtedness and before taking into account any incentive fees payable during the period) at the end of the immediately preceding calendar quarter. If market interest rates rise, we may be able to invest our funds in debt instruments that provide for a higher return, which would increase our pre-incentive fee net investment income and make it easier for the Advisor to surpass the fixed Hurdle rate and receive an incentive fee based on such net investment income. PIK interest and OID will also increase our pre-incentive fee net investment income and make it easier to surpass the fixed Hurdle rate. Our pre-incentive fee net investment income used to calculate this part of the incentive fee is also included in the amount of our total assets (other than cash and cash equivalents but including assets purchased with borrowed amounts) used to calculate the 1.5% base management fee.

Prior to the occurrence of a Qualified IPO, the Company will pay the income incentive fee in each calendar quarter as follows:

· no income incentive fee in any calendar quarter in which the Company’s pre-incentive fee net investment income does not exceed the Hurdle Amount;

· 100% of the Company’s pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the Hurdle Amount but is less than or equal to an amount (the “Pre-Qualified IPO Catch-Up Amount”) determined on a quarterly basis by multiplying 1.7647% by the Company’s net asset value at the beginning of each applicable calendar quarter. The Pre-Qualified IPO Catch-Up Amount is intended to provide the Advisor with an incentive fee of 15% on all of the Company’s pre-incentive fee net investment income when the Company’s pre-incentive fee net investment income reaches the Pre-Qualified IPO Catch-Up Amount in any calendar quarter; and

· for any calendar quarter in which the Company’s pre-incentive fee net investment income exceeds the Pre-Qualified IPO Catch-Up Amount, the income incentive fee shall equal 15% of the amount of the Company’s pre-incentive fee net investment income for the calendar quarter.

On and after the occurrence of a Qualified IPO, the Company will pay the income incentive fee in each calendar quarter as follows:

· no income incentive fee in any calendar quarter in which the Company’s pre-incentive fee net investment income does not exceed the Hurdle Amount;

· 100% of the Company’s pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the Hurdle Amount but is less than or equal to an amount (the “Post-Qualified IPO Catch-Up Amount”) determined on a quarterly basis by multiplying 1.8182% by the Company’s net asset value at the beginning of each applicable calendar quarter. The Post-Qualified IPO Catch-Up Amount is intended to provide the Advisor with an incentive fee of 17.5% on all of the Company’s pre-incentive fee net investment income when the Company’s pre-incentive fee net investment income reaches the Post-Qualified IPO Catch-Up Amount in any calendar quarter; and
 
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· for any calendar quarter in which the Company’s pre-incentive fee net investment income exceeds the Post-Qualified IPO Catch-Up Amount, the income incentive fee shall equal 17.5% of the amount of the Company’s pre-incentive fee net investment income for the calendar quarter.

These calculations will be appropriately pro-rated for any period of less than three months and adjusted for any share issuances or repurchases by the Company during the current quarter. The Company does not currently intend to institute a share repurchase program and share repurchases will be effected only in extremely limited circumstances in accordance with applicable law. If the Qualified IPO occurs on a date other than the first day of a calendar quarter, the income incentive fee shall be calculated for such calendar quarter at a weighted rate calculated based on the fee rates applicable before and after a Qualified IPO based on the number of days in such calendar quarter before and after a Qualified IPO.

The second part of the incentive fee is a capital gains incentive fee that will be determined and payable in arrears in cash as of the end of each fiscal year (or upon termination of the Investment Advisory Agreement, as of the termination date), and equals (i) 15% of our realized capital gains as of the end of the fiscal year prior to a Qualified IPO, and (ii) 17.5% of our realized capital gains as of the end of the fiscal year after a Qualified IPO. In determining the capital gains incentive fee payable to the Advisor, we calculate the cumulative aggregate realized capital gains and cumulative aggregate realized capital losses since our inception, and the aggregate unrealized capital depreciation as of the date of the calculation, as applicable, with respect to each of the investments in our portfolio. For this purpose, cumulative aggregate realized capital gains, if any, equals the sum of the differences between the net sales price of each investment, when sold, and the original cost of such investment since our inception. Cumulative aggregate realized capital losses equals the sum of the amounts by which the net sales price of each investment, when sold, is less than the original cost of such investment since our inception. Aggregate unrealized capital depreciation equals the sum of the difference, if negative, between the valuation of each investment as of the applicable calculation date and the original cost of such investment. At the end of the applicable year, the amount of capital gains that serves as the basis for our calculation of the capital gains incentive fee equals the cumulative aggregate realized capital gains less cumulative aggregate realized capital losses, less aggregate unrealized capital depreciation, with respect to our portfolio of investments. If this number is positive at the end of such year, then the capital gains incentive fee for such year will equal 15% before a Qualified IPO or 17.5% after a Qualified IPO, as applicable, of such amount, less the aggregate amount of any capital gains incentive fees paid in respect of our portfolio in all prior years as calculated in accordance with the below after a Qualified IPO.

If a Qualified IPO occurs on a date other than the first day of a fiscal year, a capital gains incentive fee shall be calculated as of the day before the Qualified IPO, with such capital gains incentive fee paid to the Advisor following the end of the fiscal year in which the Qualified IPO occurred. For the avoidance of doubt, such capital gains incentive fee shall be equal to 15% of the Company’s realized capital gains on a cumulative basis from inception through the day before the Qualified IPO, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gains incentive fees. Following a Qualified IPO, solely for the purposes of calculating the capital gains incentive fee, the Company will be deemed to have previously paid capital gains incentive fees prior to a Qualified IPO equal to the product obtained by multiplying (a) the actual aggregate amount of previously paid capital gains incentive fees for all periods prior to a Qualified IPO by (b) the percentage obtained by dividing (x) 17.5% by (y) 15%. In the event that the Investment Advisory Agreement shall terminate as of a date that is not a fiscal year end, the termination date shall be treated as though it were a fiscal year end for purposes of calculating and paying a capital gains incentive fee.

Our Board will monitor the mix and performance of our investments over time and will seek to satisfy itself that the Advisor is acting in our interests and that our fee structure appropriately incentivizes the Advisor to do so.
 
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We have also entered into an administration agreement (the “Administration Agreement”) with the Advisor (in such capacity, the “Administrator”), pursuant to which the Administrator will provide the administrative services necessary for us to operate, and we will utilize the Administrator’s office facilities, equipment and recordkeeping services. Pursuant to the Administration Agreement, the Administrator has agreed to oversee our public reporting requirements and tax reporting and monitor our expenses and the performance of professional services rendered to us by others. The Administrator has also hired a sub-administrator to assist in the provision of administrative services. We will reimburse the Administrator for its costs and expenses and our allocable portion of overhead incurred by it in performing its obligations under the Administration Agreement, including compensation paid to or compensatory distributions received by our officers (including our Chief Compliance Officer and Chief Financial Officer) and any of their respective staff who provide services to us, operations staff who provide services to us, and internal audit staff, if any, to the extent internal audit performs a role in our Sarbanes-Oxley internal control assessment. Our allocable portion of overhead will be determined by the Administrator, which expects to use various methodologies such as allocation based on the percentage of time certain individuals devote, on an estimated basis, to the business and affairs of the Company, and will be subject to oversight by the Board. The sub-administrator will be paid its compensation for performing its sub-administrative services under the sub-administration agreement. The Administrator will waive its right to be reimbursed in the event that any such reimbursements would cause any distributions to our stockholders to constitute a return of capital. See “ Fees and Expenses .” In addition, the Administrator is permitted to delegate its duties under the Administration Agreement to affiliates or third parties and we will reimburse the expenses of these parties incurred and paid by the Advisor on our behalf.

Both the Investment Advisory Agreement and the Administration Agreement have been approved by our Board. Unless earlier terminated as described below, both the Investment Advisory Agreement and the Administration Agreement will remain in effect for a period of two years from their effective date and will remain in effect from year to year thereafter if approved annually by (i) the vote of our Board, or by the vote of a majority of our outstanding voting securities, and (ii) the vote of a majority of our Independent Directors. The Investment Advisory Agreement and the Administration Agreement will automatically terminate in the event of assignment. Both the Investment Advisory Agreement and the Administration Agreement may be terminated by either party without penalty upon not less than 60 days’ written notice to the other. Upon termination of the Investment Advisory Agreement, the Company will be required to change its name which may have a material adverse impact on the Company’s operations. See “ Item 1A. Risk Factors—Risks Relating to Our Business and Structure—   Dependence Upon Key Personnel of Bain Capital Credit and the Advisor .”

Under the Investment Advisory Agreement, the Advisor has not assumed any responsibility to us other than to render the services called for under that agreement. It will not be responsible for any action of our Board in following or declining to follow the Advisor’s advice or recommendations. Under the Investment Advisory Agreement, the Advisor, its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with the Advisor, and any person controlling or controlled by the Advisor will not be liable to us, any subsidiary of ours, our directors, our stockholders or any subsidiary’s stockholders or partners for acts or omissions performed in accordance with and pursuant to the Investment Advisory Agreement, except those resulting from acts constituting gross negligence, willful misfeasance, bad faith or reckless disregard of the duties that the Advisor owes to us under the Investment Advisory Agreement. In addition, as part of the Investment Advisory Agreement, we have agreed to indemnify the Advisor and each of its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with the Advisor, from and against any claims or liabilities, including reasonable legal fees and other expenses reasonably incurred, arising out of or in connection with our business and operations or any action taken or omitted on our behalf pursuant to authority granted by the Investment Advisory Agreement, except where attributable to gross negligence, willful misfeasance, bad faith or reckless disregard of such person’s duties under the Investment Advisory Agreement. These protections may lead the Advisor to act in a riskier manner when acting on our behalf than it would when acting for its own account.

United States federal and state securities laws may impose liability under certain circumstances on persons who act in good faith. Nothing in the Investment Advisory Agreement will constitute a waiver or limitation of any rights that the Company may have under any applicable federal or state securities laws.

Investment Decision Process

The Advisor’s investment process can be broken into five processes: (1) Sourcing and Idea Generation, (2) Investment Diligence & Recommendation, (3) Credit Committee Approval, (4) Portfolio Construction and (5) Portfolio & Risk Management.
 
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Sourcing and Idea Generation

The investment decision-making process begins with sourcing ideas. Bain Capital Credit’s Private Credit Group interacts with over 1,500 global contacts, enabling the group to generate a large set of middle-market investment opportunities. Further enhancing the sourcing capability of the core Private Credit Group are Bain Capital Credit’s 14 industry groups, Trading Desk, Portfolio Group and Restructuring team, each with its own sets of contacts. Of these contacts (with many of which a traditional middle-market fund would not typically have relationships), approximately 400 are private equity firms. Relationships with banks, a variety of advisors and intermediaries and a handful of unique independent sponsors compose the remainder of the relationships.  Over the last 12 months as of December 31, 2015, Bain Capital Credit’s Private Credit Group considered approximately 790 global investment opportunities.

Investment Diligence & Recommendation

The Advisor utilizes Bain Capital Credit’s bottom-up approach to investing and it starts with the due diligence performed by its Private Credit Group. They work with the close support of Bain Capital Credit’s 14 industry groups. This diligence process typically begins with a detailed review of the offering memorandum as well as Bain Capital Credit’s own independent diligence efforts, including in-house materials and expertise, third-party independent research and interviews, and hands-on field checks where appropriate. For deals that progress beyond an initial stage, the team will schedule one or more meetings with company management, facilities visits and also meetings with the sponsor in order to ask more detailed questions and to better understand the sponsor’s view of the business and plans for it going forward.  The team’s diligence work is summarized in investment memos and accompanying credit packs.  Work product also includes full models and covenant analysis. The approval process itself is iterative, involving multiple levels of discussion and approval which culminate with a final credit approval meeting with Bain Capital Credit’s unified eight-member Credit Committee that is responsible for approving all investments across every asset class and strategy within Bain Capital Credit.

Credit Committee Approval

Once an investment is deemed worthy of serious consideration, it must be presented to the Advisor’s Credit Committee. The Advisor’s Credit Committee is composed of 8 credit professionals (4 of whom serve as full-time members and 4 of whom serve as adjunct members) who average over 24 years of experience and have varied areas of expertise from bank loans to high yield to restructuring, including Jonathan S. Lavine (Co-Managing Partner, Chief Investment Officer), Tim Barns (Managing Director, Chief Credit Officer), Stuart E. Davies (Managing Director, Chief Investment Officer – Opportunistic Credit), Jonathan DeSimone (Managing Director, Chief Investment Officer – Liquid Credit), Alon Avner (Adjunct Member - Managing Director, Head of Europe), Michael A. Ewald (Adjunct Member - Managing Director, Head of Private Credit Group), Christopher Linneman (Adjunct Member - Managing Director, Head of New York) and Jeff Robinson (Adjunct Member - Managing Director, Portfolio Manager).

Portfolio Construction

Portfolio construction is largely the responsibility of the portfolio managers (the “Portfolio Managers”). The Portfolio Managers will construct the portfolio using a set of investments approved by the Credit Committee. While the decision to buy requires approval from the Credit Committee, the decision to sell securities is at the sole discretion of the Portfolio Managers. The Portfolio Managers’ sell decisions are based primarily on price targets, relative value and market conditions. For middle-market holdings, the path to exit an investment is discussed at Credit Committee meetings, including restructurings, acquisitions and sale to strategic buyers. Since most middle-market investments are illiquid, exits are driven by a sale of the portfolio company or a refinancing of the portfolio company’s debt.

Portfolio & Risk Management

The Advisor will utilize Bain Capital Credit’s Private Credit Group for the daily monitoring of its respective credits once an investment has been made. This monitoring is facilitated through Bain Capital Credit’s proprietary system, Sankaty Tool for Analyst Recommendations (“STAR”). The Advisor believes that the ongoing monitoring of financial performance and market developments of portfolio investments is critical to successful investment management. Accordingly, the Advisor is actively involved in an on-going portfolio review process and attends board meetings. To the extent a portfolio investment is not meeting the Advisor’s expectations, the Advisor takes corrective action when it deems appropriate, which may include raising interest rates, gaining a more influential role on its board, taking warrants and, where appropriate, restructuring the balance sheet to take control of the company. The Advisor will utilize the Bain Capital Credit Risk and Oversight Committee. The members of Bain Capital Credit’s Risk and Oversight Committee are Jonathan S. Lavine, Sally F. Dornaus, Jeffrey B. Hawkins, Jamie Kellogg, David McCarthy, Ranesh Ramanathan and Andrew S. Viens.  The Risk and Oversight Committee is responsible for monitoring and reviewing risk management, including portfolio risk, counterparty risk and firm-wide risk issues. In addition to the methods noted above, there are a number of proprietary methods and tools used through all levels of Bain Capital Credit to manage portfolio risk.
 
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Investment Strategy

The Advisor, through the resources and personnel provided by Bain Capital Credit through the Resource Sharing Agreement, uses detailed business, industry and competitive analyses to make investments. In evaluating potential opportunities, Bain Capital Credit’s investment professionals typically complete market analyses to assess the attractiveness of a given industry and a specific investment and monitor, on an ongoing basis, financial performance and market developments. The Advisor’s approach to making investments generally involves evaluating the following business characteristics: market definition, market size and growth prospects, competitive analysis, historical financial performance, margin analysis and cost structure, quality of earnings, capital structure, access to capital markets and regulatory, risk analysis, tax and legal matters. Additionally, the Advisor places significant emphasis on the quality and track record of the controlling stockholders and management team as well as careful consideration to the underlying deal structure and documentation. When considering an investment that meets the Company’s return objectives, the Advisor seeks to mitigate downside risk.

We will seek to create a broad and varied portfolio of investments across various industries as a method to manage risk and capitalize on specific sector trends, although our investments may be concentrated in a small number of industries.

Investment Focus

We are a business development company. Our primary focus is capitalizing on senior middle-market lending opportunities.  We will seek to provide risk-adjusted returns and current income to investors by investing primarily in middle-market companies with between $10 million and $150 million in EBITDA. We intend to focus on senior investments with a first or second lien on collateral and strong structures and documentation intended to protect the lender. We may also invest in mezzanine debt and other junior securities and in secondary purchases of assets or portfolios, as described below. Investments are likely to include, among other things, (i) senior first lien, stretch senior, senior second lien, unitranche, (ii) mezzanine debt and other junior investments and (iii) secondary purchases of assets or portfolios that primarily consist of middle-market corporate debt. We may also invest, from time to time, in distressed debt, debtor-in-possession loans, structured products, structurally subordinate loans, investments with deferred interest features, zero-coupon securities and defaulted securities. Leverage is expected to be utilized to help the Company meet its investment objective. Any such leverage, if incurred, would be expected to increase the total capital available for investment by the Company.   As a BDC, we may also invest up to 30% of our portfolio opportunistically in “non-qualifying” portfolio investments, such as investments in non-U.S. companies.

We may invest in securities that are rated below investment grade by rating agencies or that would be rated below investment grade if they were rated (i.e. junk bonds). See “ Item 1A. Risk Factors—Risks Relating to Our Investments—   Lack of Liquidity in Investments .” Our investments also may include non-cash income features, including payment-in-kind (“PIK”) interest and original issue discount (“OID”). See “ Item 1A. Risk Factors—Risks Relating to Our Investments—Risks Associated with OID and PIK Interest Income .”

Competition

Our primary competitors in providing financing to middle-market companies include public and private funds, other business development companies, commercial and investment banks, commercial financing companies and, to the extent they provide an alternative form of financing, private equity and hedge funds. Many of our competitors are substantially larger and have considerably greater financial, technical and marketing resources than we do. For example, we believe some competitors may have access to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of investments and establish more relationships than us. Furthermore, many of our competitors are not subject to the regulatory restrictions that the 1940 Act imposes on us as a BDC or to the distribution and other requirements we must satisfy to maintain our qualification as a RIC.
 
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We expect to use the expertise of the investment professionals of Bain Capital Credit to which we will have access to assess investment risks and determine appropriate pricing for our investments in portfolio companies. In addition, we expect that the relationships of Bain Capital Credit will enable us to learn about, and compete effectively for, financing opportunities with attractive middle-market companies in the industries in which we seek to invest . For additional information concerning the competitive risks we face, see “ Item 1A. Risk Factors—Risks Relating to our Business and Structure—Operation in a Highly Competitive Market for Investment Opportunities .”

Fees and Expenses

Our primary operating expenses will include the payment of fees to the Advisor under the Investment Advisory Agreement, our allocable portion of overhead expenses under the Administration Agreement and other operating costs described below. We will bear all other out-of-pocket costs and expenses of our operations and transactions, including:

· our initial organization costs incurred prior to the commencement of our operations up to a maximum of $1.5 million;

· operating costs incurred prior to the commencement of our operations;

· the cost of calculating our net asset value, including the cost of any third-party valuation services;

· the cost of effecting sales and repurchases of shares of our common stock and other securities;

· fees payable to third parties relating to making investments, including our Advisor’s or its affiliates’ travel expenses, research costs and out-of-pocket fees and expenses associated with performing due diligence and reviews of prospective investments;

· interest expense and other costs associated with Company indebtedness;

· transfer agent and custodial fees;

· out-of-pocket fees and expenses associated with marketing efforts;

· federal and state registration fees and any stock exchange listing fees;

· U.S. federal, state and local taxes;

· independent directors’ fees and expenses;

· brokerage commissions and markups;

· fidelity bond, directors’ and officers’ liability insurance and other insurance premiums;

· direct costs, such as printing, mailing, long distance telephone and staff;

· fees and expenses associated with independent audits and outside legal costs;

· costs associated with our reporting and compliance obligations under the 1940 Act and other applicable U.S. federal and state securities laws; and

· other expenses incurred by the Administrator or us in connection with administering our business, including payments under the Administration Agreement that will be based upon our allocable portion (subject to the review and approval of our Board) of overhead.
 
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All of the foregoing expenses are borne indirectly by our stockholders.

We have agreed to repay the Advisor for initial organization costs incurred prior to the commencement of our operations up to a maximum of $1.5 million and operating costs incurred prior to the commencement of our operations.

From time to time, the Administrator or its affiliates may pay third-party providers of goods or services . We   will reimburse the Administrator or such affiliates thereof for any such amounts paid on our behalf. The Administrator will waive its right to be reimbursed in the event that such reimbursements would cause any distributions to our stockholders to constitute a return of capital. All of the foregoing expenses will ultimately be borne by our stockholders.

Our Advisor is authorized to determine the broker to be used for each securities transaction. In selecting brokers to execute transactions, the Advisor need not solicit competitive bids and does not have an obligation to seek the lowest available commission cost. In selecting brokers, the Advisor may or may not negotiate “execution only” commission rates and thus we may be deemed to be paying for other services provided by the broker that are included in the commission rate. In negotiating commission rates, the Advisor will take into account the financial stability and reputation of the broker and the brokerage, research and other services provided to us, the Advisor and other customers of the Advisor and its affiliates by such broker, even though we may not, in any particular instance, be the direct or indirect beneficiaries of the research or other services provided and the management fee payable to the Advisor is not reduced because it receives such services. In addition, the Advisor may direct commissions to certain brokers that on the foregoing basis may furnish other services to us, the Advisor and other customers of the Advisor and its affiliates, such as telephone lines, news and quotation equipment, electronic office equipment, account record keeping and clerical services, trading software, financial publications and economic consulting services. As a result of the brokerage practices described above, the levels of commission paid and prices paid or received by us in securities transactions may be less favorable than in securities transactions effected on a best price and execution basis.

The Company and the Advisor have currently engaged several placement agents to assist with the placement of the Company’s shares, and may engage additional or different placement agents in the future. The Advisor and/or investors referred by a placement agent shall pay all compensation to the placement agents. Any placement fees borne by an investor shall be fully disclosed to such investor. The Company does not currently intend to pay compensation to any placement agents in connection with the Private Offering. The prospect of receiving placement fees or other compensation may provide placement agents and/or their salespersons with an incentive to favor sales of the shares of the Company over the sale of interests of other investments with respect to which the placement agent does not receive such additional compensation, or receives lower levels of additional compensation.

Capital Resources and Borrowings

We anticipate cash to be generated from the Private Offering and other future offerings of securities (including a Qualified IPO), and cash flows from operations, including interest earned from the temporary investment of cash in cash equivalents, U.S. government securities and other high-quality debt investments that mature in one year or less. Additionally, we will be permitted, under specified conditions, to issue multiple classes of indebtedness and one class of stock senior to our common stock if our asset coverage, as defined in the 1940 Act, is at least equal to 200% immediately after each such issuance. Furthermore, while any indebtedness and senior securities remain outstanding, we must make provisions to prohibit any distribution to our stockholders or the repurchase of such securities or shares unless we meet the applicable asset coverage ratios at the time of the distribution or repurchase. In connection with borrowings, our lenders may require us to pledge assets, investor commitments to fund capital calls and/or the proceeds of those capital calls. In addition, the lenders may ask us to comply with positive or negative covenants that could have an effect on our operations.

We expect to enter into one or more agreements for a credit facility and/or subscription facility (each, a “Credit Facility”). Each Credit Facility will provide for borrowings to make additional investments and for other general corporate purposes. It is anticipated that a Credit Facility will bear interest at floating rates at to be determined spreads over LIBOR and will be secured by the Company’s assets, and/or the Company may be required to pledge capital commitments to the lender. We cannot assure stockholders that we will be able to enter into a Credit Facility. Our stockholders will indirectly bear the costs associated with any borrowings under a Credit Facility or otherwise, including increased management fees payable to the Advisor as a result of such borrowings.
 
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Dividend Reinvestment Plan
 
Prior to the listing of the Company’s shares on a national securities exchange (a “Listing”), stockholders who “opt in” to the Company’s dividend reinvestment plan will have their cash dividends and distributions automatically reinvested in additional shares of the Company’s common stock, rather than receiving cash dividends and distributions.
 
Subsequent to a Listing, stockholders who do not “opt out” of the Company’s dividend reinvestment plan will have their cash dividends and distributions automatically reinvested in additional shares of the Company’s common stock, rather than receiving cash dividends and distributions.
 
Stockholders can elect to “opt in” or “opt out” of the Company’s dividend reinvestment plan in their Subscription Agreements.  We have adopted a dividend reinvestment plan that will provide for reinvestment of our dividends and other distributions on behalf of our stockholders, unless a stockholder elects to receive cash. As a result, if our Board authorizes, and we declare, a cash dividend or other distribution, then (i) prior to a Listing, stockholders who “opt in” to the Company’s dividend reinvestment plan and (ii) subsequent to a Listing, stockholders who do not “opt out” of the Company’s dividend reinvestment plan, will have their cash dividends and distributions automatically reinvested in additional shares of the Company’s common stock, rather than receiving cash dividends and distributions. The elections of stockholders that make an election prior to a Listing shall remain effective after the Listing.
 
Administration
 
We do not currently have any employees.   Each officer of the Company will also be an employee of the Advisor or its affiliates. See “ Item 5. Directors and Executive Officers.”
 
Our day-to-day investment operations will be managed by the Advisor. Pursuant to its Resource Sharing Agreement with Bain Capital Credit, the Advisor will have access to the individuals who comprise our Advisor’s Credit Committee, and a team of additional experienced investment professionals who, collectively, comprise the Advisor’s investment team. The Advisor may hire additional investment professionals to provide services to us, based upon its needs. See “ Item 1(c). Description of Business—General—Investment Advisory Agreement; Administration Agreement .”
 
The Private Offering
 
We expect to enter into separate Subscription Agreements with a number of investors for the Private Offering. Each investor will make a capital commitment to purchase shares of our common stock pursuant to the Subscription Agreement. Investors will be required to make capital contributions to purchase shares of the Company’s common stock each time the Company delivers a drawdown notice, which will be delivered at least 10 business days prior to the required funding date, in an aggregate amount not to exceed their respective capital commitments. All purchases will generally be made pro rata in accordance with the investors’ capital commitments, at a per-share price as determined by the Company’s Board (including any committee thereof) as of the end of the most recent calendar quarter or such other date determined by the Board prior to the date of the applicable drawdown notice. The per-share price shall be at least equal to the net asset value per share in accordance with the limitations under Section 23 of the 1940 Act. The Board may set the per-share price above the net asset value per share based on a variety of factors, including without limitation the total amount of the Company’s organizational and other expenses. Upon the earlier to occur of (i) a Qualified IPO and (ii) the three and a half-year anniversary of the Initial Closing, investors will be released from any further obligation to purchase additional shares, subject to certain exceptions contained herein and in the Subscription Agreement.  Prior to a Qualified IPO, no investor who participated in the Private Offering will be permitted to sell, assign, transfer or otherwise dispose of its shares or capital commitment unless the Company provides its prior written consent and the transfer is otherwise made in accordance with applicable law.
 
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The Initial Closing is expected to occur shortly after the filing of the Company’s election to be treated as a BDC under the 1940 Act. Additional closings of the Private Offering are expected to occur from time to time as determined by the Company. The Company reserves the right to conduct additional offerings of securities in the future in addition to the Private Offering. In the event that the Company enters into a Subscription Agreement with one or more investors after the initial drawdown, each such investor will be required to make purchases of shares of common stock (each, a “Catch-up Purchase”) on one or more dates to be determined by the Company. The aggregate purchase price of the Catch-up Purchases will be equal to an amount necessary to ensure that, upon payment of the aggregate purchase price, such investor will have contributed the same percentage of its capital commitment to the Company as all investors whose subscriptions were accepted at previous closings. Catch-up Purchases will be made at a per-share price as determined by the Company’s Board (including any committee thereof) as of the end of the most recent calendar quarter or such other date as determined by the Board prior to the date of the applicable drawdown notice. The per-share price shall be at least equal to the net asset value per share of the Company’s common stock in accordance with the limitations under Section 23 of the 1940 Act.  The Board may set the per-share price above the net asset value per share based on a variety of factors, including without limitation the total amount of the Company’s organizational and other expenses.
 
In addition to all legal remedies available to the Company, failure by an investor to purchase additional common stock when requested by the Company will (following a cure period of ten business days) result in that investor being subject to certain default provisions set forth in the Subscription Agreement. Defaulting investors may also forfeit their right to participate in purchasing additional shares on any future drawdown date or otherwise participate in any future investments in the Company.
 
Except as provided above, three and a half years following the Initial Closing (the “Commitment Period”), investors in the Private Offering will be released from any further obligation to purchase additional shares of common stock, except to the extent necessary to (a) pay Company expenses, including management fees, any amounts that may become due under any borrowings or other financings or similar obligations and any other liabilities, contingent or otherwise, in each case to the extent they relate to the Commitment Period, (b) complete investments in any transactions for which there are binding written agreements as of the end of the Commitment Period (including investments that are funded in phases), (c) fund follow-on investments made in existing portfolio companies that, in the aggregate, do not exceed 10% of total commitments, (d) fund obligations under any Company guarantee or indemnity made during the Commitment Period and/or (e) fund any defaulted commitments.  The Commitment Period shall terminate earlier upon a Qualified IPO and investors will be released from any further obligation to purchase additional shares of common stock. Additional closings of the Private Offering are expected to occur from time to time as determined by the Company. The Company reserves the right to conduct new or additional offerings of securities in the future, in addition to the Private Offering.
 
If a Qualified IPO has not occurred by the expiration of the Commitment Period, the Board will use its best efforts to wind down and/or liquidate and dissolve the Company. The Company does not intend to give investors in-kind distributions of illiquid securities.  The Company also does not have the ability or intention to create liquidating vehicles after dissolution. There is no step-down in management fees after the expiration of the Commitment Period. The Advisor will continue to collect the same level of fees after the expiration of the Commitment Period through the final dissolution of the Company.
 
As part of certain Credit Facilities, the right to make capital calls of stockholders may be pledged as collateral to the lender, which will be able to call for capital contributions upon the occurrence of an event of default under such Credit Facility. To the extent such an event of default does occur, stockholders could therefore be required to fund any shortfall up to their remaining capital commitments, without regard to the underlying value of their investment. See “ Item 1A. Risk Factors—Risks Relating to our Business and Structure—Potential Limits Under a Credit Facility or Any Other Future Borrowing Facility .”
 
Regulation as a Business Development Company
 
We intend to be regulated as a BDC under the 1940 Act. A BDC is regulated under the 1940 Act. A BDC must be organized in the United States for the purpose of investing in or lending to primarily private companies and making significant managerial assistance available to them. A BDC may use capital provided by public stockholders and from other sources to make long-term, private investments in businesses. A publicly-traded BDC provides stockholders the ability to retain the liquidity of a publicly-traded stock while sharing in the possible benefits, if any, of investing in primarily privately owned companies. Until a Qualified IPO, we do not intend to list our common stock on a stock exchange and it will not be publicly traded. We will only pursue a Qualified IPO if and when the Advisor believes market conditions are appropriate for the Company to conduct a Qualified IPO and list its shares on an exchange. At such time, the Advisor will recommend that the Board approve such Qualified IPO. There can be no guarantee that a Qualified IPO will take place and investors should not rely on a Qualified IPO for liquidity.
 
We may not change the nature of our business so as to cease to be, or withdraw our election as, a BDC unless authorized by vote of a majority of the outstanding voting securities, as required by the 1940 Act. A majority of the outstanding voting securities of a company is defined under the 1940 Act as the lesser of: (a) 67% or more of such company’s voting securities present at a meeting if more than 50% of the outstanding voting securities of such company are present or represented by proxy, or (b) more than 50% of the outstanding voting securities of such company. We do not anticipate any substantial change in the nature of our business.
 
As with other companies regulated by the 1940 Act, a BDC must adhere to certain substantive regulatory requirements. A majority of our directors must be persons who are not interested persons, as that term is defined in the 1940 Act. Additionally, we will be required to provide and maintain a bond issued by a reputable fidelity insurance company to protect the BDC. Furthermore, as a BDC, we will be prohibited from protecting any director or officer against any liability to us or our stockholders arising from willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such person’s office.
 
As a BDC, we will generally be required to meet an asset coverage ratio, defined under the 1940 Act as the ratio of our total assets (less all liabilities and indebtedness not represented by senior securities) to our outstanding senior securities, of at least 200% after each issuance of senior securities. 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 will generally be limited in our ability to invest in any portfolio company in which our Advisor or any of its affiliates currently has an investment or to make any co-investments with our Advisor or its affiliates without an exemptive order from the SEC, subject to certain exceptions.
 
We do not intend to acquire securities issued by any investment company that exceed the limits imposed by the 1940 Act. Under these limits, except for registered money market funds, we generally cannot acquire more than 3% of the voting stock of any investment company, invest more than 5% of the value of our total assets in the securities of one investment company or invest more than 10% of the value of our total assets in the securities of investment companies in the aggregate. The portion of our portfolio invested in securities issued by investment companies ordinarily will subject our stockholders to additional expenses. Our investment portfolio is also subject to diversification requirements by virtue of our intention to be a RIC for U.S. tax purposes.
 
We will generally not be able to issue and sell our common stock at a price below net asset value per share. We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the then-current net asset value of our common stock if our Board determines that such sale is in our best interests and the best interests of our stockholders, and our stockholders approve such sale. 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.
 
We will be periodically examined by the SEC for compliance with the 1940 Act.
 
As a BDC, we will be subject to certain risks and uncertainties. See “ Item 1A. Risk Factors .”
 
Qualifying Assets
 
We may invest up to 30% of our portfolio opportunistically in “non-qualifying assets”, which will be driven primarily through opportunities sourced through the Advisor. However, under the 1940 Act, a BDC may not acquire any asset other than assets of the type listed in Section 55(a) of the 1940 Act, which are referred to as “qualifying assets,” unless, at the time the acquisition is made, qualifying assets represent at least 70% of the BDC’s total assets. The principal categories of qualifying assets relevant to our proposed business are the following:
 
(1) Securities purchased in transactions not involving any public offering from the issuer of such securities, which issuer (subject to certain limited exceptions) is an eligible portfolio company, or from any person who is, or has been during the preceding 13 months, an affiliated person of an eligible portfolio company, or from any other person, subject to such rules as may be prescribed by the SEC. An eligible portfolio company is defined in the 1940 Act as any issuer which:
 
(a) is organized under the laws of, and has its principal place of business in, the United States;
 
(b) is not an investment company (other than a small business investment company wholly owned by the BDC) or a company that would be an investment company but for certain exclusions under the 1940 Act; and
 
(c) satisfies any of the following:
 
i. does not have any class of securities that is traded on a national securities exchange;
 
ii. has a class of securities listed on a national securities exchange, but has an aggregate market value of outstanding voting and non-voting common equity of less than $250 million;
 
iii. is controlled by a BDC or a group of companies including a BDC and the BDC has an affiliated person who is a director of the eligible portfolio company; or
 
iv. is a small and solvent company having total assets of not more than $4.0 million and capital and surplus of not less than $2.0 million.
 
(2) Securities of any eligible portfolio company which we control.
 
(3) Securities purchased in a private transaction from a U.S. issuer that is not an investment company or from an affiliated person of the issuer, or in transactions incident thereto, if the issuer is in bankruptcy and subject to reorganization or if the issuer, immediately prior to the purchase of its securities, was unable to meet its obligations as they came due without material assistance other than conventional lending or financing arrangements.
 
(4) Securities of an eligible portfolio company purchased from any person in a private transaction if there is no ready market for such securities and we already own 60% of the outstanding equity of the eligible portfolio company.
 
(5) Securities received   in exchange for or distributed on or with respect to securities described in (1) through (4) above, or pursuant to the exercise of warrants or rights relating to such securities.
 
(6) Cash, cash equivalents, U.S. government securities or high-quality debt securities maturing in one year or less from the time of investment.
 
Limitations on Leverage
 
As a BDC, we will generally be required to meet an asset coverage ratio, defined under the 1940 Act as the ratio of our total assets (less all liabilities and indebtedness not represented by senior securities) to our outstanding senior securities, of at least 200% after each issuance of senior securities.
 
Managerial Assistance to Portfolio Companies
 
A BDC must have been organized under the laws of, and have its principal place of business in, any state or states within the United States and must be operated for the purpose of making investments in the types of securities described in (1), (2) or (3) above. However, in order to count portfolio securities as qualifying assets for the purpose of the 70% test, the BDC must either control the issuer of the securities or must offer to make available to the issuer of the securities (other than small and solvent companies described above) significant managerial assistance; except that, where the BDC purchases such securities in conjunction with one or more other persons acting together, one of the other persons in the group may make available such managerial assistance. Making available managerial assistance means, among other things, any arrangement whereby the BDC, through its directors or officers, offers to provide, and, if accepted, does so provide, significant guidance and counsel concerning the management, operations or business objectives and policies of a portfolio company.
 
Monitoring Investments
 
In most cases, we will not have influence over the board of directors of our portfolio companies. In some instances, the Advisor’s investment professionals may obtain board representation or observation rights in conjunction with our investments. In conjunction with our Advisor’s Credit Committee and our Board, the Advisor will take an active approach in monitoring all investments, which includes reviews of financial performance on at least a quarterly basis and may include discussions with management and/or the equity sponsor. The monitoring process will begin with structuring terms and conditions which require the timely delivery and access to critical financial and business information regarding portfolio companies.
 
Temporary Investments
 
We generally expect to call capital for investment purposes only at the time we identify an investment opportunity. Notwithstanding the foregoing, we expect to deploy all proceeds from each capital call for investment purposes within two years of calling such capital. Until such time as we invest the proceeds of such capital calls in portfolio companies and while new investments are pending, our investments may consist of cash, cash equivalents, U.S. government securities or high-quality debt securities maturing in one year or less from the time of investment, which we refer to, collectively, as “temporary investments,” so that 70% of our assets are qualifying assets. See “ Item I. Certain U.S. Federal Income Tax Consequences—Election to be Taxed as a RIC .” Typically, we will invest in U.S. Treasury bills or in repurchase agreements, provided that such agreements are fully collateralized by cash or securities issued by the U.S. government or its agencies. A repurchase agreement involves the purchase by an investor, such as us, of a specified security and the simultaneous agreement by the seller to repurchase it at an agreed-upon future date and at a price which is greater than the purchase price by an amount that reflects an agreed-upon interest rate. There is no percentage restriction on the proportion of our assets that may be invested in such repurchase agreements. However, if more than 25% of our gross assets constitute repurchase agreements from a single counterparty, we may not meet the diversification tests in order to qualify as a RIC. Thus, we do not intend to enter into repurchase agreements with a single counterparty in excess of this limit. Our Advisor will monitor the creditworthiness of the counterparties with which we enter into repurchase agreement transactions.
 
Senior Securities
 
We are permitted, under specified conditions, to issue multiple classes of indebtedness and one class of stock senior to our common stock if our asset coverage, as defined in the 1940 Act, is at least equal to 200% immediately after each such issuance. In addition, while any senior securities remain outstanding, we must make provisions to prohibit any distribution to our stockholders or the repurchase of such securities or shares unless we meet the applicable asset coverage ratios at the time of the distribution or repurchase. We may also borrow amounts up to 5% of the value of our total assets for temporary or emergency purposes without regard to asset coverage. See “ Item 1A. Risk Factors—Risks Relating to Our Business and Structure—   Financing Investments With Borrowed Money .”
 
The 1940 Act imposes limitations on a BDC’s issuance of preferred shares, which are considered “senior securities” and thus are subject to the 200% asset coverage requirement described above. In addition, (i) preferred shares must have the same voting rights as the common stockholders (one share, one vote); and (ii) preferred stockholders must have the right, as a class, to appoint directors to the board of directors.
 
Code of Ethics
 
Prior to acceptance of any subscriptions in this offering, we and the Advisor will each adopt a code of ethics pursuant to Rule 17j-1 under the 1940 Act and Rule 204A-1 under the Advisers Act, respectively, that establishes procedures for personal investments and restricts certain transactions by our personnel. Our codes of ethics generally will not permit investments by our and the Advisor’s personnel in securities that may be purchased or sold by us. Once it is filed, investors may read and copy this code of ethics at the SEC’s Public Reference Room in Washington, D.C. Investors may obtain information on the operation of the Public Reference Room by calling the SEC at (202) 551-8090. Investors may also obtain copies of the code of ethics, after paying a duplicating fee, by electronic request at the following email address:  publicinfo@sec.gov , or by writing the SEC’s Public Reference Section, 100 F Street, N.E., Washington, D.C. 20549.
 
Compliance Policies and Procedures
 
Prior to acceptance of any subscriptions in the Private Offering, we and our Advisor will have adopted and implemented written policies and procedures reasonably designed to detect and prevent violation of the federal securities laws and will be required to review these compliance policies and procedures annually for their adequacy and the effectiveness of their implementation and designate a Chief Compliance Officer to be responsible for administering the policies and procedures. James Goldman currently serves as our Chief Compliance Officer.
 
Sarbanes-Oxley Act of 2002
 
The Sarbanes-Oxley Act imposes a wide variety of regulatory requirements on publicly-held companies and their insiders. Many of these requirements affect us. For example:
 
· pursuant to Rule 13a-14 of the Exchange Act, our President and Chief Financial Officer must certify the accuracy of the financial statements contained in our periodic reports;
 
· pursuant to Item 307 of Regulation S-K, our periodic reports must disclose our conclusions about the effectiveness of our disclosure controls and procedures;
 
· pursuant to Rule 13a-15 of the Exchange Act, our management must prepare an annual report regarding its assessment of our internal control over financial reporting and (once we cease to be an emerging growth company under the JOBS Act or, if later, for the year following our first annual report required to be filed with the SEC) must obtain an audit of the effectiveness of internal control over financial reporting performed by our independent registered public accounting firm; and
 
· pursuant to Item 308 of Regulation S-K and Rule 13a-15 of the Exchange Act, our periodic reports must disclose whether there were significant changes in our internal controls over financial reporting or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
 
The Sarbanes-Oxley Act requires us to review our current policies and procedures to determine whether we comply with the Sarbanes-Oxley Act and the regulations promulgated thereunder. We will continue to monitor our compliance with all regulations that are adopted under the Sarbanes-Oxley Act and will take actions necessary to ensure that we are in compliance therewith.
 
Proxy Voting Policies and Procedures
 
We will delegate our proxy voting responsibility to our Advisor. The Proxy Voting Policies and Procedures of the Advisor are set forth below. The guidelines will be reviewed periodically by the Advisor and our non-interested directors, and, accordingly, are subject to change.
 
An investment adviser registered under the Advisers Act has a fiduciary duty to act solely in the best interests of its clients. As part of this duty, the Advisor recognizes that it must vote portfolio securities in a timely manner free of conflicts of interest and in the best interests of its clients.
 
These policies and procedures for voting proxies are intended to comply with Section 206 of, and Rule 206(4)-6 under, the Advisers Act.
 
The Advisor will vote proxies relating to our portfolio securities in what the Advisor perceives to be the best interest of our stockholders. The Advisor will review on a case-by-case basis each proposal submitted to a stockholder vote to determine its impact on the portfolio securities held by us. Although the Advisor will generally vote against proposals that may have a negative impact on our portfolio securities, the Advisor may vote for such a proposal if there exists compelling long-term reasons to do so.
 
The Advisor’s proxy voting decisions will be made by our Advisor’s Credit Committee. To ensure that the vote is not the product of a conflict of interest, the Advisor will require that: (1) anyone involved in the decision making process disclose to our Advisor’s Credit Committee, and disinterested directors, any potential conflict that he or she is aware of and any contact that he or she has had with any interested party regarding a proxy vote; and (2) employees involved in the decision making process or vote administration are prohibited from revealing how the Advisor intends to vote on a proposal in order to reduce any attempted influence from interested parties.
 
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 investors understand what personal information we collect, how we protect that information and why, in certain cases, we may share information with select other parties.
 
Pursuant to our privacy policy, we will not disclose any non-public personal information concerning any of our stockholders who are individuals unless the disclosure meets certain permitted exceptions under Regulation S-P. We generally will not use or disclose any stockholder information for any purpose other than as required by law.
 
We may collect non-public information about investors from our Subscription Agreements or other forms, such as name, address, account number and the types and amounts of investments, and information about transactions with us or our affiliates, such as participation in other investment programs, ownership of certain types of accounts or other account data and activity. We may disclose the information that we collect from our stockholders or former stockholders, as described above, only to our affiliates and service providers and only as allowed by applicable law or regulation. Any party that receives this information will use it only for the services required by us and as allowed by applicable law or regulation, and is not permitted to share or use this information for any other purpose. To protect the non-public personal information of individuals, we permit access only by authorized personnel who need access to that information to provide services to us and our stockholders. In order to guard our stockholders’ non-public personal information, we maintain physical, electronic and procedural safeguards that are designed to comply with applicable law. Non-public personal information that we collect about our stockholders will generally be stored on secured servers. An individual stockholder’s right to privacy extends to all forms of contact with us, including telephone, written correspondence and electronic media, such as the Internet.
 
Pursuant to our privacy policy, we will provide a clear and conspicuous notice to each investor that details our privacy policies and procedures at the time of the investor’s subscription.
 
Reporting Obligations
 
We will furnish our stockholders with annual reports containing audited financial statements, quarterly reports, and such other periodic reports as we determine to be appropriate or as may be required by law. We are filing this Registration Statement with the SEC voluntarily with the intention of establishing the Company as a reporting company under the Exchange Act. Upon the effectiveness of our Form 10 under the Exchange Act, we will be required to comply with all periodic reporting, proxy solicitation and other applicable requirements under the Exchange Act.
 
Stockholders and the public may also read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may also obtain information on the operation of the Public Reference Room by calling the SEC at (202) 551-8090. The SEC also maintains a website ( www.sec.gov ) that contains such information.
 
Certain U.S. Federal Income Tax Consequences
 
The following discussion is a general summary of certain material U.S. federal income tax considerations applicable to us and an investment in shares of our common stock. The discussion is based upon the Code, the regulations of the U.S. Department of Treasury promulgated thereunder, which we refer to as the “Treasury regulations,” the legislative history of the Code, current administrative interpretations and practices of the Internal Revenue Service, which we refer to as the “IRS” (including administrative interpretations and practices of the IRS expressed in private letter rulings which are binding on the IRS only with respect to the particular taxpayers that requested and received those rulings) and judicial decisions, each as of the date of this Registration Statement and all of which are subject to change or differing interpretations, possibly retroactively, which could affect the continuing validity of this discussion. We have not sought, and will not seek, any ruling from the IRS regarding any matter discussed in this summary, and this summary is not binding on the IRS. Accordingly, there can be no assurance that the IRS will not assert, and a court will not sustain, a position contrary to any of the tax consequences discussed below.
 
Investors should note that this summary does not purport to be a complete description of all the tax aspects affecting us or the beneficial owners of shares of our common stock, which we refer to as “stockholders”. For example, this summary does not describe all of the U.S. federal income tax consequences that may be relevant to certain types of stockholders subject to special treatment under the U.S. federal income tax laws, including stockholders subject to the alternative minimum tax, tax-exempt organizations, insurance companies, partnerships or other pass-through entities and their owners, Non-U.S. stockholders (as defined below) engaged in a trade or business in the United States or entitled to claim the benefits of an applicable income tax treaty, persons who have ceased to be U.S. citizens or to be taxed as residents of the United States, U.S. stockholders (as defined below) whose functional currency is not the U.S. dollar, persons holding our common stock in connection with a hedging, straddle, conversion or other integrated transaction, dealers in securities, traders in securities that elect to use a market-to-market method of accounting for securities holdings, pension plans and trusts, and financial institutions. This summary assumes that our stockholders hold shares of our common stock as capital assets for U.S. federal income tax purposes (generally, assets held for investment). This summary does not discuss any aspects of U.S. estate or gift taxation, U.S. state or local taxation or non-U.S. taxation. It does not discuss the special treatment under U.S. federal income tax laws that could result if we invest in tax-exempt securities or certain other investment assets.
 
For purposes of this discussion, a “U.S. stockholder” is a beneficial owner of shares of our common stock that is, for U.S. federal income tax purposes:
 
· an individual who is a citizen or resident of the United States;
 
· a corporation, or other entity treated as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States or any state thereof, including, for this purpose, the District of Columbia;
 
· a trust if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more “United States persons” (as defined in the Code) have the authority to control all substantive decisions of the trust, or (ii) the trust has in effect a valid election to be treated as a domestic trust for U.S. federal income tax purposes; or
 
· an estate, the income of which is subject to U.S. federal income taxation regardless of its source.
 
For purposes of this discussion, a “Non-U.S. stockholder” is a beneficial owner of shares of our common stock that is not a U.S. stockholder or a partnership (or an entity or arrangement treated as a partnership) for U.S. federal income tax purposes.
 
If a partnership, or other entity or arrangement treated as a partnership for U.S. federal income tax purposes, holds shares of our common stock, the U.S. federal income tax treatment of a partner in the partnership generally will depend on the status of the partner, the activities of the partnership and certain determinations made at the partner level. A stockholder that is a partnership holding shares of our common stock, and each partner in such a partnership, should consult his, her or its own tax adviser with respect to the tax consequences of the purchase, ownership and disposition of shares of our common stock.
 
Tax matters are very complicated and the tax consequences to each stockholder of the ownership and disposition of shares of our common stock will depend on the facts of his, her or its particular situation. You should consult your own tax adviser regarding the specific tax consequences of the ownership and disposition of shares of our common stock to you, including tax reporting requirements, the applicability of U.S. federal, state and local tax laws and non-U.S. tax laws, eligibility for the benefits of any applicable income tax treaty and the effect of any possible changes in the tax laws.
 
Election to be Taxed as a RIC
 
We intend to elect to be treated, and intend to qualify annually, as a RIC under Subchapter M of the Code, commencing with our anticipated initial taxable year during 2016. As a RIC, we generally will not pay corporate-level U.S. federal income taxes on any income or gains that we timely distribute as dividends to our stockholders. Rather, dividends we distribute generally will be taxable to our stockholders, and any net operating losses, foreign tax credits and other of our tax attributes generally will not pass through to our stockholders, subject to special rules for certain items such as net capital gains and qualified dividend income we recognize. See “ —Taxation of U.S. Stockholders ” and “ —Taxation of Non-U.S. Stockholders ,” below.
 
To qualify as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements (as described below). In addition, to qualify as a RIC, we must timely distribute dividends to our stockholders of an amount generally at least equal to 90% of our investment company taxable income (determined without regard to the dividends paid deduction), which is generally our net ordinary income plus the excess of realized net short-term capital gains over realized net long-term capital losses, if any, for each taxable year (the “Annual Distribution Requirement”).
 
Taxation as a RIC
 
If we qualify as a RIC and satisfy the Annual Distribution Requirement, then we will not be subject to U.S. federal income tax on the portion of our investment company taxable income and net capital gain (generally, net long-term capital gain in excess of net short-term capital loss) that we timely distribute (or are deemed to timely distribute) as dividends to our stockholders. We will be subject to U.S. federal income tax at the regular corporate rates on any income or capital gain not distributed (or deemed distributed) to our stockholders.
 
We generally will be subject to a 4% nondeductible U.S. federal excise tax on certain undistributed income or gains in respect of any calendar year unless we distribute dividends in a timely manner to our stockholders of an amount at least equal to the sum of (1) 98% of our net ordinary income (taking into account certain deferrals and elections) for the calendar year, (2) 98.2% of our capital gain net income (adjusted for certain ordinary losses) generally for the one-year period ending October 31 in such calendar year and (3) any net ordinary income and capital gain net income recognized, but not distributed, in preceding years (the “Excise Tax Avoidance Requirement”).  Any distribution declared by us during October, November or December of any calendar year, payable to stockholders of record on a specified date in such a month and actually paid during January of the following calendar year, will be treated as if it had been paid by us, as well as received by our U.S. stockholders, on December 31 of the calendar year in which the distribution was declared.  We will not be subject to the U.S. federal excise tax on amounts on which we are required to pay U.S. federal income tax (such as retained net capital gains).  Depending upon the level of taxable income earned in a taxable year, we may choose to carry forward taxable income for distribution in the following taxable year and pay the applicable U.S. federal excise tax.
 
We may incur the 4% nondeductible U.S. federal excise tax in the future on a portion of our income and capital gains. While we intend to distribute income and capital gains to minimize exposure to 4% nondeductible U.S. federal excise tax, we may not be able to, or may choose not to, distribute amounts sufficient to avoid the imposition of the tax entirely. In that event, we generally will be liable for 4% nondeductible U.S. federal excise tax only on the amount by which we do not meet the Excise Tax Avoidance Requirement.  We generally will endeavor in each taxable year to avoid any material U.S. federal excise tax on our earnings.
 
In order to qualify as a RIC for U.S. federal income tax purposes, we must, among other things:
 
· qualify and have in effect an election to be treated as a BDC under the 1940 Act at all times during each taxable year;
 
· derive in each taxable year at least 90% of our gross income from dividends, interest, payments with respect to loans of certain securities, gains from the sale of stock or other securities, net income derived from an interest in a “qualified publicly traded partnership” (as defined in the Code), or other income derived with respect to our business of investing in such stock or securities (the “90% Income Test”); and
 
· diversify our holdings so that at the end of each quarter of the taxable year:
 
· at least 50% of the value of our assets consists of cash, cash equivalents, U.S. government securities, securities of other RICs, and other securities if such other securities of any one issuer do not represent more than 5% of the value of our assets or more than 10% of the outstanding voting securities of the issuer; and
 
· no more than 25% of the value of our assets is invested in (a) the securities, other than U.S. government securities or securities of other RICs, of one issuer or of two or more issuers that are controlled, as determined under applicable Code rules, by us and that are engaged in the same or similar or related trades or businesses or (b) the securities of one or more qualified publicly traded partnerships (the “Diversification Tests”).
 
A RIC is limited in its ability to deduct expenses in excess of its investment company taxable income. If our expenses in a given taxable year exceed our investment company taxable income, we may experience a net operating loss for that taxable year. However, a RIC is not permitted to carry forward net operating losses to subsequent taxable years and such net operating losses do not pass through to its stockholders. In addition, deductible expenses can be used only to offset investment company taxable income, not net capital gain. A RIC may not use any net capital losses (that is, the excess of realized capital losses over realized capital gains) to offset its investment company taxable income, but may carry forward such net capital losses, and use them to offset future capital gains, indefinitely. Due to these limits on deductibility of expenses and net capital losses, we may for tax purposes have aggregate taxable income for several years that we are required to distribute and that is taxable to our stockholders even if such taxable income is greater than the net income we actually earn during those taxable years.
 
For U.S. federal income tax purposes, we will include in our taxable income certain amounts that we have not yet received in cash. For example, if we hold debt obligations that are treated under applicable U.S. federal income tax rules as having OID (such as debt instruments with PIK interest or, in certain cases, that have increasing interest rates or are issued with warrants), we must include in our taxable income in each taxable year a portion of the OID that accrues over the life of the obligation, regardless of whether we receive cash representing such income in the same taxable year. We may also have to include in our taxable income other amounts that we have not yet received in cash, such as accruals on a contingent payment debt instrument or deferred loan origination fees that are paid after origination of the loan or are paid in non-cash compensation such as warrants or stock. Further, we may elect to amortize market discount on debt investments and currently include such amounts in our taxable income, instead of upon their sale or other disposition, as any failure to make such election would limit our ability to deduct interest expense for tax purposes. Because such OID or other amounts accrued will be included in our investment company taxable income for the taxable year of accrual, we may be required to make distributions to our stockholders in order to satisfy the Annual Distribution Requirement and/or the Excise Tax Avoidance Requirement, even though we will have not received any corresponding cash payments. Accordingly, to enable us to make distributions to our stockholders that will be sufficient to enable us to satisfy the Annual Distribution Requirement, we may need to sell some of our assets at times and/or at prices that we would not consider advantageous, we may need to raise additional equity or debt capital or we may need to forego new investment opportunities or otherwise take actions that are disadvantageous to our business (or be unable to take actions that are advantageous to our business). If we are unable to obtain cash from other sources to enable us to satisfy the Annual Distribution Requirement, we may fail to qualify for the U.S. federal income tax benefits allowable to RICs and, thus, become subject to a corporate-level U.S. federal income tax (and any applicable state and local taxes).
 
Because we expect to use debt financing, we may be prevented by financial covenants contained in our debt financing agreements from making distributions to our stockholders in certain circumstances. In addition, under the 1940 Act, we are generally not permitted to make distributions to our stockholders while our debt obligations and other senior securities are outstanding unless certain “asset coverage” tests are met.  Limits on our distributions to our stockholders may prevent us from satisfying the Annual Distribution Requirement and, therefore, may jeopardize our qualification for taxation as a RIC, or may cause us to be subject to the 4% nondeductible U.S. federal excise tax.
 
Although we do not presently expect to do so, we may borrow funds and sell assets in order to make distributions to our stockholders that are sufficient for us to satisfy the Annual Distribution Requirement. However, our ability to dispose of assets may be limited by (1) the illiquid nature of our portfolio and/or (2) other requirements relating to our status as a RIC, including the Diversification Tests. If we dispose of assets in order to meet the Annual Distribution Requirement or the Excise Tax Avoidance Requirement, we may make such dispositions at times that, from an investment standpoint, are not advantageous.  Alternatively, although we currently do not intend to do so, to satisfy the Annual Distribution Requirement, we may declare a taxable dividend payable in our stock or cash at the election of each stockholder.  In such case, for U.S. federal income tax purposes, the amount of the dividend paid in our common stock will generally be equal to the amount of cash that could have been received instead of our stock.  See “ —Taxation of Stockholders ” below for a discussion of the tax consequences to stockholders upon receipt of such dividends.
 
Distributions we make to our stockholders may be made from our cash assets or by liquidation of our investments, if necessary. We may recognize gains or losses from such liquidations. In the event we recognize net capital gains from such transactions, investors may receive a larger capital gain distribution than they would have received in the absence of such transactions.
 
Failure to Qualify as a RIC
 
If we failed to satisfy the 90% Income Test for any taxable year or the Diversification Tests for any quarter of a taxable year, we might nevertheless continue to qualify as a RIC for such taxable year if certain relief provisions of the Code applied (which might, among other things, require us to pay certain corporate-level U.S. federal taxes or to dispose of certain assets). If we failed to qualify for treatment as a RIC and such relief provisions did not apply to us, we would be subject to U.S. federal income tax on all of our taxable income at regular corporate U.S. federal income tax rates (and we also would be subject to any applicable state and local taxes), regardless of whether we make any distributions to our stockholders.  We would not be able to deduct distributions to our stockholders, nor would distributions to our stockholders be required to be made for U.S. federal income tax purposes. Any distributions we make generally would be taxable to our U.S. stockholders as ordinary dividend income and, subject to certain limitations under the Code, would be eligible for the 20% maximum rate generally applicable to individuals and other non-corporate U.S. stockholders, to the extent of our current or accumulated earnings and profits. Subject to certain limitations under the Code, U.S. stockholders that are corporations for U.S. federal income tax purposes generally would be eligible for the dividends-received deduction. Distributions in excess of our current and accumulated earnings and profits would be treated first as a return of capital to the extent of the stockholder’s adjusted tax basis, and any remaining distributions would be treated as a capital gain.
 
Subject to a limited exception applicable to RICs that qualified as such under Subchapter M of the Code for at least one taxable year prior to disqualification and that re-qualify as a RIC no later than the second consecutive taxable year following the non-qualifying taxable year, we could be subject to U.S. federal income 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 during the five-taxable year period after our requalification as a RIC, unless we made a special election to pay corporate-level U.S. federal income tax on such net built-in gains at the time of our requalification as a RIC. We may decide to be taxed as a regular corporation even if we would otherwise qualify as a RIC if we determine that treatment as a corporation for a particular taxable year would be in our best interests.
 
Our Investments — General
 
Certain of our investment practices may be subject to special and complex U.S. federal income tax provisions that may, among other things, (1) treat dividends that would otherwise constitute qualified dividend income as non-qualified dividend income, (2) disallow, suspend or otherwise limit the allowance of certain losses or deductions, (3) convert lower-taxed long-term capital gain into higher-taxed short-term capital gain or ordinary income, (4) convert an ordinary loss or a deduction into a capital loss (the deductibility of which is more limited), (5) cause us to recognize income or gain without receipt of a corresponding cash payment, (6) adversely affect the time as to when a purchase or sale of stock or securities is deemed to occur, (7) adversely alter the characterization of certain complex financial transactions and (8) produce income that will not be qualifying income for purposes of the 90% Income Test. We intend to monitor our transactions and may make certain tax elections to mitigate the potential adverse effect of these provisions, but there can be no assurance that we will be eligible for any such tax elections or that any adverse effects of these provisions will be mitigated.
 
We may invest a portion of our net assets in below investment grade instruments. Investments in these types of instruments may present special tax issues for us. U.S. federal income tax rules are not entirely clear about issues such as when we may cease to accrue interest, original issue discount or market discount, when and to what extent deductions may be taken for bad debts or worthless instruments, how payments received on obligations in default should be allocated between principal and income and whether exchanges of debt obligations in a bankruptcy or workout context are taxable. We intend to address these and other issues to the extent necessary in order to seek to ensure that we distribute sufficient income to avoid any material U.S. federal income or the 4% nondeductible U.S. federal excise tax.
 
A portfolio company in which we invest may face financial difficulties that require us to work-out, modify or otherwise restructure our investment in the portfolio company.  Any such transaction could, depending upon the specific terms of the transaction, result in unusable capital losses and future non-cash income. Any such transaction could also result in our receiving assets that give rise to non-qualifying income for purposes of the 90% Income Test or otherwise would not count toward satisfying the Diversification Tests.  Furthermore, some of the income that we might otherwise earn, such as fees for providing managerial assistance, certain fees earned with respect to our investments, income recognized in a work-out or restructuring of a portfolio investment, or income recognized from an equity investment in an operating partnership, may not satisfy the 90% Income Test. To manage the risk that such income might disqualify us as a RIC for failure to satisfy the 90% Income Test, one or more subsidiary entities treated as U.S. corporations for entity-level income tax purposes may be employed to earn such income and (if applicable) hold the related asset. Such subsidiary entities will be required to pay entity-level income tax on their earnings, which ultimately will reduce the yield to our stockholders on such fees and income.
 
Gain or loss recognized by us from warrants or other securities acquired by us, as well as any loss attributable to the lapse of such warrants, generally will be treated as capital gain or loss.  Such gain or loss generally will be long-term or short-term depending on how long we held a particular warrant or security.
 
A portfolio company in which we invest may face financial difficulties that require us to work-out, modify or otherwise restructure our investment in the portfolio company.  Any such transaction could, depending upon the specific terms of the transaction, result in unusable capital losses and future non-cash income.  Any such transaction could also result in our receiving assets that give rise to non-qualifying income for purposes of the 90% Income Test or otherwise would not count toward satisfying the Diversification Tests.
 
Our investment in non-U.S. securities may be subject to non-U.S. income, withholding and other taxes.  In that case, our yield on those securities would be decreased.  Stockholders generally will not be entitled to claim a U.S. foreign tax credit or deduction with respect to non-U.S. taxes paid by us.
 
If we acquire shares in a PFIC, we may be subject to U.S. federal income tax on a portion of any “excess distribution” received on, or any gain from the disposition of, such shares even if we distribute such income as a taxable dividend to our stockholders. Additional charges in the nature of interest generally will be imposed on us in respect of deferred taxes arising from any such excess distribution or gain. If we invest in the shares of a PFIC and elect to treat the PFIC as a “qualified electing fund” under the Code (a “QEF”), in lieu of the foregoing requirements, we will be required to include in income each year our proportionate share of the ordinary earnings and net capital gain of the QEF, even if such income is not distributed by the QEF. Alternatively, we may be able to elect to mark our shares in a PFIC at the end of each taxable year to market; in this case, we will recognize as ordinary income any increase in the value of such shares, and as ordinary loss any decrease in such value to the extent that any such decrease does not exceed prior increases in such value included in our income. Our ability to make either election will depend on factors beyond our control, and are subject to restrictions which may limit the availability of the benefit of these elections.  Under either election, we may be required to recognize in a taxable year income in excess of any distributions we receive from PFICs and any proceeds from dispositions of PFIC stock during that taxable year, and such income will nevertheless be subject to the Annual Distribution Requirement and will be taken into account for purposes of determining whether we satisfy the Excise Tax Avoidance Requirement. See “ —Taxation as a RIC ” above.
 
Under Section 988 of the Code, gains or losses attributable to fluctuations in exchange rates between the time we accrue income, expenses or other liabilities denominated in a foreign currency and the time we actually collect such income or pay such expenses or liabilities are generally treated as ordinary income or loss. Similarly, gains or losses on foreign currency-denominated forward, futures and option contracts, as well as certain other financial instruments, and the disposition of debt obligations denominated in a foreign currency, to the extent attributable to fluctuations in exchange rates between the acquisition and disposition dates, are also treated as ordinary income or loss.
 
Some of the income that we might otherwise earn, such as fees for providing managerial assistance, certain fees earned with respect to our investments, income recognized in a work-out or restructuring of a portfolio investment, or income recognized from an equity investment in an operating partnership, may not satisfy the 90% Income Test.  To manage the risk that such income might disqualify us as a RIC for failure to satisfy the 90% Income Test, one or more subsidiary entities treated as U.S. corporations for U.S. federal income tax purposes may be employed to earn such income and (if applicable) hold the related asset.  Such subsidiary entities will be required to pay U.S. federal income tax on their earnings, which ultimately will reduce the yield to our stockholders on such fees and income.
 
The remainder of this discussion assumes that we qualify as a RIC for each taxable year.
 
Taxation of U.S. Stockholders
 
The following discussion only applies to U.S. stockholders. Prospective stockholders that are not U.S. stockholders should refer to “— Taxation of Non-U.S. Stockholders ” below.
 
Distributions
 
Distributions by us (including distributions where stockholders can elect to receive cash or stock) generally are taxable to U.S. stockholders as ordinary income or capital gains. Distributions of our investment company taxable income will be taxable as ordinary income to U.S. stockholders to the extent of our current or accumulated earnings and profits, whether paid in cash or stock. To the extent that such distributions paid by us to non-corporate U.S. stockholders (including individuals) are attributable to dividends from U.S. corporations and certain qualified foreign corporations, such distributions (“Qualifying Dividends”) may be eligible for a reduced maximum U.S. federal income tax rate of 20%. In this regard, it is anticipated that our distributions generally will not be attributable to dividends received by us and, therefore, generally will not qualify for the 20% maximum rate applicable to Qualifying Dividends. Distributions of our net capital gain (which is generally our realized net long-term capital gains in excess of realized net short-term capital losses) properly designated by us as “capital gain dividends” will be taxable to U.S. stockholders as long-term capital gains (currently taxable at a maximum U.S. federal income tax rate of 20% in the case of non-corporate U.S. stockholders (including individuals)), regardless of the U.S. stockholder’s holding period for his, her or its common stock and regardless of whether paid in cash or stock. Distributions in excess of our earnings and profits first will reduce a U.S. stockholder’s adjusted tax basis in such stockholder’s common stock and, after the adjusted tax basis is reduced to zero, will constitute capital gains to such U.S. stockholder.
 
We may decide to retain some or all of our net capital gain for reinvestment, but designate the retained net capital gain as a “deemed distribution”. In that case, among other consequences, (i) we will pay tax on the retained amount, (ii) each U.S. stockholder will be required to include his, her or its share of the deemed distribution in income as if it had been actually distributed to the U.S. stockholder, and (iii) the U.S. stockholder will be entitled to claim a credit equal to his, her or its allocable share of the tax paid thereon by us. Because we expect to pay tax on any retained net capital gains at the regular corporate U.S. federal income tax rate, and because that rate is in excess of the maximum U.S. federal income tax rate currently payable by individuals (and other non-corporate U.S. stockholders) on long-term capital gains, the amount of tax that individuals (and other non-corporate U.S. stockholders) will be treated as having paid will exceed the tax they owe on the capital gain distribution.  Such excess generally may be claimed as a credit against the U.S. stockholder’s other federal income tax obligations or may be refunded to the extent it exceeds the U.S. stockholder’s U.S. federal income tax liability. The amount of the deemed distribution net of such tax will be added to the U.S. stockholder’s tax basis for his, her or its common stock. In order to utilize the deemed distribution approach, we must provide written notice to our stockholders prior to the expiration of 60 days after the close of the relevant taxable year. We cannot treat any of our investment company taxable income as a “deemed distribution”.
 
For purposes of determining (1) whether the Annual Distribution Requirement is satisfied for any year and (2) the amount of capital gain dividends paid for that year, under certain circumstances, we may elect to treat a dividend that is paid during the following taxable year as if it had been paid during the taxable year in question. If we make such an election, U.S. stockholders will still be treated as receiving the dividend in the taxable year in which the distribution is made. However, any dividend declared by us in October, November or December of any calendar year, payable to stockholders of record on a specified date in such a month and actually paid during January of the following calendar year, will be treated as if it had been received by our U.S. stockholders on December 31 of the calendar year in which the dividend was declared.
 
Although we currently do not intend to do so, we have the ability to declare a large portion of a dividend in shares of our stock. As long as a portion of such dividend is paid in cash and certain requirements are met, the entire distribution will be treated as a dividend for U.S. federal income tax purposes.  For U.S. federal income tax purposes, the amount of the dividend paid in our common stock will generally be equal to the amount of cash that could have been received instead of our stock. This may result in our U.S. stockholders having to pay tax on such dividends, even if no cash is received.
 
We will be treated as a “publicly offered regulated investment company” (within the meaning of Section 67 of the Code) if either (i) shares of our common stock and our preferred stock collectively are held by at least 500 persons at all times during a taxable year, (ii) shares of our common stock are treated as regularly traded on an established securities market or (iii) shares of our common stock are continuously offered pursuant to a public offering (within the meaning of Section 4 of the Securities Act).  We cannot assure investors that we will be treated as a publicly offered regulated investment company for all taxable years. If we are not treated as a publicly offered regulated investment company for any calendar year, for purposes of computing the taxable income of U.S. stockholders that are individuals, trusts or estates, (i) our earnings will be computed without taking into account such U.S. stockholders’ allocable shares of the management and incentive fees paid to our Advisor and certain of our other expenses, (ii) each such U.S. stockholder will be treated as having received or accrued a dividend from us in the amount of such U.S. stockholder’s allocable share of these fees and expenses for the calendar year, (iii) each such U.S. stockholder will be treated as having paid or incurred such U.S. stockholder’s allocable share of these fees and expenses for the calendar year, and (iv) each such U.S. stockholder’s allocable share of these fees and expenses will be treated as miscellaneous itemized deductions by such U.S. stockholder.  Miscellaneous itemized deductions generally are deductible by a U.S. stockholder that is an individual, trust or estate only to the extent that the aggregate of such U.S. stockholder’s miscellaneous itemized deductions exceeds 2% of such U.S. stockholder’s adjusted gross income for U.S. federal income tax purposes, are not deductible for purposes of the alternative minimum tax and are subject to the overall limitation on itemized deductions under Section 68 of the Code.
 
Our U.S. stockholders will receive, as promptly as possible after the end of each calendar year, a notice reporting the amounts includible in such U.S. stockholder’s taxable income for such calendar year as ordinary income and as long-term capital gain. In addition, the U.S. federal tax status of each calendar year’s distributions from us generally will be reported to the IRS (including the amount of any dividends that are Qualifying Dividends eligible for the 20% maximum rate). Dividends paid by us generally will not be eligible for the dividends-received deduction or the preferential tax rate applicable to Qualifying Dividends because our income generally will not consist of dividends. Distributions may also be subject to additional state, local and non-U.S. taxes depending on a U.S. stockholder’s particular situation.
 
Alternative Minimum Tax
 
As a RIC, we will be subject to alternative minimum tax, also referred to as “AMT”, but any items that are treated differently for AMT purposes must be apportioned between us and our U.S. stockholders, and this may affect the U.S. stockholders’ AMT liabilities. Although Treasury regulations explaining the precise method of apportionment have not yet been issued, such items will generally be apportioned in the same proportion that dividends paid to each U.S. stockholder bear to our taxable income (determined without regard to the dividends paid deduction), unless a different method for a particular item is warranted under the circumstances.
 
Dispositions
 
A U.S. stockholder generally will recognize taxable gain or loss if the U.S. stockholder sells or otherwise disposes of his, her or its shares of our common stock. The amount of gain or loss will be measured by the difference between such stockholder’s adjusted tax basis in the common stock sold and the amount of the proceeds received in exchange. Any gain or loss arising from such sale or disposition generally will be treated as long-term capital gain or loss if the U.S. stockholder has held his, her or its shares for more than one year; otherwise, any such gain or loss will be classified as short-term capital gain or loss. However, any capital loss arising from the sale or disposition of shares of our common stock held for six months or less will be treated as long-term capital loss to the extent of the amount of capital gain dividends received, or undistributed capital gain deemed received, with respect to such shares. In addition, all or a portion of any loss recognized upon a disposition of shares of our common stock may be disallowed if other shares of our common stock are purchased (whether through reinvestment of distributions or otherwise) within 30 days before or after the disposition.
 
In general, non-corporate U.S. stockholders (including individuals) currently are subject to a maximum U.S. federal income tax rate of 20% on their net capital gain (i.e., the excess of realized net long-term capital gains over realized net short-term capital losses), including any long-term capital gain derived from an investment in shares of our common stock. Such rate is lower than the maximum rate on ordinary income currently payable by individuals. Corporate U.S. stockholders currently are subject to U.S. federal income tax on net capital gain at the maximum 35% rate also applied to ordinary income. Non-corporate U.S. stockholders (including individuals) incurring net capital losses (i.e., capital losses in excess of capital gains) for a taxable year generally may deduct up to $3,000 of such losses against their ordinary income each taxable year; any net capital losses of a non-corporate U.S. stockholder (including an individual) in excess of $3,000 generally may be carried forward and used in subsequent taxable years as provided in the Code. Corporate U.S. stockholders generally may not deduct any net capital losses for a taxable year, but may carry back such capital losses for three taxable years or carry forward such capital losses for five taxable years.
 
The Code and the related U.S. Treasury Regulations require us to annually report the   adjusted cost basis information of covered securities, which generally include shares of a RIC, to the IRS and to taxpayers.  Stockholders should contact their financial intermediaries with respect to reporting of cost basis and available elections for their accounts.
 
Medicare Tax on Net Investment Income
 
An additional 3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends and capital gain distributions received from us and net gains from redemptions or other taxable dispositions of our shares) of U.S. individuals, estates and trusts to the extent that such person’s “modified adjusted gross income” (in the case of an individual) or “adjusted gross income” (in the case of an estate or trust) exceeds certain threshold amounts.
 
Tax Shelter Reporting Regulations
 
Under applicable Treasury regulations, if a U.S. stockholder recognizes a loss with respect to our common stock of $2 million or more for a non-corporate U.S. stockholder or $10 million or more for a corporate U.S. stockholder in any single taxable year (or a greater loss over a combination of years), the U.S. stockholder must file with the IRS a disclosure statement on Form 8886. Direct U.S. stockholders of portfolio securities are in many cases excepted from this reporting requirement, but under current guidance, U.S. stockholders of a RIC are not excepted. Future guidance may extend the current exception from this reporting requirement to U.S. stockholders of most or all RICs. The fact that a loss is reportable under these regulations does not affect the legal determination of whether the taxpayer’s treatment of the loss is proper. Significant monetary penalties apply to a failure to comply with this reporting requirement. States may also have a similar reporting requirement. U.S. stockholders should consult their own tax advisers to determine the applicability of these Treasury regulations in light of their individual circumstances.
 
Backup Withholding
 
The relevant withholding agent may be required to withhold U.S. federal income tax (“backup withholding”), at a current rate of 28%, from any taxable distribution to a U.S. stockholder (other than a “C” corporation, a financial institution, or a stockholder that otherwise qualifies for an exemption) (1) that fails to provide a correct taxpayer identification number or a certificate that such stockholder is exempt from backup withholding or (2) with respect to whom the IRS notifies the withholding agent that such stockholder has failed to properly report certain interest and dividend income to the IRS and to respond to notices to that effect. An individual’s taxpayer identification number is his or her social security number. Backup withholding is not an additional tax, and any amount withheld under the backup withholding rules is allowed as a credit against the U.S. stockholder’s U.S. federal income tax liability, provided that proper information is timely provided to the IRS.
 
Taxation of Non-U.S. Stockholders
 
The following discussion applies only to Non-U.S. stockholders. Whether an investment in shares of our common stock is appropriate for a Non-U.S. stockholder will depend upon that stockholder’s particular circumstances. An investment in shares of our common stock by a Non-U.S. stockholder may have adverse tax consequences to such Non-U.S. stockholder. Non-U.S. stockholders should consult their own tax advisers before investing in our common stock.
 
Distributions; Dispositions
 
Subject to the discussion below, distributions of our investment company taxable income to a Non-U.S. stockholder that are not effectively connected with the Non-U.S. stockholder’s conduct of a trade or business within the United States will be subject to withholding of U.S. federal income tax at a 30% rate (or lower rate provided by an applicable income tax treaty) to the extent of our current or accumulated earnings and profits.
 
Certain properly designated dividends are generally exempt from withholding of U.S. federal income tax where paid in respect of a RIC’s (i) “qualified net interest income” (generally, its U.S.-source interest income, other than certain contingent interest and interest from obligations of a corporation or partnership in which the RIC or the non-U.S. stockholder are at least a 10% stockholder, reduced by expenses that are allocable to such income) or (ii) “qualified short-term capital gains” (generally, the excess of the RIC’s net short-term capital gain, other than short-term capital gains recognized on the disposition of U.S. real property interests, over the RIC’s long-term capital loss), as well as if certain other requirements are satisfied.  Nevertheless, no assurance can be given as to whether any of our distributions will be eligible for this exemption from withholding of U.S. federal income tax or, if eligible, will be designated as such by us.  Furthermore, in the case of shares of our stock held through an intermediary, the intermediary may have withheld U.S. federal income tax even if we designated the payment as an interest-related dividend or short-term capital gain dividend.  Since our common stock will be subject to significant transfer restrictions, and an investment in our common stock will generally be illiquid, non-U.S. stockholders whose distributions on our common stock are subject to withholding of U.S. federal income tax may not be able to transfer their shares of our common stock easily or quickly or at all .
 
Distributions of our investment company taxable income to a Non-U.S. stockholder that are effectively connected with the Non-U.S. stockholder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, are attributable to a U.S. permanent establishment of the Non-U.S. stockholder), generally will not be subject to withholding of U.S. federal income tax if the Non-U.S. stockholder complies with applicable certification and disclosure requirements, although the distributions (to the extent of our current or accumulated earnings and profits) will be subject to U.S. federal income tax on a net basis at the rates and in the manner applicable to U.S. stockholders generally.
 
Actual or deemed distributions of our net capital gains, other than any net capital gains recognized on the disposition of U.S. real property interests, to a Non-U.S. stockholder, and gains realized by a Non-U.S. stockholder upon the sale of our common stock, will not be subject to U.S. federal income tax or any withholding of such tax, unless (a) the distributions or gains, as the case may be, are effectively connected with the Non-U.S. stockholder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, are attributable to a U.S. permanent establishment of the Non-U.S. stockholder), in which case the distributions or gains will be subject to U.S. federal income tax on a net basis at the rates and in the manner applicable to U.S. stockholders generally or (b) the Non-U.S. stockholder is an individual who has been present in the United States for 183 days or more during the taxable year and satisfies certain other conditions, in which case, except as otherwise provided by an applicable income tax treaty, the distributions or gains, which may be offset by certain U.S.-source capital losses, generally will be subject to a flat 30% U.S. federal income tax, even though the Non-U.S. stockholder is not considered a resident alien under the Code.
 
If we distribute our net capital gains in the form of deemed rather than actual distributions, a Non-U.S. stockholder will be entitled to a U.S. federal income tax credit or tax refund equal to the stockholder’s allocable share of the tax we pay on the capital gains deemed to have been distributed. In order to obtain the refund, the Non-U.S. stockholder must obtain a U.S. taxpayer identification number and file a U.S. federal income tax return, even if the Non-U.S. stockholder would not otherwise be required to obtain a U.S. taxpayer identification number or file a U.S. federal income tax return.
 
For a corporate Non-U.S. stockholder, both distributions (actual or deemed) and gains realized upon the sale of our common stock that are effectively connected with the Non-U.S. stockholder’s conduct of a trade or business within the United States may, under certain circumstances, be subject to an additional “branch profits tax” at a 30% rate (or at a lower rate if provided for by an applicable income tax treaty).
 
Backup Withholding
 
A Non-U.S. stockholder who is a non-resident alien individual, and who is otherwise subject to withholding of U.S. federal income tax, will be subject to information reporting and may be subject to backup withholding of U.S. federal income tax on taxable distributions unless the Non-U.S. stockholder provides the applicable withholding agent with a U.S. nonresident withholding tax certificate (e.g., an IRS Form W-8BEN, IRS Form W-8BEN-E or an acceptable substitute form) or otherwise establishes an exemption from backup withholding.
 
Non-U.S. stockholders should consult their own tax advisers with respect to the U.S. federal income and withholding tax consequences, and state, local and non-U.S. tax consequences, of an investment in shares of our common stock.
 
Withholding and Information Reporting on Foreign Financial Accounts
 
Under the Code and recently issued Treasury regulations, the applicable withholding agent generally will be required to withhold 30% of the dividends on our common stock and the gross proceeds from a sale of our common stock and certain capital gain dividends paid after December 31, 2018 to (i) a non-U.S. financial institution (whether such financial institution is the beneficial owner or an intermediary) unless such non-U.S. financial institution agrees to verify, report and disclose its U.S. accountholders and meets certain other specified requirements or (ii) a non-financial non-U.S. entity (whether such entity is the beneficial owner or an intermediary) unless such entity certifies that it does not have any substantial U.S. owners or provides the name, address and taxpayer identification number of each substantial U.S. owner and such entity meets certain other specified requirements. If payment of this withholding tax is made, Non-U.S. stockholders that are otherwise eligible for an exemption from, or a reduction in, withholding of U.S. federal income taxes with respect to such dividends or proceeds will be required to seek a credit or refund from the IRS to obtain the benefit of such exemption or reduction.  We will not pay any additional amounts in respect to any amounts withheld.
 
Item 1A. Risk Factors
 
Investing in our common stock involves a number of significant risks. Before an investor invests in our common stock, the investor should be aware of various risks, including those described below. The investor should carefully consider these risk factors, together with all of the other information included in this Registration Statement, before the investor decides whether to make an investment in our common stock. The risks set out below are not the only risks we face. Additional risks and uncertainties not presently known to us or not presently deemed material by us may also impair our operations and performance. If any of the following events occur, our business, financial condition, results of operations and cash flows could be materially and adversely affected. In such case, the net asset value of our common stock could decline, and an investor may lose all or part of his or her investment.
 
Risks Relating to our Business and Structure
 
No Operating History
 
We will begin operations upon the Initial Closing and have no operating history. There can be no assurance that the results achieved by Bain Capital Credit’s past investments will be achieved for the Company. Past performance should not be relied upon as an indication of future results. Moreover, the Company is subject to all of the business risks and uncertainties associated with any new business, including the risk that it will not achieve its investment objectives and that the value of an investor’s investment could decline substantially or that the investor will suffer a complete loss of its investment in the Company.
 
In addition, Bain Capital Credit has never managed a BDC. The 1940 Act and the Code impose numerous constraints on the operations of BDCs and RICs that do not apply to other investment vehicles managed by Bain Capital Credit. BDCs are required, for example, to invest at least 70% of their total assets primarily in securities of U.S. private or thinly traded public companies, cash, cash equivalents, U.S. government securities and other high-quality debt instruments that mature in one year or less from the date of investment. Moreover, qualification for taxation as a RIC requires satisfaction of source-of-income, asset diversification and distribution requirements. Neither we, the Advisor nor Bain Capital Credit has any experience operating or advising under these constraints, which may hinder our ability to take advantage of attractive investment opportunities and to achieve our investment objective.
 
Inability to Meet Investment Objective or Investment Strategy
 
The Company is intended for long-term investors who can accept the risks associated with investing primarily in potentially illiquid, privately negotiated (i) senior first lien, stretch senior, senior second lien, unitranche, and mezzanine debt and other junior securities and (ii) secondary purchases of assets or portfolios that primarily consist of middle market corporate debt. Our success depends on the Advisor’s ability to identify and select appropriate investment opportunities, as well as the Company’s ability to acquire those investments. There can be no assurance that the Company will achieve its investment or performance objectives, including its targeted returns, or that the Advisor will be successful in identifying a sufficient number of suitable investment opportunities to fully deploy the Company’s committed capital. The possibility of partial or total loss of the Company’s capital exists, and prospective investors should not subscribe unless they can readily bear the consequences of a complete loss of their investment.
 
Dependence Upon Key Personnel of Bain Capital Credit and the Advisor
 
The success of the Company is highly dependent on the financial and managerial expertise of the Advisor.  Although Bain Capital Credit has attempted to foster a team approach to investing, the loss of key individuals employed by Bain Capital Credit could have a material adverse effect on the performance of the Company. The individuals may not necessarily continue to remain employed by Bain Capital Credit during the entire term of the Company. If these individuals do not maintain their existing relationships with Bain Capital Credit and do not develop new relationships with other sources of investment opportunities available to us, we may not be able to grow our investment portfolio. In addition, individuals with whom the senior professionals of Bain Capital Credit have relationships are not obligated to provide us with investment opportunities. Therefore, we can offer no assurance that such relationships will generate investment opportunities for us. In addition, a number of members of the professional staff of Bain Capital Credit are investors in, and are actively involved in managing the investment decisions of, other funds advised by Bain Capital Credit. Accordingly, the members of the professional staff of the Advisor will have demands on their time for the investment, monitoring and other functions of other funds advised by Bain Capital Credit.
 
The employees of the Advisor and other Bain Capital Credit investment professionals expect to devote such time and attention to the conduct of the Company’s business as such business shall reasonably require. However, there can be no assurance, for example, that the members of the Advisor or such investment professionals will devote any minimum number of hours each week to the affairs of the Company or that they will continue to be employed by Bain Capital Credit. Subject to certain remedies, in the event that certain employees of the Advisor cease to be actively involved with the Company, we will be required to rely on the ability of Bain Capital Credit to identify and retain other investment professionals to conduct the Company’s business. The Board intends to evaluate the commitment and performance of the Advisor in conjunction with the annual approval of the Company’s Investment Advisory Agreement and Administration Agreement.
 
Under a Resource Sharing Agreement entered into between Bain Capital Credit and the Advisor, Bain Capital Credit has agreed to provide the Advisor with the resources necessary to fulfill its obligations under the Investment Advisory Agreement. The Resource Sharing Agreement provides that Bain Capital Credit will make available to the Advisor experienced investment professionals and access to the resources of Bain Capital Credit for purposes of evaluating, negotiating, structuring, closing and monitoring our investments. Although we are a third-party beneficiary of the Resource Sharing Agreement, we cannot assure stockholders that Bain Capital Credit will fulfill its obligations under the agreement. We cannot assure stockholders that the Advisor will enforce the Resource Sharing Agreement if Bain Capital Credit fails to perform, that such agreement will not be terminated by either party or that we will continue to have access to the investment professionals of Bain Capital Credit and its affiliates or their information and deal flow.
 
Dependence on Strong Referral Relationships
 
We depend upon Bain Capital Credit to maintain its relationships with private equity sponsors, placement agents, investment banks, management groups and other financial institutions, and we expect to rely to a significant extent upon these relationships to provide us with potential investment opportunities. If Bain Capital Credit fails to maintain such relationships, or to develop new relationships with other sources of investment opportunities, we will not be able to grow our investment portfolio. In addition, individuals with whom Bain Capital Credit has relationships are not obligated to provide us with investment opportunities, and we can offer no assurance that these relationships will generate investment opportunities for us in the future.
 
No Guarantee to Replicate Historical Results Achieved by Bain Capital Credit
 
Our primary focus in making investments may differ from those of existing investment funds, accounts or other investment vehicles that are or have been managed by members of the Advisor’s Credit Committee or by Bain Capital Credit. We may consider co-investing in portfolio investments with other investment funds, accounts or investment vehicles managed by members of the Advisor’s Credit Committee or by Bain Capital Credit. Any such investments will be subject to regulatory limitations and approvals by directors who are not “interested persons,” as defined in the 1940 Act. We can offer no assurance, however, that we will be able to obtain such approvals or develop opportunities that comply with such limitations. There can be no guarantee that we will replicate the historical results achieved by members of the Advisor’s Credit Committee or by Bain Capital Credit, and we caution stockholders that our investment returns could be substantially lower than the returns achieved by them in prior periods. Additionally, all or a portion of the prior results may have been achieved in particular market conditions which may never be repeated. Moreover, current or future market volatility and regulatory uncertainty may have an adverse impact on our future performance.
 
Expedited Investment Decisions
 
Investment analyses and decisions by the Advisor may frequently be required to be undertaken on an expedited basis to take advantage of investment opportunities. In these cases, the information available to the Advisor at the time of making an investment decision may be limited. Therefore, no assurance can be given that the Advisor will have knowledge of all circumstances that may adversely affect an investment. In addition, the Advisor expects to rely upon independent consultants and other sources in connection with its evaluation of proposed investments, and no assurance can be given as to the accuracy or completeness of the information provided by such independent consultants or other sources, or as to the Company’s right of recourse against them in the event errors or omissions do occur.
 
Ability to Manage Our Business Effectively
 
Our ability to achieve our investment objective will depend on our ability to manage our business and to grow our investments and earnings. This will depend, in turn, on Bain Capital Credit’s ability to identify, invest in and monitor portfolio companies that meet our investment criteria. The achievement of our investment objectives on a cost-effective basis will depend upon Bain Capital Credit’s execution of our investment process, its ability to provide competent, attentive and efficient services to us and, to a lesser extent, our access to financing on acceptable terms. Bain Capital Credit’s investment professionals will have substantial responsibilities in connection with the management of other investment funds, accounts and investment vehicles. The personnel of Bain Capital Credit may be called upon to provide managerial assistance to our portfolio companies. These activities may distract them from servicing new investment opportunities for us or slow our rate of investment. Any failure to manage our business and our future growth effectively could have a material adverse effect on our business, financial condition, results of operations and cash flows.
 
Potential Conflicts of Interest
 
As a result of our arrangements with Bain Capital Credit, the Advisor and the Advisor’s Credit Committee, there may be times when the Advisor or such persons have interests that differ from those of our stockholders, giving rise to a conflict of interest.
 
Conflicts Related to Obligations of Bain Capital Credit or the Portfolio Managers
 
Bain Capital Credit employees, including the Portfolio Managers, serve, or may serve, as officers, directors, members, or principals of entities that operate in the same or a related line of business as we do, or of investment funds, accounts, or investment vehicles managed by Bain Capital Credit and/or its affiliates. Similarly, Bain Capital Credit and its affiliates may have other clients with similar, different or competing investment objectives.
 
In serving in these multiple capacities, they may have obligations to other clients or investors in those entities, the fulfillment of which may not be in the best interests of us or our stockholders. For example, Bain Capital Credit has, and, following this offering, will continue to have management responsibilities for other investment funds, accounts and investment vehicles. There is a potential that we will compete with these funds, and other entities managed by Bain Capital Credit and its affiliates, for capital and investment opportunities. As a result, Bain Capital Credit and the Portfolio Managers who are affiliated with Bain Capital Credit will face conflicts in the allocation of investment opportunities among us and the investment funds, accounts and investment vehicles managed by Bain Capital Credit and its affiliates. Bain Capital Credit intends to allocate investment opportunities among eligible investment funds, accounts and investment vehicles in a manner that is fair and equitable over time and consistent with its allocation policy. However, we can offer no assurance that such opportunities will be allocated to us fairly or equitably in the short-term or over time. We expect that Bain Capital Credit and the Advisor will agree with our Board that, subject to applicable law, allocations among us and other investment funds, accounts and investment vehicles managed by Bain Capital Credit will generally be made based on capital available for investment in the asset class being allocated and the respective governing documents of such investment funds, accounts and investment vehicles. We expect that available capital for our investments will be determined based on the amount of cash on-hand, existing commitments and reserves, if any, the targeted leverage level, targeted asset mix and diversification requirements and other investment policies and restrictions set by our Board or as imposed by applicable laws, rules, regulations or interpretations. However, there can be no assurance that we will be able to participate in all investment opportunities that are suitable to us.
 
Possession of Material Non-Public Information by Principals and Employees of Bain Capital Credit
 
Principals and other employees of Bain Capital Credit, including members of the Advisor’s Credit Committee, may serve as directors of, or in a similar capacity with, portfolio companies in which we invest, the securities of which are purchased or sold on our behalf. In the event that material nonpublic information is obtained with respect to such companies, or we become subject to trading restrictions under the internal trading policies of those companies or as a result of applicable law or regulations, we could be prohibited for a period of time from purchasing or selling the securities of such companies, and this prohibition may have an adverse effect on us.
 
Third Party Involvement
 
We may invest alongside third parties through partnerships, joint ventures or other entities. Such investments may involve risks not present in investments where a third party is not involved, including the possibility that such third party may at any time have economic or business interests or goals which are inconsistent with those of the Company, or may be in a position to take action contrary to the investment objective of the Company. In addition, the Company may in certain circumstances be liable for actions of such third party.
 
Incentive Fee Structure Relating to the Advisor
 
In the course of our investing activities, we will pay management and incentive fees to the Advisor. We have entered into an Investment Advisory Agreement with the Advisor that provides that these fees will be based on the value of our gross assets. As a result, investors in our common stock will invest on a “gross” basis and receive distributions on a “net” basis after expenses, resulting in a lower rate of return than one might achieve through direct investments. Because these fees are based on the value of our gross assets, the Advisor will benefit when we incur debt or use leverage. Additionally, under the incentive fee structure, the Advisor may benefit when capital gains are recognized and, because the Advisor will determine when to sell a holding, the Advisor will control the timing of the recognition of such capital gains. As a result of these arrangements, there may be times when the management team of the Advisor has interests that differ from those of our stockholders, giving rise to a conflict. Furthermore, there is a risk the Advisor will make more speculative investments in an effort to receive this payment.
 
Our Board is charged with protecting our interests by monitoring how the Advisor addresses these and other conflicts of interests associated with its services and compensation. While they are not expected to review or approve each investment decision or incurrence of leverage, our independent directors will periodically review the Advisor’s services and fees as well as its portfolio management decisions and portfolio performance. In connection with these reviews, our independent directors will consider whether our fees and expenses (including those related to leverage) remain appropriate.
 
The part of the incentive fee payable to the Advisor relating to our net investment income will be computed and paid on income that may include interest income that has been accrued but not yet received in cash. This fee structure may give rise to a conflict of interest for the Advisor to the extent that it encourages the Advisor to favor debt financings that provide for deferred interest, rather than current cash payments of interest. The Advisor may have an incentive to invest in deferred interest securities in circumstances where it would not have done so but for the opportunity to continue to earn the incentive fee even when the issuers of the deferred interest securities would not be able to make actual cash payments to us on such securities. This risk could be increased because, under our Investment Advisory Agreement, the Advisor is not obligated to reimburse us for incentive fees it receives even if we subsequently incur losses or never receive in cash the deferred income that was previously accrued.
 
Conflict of Interest Created by Valuation Process for Certain Portfolio Holdings
 
We expect to make many of our portfolio investments in the form of loans and securities that are not publicly traded and for which no market based price quotation is available. As a result, our Board will determine the fair value of these loans and securities in good faith as described below in “ Item 1A. Risk Factors—Risks Relating to Our Business and Structure—Uncertainty as to the Value of Certain Portfolio Investments. ” In connection with that determination, investment professionals from Bain Capital Credit may provide our Board with valuations based upon the most recent portfolio company financial statements available and projected financial results of each portfolio company. While the valuation for each portfolio investment that constitutes a material portion of our portfolio and that does not have a readily available market quotation will be reviewed by an independent valuation firm at least once annually, the ultimate determination of fair value will be made by our Board and not by such third-party valuation firm. In addition, each of the interested members of our Board has an indirect pecuniary interest in the Advisor. The participation of the Advisor’s investment professionals in our valuation process, and the pecuniary interest in the Advisor by certain members of our Board, could result in a conflict of interest as the Advisor’s management fee is based, in part, on the value of our gross assets, and our incentive fees will be based, in part, on realized gains and realized and unrealized losses.
 
Conflicts Related to Other Arrangements With Bain Capital Credit and the Advisor’s Other Affiliates
 
We have entered into an Administration Agreement with the Administrator pursuant to which we are required to pay to the Administrator our allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations under such Administration Agreement, such as rent and our allocable portion of the cost of our chief financial officer and chief compliance officer and their respective staffs. This will create conflicts of interest that our Board will monitor. For example, we will be unable to preclude Bain Capital Credit from using the “Bain Capital” name for other funds or activities, some of whom may compete against us. Consequently, we will be unable to prevent any damage to goodwill that may occur as a result of the activities of Bain Capital Credit or others. Furthermore, in the event the Investment Advisory Agreement is terminated, we will be required to change our name and cease using “Bain Capital” as part of our name. Any of these events could disrupt our recognition in the market place, damage any goodwill we may have generated and otherwise harm our business.
 
Negotiation of the Investment Advisory Agreement with the Advisor and the Administration Agreement with the Administrator
 
The Investment Advisory Agreement and the Administration Agreement were negotiated between related parties. Consequently, their terms, including fees payable to the Advisor, may not be as favorable to us as if they had been negotiated with an unaffiliated third party. In addition, we may choose not to enforce, or to enforce less vigorously, our rights and remedies under these agreements because of our desire to maintain our ongoing relationship with the Advisor and its affiliates. Any such decision, however, could breach our fiduciary obligations to our stockholders.
 
Limited Liability and Indemnification of the Advisor
 
Under the Investment Advisory Agreement, the Advisor has not assumed any responsibility to us other than to render the services called for under that agreement. It will not be responsible for any action of our Board in following or declining to follow the Advisor’s advice or recommendations. Under the Investment Advisory Agreement, the Advisor, its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with the Advisor, and any person controlling or controlled by the Advisor will not be liable to us, any subsidiary of ours, our directors, our stockholders or any subsidiary’s stockholders or partners for acts or omissions performed in accordance with and pursuant to the Investment Advisory Agreement, except those resulting from acts constituting gross negligence, willful misfeasance, bad faith or reckless disregard of the duties that the Advisor owes to us under the Investment Advisory Agreement. In addition, as part of the Investment Advisory Agreement, we have agreed to indemnify the Advisor and each of its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with the Advisor, from and against any claims or liabilities, including reasonable legal fees and other expenses reasonably incurred, arising out of or in connection with our business and operations or any action taken or omitted on our behalf pursuant to authority granted by the Investment Advisory Agreement, except where attributable to gross negligence, willful misfeasance, bad faith or reckless disregard of such person’s duties under the Investment Advisory Agreement. These protections may lead the Advisor to act in a riskier manner when acting on our behalf than it would when acting for its own account.
 
Restricted Ability to Enter Into Transactions with Affiliates
 
We are prohibited under the 1940 Act from participating in certain transactions with our affiliates without the prior approval of our independent directors and, in some cases, the SEC. Any person that owns, directly or indirectly, 5% or more of our outstanding voting securities will be our affiliate for purposes of the 1940 Act, and we are generally prohibited from buying or selling any security from or to such affiliate without the prior approval of our independent directors. We consider the Advisor and its affiliates, including Bain Capital Credit, to be our affiliates for such purposes. The 1940 Act also prohibits certain “joint” transactions with certain of our affiliates, which could include investments in the same portfolio company, without prior approval of our independent directors and, in some cases, of the SEC. We are prohibited from buying or selling any security from or to any person who owns more than 25% of our voting securities or certain of that person’s affiliates, or entering into prohibited joint transactions with such persons, absent the prior approval of the SEC.
 
We may, however, invest alongside Bain Capital Credit’s investment funds, accounts and investment vehicles in certain circumstances where doing so is consistent with our investment strategy as well as applicable law and SEC staff interpretations. For example, we may invest alongside such investment funds, accounts and investment vehicles consistent with guidance promulgated by the SEC staff to purchase interests in a single class of privately placed securities so long as certain conditions are met, including that Bain Capital Credit, acting on our behalf and on behalf of such investment funds, accounts and investment vehicles, negotiates no term other than price. We may also invest alongside Bain Capital Credit’s investment funds, accounts and investment vehicles as otherwise permissible under regulatory guidance, applicable regulations and Bain Capital Credit’s allocation policy. If the Company is prohibited by applicable law from investing alongside Bain Capital Credit’s investment funds, accounts and investment vehicles with respect to an investment opportunity, the Company will not participate in such investment opportunity.   This allocation policy provides that allocations among us and investment funds, accounts and investment vehicles managed by Bain Capital Credit and its affiliates will generally be made pro rata based on capital available for investment, as determined, in our case, by our Board as well as the terms of our governing documents and those of such investment funds, accounts and investment vehicles. It is our policy to base our determinations on such factors as: the amount of cash on-hand, existing commitments and reserves, if any, our targeted leverage level, our targeted asset mix and diversification requirements and other investment policies and restrictions set by our Board or imposed by applicable laws, rules, regulations or interpretations. We expect that these determinations will be made similarly for investment funds, accounts and investment vehicles managed by Bain Capital Credit. However, we can offer no assurance that investment opportunities will be allocated to us fairly or equitably in the short-term or over time.
 
In situations where co-investment with investment funds, accounts and investment vehicles managed by Bain Capital Credit is not permitted or appropriate, such as when there is an opportunity to invest in different securities of the same issuer or where the different investments could be expected to result in a conflict between our interests and those of Bain Capital Credit’s clients, subject to the limitations described in the preceding paragraph, Bain Capital Credit will need to decide which client will proceed with the investment. Moreover, except in certain limited circumstances as permitted by the 1940 Act, such as when the only term being negotiated is price, we will be unable to invest in any issuer in which an investment fund, account or investment vehicle managed by Bain Capital Credit has previously invested. Similar restrictions limit our ability to transact business with our officers or directors or their affiliates. These restrictions will limit the scope of investment opportunities that would otherwise be available to us.
 
We, the Advisor and Bain Capital Credit submitted an application for exemptive relief from the SEC to permit greater flexibility to negotiate the terms of co-investments if our Board determines that it would be advantageous for us to co-invest with investment funds, accounts and investment vehicles managed by Bain Capital Credit in a manner consistent with our investment objectives, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors. We believe that co-investment by us and investment funds, accounts and investment vehicles managed by Bain Capital Credit may afford us additional investment opportunities and an ability to achieve greater diversification. Accordingly, our application for exemptive relief will seek an exemptive order permitting us to invest with investment funds, accounts and investment vehicles managed by Bain Capital Credit in the same portfolio companies under circumstances in which such investments would otherwise not be permitted by the 1940 Act. We expect that such exemptive relief permitting co-investments, if granted, would apply only if our independent directors review and approve each co-investment. There can be no assurance if and when the SEC will grant such relief.
 
Restriction on Ability to Sell or Otherwise Exit Investments Also Invested in by Other Bain Capital Credit Investment Vehicles
 
We may be considered affiliates with respect to certain of our portfolio companies because certain investment funds, accounts or investment vehicles managed by Bain Capital Credit also hold interests in these portfolio companies and as such these interests may be considered a joint enterprise under the 1940 Act. To the extent that our interests in these portfolio companies may need to be restructured in the future or to the extent that we choose to exit certain of these transactions, our ability to do so will be limited. We intend to seek exemptive relief in relation to certain joint transactions; however, there is no assurance that we will obtain relief that would permit us to negotiate future restructurings or other transactions that may be considered a joint enterprise.
 
Operation in a Highly Competitive Market for Investment Opportunities
 
The business of investing in assets meeting our investment objective is highly competitive. Competition for investment opportunities includes a growing number of nontraditional participants, such as hedge funds, senior private debt funds, including business development companies, and other private investors, as well as more traditional lending institutions and competitors. Some of these competitors may have access to greater amounts of capital and to capital that may be committed for longer periods of time or may have different return thresholds than the Company, and thus these competitors may have advantages not shared by the Company. Furthermore, many of our competitors are not subject to the regulatory restrictions that the 1940 Act imposes on us as a BDC or the source-of-income, asset diversification and distribution requirements we must satisfy to maintain our RIC qualification. Increased competition for, or a diminishment in the available supply of, investments suitable for the Company could result in lower returns on such investments. Moreover, the identification of attractive investment opportunities is difficult and involves a high degree of uncertainty. The Company may incur significant expenses in connection with identifying investment opportunities and investigating other potential investments which are ultimately not consummated, including expenses relating to due diligence, transportation, legal expenses and the fees of other third party advisors.
 
With respect to the investments we make, we will not seek to compete based primarily on the interest rates we will offer, and we believe that some of our competitors may make loans with interest rates that will be lower than the rates we offer. In the secondary market for acquiring existing loans, we expect to compete generally on the basis of pricing terms. With respect to all investments, we may lose some investment opportunities if we do not match our competitors’ pricing, terms and structure. However, if we match our competitors’ pricing, terms and structure, we may experience decreased net interest income, lower yields and increased risk of credit loss. We may also compete for investment opportunities with investment funds, accounts and investment vehicles managed by Bain Capital Credit. Although Bain Capital Credit will allocate opportunities in accordance with its policies and procedures, allocations to such investment funds, accounts and investment vehicles will reduce the amount and frequency of opportunities available to us and may not be in the best interests of us and our stockholders. Moreover, the performance of investments will not be known at the time of allocation.
 
See “Item 1A. Risk Factors—Risks Relating to Our Business and Structure—Potential Conflicts of Interest” and “—Conflicts Related to Obligations of Bain Capital Credit or the Advisor’s Credit Committee.”
 
Possibility of Corporate-Level Income Tax
 
In order to qualify and be subject to tax as a RIC under the Code, we must meet certain source-of-income, asset diversification and distribution requirements. The distribution requirement for a RIC is satisfied if we distribute dividends in respect of each taxable year of an amount at least 90% of our investment company taxable income, determined without regard to any deduction for dividends paid, to our stockholders. We will be subject, to the extent we use debt financing, to certain asset coverage ratio requirements under the 1940 Act and financial covenants under loan and credit agreements that could, under certain circumstances, restrict us from making distributions necessary to enable us to be subject to tax as a RIC. If we are unable to obtain cash from other sources, we may fail to be subject to tax as a RIC and, thus, may be subject to corporate-level income tax. To qualify to be subject to tax as a RIC, we must also meet certain asset diversification requirements at the end of each quarter of our taxable year. Failure to meet these tests may result in our having to dispose of certain investments quickly in order to prevent the loss of our qualifications as a RIC. Because most of our investments will be in private or thinly traded public companies, any such dispositions could be made at disadvantageous prices and may result in substantial losses. If we fail to qualify to be subject to tax as a RIC for any reason and become subject to corporate income tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income available for distributions to our stockholders and the amount of funds available for new investments. Such a failure would have a material adverse effect on us and our stockholders.
 
Possibility of the Need to Raise Additional Capital
 
We may need additional capital to fund new investments and grow our portfolio of investments once we have fully invested the net proceeds of this Private Offering. We intend to access the capital markets periodically to issue debt or equity securities or borrow from financial institutions in order to obtain such additional capital. Unfavorable economic conditions could increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. A reduction in the availability of new capital could limit our ability to grow. In addition, we will be required to distribute at least 90% of our net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any, to our stockholders to maintain our qualification as a RIC. As a result, these earnings will not be available to fund new investments. An inability on our part to access the capital markets successfully could limit our ability to grow our business and execute our business strategy fully and could decrease our earnings, if any, which would have an adverse effect on the value of our securities.
 
Required Distributions and the Recognition of Income
 
For U.S. federal income tax purposes, we will include in income certain amounts that we have not yet received in cash, such as the accretion of OID. This may arise if we receive warrants in connection with the making of a loan and in other circumstances, or through contracted PIK interest, which represents contractual interest added to the loan balance and due at the end of the loan term. Such OID, which could be significant relative to our overall investment activities, or increases in loan balances as a result of contracted PIK arrangements, will be included in income before we receive any corresponding cash payments. We also may be required to include in income certain other amounts that we will not receive in cash.
 
Since in certain cases we may recognize income before or without receiving cash representing such income, we may have difficulty meeting the requirement in a given taxable year to distribute at least 90% of our investment company taxable income, determined without regard to any deduction for dividends paid, as dividends to our stockholders in order to maintain our ability to be subject to tax as a RIC. In such a case, we may have to sell some of our investments at times we would not consider advantageous, raise additional debt or equity capital or reduce new investment originations to meet these distribution requirements. If we are not able to obtain such cash from other sources, we may fail to qualify to be subject to tax as a RIC and thus be subject to corporate-level income tax.
 
Potential Adverse Tax Consequences as a Result of Not Being Treated as a “Publicly Offered Regulated Investment Company”
 
We will be treated as a “publicly offered regulated investment company” (within the meaning of Section 67 of the Code) if either (i) shares of our common stock and our preferred stock (if any) collectively are held by at least 500 persons at all times during a taxable year, (ii) shares of our common stock are treated as regularly traded on an established securities market or (iii) shares of our common stock are continuously offered pursuant to a public offering (within the meaning of Section 4 of the Securities Act).  We cannot assure investors that we will be treated as a publicly offered regulated investment company for all years.  If we are not treated as a publicly offered regulated investment company for any calendar year, each U.S. stockholder that is an individual, trust or estate will be treated as having received a dividend from us in the amount of such U.S. stockholder’s allocable share of the management and incentive fees paid to our Advisor and certain of our other expenses for the calendar year, and these fees and expenses will be treated as miscellaneous itemized deductions of such U.S. stockholder.  Miscellaneous itemized deductions generally are deductible by a U.S. stockholder that is an individual, trust or estate only to the extent that the aggregate of such U.S. stockholder’s miscellaneous itemized deductions exceeds 2% of such U.S. stockholder’s adjusted gross income for U.S. federal income tax purposes, are not deductible for purposes of the alternative minimum tax and are subject to the overall limitation on itemized deductions under Section 68 of the Code.
 
Withholding of U.S. Federal Income Tax on Dividends for Non-U.S. Stockholders
 
Distributions by a BDC generally are treated as dividends for U.S. tax purposes, and will be subject to U.S. income or withholding tax unless the stockholder receiving the dividend qualifies for an exemption from U.S. tax, or the distribution is subject to one of the special look-through rules described below. Distributions paid out of net capital gains can qualify for a reduced rate of taxation in the hands of an individual U.S. stockholder, and an exemption from U.S. tax in the hands of a non-U.S. stockholder.
 
However, if designated by a RIC, dividend distributions by the RIC derived from certain interest income (such distributions, “interest-related dividends”) and certain net short-term capital gains (such distributions, “short-term capital gain dividends”) generally are exempt from U.S. withholding tax otherwise imposed on non-U.S. stockholders. Interest-related dividends are dividends that are attributable to “qualified net interest income” ( i.e ., “qualified interest income,” which generally consists of certain interest and OID on obligations “in registered form” as well as interest on bank deposits earned by a RIC, less allocable deductions) from sources within the United States. Short-term capital gain dividends are dividends that are attributable to net short-term capital gains, other than short-term capital gains recognized on the disposition of U.S. real property interests, earned by a RIC. However, no assurance can be given as to whether any of our distributions will be eligible for this exemption from U.S. withholding tax or, if eligible, will be designated as such by us.  Furthermore, in the case of shares of our stock held through an intermediary, the intermediary may have withheld U.S. federal income tax even if we designated the payment as an interest-related dividend or short-term capital gain dividend.   Since our common stock will be subject to significant transfer restrictions, and an investment in our common stock will generally be illiquid, non-U.S. stockholders whose distributions on our common stock are subject to U.S. withholding tax may not be able to transfer their shares of our common stock easily or quickly or at all.
 
A failure of any portion of our distributions to qualify for the exemption for interest-related dividends or short-term capital gain dividends would not affect the treatment of non-U.S. stockholders that qualify for an exemption from U.S. withholding tax on dividends by reason of their special status (for example, foreign government-related entities and certain pension funds resident in favorable treaty jurisdictions).
 
PIK Interest Payments
 
Certain of our debt investments may contain provisions providing for the payment of PIK interest. Because PIK interest results in an increase in the size of the loan balance of the underlying loan, the receipt by us of PIK interest will have the effect of increasing our assets under management. As a result, because the base management fee that we pay to the Advisor is based on the value of our gross assets, the receipt by us of PIK interest will result in an increase in the amount of the base management fee payable by us. In addition, any such increase in a loan balance due to the receipt of PIK interest will cause such loan to accrue interest on the higher loan balance, which will result in an increase in our pre-incentive fee net investment income and, as a result, an increase in incentive fees that are payable by us to the Advisor.
 
Regulations Governing Our Operation as a BDC
 
We may issue debt securities or preferred stock and/or borrow money from banks or other financial institutions, which we refer to collectively as “senior securities,” up to the maximum amount permitted by the 1940 Act. Under the provisions of the 1940 Act, we will be permitted as a BDC to issue senior securities in amounts such that our asset coverage ratio, as defined in the 1940 Act, equals at least 200% of our gross assets less all liabilities and indebtedness not represented by senior securities, after each issuance of senior securities. If the value of our assets declines, we may be unable to satisfy this test. If that happens, we may be required to sell a portion of our investments at a time when such sales may be disadvantageous to us in order to repay a portion of our indebtedness. Also, any amounts that we use to service our indebtedness would not be available for distributions to our common stockholders. If we issue senior securities, we will be exposed to typical risks associated with leverage, including an increased risk of loss.
 
We are not generally able to issue and sell our common stock at a price below net asset value per share. We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the then-current net asset value per share of our common stock if our Board determines that such sale is in our best interests, and if our stockholders approve such sale. In any such case, the price at which our securities are to be issued and sold may not be less than a price that, in the determination of our Board, closely approximates the market value of such securities (less any distributing commission or discount). If we raise additional funds by issuing common stock or senior securities convertible into, or exchangeable for, our common stock, then the percentage ownership of our stockholders at that time will decrease, and stockholders may experience dilution.
 
Potential Default or Other Issues Under a Credit Facility
 
We intend to enter into one or more Credit Facilities following the completion of this offering. The closing of a Credit Facility is contingent on a number of conditions including, without limitation, the closing of this offering and the negotiation and execution of definitive documents relating to such Credit Facility. If we are successful in securing a Credit Facility, we intend to use borrowings under such Credit Facility to make additional investments and for other general corporate purposes. However, there can be no assurance that we will be able to close a Credit Facility or obtain other financing.
 
In the event we default under a Credit Facility or any other future borrowing facility, our business could be adversely affected as we may be forced to sell a portion of our investments quickly and prematurely at what may be disadvantageous prices to us in order to meet our outstanding payment obligations and/or support working capital requirements under such Credit Facility or such future borrowing facility, any of which would have a material adverse effect on our business, financial condition, results of operations and cash flows. In addition, following any such default, the agent for the lenders under the relevant Credit Facility or such future borrowing facility could assume control of the disposition of any or all of our assets, including the selection of such assets to be disposed and the timing of such disposition, which would have a material adverse effect on our business, financial condition, results of operations and cash flows. As part of certain Credit Facilities, the right to make capital calls of stockholders may be pledged as collateral to the lender, which will be able to call for capital contributions upon the occurrence of an event of default under such Credit Facility. To the extent such an event of default does occur, stockholders could therefore be required to fund any shortfall up to their remaining capital commitments, without regard to the underlying value of their investment.
 
Potential Limited Ability To Invest in Public Companies
 
To maintain our status as a BDC, we are not permitted to acquire any assets other than “qualifying assets” specified in the 1940 Act unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets (with certain limited exceptions). Subject to certain exceptions for follow-on investments and distressed companies, an investment in an issuer that has outstanding securities listed on a national securities exchange may be treated as a qualifying asset only if such issuer has a common equity market capitalization that is less than $250 million at the time of such investment.
 
Financing Investments With Borrowed Money
 
The use of leverage magnifies the potential for gain or loss on amounts invested. The use of leverage is generally considered a speculative investment technique and increases the risks associated with investing in our securities. However, we intend to borrow from, and may in the future issue debt securities to, banks, insurance companies and other lenders. Lenders of these funds will have fixed dollar claims on our assets that are superior to the claims of our common stockholders, and we would expect such lenders to seek recovery against our assets in the event of a default. We may pledge up to 100% of our assets and may grant a security interest in all of our assets under the terms of any debt instruments we may enter into with lenders. In addition, under the terms of a Credit Facility and any borrowing facility or other debt instrument we may enter into, we are likely to be required to use the net proceeds of any investments that we sell to repay a portion of the amount borrowed under such facility or instrument before applying such net proceeds to any other uses. If the value of our assets decreases, leveraging would cause net asset value to decline more sharply than it otherwise would have had we not leveraged, thereby magnifying losses or eliminating our stake in a leveraged investment. Similarly, any decrease in our revenue or income will cause our net income to decline more sharply than it would have had we not borrowed. Such a decline would also negatively affect our ability to make dividend payments on our common stock or preferred stock. Our ability to service any debt will depend largely on our financial performance and will be subject to prevailing economic conditions and competitive pressures. Moreover, as we expect that the base management fee payable to the Advisor will be payable based on the value of our gross assets, including those assets acquired through the use of leverage, the Advisor will have a financial incentive to incur leverage, which may not be consistent with our stockholders’ interests. In addition, our common stockholders will bear the burden of any increase in our expenses as a result of our use of leverage, including interest expenses and any increase in the base management fee payable to the Advisor.
 
As a BDC, we generally are required to meet a coverage ratio of total assets to total borrowings and other senior securities, which include all of our borrowings and any preferred stock that we may issue in the future, of at least 200%. If this ratio declines below 200%, we will not be able to incur additional debt and could be required to sell a portion of our investments to repay some debt when it is otherwise disadvantageous for us to do so. This could have a material adverse effect on our operations, and we may not be able to make distributions. The amount of leverage that we employ will depend on the Advisor’s and our Board’s assessment of market and other factors at the time of any proposed borrowing. We cannot assure investors that we will be able to obtain credit at all or on terms acceptable to us.
 
In addition, a Credit Facility will, and our future debt facilities may, impose financial and operating covenants that restrict our business activities, including limitations that hinder our ability to finance additional loans and investments or to make the distributions required to maintain our qualification as a RIC under the Code.
 
Changes in Interest Rates May Affect Our Cost of Capital and Net Investment Income
 
To the extent we borrow money to make investments, our net investment income will depend, in part, upon the difference between the rate at which we borrow funds and the rate at which we invest those funds. As a result, we can offer no assurance that a significant change in market interest rates would not have a material adverse effect on our net investment income in the event we use debt to finance our investments. In periods of rising interest rates, our cost of funds would increase, which could reduce our net investment income. We may use interest rate risk management techniques in an effort to limit our exposure to interest rate fluctuations. Such techniques may include various interest rate hedging activities to the extent permitted by the 1940 Act.
 
In addition, a rise in the general level of interest rates typically leads to higher interest rates applicable to our debt investments. Accordingly, an increase in interest rates may result in an increase of the amount of our pre-incentive fee net investment income and, as a result, an increase in incentive fees payable to the Advisor.
 
Potential Limits Under a Credit Facility or Any Other Future Borrowing Facility
 
Each Credit Facility, and any future borrowing facility, may be backed by all or a portion of our loans and securities on which the lenders may have a security interest. We may pledge up to 100% of our assets and may grant a security interest in all of our assets under the terms of any debt instrument we enter into with lenders. We expect that any security interests we grant will be set forth in a pledge and security agreement and evidenced by the filing of financing statements by the agent for the lenders. In addition, we expect that the custodian for our securities serving as collateral for such loan would include in its electronic systems notices indicating the existence of such security interests and, following notice of occurrence of an event of default, if any, and during its continuance, will only accept transfer instructions with respect to any such securities from the lender or its designee. If we were to default under the terms of any debt instrument, the agent for the applicable lenders would be able to assume control of the timing of disposition of any or all of our assets securing such debt, which would have a material adverse effect on our business, financial condition, results of operations and cash flows.
 
In addition, any security interests as well as negative covenants a Credit Facility or any other borrowing facility may provide may limit our ability to create liens on assets to secure additional debt and may make it difficult for us to restructure or refinance indebtedness at or prior to maturity or obtain additional debt or equity financing. In addition, if our borrowing base under a Credit Facility or any other borrowing facility were to decrease, we would be required to secure additional assets in an amount equal to any borrowing base deficiency. In the event that all of our assets are secured at the time of such a borrowing base deficiency, we could be required to repay advances under the relevant Credit Facility or any other borrowing facility or make deposits to a collection account, either of which could have a material adverse impact on our ability to fund future investments and to pay dividends.
 
In addition, we expect that under a Credit Facility we will be subject to limitations as to how borrowed funds may be used, which may include restrictions on geographic and industry concentrations, loan size, payment frequency and status, average life, collateral interests and investment ratings, as well as regulatory restrictions on leverage which may affect the amount of funding that may be obtained. There may also be certain requirements relating to portfolio performance, including required minimum portfolio yield and limitations on delinquencies and charge-offs, a violation of which could limit further advances and, in some cases, result in an event of default. An event of default under a Credit Facility or any other borrowing facility could result in an accelerated maturity date for all amounts outstanding thereunder, which could have a material adverse effect on our business and financial condition. This could reduce our revenues and, by delaying any cash payment allowed to us under the relevant Credit Facility or any other borrowing facility until the lenders have been paid in full, reduce our liquidity and cash flow and impair our ability to grow our business and maintain our qualification as a RIC.
 
Adverse Developments in the Credit Markets
 
During the economic downturn in the United States that began in mid-2007, many commercial banks and other financial institutions stopped lending or significantly curtailed their lending activity. In addition, in an effort to stem losses and reduce their exposure to segments of the economy deemed to be high risk, some financial institutions limited refinancing and loan modification transactions and reviewed the terms of existing facilities to identify bases for accelerating the maturity of existing lending facilities. If these conditions recur, it may be difficult for us to enter into a new borrowing facility (including a Credit Facility), obtain other financing to finance the growth of our investments, or refinance any outstanding indebtedness on acceptable economic terms, or at all.
 
Investing a Sufficient Portion of Assets in Qualifying Assets
 
As a BDC, we may not acquire any assets other than “qualifying assets” unless, at the time of and after giving effect to such acquisition, at least 70% of our total assets are qualifying assets. See—“ Item 1(c). Description of Business—Qualifying Assets .”
 
We believe that most of the investments that we may acquire in the future will constitute qualifying assets. However, we may be precluded from investing in what we believe to be attractive investments if such investments are not qualifying assets for purposes of the 1940 Act. If we do not invest a sufficient portion of our assets in qualifying assets, we could violate the 1940 Act provisions applicable to BDCs. As a result of such violation, specific rules under the 1940 Act could prevent us, for example, from making follow-on investments in existing portfolio companies (which could result in the dilution of our position) or could require us to dispose of investments at inopportune times in order to come into compliance with the 1940 Act. If we need to dispose of such investments quickly, it could be difficult to dispose of such investments on favorable terms. We may not be able to find a buyer for such investments and, even if we do find a buyer, we may have to sell the investments at a substantial loss. Any such outcomes would have a material adverse effect on our business, financial condition, results of operations and cash flows.
 
If we do not maintain our status as a BDC, we would be subject to regulation as a registered closed-end investment company under the 1940 Act. As a registered closed-end investment company, we would be subject to substantially more regulatory restrictions under the 1940 Act which would significantly decrease our operating flexibility.
 
Uncertainty as to the Value of Certain Portfolio Investments
 
We expect that many of our portfolio investments will take the form of securities that are not publicly traded. The fair value of loans, securities and other investments that are not publicly traded may not be readily determinable, and we will value these investments at fair value as determined in good faith by our Board, including to reflect significant events affecting the value of our investments. Most, if not all, of our investments (other than cash and cash equivalents) will be classified as Level 3 under Topic 820 of the U.S. Financial Accounting Standards Board’s Accounting Standards Codification, as amended, Fair Value Measurements and Disclosures (“ASC Topic 820”). This means that our portfolio valuations will be based on unobservable inputs and our own assumptions about how market participants would price the asset or liability in question. We expect that inputs into the determination of fair value of our portfolio investments will require significant management judgment or estimation. Even if observable market data are available, such information may be the result of consensus pricing information or broker quotes, which include a disclaimer that the broker would not be held to such a price in an actual transaction. The non-binding nature of consensus pricing and/or quotes accompanied by disclaimers materially reduces the reliability of such information. We expect to retain the services of one or more independent service providers to review the valuation of these loans and securities. The types of factors that the Board may take into account in determining the fair value of our investments generally include, as appropriate, comparison to publicly-traded securities including such factors as yield, maturity and measures of credit quality, the enterprise value of a portfolio company, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flow, the markets in which the portfolio company does business and other relevant factors. Because such valuations, and particularly valuations of private securities and private companies, are inherently uncertain, may fluctuate over short periods of time and may be based on estimates, our determinations of fair value may differ materially from the values that would have been used if a ready market for these loans and securities existed. Our net asset value could be adversely affected if our determinations regarding the fair value of our investments were materially higher than the values that we ultimately realize upon the disposal of such loans and securities.
 
We will adjust quarterly the valuation of our portfolio to reflect our Board’s determination of the fair value of each investment in our portfolio. Any changes in fair value are recorded in our statement of operations as net change in unrealized appreciation or depreciation.
 
Potential Fluctuations in Quarterly Operating Results
 
We could experience fluctuations in our quarterly operating results due to a number of factors, including the interest rate payable on the loans and debt securities we acquire, the default rate on such loans and securities, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which we encounter competition in our markets and general economic conditions. In light of these factors, results for any period should not be relied upon as being indicative of performance in future periods.
 
Potential Fluctuations in our Net Asset Value (“NAV”)
 
Our NAV may fluctuate over time and, consequently, you may pay a different price per share at subsequent closings than some other investors paid at earlier closings. The price per share of a subsequent closing may be above NAV per share to take into account the amortization of organizational and offering expenses. Consequently, investors in subsequent closings may receive a different number shares for the same capital contribution that earlier investors made depending on the NAV at the relevant time.
 
Potential Adverse Effects of New or Modified Laws or Regulations
 
We and our portfolio companies will be subject to regulation by laws at the U.S. federal, state and local levels. These laws and regulations, as well as their interpretation, may change from time to time, and new laws, regulations and interpretations may also come into effect. Any such new or changed laws or regulations could have a material adverse effect on our business.
 
Additionally, changes to the laws and regulations governing our operations related to permitted investments may cause us to alter our investment strategy in order to avail ourselves of new or different opportunities. Such changes could result in material differences to the strategies and plans set forth in this Registration Statement and may shift our investment focus from the areas of expertise of Bain Capital Credit to other types of investments in which Bain Capital Credit may have little or no expertise or experience. Any such changes, if they occur, could have a material adverse effect on our results of operations and the value of a stockholder’s investment.
 
Shadow Banking Regulatory Changes
 
There has been increasing commentary amongst regulators and intergovernmental institutions, including the Financial Stability Board and International Monetary Fund, on the topic of so called “shadow banking” (a term generally taken to refer to credit intermediation involving entities and activities outside the regulated banking system). The Company is an entity outside the regulated banking system and certain of the activities of the Company may be argued to fall within this definition and, in consequence, may be subject to regulatory developments.  As a result, the Company and the Advisor could be subject to increased levels of oversight and regulation. This could increase costs and limit operations. In an extreme eventuality, it is possible that such regulations could render the continued operation of the Company unviable and lead to its premature termination or restructuring.
 
Potential Changes in Investment Objective, Operating Policies or Strategies Without Prior Notice or Stockholder Approval
 
Our Board has the authority, except as otherwise provided in the 1940 Act, to modify or waive certain of our operating policies and strategies without prior notice and without stockholder approval. However, absent stockholder approval, we may not change the nature of our business so as to cease to be, or withdraw our election as, a BDC. Under Delaware law, we also cannot be dissolved without prior stockholder approval. We cannot predict the effect any changes to our current operating policies and strategies would have on our business, operating results and the market price of our common stock. Nevertheless, any such changes could adversely affect our business and impair our ability to make distributions to our stockholders.
 
Potential Deterrence of Takeover Attempts
 
The General Corporation Law of the State of Delaware, as amended (the “DGCL”), contains provisions that may discourage, delay or make more difficult a change in control of us or the removal of our directors. Our Certificate of Incorporation and bylaws contain provisions that limit liability and provide for indemnification of our directors and officers. These provisions and others which we may adopt also may have the effect of deterring hostile takeovers or delaying changes in control or management. We are subject to Section 203 of the DGCL, the application of which is subject to any applicable requirements of the 1940 Act. This section generally prohibits us from engaging in mergers and other business combinations with stockholders that beneficially own 15% or more of our voting stock, either individually or together with their affiliates, unless our directors or stockholders approve the business combination in the prescribed manner. Our Board will adopt a resolution exempting from Section 203 of the DGCL any business combination between us and any other person, subject to prior approval of such business combination by our Board, including approval by a majority of our directors who are not “interested persons.” If our Board does not adopt, or adopts but later repeals such resolution exempting business combinations, or if our Board does not approve a business combination, Section 203 of the DGCL may discourage third parties from trying to acquire control of us and increase the difficulty of consummating such an offer.
 
We have also adopted measures that may make it difficult for a third party to obtain control of us, including provisions of our Certificate of Incorporation that classify our Board in three classes serving staggered three-year terms, and provisions of our Certificate of Incorporation authorizing our Board to classify or reclassify shares of our preferred stock in one or more classes or series, to cause the issuance of additional shares of our stock, and to amend our Certificate of Incorporation, without stockholder approval, to increase or decrease the number of shares of stock that we have authority to issue. These provisions, as well as other provisions we have adopted in our Certificate of Incorporation and bylaws, may delay, defer or prevent a transaction or a change in control that might otherwise be in the best interests of our stockholders.
 
Potential Resignation of the Advisor and/or the Administrator
 
The Advisor has the right under the Investment Advisory Agreement to resign as our Advisor at any time upon not less than 60 days’ written notice, whether we have found a replacement or not. Similarly, the Administrator has the right under the administration agreement to resign at any time upon not less than 60 days’ written notice, whether we have found a replacement or not. If the Advisor or the Administrator were to resign, we may not be able to find a new investment adviser or administrator, as applicable, or hire internal management with similar expertise and ability to provide the same or equivalent services on acceptable terms within 60 days, or at all. If we are unable to do so quickly, our operations are likely to experience a disruption, our financial condition, business and results of operations as well as our ability to pay distributions to our stockholders are likely to be adversely affected and the market price of our shares may decline. In addition, the coordination of our internal management and investment or administrative activities, as applicable, is likely to suffer if we are unable to identify and reach an agreement with a single institution or group of executives having the expertise possessed by the Advisor, or the Administrator, as applicable. Even if we are able to retain comparable management, whether internal or external, the integration of such management and their lack of familiarity with our investment objective may result in additional costs and time delays that may adversely affect our business, financial condition, results of operations and cash flows.
 
Incurrence of Significant Costs as a Result of Being an Exchange Act Reporting Company
 
As an Exchange Act reporting company, we will incur legal, accounting and other expenses, including costs associated with the periodic reporting requirements applicable to a company whose securities are registered under the Exchange Act, as well as additional corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the SEC.
 
Dependence on Information Systems and Potential Systems Failures
 
Our business is highly dependent on the communications and information systems of Bain Capital Credit. In addition, certain of these systems are provided to Bain Capital Credit by third-party service providers. Any failure or interruption of such systems, including as a result of the termination of an agreement with any such third-party service provider, could cause delays or other problems in our activities. This, in turn, could have a material adverse effect on our operating results and negatively affect the market price of our common stock and our ability to pay dividends to our stockholders.
 
Small Business Investment Company License
 
Principals or employees of Bain Capital Credit may apply for a license to form a SBIC for the Company. If the application is approved and the SBA so permits, the SBIC license will be transferred to a wholly-owned subsidiary of the Company. Following such transfer, the SBIC subsidiary will be allowed to issue SBA-guaranteed debentures, subject to the required capitalization of the SBIC subsidiary. SBA guaranteed debentures carry long-term fixed rates that are generally lower than rates on comparable bank and other debt. We cannot assure investors that the principals or employees of Bain Capital Credit will be successful in receiving an SBIC license from the SBA or that the SBA will permit such license to be transferred to the Company. If we do receive an SBIC license, there is no minimum amount of SBA-guaranteed debentures that must be allocated to us.
 
Risks Related to our Investments
 
Potential Impact of Economic Recessions or Downturns
 
Many of the portfolio companies in which we expect to make investments are likely to be susceptible to economic slowdowns or recessions and may be unable to repay our loans during such periods. Therefore, the number of our non-performing assets is likely to increase and the value of our portfolio is likely to decrease during such periods. Adverse economic conditions may decrease the value of collateral securing some of our loans and debt securities and the value of our equity investments. Economic slowdowns or recessions could lead to financial losses in our portfolio and a decrease in revenues, net income and assets. Unfavorable economic conditions also could increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These events could prevent us from increasing our investments and harm our operating results.
 
A portfolio company’s failure to satisfy financial or operating covenants imposed by us or other lenders could lead to defaults and, potentially, termination of its loans and foreclosure on its assets, which could trigger cross-defaults under other agreements and jeopardize our portfolio company’s ability to meet its obligations under the loans and debt securities that we hold. We may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms with a defaulting portfolio company. In addition, lenders in certain cases can be subject to lender liability claims for actions taken by them when they become too involved in the borrower’s business or exercise control over a borrower. It is possible that we could become subject to a lender’s liability claim, including as a result of actions taken if we render significant managerial assistance to the borrower. Furthermore, if one of our portfolio companies were to file for bankruptcy protection, a bankruptcy court might re-characterize our debt holding and subordinate all or a portion of our claim to claims of other creditors, even though we may have structured our investment as senior secured debt. The likelihood of such a re-characterization would depend on the facts and circumstances, including the extent to which we provided managerial assistance to that portfolio company.
 
Potential Material and Adverse Effects of Market Conditions on Debt and Equity Capital Markets
 
From 2007 through 2009, the global capital markets experienced a period of disruption resulting in increasing spreads between the yields realized on riskier debt securities and those realized on risk-free securities and a lack of liquidity in parts of the debt capital markets, significant write-offs in the financial services sector relating to subprime mortgages and the re-pricing of credit risk in the broadly syndicated market. We and the portfolio companies in which we may invest may be adversely affected by deteriorations in the financial markets and economic conditions throughout the world, some of which may magnify the risks described herein and may have other adverse effects. Deteriorating market conditions could result in increasing volatility and illiquidity in the global credit, debt and equity markets generally. The duration and ultimate effect of recent market conditions cannot be forecast, nor is it known whether or the degree to which such conditions may remain stable or worsen. Deteriorating market conditions and uncertainty regarding economic markets generally could result in declines in the market values of potential investments or declines in the market values of investments after they are made or acquired by the Company . Such declines may be exacerbated by other events, such as the failure of significant financial institutions or hedge funds, dislocations in other investment markets or other extrinsic events. In addition, such declines could lead to weakened investment opportunities for the Company , could prevent the Company from successfully meeting its investment objectives and/or could require the Company to dispose of investments at a loss while such unfavorable market conditions prevail. Although the credit markets and the U.S. economy have improved in recent years, there can be no assurance that market conditions will remain or improve further in the near future. A prolonged period of market illiquidity may cause us to reduce the volume of loans and debt securities we originate and/or fund and adversely affect the value of our portfolio investments, which could have a material and adverse effect on our business, financial condition, results of operations and cash flows.
 
General Market and Credit Risks of Debt Securities
 
Debt portfolios are subject to credit and interest rate risk. “Credit risk” refers to the likelihood that an issuer will default in the payment of principal and/or interest on an instrument. Financial strength and solvency of an issuer are the primary factors influencing credit risk. In addition, subordination, lack or inadequacy of collateral or credit enhancement for a debt instrument may affect its credit risk. Credit risk may change over the life of an instrument, and securities which are rated by rating agencies are often reviewed and may be subject to downgrade. “Interest rate risk” refers to the risks associated with market changes in interest rates. Factors that may affect market interest rates include, without limitation, inflation, slow or stagnant economic growth or recession, unemployment, money supply and the monetary policies of the Federal Reserve Board and central banks throughout the world, international disorders and instability in domestic and foreign financial markets. Interest rate changes may affect the value of a debt instrument indirectly (especially in the case of fixed rate securities) and directly (especially in the case of instruments whose rates are adjustable). In general, rising interest rates will negatively impact the price of a fixed rate debt instrument and falling interest rates will have a positive effect on price. Adjustable rate instruments may also react to interest rate changes in a similar manner although generally to a lesser degree (depending, however, on the characteristics of the reset terms, including, among other factors, the index chosen, frequency of reset and reset caps or floors). Interest rate sensitivity is generally more pronounced and less predictable in instruments with uncertain payment or prepayment schedules. The Company expects that it will periodically experience imbalances in the interest rate sensitivities of its assets and liabilities and the relationships of various interest rates to each other. In a changing interest rate environment, the Company may not be able to manage this risk effectively, which in turn could adversely affect the Company’s performance.
 
Investments in Leveraged Portfolio Companies
 
Portfolio companies may face intense competition, including competition from companies with greater financial resources, more extensive development, manufacturing, marketing and other capabilities, or a larger number of qualified managerial and technical personnel. As a result, portfolio companies which the Advisor expects to be stable may operate at a loss or have significant variations in operating results, may require substantial additional capital to support their operations or to maintain their competitive position or may otherwise have a weak financial condition or be experiencing financial distress.
 
Portfolio companies may issue certain types of debt, such as senior loans, mezzanine or high yield in connection with leveraged acquisitions or recapitalizations in which the portfolio company incurs a substantially higher amount of indebtedness than the level at which it had previously operated. Leverage may have important consequences to these portfolio companies and the Company as an investor. For example, the substantial indebtedness of a portfolio company could (i) limit its ability to borrow money for its working capital, capital expenditures, debt service requirements, strategic initiatives or other purposes; (ii) require it to dedicate a substantial portion of its cash flow from operations to the repayment of its indebtedness, thereby reducing funds available to it for other purposes; (iii) make it more highly leveraged than some of its competitors, which may place it at a competitive disadvantage and (iv) subject it to restrictive financial and operating covenants, which may preclude it from favorable business activities or the financing of future operations or other capital needs.
 
A leveraged portfolio company’s income and net assets will tend to increase or decrease at a greater rate than if borrowed money were not used. In addition, a portfolio company with a leveraged capital structure will be subject to increased exposure to adverse economic factors, such as a significant rise in interest rates, a severe downturn in the economy or deterioration in the condition of that portfolio company or its industry. If a portfolio company is unable to generate sufficient cash flow to meet all of its obligations, it may take alternative measures (e.g., reduce or delay capital expenditures, sell assets, seek additional capital, or seek to restructure, extend or refinance indebtedness). These actions may negatively affect our investment in such a portfolio company.
 
Investment in leveraged companies involves a number of significant risks. Leveraged companies in which we invest may have limited financial resources and may be unable to meet their obligations under their loans and debt securities that we hold. Such developments may be accompanied by a deterioration in the value of any collateral and a reduction in the likelihood of our realizing any guarantees that we may have obtained in connection with our investment. Smaller leveraged companies also may have less predictable operating results and may require substantial additional capital to support their operations, finance their expansion or maintain their competitive position.
 
Volatility of Loans and Debt Securities of Leveraged Companies
 
Leveraged companies may experience bankruptcy or similar financial distress. The bankruptcy process has a number of significant inherent risks. Many events in a bankruptcy proceeding are the product of contested matters and adversary proceedings and are beyond the control of the creditors. A bankruptcy filing by a portfolio company may adversely and permanently affect the company. If the proceeding is converted to a liquidation, the value of the portfolio company may not equal the liquidation value that was believed to exist at the time of the investment. The duration of a bankruptcy proceeding is also difficult to predict, and a creditor’s return on investment can be adversely affected by delays until the plan of reorganization or liquidation ultimately becomes effective. The administrative costs in connection with a bankruptcy proceeding are frequently high and would be paid out of the debtor’s estate prior to any return to creditors. Because the standards for classification of claims under bankruptcy law are vague, our influence with respect to the class of securities or other obligations we own may be lost by increases in the number and amount of claims in the same class or by different classification and treatment. In the early stages of the bankruptcy process, it is often difficult to estimate the extent of, or even to identify, any contingent claims that might be made. In addition, certain claims that have priority by law (for example, claims for taxes) may be substantial.
 
Investments in Middle-Market Portfolio Companies
 
We expect to invest its investable capital in small and/or less well-established companies. While smaller companies may have potential for rapid growth, they often involve higher risks because they lack the management experience, financial resources, product diversification and competitive strength of larger corporations, all of which may contribute to illiquidity, which may, in turn adversely affect the price and timing of liquidation of our investments. Generally, little public information exists about these companies, and we will rely on the ability of Bain Capital Credit’s investment professionals to obtain adequate information to evaluate the potential returns from investing in these companies. If we are unable to uncover all material information about these companies, we may not make a fully informed investment decision, and we may lose money on our investments. Middle-market companies may have limited financial resources and may be unable to meet their obligations under their loans and debt securities that we hold, which may be accompanied by a deterioration in the value of any collateral and a reduction in the likelihood of our realizing any guarantees we may have obtained in connection with our investment. Additionally, middle-market companies are more likely to depend on the management talents and efforts of a small group of persons. Therefore, the death, disability, resignation or termination of one or more of these persons could have a material adverse impact on one or more of the portfolio companies we invest in and, in turn, on us. Middle-market companies also may be parties to litigation and may be engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence. In addition, our executive officers, directors and the Advisor may, in the ordinary course of business, be named as defendants in litigation arising from our investments in portfolio companies.
 
Lack of Liquidity in Investments
 
The lack of an established, liquid secondary market for a large portion of our investments may have an adverse effect on the market value of our investments and on our ability to dispose of them. Additionally, our investments may be subject to certain transfer restrictions that may also contribute to illiquidity. Further, our assets that are typically traded in a liquid market may become illiquid if the applicable trading market tightens. Therefore, no assurance can be given that, if the Company is determined to dispose of a particular investment held by the Company, it could dispose of such investment at the prevailing market price.
 
In addition, we may, from time to time, possess material, non-public information, including information received due to its participation on creditors’ committees, about a borrower or issuer or the Company may be an affiliate of a borrower or an issuer. Such information or affiliation may limit the ability of the Company to buy and sell investments.
 
We may also invest in debt securities which will not be rated by any rating agency and, if they were rated, would be rated as below investment grade quality. Below investment grade securities, which are often referred to as “junk,” have predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal. They may also be illiquid and difficult to value. Some of our debt investments may contain interest rate reset provisions that may make it more difficult for the borrowers to make periodic interest payments to us. In addition, some of our debt investments may not pay down principal until the end of their lifetimes, which could result in a substantial loss to us if the portfolio companies are unable to refinance or repay their debts at maturity.
 
Potential Adverse Effects of Price Declines and Illiquidity in the Corporate Debt Markets
 
As a BDC, we are required to carry our investments at market value or, if no market value is ascertainable, at fair value as determined in good faith by our Board. As part of the valuation process, we may take into account the following types of factors, if relevant, in determining the fair value of our investments:
 
• a comparison of the portfolio company’s securities to publicly-traded securities;
 
• the enterprise value of a portfolio company;
 
• the nature and realizable value of any collateral;
 
• the portfolio company’s ability to make payments and its earnings and discounted cash flow;
 
• the markets in which the portfolio company does business;
 
• appraisals and reviews by third-party valuation firms; and
 
• changes in the interest rate environment and the credit markets generally that may affect the price at which similar investments may be made in the future and other relevant factors.
 
When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, we use the pricing indicated by the external event to corroborate our valuation. We record decreases in the market values or fair values of our investments as unrealized depreciation. Declines in prices and liquidity in the corporate debt markets may result in significant net unrealized depreciation in our portfolio. The effect of all of these factors on our portfolio may reduce our net asset value by increasing net unrealized depreciation in our portfolio. Depending on market conditions, we could incur substantial realized losses and may suffer additional unrealized losses in future periods, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
 
Risks of Secured Loans
 
While we may invest in secured loans that may be over-collateralized at the time of the investment, it may nonetheless be exposed to losses resulting from default and foreclosure. Therefore, the value of the underlying collateral, the creditworthiness of the borrower and the priority of the lien are each of great importance. We cannot guarantee the adequacy of the protection of the Company’s interests, including the validity or enforceability of the loan and the maintenance of the anticipated priority and perfection of the applicable security interests. Furthermore, the Company cannot assure that claims may not be asserted that might interfere with enforcement of the Company’s rights. In addition, in the event of any default under a secured loan held directly by the Company, the Company will bear a risk of loss of principal to the extent of any deficiency between the value of the collateral and the principal and accrued interest of the secured loan, which could have a material adverse effect on the Company’s cash flow from operations.
 
In the event of a foreclosure, we may assume direct ownership of the underlying asset. The liquidation proceeds upon sale of such asset may not satisfy the entire outstanding balance of principal and interest on the loan, resulting in a loss to us. Any costs or delays involved in the effectuation of a foreclosure of the loan or a liquidation of the underlying property will further reduce the proceeds and thus increase the loss.
 
These risks are magnified for stretch senior loans. Stretch senior loans are senior loans that have a greater loan-to-value ratio than traditional senior loans and typically carry a higher interest rate to compensate for the additional risk.  Because stretch senior loans have a greater loan-to-value ratio, there is potentially less over-collateralization available to cover the entire principal of the stretch senior loan.
 
Mezzanine Debt and Other Junior Securities
 
The mezzanine debt and other junior securities in which we may invest are typically contractually or structurally subordinate to senior indebtedness of the applicable company, or effectively subordinated as a result of being unsecured debt and therefore subject to the prior repayment of secured indebtedness to the extent of the value of the assets pledged as security. In some cases, the subordinated debt held by the Company may be subject to the prior repayment of different classes of senior debt that may be in priority ahead of the debt held by the Company. In the event of financial difficulty on the part of a portfolio company, such class or classes of senior indebtedness ranking prior to the debt held by us, and interest thereon and related expenses, must first be repaid in full before any recovery may be had on the Company’s mezzanine or other subordinated investments. Subordinated investments are characterized by greater credit risks than those associated with the senior or senior secured obligations of the same issuer. In addition, under certain circumstances the holders of the senior indebtedness will have the right to block the payment of interest and principal on the Company’s mezzanine debt and other junior securities and to prevent us from pursuing its remedies on account of such non-payment against the issuer. Further, in the event of any debt restructuring or workout of the indebtedness of any issuer, the holders of the senior indebtedness will likely control the creditor side of such negotiations.
 
Many issuers of mezzanine debt and other junior securities are highly leveraged, and their relatively high debt-to-equity ratios create increased risks that their operations might not generate sufficient cash flow to service their debt obligations. In addition, many issuers of mezzanine debt and other junior securities may be in poor financial condition, experiencing poor operating results, having substantial capital needs or negative net worth or be facing special competitive or product obsolescence problems, and may include companies involved in bankruptcy or other reorganizations or liquidation proceedings. Adverse changes in the financial condition of an issuer, general economic conditions, or both, may impair the ability of such issuer to make payments on the subordinated securities and result in defaults on such securities more quickly than in the case of the senior obligations of such issuer. Mezzanine debt and other junior securities may not be publicly traded, and therefore it may be difficult to obtain information as to the true condition of the issuers. Finally, the market values of certain of mezzanine debt and other junior securities may reflect individual corporate developments.
 
Investments in mezzanine debt and other junior securities may also be in the form of zero-coupon or deferred interest bonds, which are bonds which are issued at a significant discount from face value. The original discount approximates the total amount of interest the bonds will accrue and compound over the period until maturity or the first interest accrual date at a rate of interest reflecting the market rate of the security at the time of issuance. While zero-coupon bonds do not require the periodic payment of interest, deferred interest bonds generally provide for a period of delay before the regular payment of interest begins. These investments typically experience greater volatility in market value due to changes in the interest rates than bonds that provide for regular payments of interest.
 
Potential Early Redemption of Some Investments
 
The terms of loans acquired or originated by the Company may be subject to early prepayment options or similar provisions which, in each case, could result in the Company realizing repayments of such loans earlier than expected, sometimes with no or a nominal prepayment premium. This may happen when there is a decline in interest rates, when the portfolio company’s improved credit or operating or financial performance allows the refinancing of certain classes of debt with lower cost debt or when the general credit market conditions improve. Additionally, prepayments could negatively impact our ability to pay, or the amount of, dividends on our common stock, which could result in a decline in the market price of our shares. The Company’s inability to reinvest such proceeds may materially affect the overall performance.
 
Limited Amortization Requirements
 
We may invest in debt that has limited mandatory amortization and interim repayment requirements. A low level of amortization of any debt, over the life of the investment, may increase the risk that a portfolio company will not be able to repay or refinance the debt held by the Company when it comes due at its final stated maturity.
 
High Yield Debt
 
We may invest in high yield debt, a substantial portion of which may be rated below investment-grade by one or more nationally recognized statistical rating organizations or is unrated but of comparable credit quality to obligations rated below investment-grade, and has greater credit and liquidity risk than more highly rated debt obligations. High yield debt is generally unsecured and may be subordinate to other obligations of the obligor. The lower rating of high yield debt reflect a greater possibility that adverse changes in the financial condition of the obligor or in general economic conditions (including, for example, a substantial period of rising interest rates or declining earnings) or both may impair the ability of the obligor to make payment of principal and interest. Many issuers of high yield debt are highly leveraged, and their relatively high debt-to-equity ratios create increased risks that their operations might not generate sufficient cash flow to service their debt obligations. In addition, many issuers of high yield debt may be in poor financial condition, experiencing poor operating results, having substantial capital needs or negative net worth or be facing special competitive or product obsolescence problems, and may include companies involved in bankruptcy or other reorganizations or liquidation proceedings. Certain of these securities may not be publicly traded, and therefore it may be difficult to obtain information as to the true condition of the issuers. Overall declines in the below investment-grade bond and other markets may adversely affect such issuers by inhibiting their ability to refinance their debt at maturity. High yield debt is often less liquid than higher rated securities, and the market for high yield debt has recently experienced periods of volatility. The market values of certain of this high yield debt may reflect individual corporate developments.
 
High yield debt generally experience greater default rates than is the case for investment-grade securities. We may also invest in equity securities issued by entities with unrated or below investment-grade debt.
 
High yield debt may also be in the form of zero-coupon or deferred interest bonds, which are bonds which are issued at a significant discount from face value. The original discount approximates the total amount of interest the bonds will accrue and compound over the period until maturity or the first interest accrual date at a rate of interest reflecting the market rate of the security at the time of issuance. While zero-coupon bonds do not require the periodic payment of interest, deferred interest bonds generally provide for a period of delay before the regular payment of interest begins. These investments typically experience greater volatility in market value due to changes in the interest rates than bonds that provide for regular payments of interest.
 
Bank Loans
 
We may invest a portion of our investments in loans originated by banks and other financial institutions. The loans invested in by us may include term loans and revolving loans, may pay interest at a fixed or floating rate and may be senior or subordinated. Purchasers of bank loans are predominantly commercial banks, investment funds and investment banks. As secondary market trading volumes for bank loans increase, new bank loans are frequently adopting standardized documentation to facilitate loan trading, which should improve market liquidity. There can be no assurance, however, that future levels of supply and demand in bank loan trading will provide an adequate degree of liquidity, that the current period of illiquidity will not persist or worsen and that the market will not experience periods of significant illiquidity in the future. In addition, the Company may make investments in stressed or distressed bank loans, which are often less liquid than performing bank loans.
 
Compared to securities and to certain other types of financial assets, purchases and sales of loans take relatively longer to settle. This extended settlement process can (i) increase the counterparty credit risk borne by the Company; (ii) leave the Company unable to timely vote, or otherwise act with respect to, loans it has agreed to purchase; (iii) delay the Company from realizing the proceeds of a sale of a loan; (iv) inhibit the Company’s ability to re-sell a loan that it has agreed to purchase if conditions change (leaving us more exposed to price fluctuations); (v) prevent the Company from timely collecting principal and interest payments; and (vi) expose the Company to adverse tax or regulatory consequences. To the extent the extended loan settlement process gives rise to short-term liquidity needs, we may hold cash, sell investments or temporarily borrow from banks or other lenders.
 
In certain circumstances, loans may not be deemed to be securities, and in the event of fraud or misrepresentation by a borrower or an arranger, lenders will not have the protection of the anti-fraud provisions of the federal securities laws, as would be the case for bonds or stocks. Instead, in such cases, lenders generally rely on the contractual provisions in the loan agreement itself, and common-law fraud protections under applicable state law.
 
We may acquire interests in bank loans either directly (by way of sale or assignment) or indirectly (by way of participation). The purchaser of an assignment typically succeeds to all the rights and obligations of the assigning institution and becomes a lender under the credit agreement with respect to the debt obligation; however, its rights can be more restricted than those of the assigning institution. Participation interests in a portion of a debt obligation typically result in a contractual relationship only with the institution participating out the interest, and not with the borrower. In purchasing participations, we generally will have no right to enforce compliance by the borrower with the terms of the loan agreement, nor any rights of set-off against the borrower, and we may not directly benefit from the collateral supporting the debt obligation in which it has purchased the participation. As a result, we will assume the credit risk of both the borrower and the institution selling the participation. The bank loans acquired by us are likely to be below investment-grade.
 
Exposure to Originated Investments
 
We may originate certain of its investments with the expectation of later syndicating a portion of such investment to other affiliated funds or third parties. Prior to such syndication, or if such syndication is not successful, our exposure to the originated investment may exceed the exposure that we intended to have over the long-term or would have had had it purchased such investment in the secondary market rather than originating it.
 
Equity Securities
 
We may in certain limited circumstances invest in equity securities. As with other investments that we may make, the value of equity securities held by us may be adversely affected by actual or perceived negative events relating to the issuer of such securities, the industry or geographic areas in which such issuer operates or the financial markets generally. However, equity securities may be even more susceptible to such events given their subordinate position in the issuer’s capital structure. As such, equity securities generally have greater price volatility than fixed income securities, and the market price of equity securities owned by us is more susceptible to moving up or down in a rapid or unpredictable manner.
 
Highly Volatile Instruments
 
The prices of the financial instruments in which we invest can be highly volatile. Price movements of instruments in which our assets may be invested are influenced by, among other things, interest rates, changing supply and demand relationships, trade, fiscal, monetary and exchange control programs and policies of governments and national and international political and economic events and policies. In addition, governments from time to time intervene, directly and by regulation, in certain markets, particularly those in currencies and financial instrument options. Such intervention is intended to influence prices directly and may, together with other factors, cause all of such markets to move rapidly in the same direction because of, among other things, interest rate fluctuations.
 
Convertible Securities
 
We may in certain limited circumstances invest in convertible securities, which are bonds, debentures, notes, preferred stocks or other securities that may be converted into or exchanged for a specified amount of common stock of the same or different issuer within a particular period of time at a specified price or formula. A convertible security entitles the holder to receive interest that is generally paid or accrued on debt or a dividend that is paid or accrued on preferred stock until the convertible security matures or is redeemed, converted or exchanged. Convertible securities have unique investment characteristics in that they generally (i) have higher yields than common stocks, but lower yields than comparable non-convertible securities, (ii) are less subject to fluctuation in value than the underlying common stock due to their fixed income characteristics and (iii) provide the potential for capital appreciation if the market price of the underlying common stock increases.
 
A convertible security may be subject to redemption at the option of the issuer at a price established in the convertible security’s governing instrument. If a convertible security held by us is called for redemption, we will be required to permit the issuer to redeem the security, convert it into the underlying common stock or sell it to a third party. Any of these actions could have an adverse effect on our ability to achieve its investment objective.
 
Portfolio Purchases
 
We may invest in entire portfolios of assets sold by hedge funds, other business development companies, regional commercial banks, specialty finance companies and other types of financial firms. The performance of individual assets in such a portfolio will vary, and the return on our investment in an entire portfolio may not exceed the returns we would have received had we purchased some, but not all, of the assets contained in such portfolio.
 
Investments in Undervalued Assets
 
We may seek to invest in undervalued assets. The identification of investment opportunities in undervalued assets is a difficult task, and there is no assurance that such opportunities will be successfully recognized or acquired. While investments in undervalued assets offer the opportunity for above-average capital appreciation, these investments involve a high degree of financial risk and can result in substantial losses. We may be required to hold undervalued assets for a substantial period of time with the expectation that the assets will appreciate in value, even though there is no assurance that such value appreciation will take place. Accordingly, we may be forced to sell such undervalued assets at a substantial loss. During the period pending any sale, a portion of our funds would be committed to undervalued assets, thus possibly preventing the Company from investing in other opportunities. In addition, the Company   may finance such purchases with borrowed funds and thus will have to pay interest on such funds during this waiting period. Finally, margin calls and other events related to the Company’s indebtedness could force the Company   to have to sell assets at prices that are less than their fair value.
 
Widening Risk
 
For reasons not necessarily attributable to any of the risks set forth herein, the prices of the securities and other financial assets in which the Company invests may decline substantially. In particular, purchasing assets at what may appear to be “undervalued” levels is no guarantee that these assets will not be trading at even lower levels at a time of valuation or at the time of sale. It is not possible to predict, or to hedge against, such “spread widening” risk.
 
Financially Troubled Companies
 
We may invest in the obligations of companies that are financially troubled and that are either engaged in a reorganization or expect to file for bankruptcy. Investments in financially troubled companies involve significantly greater risk than investments in non-troubled companies, and the repayment of obligations of financially troubled companies is subject to significant uncertainties. Such companies generally are more vulnerable to real or perceived economic changes, political changes or adverse industry developments, and if their financial condition deteriorates, accurate financial and business information may be limited or unavailable. In addition, securities of such companies may be thinly traded and there may be no established secondary or public market. The level of analytical sophistication, both financial and legal, necessary for successful financing to companies experiencing significant business and financial difficulties is unusually high. There is no assurance that we will correctly evaluate the value of the assets collateralizing our loans or the prospects for a successful reorganization or similar action. Additionally, the Company may invest in the securities of financially troubled companies that are non-U.S. issuers. Such non-U.S. issuers may be subject to bankruptcy and reorganization processes and proceedings that are not comparable to those in the United States and that may be less favorable to the rights of lenders.  We may make investments that become distressed due to factors outside the control of the Advisor. There is no assurance that there will be sufficient collateral to cover the value of the loans and/or other investments purchased by us or that there will be a successful reorganization or similar action of the company or investment which becomes distressed. In any reorganization or liquidation proceeding relating to a company in which we invest, we may lose its entire investment, may be required to accept cash or securities with a value less than our original investment and/or may be required to accept payment over an extended period of time. Under these circumstances, the returns generated from the Company’s investments may not compensate the Stockholders adequately for the risks assumed. For example, under certain circumstances, a lender who has inappropriately exercised control of the management and policies of a debtor may have its claims subordinated, or disallowed, or may be found liable for damage suffered by parties as a result of such actions. In addition, under circumstances involving a portfolio company’s insolvency, payments to the Company and distributions by the Company to the Stockholders may be reclaimed if any such payment or distribution is later determined to have been a fraudulent conveyance or a preferential payment.
 
Troubled company investments require active monitoring and may, at times, require significant participation in business strategy or reorganization proceedings by the Advisor. In addition, involvement by the Advisor in a company’s reorganization proceedings could result in the imposition of restrictions limiting the Company’s ability to liquidate its position in the company.
 
Event-Driven Special Situations
 
Our strategies will, from time to time, involve investments in “event-driven” special situations such as recapitalizations, spinoffs, corporate and financial restructurings, litigation or other catalyst-orientated situations. Investments in such securities are often difficult to analyze, and the Company could be incorrect in its assessment of the downside risk associated with an investment, thus resulting in a significant loss. Although the Company intends to utilize appropriate risk management strategies, such strategies cannot fully insulate the Company from the risks inherent in its planned activities. Moreover, in certain situations, the Company may be unable to, or may choose not to, implement risk management strategies because of the costs involved or other relevant circumstances.
 
Lender Liability Considerations and Equitable Subordination
 
In recent years, a number of judicial decisions in the United States have upheld the right of borrowers to sue lending institutions on the basis of various evolving legal theories (collectively termed “lender liability”). Generally, lender liability is founded upon the premise that an institutional lender has violated a duty (whether implied or contractual) of good faith and fair dealing owed to the borrower or has assumed a degree of control over the borrower resulting in creation of a fiduciary duty owed to the borrower or its other creditors or stockholders. Because of the nature of certain of the Company’s investments, the Company could be subject to allegations of lender liability.
 
In addition, under common law principles that in some cases form the basis for lender liability claims, if a lending institution (i) intentionally takes an action that results in the undercapitalization of a borrower to the detriment of other creditors of such borrower, (ii) engages in other inequitable conduct to the detriment of such other creditors, (iii) engages in fraud with respect to, or makes misrepresentations to, such other creditors or (iv) uses its influence as a stockholder to dominate or control a borrower to the detriment of the other creditors of such borrower, a court may elect to subordinate the claim of the offending lending institution to the claims of the disadvantaged creditor or creditors, a remedy called “equitable subordination.” Because of the nature of certain of the Company’s investments, the Company could be subject to claims from creditors of an obligor that the Company’s investments issued by such obligor should be equitably subordinated. A significant number of the Company’s investments will involve investments in which the Company will not be the lead creditor. It is, accordingly, possible that lender liability or equitable subordination claims affecting the Company’s investments could arise without the direct involvement of the Company.
 
If the Company purchases debt securities of an affiliate of a portfolio company in the secondary market at a discount, (i) a court might require the Company to disgorge profit it realizes if the opportunity to purchase such securities at a discount should have been made available to the issuer of such securities or (ii) the Company might be prevented from enforcing such securities at their full face value if the issuer of such securities becomes bankrupt.
 
Fraudulent Conveyance and Preference Considerations
 
Various federal and state laws enacted for the protection of creditors may apply to the purchase of the Company’s investments, which constitute the primary assets of the Company, by virtue of the Company’s role as a creditor with respect to the borrowers under such investments. If a court in a lawsuit brought by an unpaid creditor or representative of creditors of a borrower, such as a trustee in bankruptcy or the borrower as debtor-in-possession, were to find that the borrower did not receive fair consideration or reasonably equivalent value for incurring indebtedness evidenced by an investment and the grant of any security interest or other lien securing such investment, and, after giving effect to the incurring of such indebtedness, the borrower (i) was insolvent, (ii) was engaged in a business for which the assets remaining in such borrower constituted unreasonably small capital or (iii) intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they mature, such court could invalidate, in whole or in part, such indebtedness and such security interest or other lien as fraudulent conveyances, could subordinate such indebtedness to existing or future creditors of the borrower or could allow the borrower to recover amounts previously paid by the borrower to the creditor (including to the Company) in satisfaction of such indebtedness or proceeds of such security interest or other lien previously applied in satisfaction of such indebtedness. In addition, in the event of the insolvency of an issuer of an investment, payments made on the Company’s investment could be subject to avoidance as a “preference” if made within a certain period of time (which may be as long as one year) before insolvency depending on a number of factors, including the amount of equity of the borrower owned by the Company and its affiliates and any contractual arrangement between the borrower, on the one hand, and the Company and its affiliates, on the other hand. The measure of insolvency for purposes of the foregoing will vary depending on the law of the jurisdiction which is being applied. Generally, however, a borrower would be considered insolvent at a particular time if the sum of its debts was greater than all of its assets at a fair valuation or if the then-present fair saleable value of its assets was less than the amount that would be required to pay its probable liabilities on its then-existing debts as they became absolute and matured. There can be no assurance as to what standard a court would apply in order to determine whether a borrower was insolvent after giving effect to the incurrence of the loan or that, regardless of the method of evaluation, a court would not determine that the borrower was “insolvent” upon giving effect to such incurrence. In general, if payments on an investment are avoidable, whether as fraudulent conveyances or preferences, such payments can be recaptured either from the initial recipient (such as the Company) or from subsequent transferees of such payments.
 
Participation on Creditors’ Committees
 
Our Advisor may participate on committees formed by creditors to negotiate the management of financially troubled companies that may or may not be in bankruptcy or the Advisor may seek to negotiate directly with the debtors with respect to restructuring issues. If the Advisor does join a creditors’ committee, the participants of the committee would be interested in obtaining an outcome that is in their respective individual best interests and there can be no assurance of obtaining results most favorable to the Company in such proceedings. By participating on such committees, the Advisor may be deemed to have duties to other creditors represented by the committees, which might expose the Advisor to liability to such other creditors who disagree with the Advisor’s actions.
 
While the Advisor intends to comply with all applicable securities laws and to make judgments concerning restrictions on trading in good faith, the Advisor may trade in a portfolio company’s securities while engaged in the portfolio company’s restructuring activities. Such trading creates a risk of litigation and liability that may cause the Advisor and/or the Company to incur significant legal fees and potential losses.
 
Projections
 
Our Advisor may rely upon projections, forecasts or estimates developed by us or a portfolio company in which we are invested concerning the portfolio company’s future performance and cash flow. Projections, forecasts and estimates are forward-looking statements and are based upon certain assumptions. Actual events are difficult to predict and beyond our control. Actual events may differ from those assumed. Some important factors which could cause actual results to differ materially from those in any forward-looking statements include changes in interest rates; domestic and foreign business, market, financial or legal conditions; differences in the actual allocation of our investments among asset groups from that described herein; the degree to which our investments are hedged and the effectiveness of such hedges, among others. Accordingly, there can be no assurance that estimated returns or projections can be realized or that actual returns or results will not be materially lower than those estimated therein.
 
Third Party Litigation
 
In addition to litigation relating to the bankruptcy process, our investment activities subject us to the normal risks of becoming involved in litigation by third parties. This risk is somewhat greater where we exercise control or significant influence over a portfolio company’s direction. The expense of defending against claims by third parties and paying any amounts pursuant to settlements or judgments would generally be borne by us and would reduce net assets.
 
Proportion of Assets that May Be Invested in Securities of a Single Issuer
 
We are classified as a non-diversified investment company within the meaning of the 1940 Act, which means that we are not limited by the 1940 Act with respect to the proportion of our assets that we may invest in securities of a single issuer. Beyond the asset diversification requirements associated with our qualification as a RIC under the Code, we do not have fixed guidelines for diversification. As such, the Company’s assets may not be diversified. Any such non-diversification would increase the risk of loss to the Company if there was a decline in the market value of any loan in which the Company   had invested a large percentage of its assets. If a large portion of the assets of the Company   is held in cash or similarly liquid form, the Company’s performance might be adversely affected. Investment in a non-diversified fund will generally entail greater risks than investment in a “diversified” fund. The Company may have a more concentrated or less broad and varied portfolio than an average mutual fund. While a more concentrated portfolio can have good results when a manager is correct, it can also cause a portfolio such as the Company’s to have higher volatility. We may also be more susceptible to any single economic or regulatory occurrence than a diversified investment company.
 
Potential Failure to Make Follow-On Investments in Portfolio Companies
 
Following its initial investment in a portfolio company, the Company may decide to provide additional funds to such portfolio company, seeking to:
 
• increase or maintain in whole or in part our position as a creditor or equity ownership percentage in a portfolio company;
 
• exercise warrants, options or convertible securities that were acquired in the original or subsequent financing; or
 
• preserve or enhance the value of our investment.
 
There is no assurance that we will make follow-on investments or that we will have sufficient funds to make all or any of such investments. Even if we have sufficient capital to make a desired follow-on investment, we may elect not to make a follow-on investment because we may not want to increase our level of risk, because we prefer other opportunities or because we are inhibited by compliance with BDC requirements of the 1940 Act or the desire to maintain our qualification as a RIC. Our ability to make follow-on investments may also be limited by Bain Capital Credit’s allocation policy. Any decision by us not to make follow-on investments or its inability to make such investments may have a substantial adverse effect on a portfolio company in need of such an investment. Additionally, a failure to make such investments may result in a lost opportunity for us to increase its participation in a successful portfolio company or the dilution of our ownership in a portfolio company if a third party invests in the portfolio company.
 
Potential Impact of Not Holding Controlling Equity Interests in Portfolio Companies
 
We do not currently intend to hold controlling equity positions in our portfolio companies. As a result, we will be subject to the risk that a portfolio company may make business decisions with which we disagree, and that the management and/or stockholders of a portfolio company may take risks or otherwise act in ways that are adverse to our interests. Due to the lack of liquidity of the debt and equity investments that we expect to hold in our portfolio companies, we may not be able to dispose of our investments in the event we disagree with the actions of a portfolio company and may therefore suffer a decrease in the value of our investments.
 
Defaults By Portfolio Companies
 
A portfolio company’s failure to satisfy financial or operating covenants imposed by us or other lenders could lead to defaults and, potentially, termination of its loans and foreclosure on its assets. This could trigger cross-defaults under other agreements and jeopardize such portfolio company’s ability to meet its obligations under the loans or debt or equity securities that we hold. We may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms, which may include the waiver of certain financial covenants, with a defaulting portfolio company.
 
Potential Incurrence of Debt by Portfolio Companies That Ranks Equally With, or Senior to, Our Investments
 
The characterization of certain of our investments as senior debt or senior secured debt does not mean that such debt will necessarily be repaid in priority to all other obligations of the businesses in which we invest. Furthermore, debt and other liabilities incurred by nonguarantor subsidiaries of the borrowers of senior secured loans made by us may be structurally senior to the debt held by us. In the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company, the debt and other liabilities of such subsidiaries could be repaid in full before any distribution can be made to an obligor of the senior secured loans held by us. Finally, portfolio companies will typically incur trade credit and other liabilities or indebtedness, which by their terms may provide that their holders are entitled to receive principal payments on or before the dates payments are due in respect of the senior secured loans held by us.
 
Where we hold a first lien to secure senior indebtedness, the portfolio companies may be permitted to issue other senior loans with liens that rank junior to the first liens granted to us. The intercreditor rights of the holders of such other junior lien debt may, in any liquidation, reorganization, insolvency, dissolution or bankruptcy of such a portfolio company, affect the recovery that we would have been able to achieve in the absence of such other debt.
 
Additionally, certain loans that we may make to portfolio companies may be secured on a second priority basis by the same collateral securing senior secured debt of such companies. The first priority liens on the collateral will secure the portfolio company’s obligations under any outstanding senior debt and may secure certain other future debt that may be permitted to be incurred by the portfolio company under the agreements governing the loans. The holders of obligations secured by first priority liens on the collateral will generally control the liquidation of, and be entitled to receive proceeds from, any realization of the collateral to repay their obligations in full before us. In addition, the value of the collateral in the event of liquidation will depend on market and economic conditions, the availability of buyers and other factors. There can be no assurance that the proceeds, if any, from sales of all of the collateral would be sufficient to satisfy the loan obligations secured by the second priority liens after payment in full of all obligations secured by the first priority liens on the collateral. If such proceeds were not sufficient to repay amounts outstanding under the loan obligations secured by the second priority liens, then we, to the extent not repaid from the proceeds of the sale of the collateral, will only have an unsecured claim against the portfolio company’s remaining assets, if any.
 
Even where the senior loans held by us are secured by a perfected lien over a substantial portion of the assets of a portfolio company and its subsidiaries, the portfolio company and its subsidiaries will often be able to incur a substantial amount of additional indebtedness, which may have an exclusive lien over particular assets. For example, debt and other liabilities incurred by non-guarantor subsidiaries of portfolio companies will be structurally senior to the debt held by us. Accordingly, any such debt and other liabilities of such subsidiaries would, in the event of liquidation, dissolution, insolvency, reorganization or bankruptcy of such subsidiary, be repaid in full before any distributions to an obligor of the loans held by us. Furthermore, these other assets over which other lenders have a lien may be substantially more liquid or valuable than the assets over which we have a lien.
 
The rights we may have with respect to the collateral securing the loans we make to our portfolio companies with senior debt outstanding may also be limited pursuant to the terms of one or more intercreditor agreements that we enter into with the holders of such senior debt. Under a typical intercreditor agreement, at any time that obligations that have the benefit of the first priority liens are outstanding, any of the following actions that may be taken in respect of the collateral will be at the direction of the holders of the obligations secured by the first priority liens:
 
• the ability to cause the commencement of enforcement proceedings against the collateral;
 
• the ability to control the conduct of such proceedings;
 
• the approval of amendments to collateral documents;
 
• releases of liens on the collateral; and
 
• waivers of past defaults under collateral documents.
 
We may not have the ability to control or direct such actions, even if our rights are adversely affected.
 
Subordinated Investments
 
We may make subordinated investments that rank below other obligations of the obligor in right of payment. Subordinated investments are subject to greater risk of default than senior obligations as a result of adverse changes in the financial condition of the obligor or in general economic conditions. If we make a subordinated investment in a portfolio company, the portfolio company may be highly leveraged, and its relatively high debt-to-equity ratio may create increased risks that its operations might not generate sufficient cash flow to service all of its debt obligations.
 
Contingent Liabilities Resulting from the Disposition of Investments
 
We may from time to time incur contingent liabilities in connection with an investment. For example, we may acquire a revolving credit or delayed draw term facility that has not yet been fully drawn or may originate or make a secondary purchase of a revolving credit facility. If the borrower subsequently draws down on the facility, we will be obligated to fund the amounts due. In connection with the disposition of an investment in loans and private securities, we may be required to make representations about the business and financial affairs of the portfolio company typical of those made in connection with the sale of a business. We may also be required to indemnify the purchasers of such investment to the extent that any such representations turn out to be inaccurate or with respect to potential liabilities. We may incur numerous other types of contingent liabilities. There can be no assurance that we will adequately reserve for its contingent liabilities and that such liabilities will not have an adverse effect on us.
 
Additional Risks of Hedging Transactions and/or Investments in Non-U.S. Securities
 
The 1940 Act generally requires that at least 70% of our investments be in issuers each of whom is organized under the laws of, and has its principal place of business in, any state of the United States, the District of Columbia, Puerto Rico, the Virgin Islands or any other possession of the United States. However, our portfolio may include debt securities of non-U.S. companies, including emerging market issuers, to the limited extent such transactions and investments would not cause us to violate the 1940 Act. We expect to invest in the securities of non-U.S. issuers. Investing in loans and securities of non-U.S. issuers involves many risks including economic, social, political, financial, tax and security conditions in the non-U.S. market, potential inflationary economic environments, less liquid markets and regulation by foreign governments. There may be less information publicly available about a non-U.S. issuer than about a U.S. issuer, and non-U.S. issuers may not be subject to accounting, auditing and financial reporting standards and practices comparable to those in the United States. In addition, with respect to certain countries, there is a possibility of expropriation, imposition of non-U.S. withholding or other taxes on dividends, interest, capital gains or other income, limitations on the removal of funds or other assets of the Company , political or social instability or diplomatic developments that could affect investments in those countries. An issuer of securities may be domiciled in a country other than the country in whose currency the instrument is denominated. The values and relative yields of investments in the securities markets of different countries, and their associated risks, are expected to change independently of each other.
 
Bankruptcy law and process in non-U.S. jurisdictions may differ substantially from that in the United States, which may result in greater uncertainty as to the rights of creditors, the enforceability of such rights, reorganization timing and the classification, seniority and treatment of claims. In certain developing countries, although bankruptcy laws have been enacted, the process for reorganization remains highly uncertain, while other developing countries may have no bankruptcy laws enacted, adding further uncertainty to the process for reorganization.
 
We are authorized to use various investment strategies to hedge interest rate or currency exchange risks. These strategies are generally accepted as portfolio management techniques and are regularly used by many investment funds and other institutional investors. Techniques and instruments may change over time as new instruments and strategies are developed or regulatory changes occur. We may use any or all such types of interest rate hedging transactions and currency hedging transactions at any time and no particular strategy will dictate the use of one transaction rather than another. The choice of any particular interest rate hedging transactions and currency hedging transactions will be a function of numerous variables, including market conditions. Investments or liabilities of the Company may be denominated in currencies other than the U.S. dollar, and hence the value of such investments, or the amount of such liabilities, will depend in part on the relative strength of the U.S. dollar. We may be affected favorably or unfavorably by exchange control regulations or changes in the exchange rate between foreign currencies and the U.S. dollar. Changes in foreign currency exchange rates may also affect the value of dividends and interest earned as well as the level of gains and losses realized on the sale of securities. The rates of exchange between the U.S. dollar and other currencies are affected by many factors, including forces of supply and demand in the foreign exchange markets. These rates are also affected by the international balance of payments and other economic and financial conditions, government intervention, speculation and other factors. We are not obligated to engage in any currency hedging operations, and there can be no assurance as to the success of any hedging operations that we may implement.
 
Although we intend to engage in any interest rate hedging transactions and currency hedging transactions only for hedging purposes and not for speculation, use of interest rate hedging transactions and currency hedging transactions involves certain inherent risks. These risks include (i) the possibility that the market will move in a manner or direction that would have resulted in gain for us had an interest rate hedging transaction or currency hedging transaction not been utilized, in which case it would have been better had we not engaged in the interest rate hedging transaction or currency hedging transaction, (ii) the risk of imperfect correlation between the risk sought to be hedged and the interest rate hedging transaction or currency hedging transaction utilized, (iii) potential illiquidity for the hedging instrument utilized, which may make it difficult for us to close-out or unwind an interest rate hedging transaction or currency hedging transaction and (iv) credit risk with respect to the counterparty to the interest rate hedging transaction or currency hedging transaction. In addition, it might not be possible for us to hedge fully or perfectly against currency fluctuations affecting the value of securities denominated in non-U.S. currencies because the value of those loans and securities would likely fluctuate as a result of factors not related to currency fluctuations.
 
We may also enter into certain hedging and short sale transactions for the purpose of protecting the market value of an investment of the Company for a period of time without having to currently dispose of such investment. Such defensive hedge transactions may be entered into when the Company is legally restricted from selling an investment or when the Company otherwise determines that it is advisable to decrease its exposure to the risk of a decline in the market value of an investment. Such defensive hedging transactions may expose the Company to the counterparty’s credit risk. There also can be no assurance that the Company will accurately assess the risk of a market value decline with respect to an investment or enter into an appropriate defensive hedge transaction to protect against such risk. Furthermore, the Company is in no event obligated to enter into any defensive hedge transaction. The Company may from time to time employ various investment programs, including the use of derivatives, short sales, swap transactions, currency hedging transactions, securities lending agreements and repurchase agreements. There can be no assurance that any such investment program will be undertaken successfully.
 
Realizing Gains From Equity Investments
 
When we invest in loans and debt securities, we may acquire warrants or other equity securities of portfolio companies as well. We may also invest in equity securities directly. To the extent we hold equity investments, we will attempt to dispose of them and realize gains upon our disposition of them. However, the equity interests we receive may not appreciate in value and, may decline in value. As a result, we may not be able to realize gains from our equity interests, and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset any other losses we experience.
 
Risks Associated with OID and PIK Interest Income
 
Our investments may include OID and PIK instruments. To the extent OID and PIK interest income constitute a portion of our income, we will be exposed to risks associated with such income being required to be included in an accounting income and taxable income prior to receipt of cash, including the following:
 
• OID instruments and PIK securities may have unreliable valuations because the accretion of OID as interest income and the continuing accruals of PIK securities require judgments about their collectability and the collectability of deferred payments and the value of any associated collateral.
 
• OID instruments may create heightened credit risks because the inducement to the borrower to accept higher interest rates in exchange for the deferral of cash payments typically represents, to some extent, speculation on the part of the borrower.
 
• For accounting purposes, cash distributions to stockholders that include a component of accreted OID income do not come from paid-in capital, although they may be paid from the offering proceeds. Thus, although a distribution of accreted OID income may come from the cash invested by the stockholders, the 1940 Act does not require that stockholders be given notice of this fact.
 
• The higher interest rates on PIK securities reflects the payment deferral and increased credit risk associated with such instruments and PIK securities generally represent a significantly higher credit risk than coupon loans.
 
• The presence of accreted OID income and PIK interest income create the risk of non-refundable cash payments to the Advisor in the form of incentive fees on income based on non-cash accreted OID income and PIK interest income accruals that may never be realized.
 
• Even if accounting conditions are met, borrowers on such securities could still default when the Company’s actual collection is expected to occur at the maturity of the obligation.
 
• PIK interest has the effect of generating investment income and increasing the incentive fees payable at a compounding rate. In addition, the deferral of PIK interest also reduces the loan-to-value ratio at a compounding rate.
 
Federal Income Tax Risks
 
Maintaining our Qualification as a RIC and Investments Made through Taxable Subsidiaries
 
To maintain RIC tax treatment under the Code, we must meet the following minimum annual distribution, income source and asset diversification requirements. See “Certain U.S. Federal Income Tax Consequences.”  The Annual Distribution Requirement will be satisfied if we distribute dividends to our stockholders in respect of each taxable year of an amount generally at least equal to 90% of our investment company taxable income, determined without regard to any deduction for dividends paid. In this regard, a RIC may, in certain cases, satisfy the Annual Distribution Requirement by distributing dividends relating to a taxable year after the close of such taxable year under the “spillback dividend” provisions of Subchapter M of the Code. We would be taxed, at regular corporate rates, on any retained income and/or gains, including any short-term capital gains or long-term capital gains. We must also satisfy the Excise Tax Avoidance Requirement, which is an additional distribution requirement with respect to each calendar year in order to avoid a 4% excise tax on the amount of any under-distribution. Because we may use debt financing, we are subject to (i) an asset coverage ratio requirement under the 1940 Act and may, in the future, be subject to (ii) certain financial covenants under loan and credit agreements that could, under certain circumstances, restrict us from making distributions necessary to satisfy the distribution requirements. If we are unable to obtain cash from other sources, or chose or be required to retain a portion of our taxable income or gains, we could (1) be required to pay excise tax and (2) fail to qualify for RIC tax treatment, and thus become subject to corporate-level income tax on our taxable income (including gains).
 
The 90% Income Test will be satisfied if we earn at least 90% of our gross income each taxable year from dividends, interest, gains from the sale of stock or securities, or other income derived from the business of investing in stock or securities.  The Diversification Tests will be satisfied if we meet certain asset diversification requirements at the end of each quarter of our taxable year. To satisfy the Diversification Tests, at least 50% of the value of our assets at the close of each quarter of each taxable year must consist of cash, cash equivalents (including receivables), U.S. government securities, securities of other RICs, and other acceptable securities; and no more than 25% of the value of our assets can be invested in the securities, other than U.S. government securities or securities of other RICs, of one issuer, of two or more issuers that are controlled, as determined under applicable Code rules, by us and that are engaged in the same or similar or related trades or businesses or of certain “qualified publicly traded partnerships.” Failure to meet these requirements may result in our having to dispose of certain investments quickly in order to prevent the loss of RIC status. Because most of our investments will be in private companies, and therefore will be relatively illiquid, any such dispositions could be made at disadvantageous prices and could result in substantial losses.
 
We may invest in certain debt and equity investments through taxable subsidiaries and the net taxable income of these taxable subsidiaries will be subject to federal and state corporate income taxes. We also may invest in certain foreign debt and equity investments which could be subject to foreign taxes (such as income tax, withholding, and value added taxes).  If we fail to qualify for or maintain RIC tax treatment for any reason and are subject to corporate income tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income available for distribution, and the amount of our distributions.
 
Realizing Income or Gains Prior to the Receipt of Cash Representing such Income or Gains
 
For federal income tax purposes, we may be required to recognize taxable income in circumstances in which we do not receive a corresponding payment in cash. For example, since we will likely hold debt obligations that are treated under applicable tax rules as having OID (such as debt instruments with PIK, secondary market purchases of debt securities at discount to par, interest or, in certain cases, increasing interest rates or debt instruments that were issued with warrants), we must include in income each taxable year a portion of the OID that accrues over the life of the obligation, regardless of whether cash representing such income is received by us in the same taxable year. We may also have to include in income other amounts that we have not yet received in cash, such as unrealized appreciation for foreign currency forward contracts and deferred loan origination fees that are paid after origination of the loan or are paid in non-cash compensation such as warrants or stock. Furthermore, we may invest in non-U.S. corporations (or other non-U.S. entities treated as corporations for U.S. federal income tax purposes) that could be treated under the Code and U.S. Treasury regulations as “passive foreign investment companies” and/or “controlled foreign corporations.” The rules relating to investment in these types of non-U.S. entities are designed to ensure that U.S. taxpayers are either, in effect, taxed currently (or on an accelerated basis with respect to corporate level events) or taxed at increased tax rates at distribution or disposition. In certain circumstances this could require us to recognize income which we would need to consider in connection with satisfying our annual distribution requirements where we do not receive a corresponding payment in cash.
 
Unrealized appreciation on derivative financial instruments, such as foreign currency forward contracts, may be included in taxable income while the receipt of cash may occur in a subsequent period when the related contract expires. Any unrealized depreciation on investments that the foreign currency forward contracts are designed to hedge are not currently deductible for tax purposes. This can result in increased taxable income whereby we may not have sufficient cash to pay distributions or we may opt to retain such taxable income and pay a 4% excise tax. In such case we could still rely upon the “spillback provisions” and distribute such taxable income as dividends to our stockholders in the following taxable year in order to maintain our ability to be subject to tax as a RIC.
 
Further, we may elect to recognize market discount with respect to debt obligations acquired in the secondary market and include such amounts currently in our investment company taxable income, instead of upon disposition of such debt obligations, as an election not to do so would limit our ability to deduct interest expense for tax purposes. Because such market discount or other amounts accrued will be included in our investment company taxable income for the taxable year of the accrual, we may be required to make a distribution to our stockholders in order to satisfy the annual distribution requirement associated with maintaining RIC tax treatment under the Code, even if we will not have received any corresponding cash amount. As a result, we may have difficulty meeting the Annual Distribution Requirement and be subject to RIC tax treatment under the Code. We may have to sell some of our investments at times and/or at prices we would not consider advantageous, raise additional debt or equity capital, make a partial share distribution, or forgo new investment opportunities for this purpose. If we are not able to obtain cash from other sources, and choose not to make a qualifying share distribution, we may fail to qualify for RIC tax treatment and thus become subject to corporate-level income tax.
 
Risks Relating to This Offering
 
Potential Difficulty Sourcing Investment Opportunities
 
We have not identified the potential investments for our portfolio that we will acquire following this offering. We cannot assure investors that we will be able to locate a sufficient number of suitable investment opportunities to allow us to deploy all capital commitments successfully. In addition, privately negotiated investments in loans and illiquid securities of private middle-market companies require substantial due diligence and structuring, and we cannot assure investors that we will achieve our anticipated investment pace. As a result, investors will be unable to evaluate any future portfolio company investments prior to purchasing our shares of common stock. Additionally, our Advisor will select our investments subsequent to the closing of this offering, and our stockholders will have no input with respect to such investment decisions. These factors increase the uncertainty, and thus the risk, of investing in our common stock. To the extent we are unable to deploy all capital commitments, our investment income and, in turn, our results of operations, will likely be materially adversely affected.
 
We generally expect to call capital for investment purposes only at the time we identify an investment opportunity. Notwithstanding the foregoing, we expect to deploy all proceeds from each capital call for investment purposes within two years of calling such capital. Until such time as we invest the proceeds of such capital calls in portfolio companies, we will invest these amounts in cash, cash equivalents, U.S. government securities and high-quality debt investments that mature in one year or less from the date of investment. We expect these temporary investments to earn yields substantially lower than the income that we expect to receive in respect of investments in secured debt (including senior secured, unitranche and second lien debt) and unsecured debt (including senior unsecured and subordinated debt), as well as related equity securities.
 
Risks Regarding Distributions
 
We intend to make distributions on a quarterly basis to our stockholders out of assets legally available for distribution. We cannot assure investors that we will achieve investment results that will allow us to make a specified level of cash distributions or year-to-year increases in cash distributions. Our ability to pay distributions might be adversely affected by the impact of one or more of the risk factors described in this Registration Statement. Due to the asset coverage test applicable to us under the 1940 Act as a BDC, we may be limited in our ability to make distributions. In addition, if we enter into a Credit Facility or any other borrowing facility, for so long as such facility is outstanding, we anticipate that we may be required by its terms to use all payments of interest and principal that we receive from our current investments as well as any proceeds received from the sale of our current investments to repay amounts outstanding thereunder, which could adversely affect our ability to make distributions.
 
Furthermore, the tax treatment and characterization of our distributions may vary significantly from time to time due to the nature of our investments. The ultimate tax characterization of our distributions made during a taxable year may not finally be determined until after the end of that taxable year. We may make distributions during a taxable year that exceed our investment company taxable income and net capital gains for that taxable year. In such a situation, the amount by which our total distributions exceed investment company taxable income and net capital gains generally would be treated as a return of capital up to the amount of a stockholder’s tax basis in the shares, with any amounts exceeding such tax basis treated as a gain from the sale or exchange of such shares. A return of capital generally is a return of a stockholder’s investment rather than a return of earnings or gains derived from our investment activities. Moreover, we may pay all or a substantial portion of our distributions from the proceeds of the sale of shares of our common stock or from borrowings in anticipation of future cash flow, which could constitute a return of stockholders’ capital and will lower such stockholders’ tax basis in our shares, which may result in increased tax liability to stockholders when they sell such shares.
 
Above Average Degree of Risk Associated with an Investment in Our Common Stock
 
The investments we make in accordance with our investment objective may result in a higher amount of risk, and higher volatility or loss of principal, than alternative investment options. Our investments in portfolio companies may be speculative and, therefore, an investment in our common stock may not be suitable for someone with lower risk tolerance.
 
Limited Liquidity of an Investment in Our Common Stock
 
Our shares of common stock constitute illiquid investments for which there is not, and will likely not be, a secondary market at any time prior to a public offering and listing of our shares on a national securities exchange. There can be no guarantee that we will conduct a public offering and list our shares on a national securities exchange. Investment in the Company is suitable only for sophisticated investors and requires the financial ability and willingness to accept the high risks and lack of liquidity inherent in an investment in the Company.
 
Severe Economic Consequences of Defaulting Stockholders
 
If stockholders fail to fund their commitment obligations or to make required capital contributions when due, the Company’s ability to complete its investment program or otherwise continue operations may be substantially impaired. A stockholder’s failure to fund such amounts when due causes that stockholder to become a defaulting stockholder. If a substantial number of stockholders become defaulting stockholders, this may severely limit opportunities for investment diversification and would likely reduce returns to the Company and restrict the Company’s ability to meet loan obligations. Any single defaulting stockholder could cause substantial costs to be incurred by the Company if such default causes the Company to fail to meet its contractual obligations or if the Company must pursue remedial action against such stockholder. In the event a stockholder fails to make a required capital contribution when due, it may be subject to various remedies, including, without limitation, forfeiture of its right to participate in purchasing additional shares on any future drawdown date or otherwise participate in any future investments of the Company.  Without limitation on the rights the Company may have against the defaulting stockholder, the Company may call for additional capital contributions from non-defaulting stockholders to make up any shortfall. The non-defaulting stockholders could therefore be required to fund any shortfall up to their remaining capital commitments, without regard to the underlying value of their investment.
 
If the Company fails to meet its contractual obligations related to a portfolio investment due to a defaulting stockholder, the relevant portfolio company may have a cause of action against the Company, which may include a claim against assets of the Company other than the Company’s interest in such portfolio company.  A creditor of the Company (including a portfolio company with respect to which the Company has failed to meet its contractual obligations) will not be bound to satisfy its claims from the assets attributable to a particular portfolio investment and such creditor generally may seek to satisfy its claims from the assets of the Company as a whole.  As a result, if a creditor’s claims relating to a particular portfolio investment exceed the net assets attributable to that portfolio investment, the remaining assets of the Company will likely be subject to such claim.
 
Item 2. Financial Information
 
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
 
Overview
 
We were incorporated under the laws of the State of Delaware on October 5, 2015. We intend to file an election to be treated as a business development company under the 1940 Act, and as a regulated investment company for federal income tax purposes. As such, we will be required to comply with various regulatory requirements, such as the requirement to invest at least 70% of our assets in “qualifying assets,” source of income limitations, asset diversification requirements, and the requirement to distribute annually at least 90% of our taxable income and tax-exempt interest. See “ Item 1(c). Description of Business—Regulation as a Public Business Development Company” and “Item 1(c). Description of Business—Certain U.S. Federal Income Tax Consequences— Election to be Taxed as a RIC .”
 
The Company is currently in the development stage and has not commenced commercial operations. Since inception, there has been no activity other than an initial $1 capital contribution received from BCSFA, our initial stockholder, in exchange for 1,000 shares of our common stock. To date our efforts have been limited to organizational and initial operating activities, the cost of which has been borne by the Advisor.
 
We have agreed to repay the Advisor for initial organization costs incurred prior to the commencement of our operations up to a maximum of $1.5 million and operating costs incurred prior to the commencement of our operations.
 
Revenues
 
We expect to generate revenues primarily in the form of interest income from the investments we hold in addition to income from dividends on direct equity investments, capital gains on the sales of loans and debt and equity securities and various loan origination and other fees. The debt we invest in will typically not be rated by any rating agency, but if it were, it is likely that such debt would be rated below investment grade.
 
Expenses
 
Our primary operating expenses will include the payment of fees to the Advisor under the Investment Advisory Agreement, our allocable portion of overhead expenses under the Administration Agreement and other operating costs described below. We will bear all other out-of-pocket costs and expenses of our operations and transactions, including:
 
· our initial organization costs incurred prior to the commencement of our operations up to a maximum of $1.5 million;
 
· operating costs incurred prior to the commencement of our operations;
 
· the cost of calculating our net asset value, including the cost of any third-party valuation services;
 
· the cost of effecting sales and repurchases of shares of our common stock and other securities;
 
· fees payable to third parties relating to making investments, including our Advisor’s or its affiliates’ travel expenses, research costs and out-of-pocket fees and expenses associated with performing due diligence and reviews of prospective investments;
 
· interest expense and other costs associated with Company indebtedness;
 
· transfer agent and custodial fees;
 
· out-of-pocket fees and expenses associated with marketing efforts;
 
· federal and state registration fees and any stock exchange listing fees;
 
· U.S. federal, state and local taxes;
 
· independent directors’ fees and expenses;
 
· brokerage commissions and markups;
 
· fidelity bond, directors’ and officers’ liability insurance and other insurance premiums;
 
· direct costs, such as printing, mailing, long distance telephone and staff;
 
· fees and expenses associated with independent audits and outside legal costs;
 
· costs associated with our reporting and compliance obligations under the 1940 Act and other applicable U.S. federal and state securities laws; and
 
· other expenses incurred by the Administrator or us in connection with administering our business, including payments under the Administration Agreement that will be based upon our allocable portion (subject to the review and approval of our Board) of overhead.
 
All of the foregoing expenses are borne indirectly by our stockholders.
 
We have agreed to repay the Advisor for initial organization costs incurred prior to the commencement of our operations up to a maximum of $1.5 million and operating costs incurred prior to the commencement of our operations.
 
From time to time, the Administrator or its affiliates may pay third-party providers of goods or services . We   will reimburse the Administrator or such affiliates thereof for any such amounts paid on our behalf. The Administrator will waive its right to be reimbursed in the event that such reimbursements would cause any distributions to our stockholders to constitute a return of capital. All of these expenses will ultimately be borne by our stockholders.
 
We may also enter into a credit facility or other debt arrangements to partially fund our operations, and could incur costs and expenses including commitment, origination, or structuring fees and the related interest costs associated with any amounts borrowed.
 
Hedging
 
The Company may enter into currency hedging contracts, interest rate hedging agreements such as futures, options, swaps and forward contracts, and credit hedging contracts, such as credit default swaps. However, no assurance can be given that such hedging transactions will be entered into or, if they are, that they will be effective.
 
Financial Condition, Liquidity and Capital Resources
 
As we have not yet commenced commercial activities, the only transaction to date has been the receipt of an initial capital contribution of $1 from BCSFA, our initial stockholder, in exchange for 1,000 shares of our securities. We expect to generate cash from (1) future offerings of our common or preferred stock, (2) cash flows from operations and (3) borrowings from banks or other lenders. We will seek to enter into any bank debt, credit facility or other financing arrangements on at least customary market terms; however, we cannot assure investors we will be able to do so.
 
Our primary use of cash will be for (1) investments in portfolio companies and other investments to comply with certain portfolio diversification requirements, (2) the cost of operations (including paying the Advisor), (3) debt service of any borrowings and (4) cash distributions to the holders of our stock.
 
Quantitative and Qualitative Disclosures about Market Risk
 
We are subject to financial market risks, including changes in interest rates. We will generally invest in illiquid loans and securities including debt and equity securities of middle-market companies. Because we expect that there will not be a readily available market for many of the investments in our portfolio, we expect to value many of our portfolio investments at fair value as determined in good faith by our Board using a documented valuation policy and a consistently applied valuation process. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material. See “ Item 9. Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters—Valuation of Investments .”
 
Item 3. Properties
 
We maintain our principal executive office at 200 Clarendon Street, 37th Floor, Boston, Massachusetts 02116. We do not own any real estate. We believe that our present facilities are adequate to meet our current needs. If new or additional space is required, we believe that adequate facilities are available at competitive prices in the same area.
 
Item 4.
Security Ownership of Certain Beneficial Owners and Management.

In conjunction with our initial incorporation, BCSFA purchased 1,000 shares of common stock of the Company at a price of $0.001 per share as our initial capital. The Company intends to redeem these shares at cost immediately prior to the initial capital drawdown date and the issuance of shares of our common stock pursuant to the Private Offering.

Item 5.
Directors and Executive Officers.

Our business and affairs are managed under the direction of our Board. Our Board consists of five members, three of whom are Independent Directors. Our Board elects our officers, who serve at the discretion of our Board. The responsibilities of our Board include quarterly determinations of fair value of our assets, corporate governance activities, oversight of our financing arrangements and oversight of our investment activities. Oversight of our investment activities extends to oversight of the risk management processes employed by the Advisor as part of its day-to-day management of our investment activities. Our Board anticipates reviewing risk management processes at both regular and special board meetings throughout the year, consulting with appropriate representatives of Bain Capital Credit as necessary and periodically requesting the production of risk management reports or presentations. The goal of our Board’s risk oversight function is to ensure that the risks associated with our investment activities are accurately identified, thoroughly investigated and responsibly addressed. Investors should note, however, that our Board’s oversight function cannot eliminate all risks or ensure that particular events do not adversely affect the value of investments.

Board of Directors and Executive Officers

We have adopted provisions in our Certificate of Incorporation that divide our Board into three classes. At each annual meeting, directors will be elected for staggered terms of three years (other than the initial terms, which extend for up to three years), with the term of office of only one of these three classes of directors expiring each year. Each director will hold office for the term to which he or she is elected and until his or her successor is duly elected and qualifies.

Directors

The address for each director is c/o Bain Capital Specialty Finance, Inc., 200 Clarendon Street, 37th Floor, Boston, Massachusetts 02116. Information regarding the Board is as follows:

Name
 
Age
 
Position
 
Director
Since
 
Expiration of Term
                 
Interested Directors
               
                 
Jeffrey B. Hawkins
 
46
 
Director & Chairman
 
2016
 
2019
                 
Michael A. Ewald
 
43
 
Director, President & Chief Executive Officer
 
2016
 
2018
                 
Independent Directors
               
                 
David G. Fubini
 
62
 
Director
 
2016
 
2019
                 
Thomas A. Hough
 
63
 
Director
 
2016
 
2017
                 
Jay Margolis
 
67
 
Director
 
2016
 
2018
 
Executive Officers who are not Directors

Information regarding our executive officers who are not directors is as follows:

Name
 
Age
 
Position(s)
         
Sally F. Dornaus
 
43
 
Chief Financial Officer
         
James Goldman
 
40
 
Chief Compliance Officer
         
James S. Athanasoulas
 
43
 
Vice President & Treasurer
         
Ranesh Ramanathan
 
43
 
Vice President & Secretary

Biographical Information

Directors

Our directors have been divided into two groups — interested directors and independent directors. An interested director is an “interested person” as defined in Section 2(a)(19) of the 1940 Act.

Interested Directors

Jeffrey B. Hawkins. Mr. Hawkins is the Chairman of our Board. He is a Managing Director, the Chief Operating Officer and a Risk & Oversight Committee member of Bain Capital Credit. As the Chief Operating Officer, he is responsible for the firm’s business strategy and all non-investment activities. Previously, Mr. Hawkins was at Ropes & Gray, LLP working on securities law, mergers & acquisitions and collateralized debt funds. Mr. Hawkins received a J.D. from Harvard Law School and a B.A. Phi Beta Kappa from Trinity College.

Michael A. Ewald. Mr. Ewald is President and Chief Executive Officer of the Company and serves on the Advisor’s Credit Committee.  He is a Managing Director, the head of the Private Credit Group and Portfolio Manager for Bain Capital Credit’s Middle Market Opportunities and Senior Direct Lending fund strategies. Previously, Mr. Ewald was an Associate Consultant at Bain & Company for three years where he focused on strategy consulting to the Financial Services, Manufacturing and Consumer Products industries. Prior to that, he worked at Credit Suisse First Boston as an analyst in the Regulated Industries group. Mr. Ewald received an M.B.A. from the Amos Tuck School of Business at Dartmouth College and a B.A. magna cum laude from Tufts University.

Independent Directors

David G. Fubini. Mr. Fubini is a Senior Lecturer at in the Organizational Behavior Unit at Harvard Business School. Previously, he was a Senior Director of McKinsey & Company where he worked for over 34 years. He was McKinsey's Managing Director of the Boston office, and the past leader of the North American Organization Practice as well as the founder and leader of the firm’s Worldwide Merger Integration Practice. During his tenure, Mr. Fubini led, and/or had been a member of, every firm personnel committee, as well as a participant in a wide cross-section of McKinsey’s governance forums and committees. Prior to joining McKinsey, he was an initial member of a small group that became the McNeil Consumer Products Company of Johnson & Johnson and helped launch the Tylenol family of products into the over-the-counter consumer marketplace. Mr. Fubini graduated with a B.B.A. from University of Massachusetts, Amherst and an M.B.A. from Harvard Business School, both with distinction. He is currently a member of the Board of Directors for Leidos and Mitre Corporations and a Trustee of the University of Massachusetts System, and was formerly on the Board of Compuware.
 
Thomas A. Hough. Mr. Hough was Executive Vice President and Chief Financial Officer of Arena Brands, Inc. and Lucchese, Inc. headquartered in El Paso, TX, from October 2001 until retiring in July 2015. Mr. Hough’s direct responsibilities included accounting, finance, credit and collections, treasury, human resources, information technology, legal, and real estate. Prior to that, he worked primarily as a CFO for a number of companies including Vectrix Business Solutions, Inc., Jamba Juice Company, Chief Auto Parts, Inc., Roy Rogers Restaurants, and Peoples Drug Stores, Inc. Mr. Hough previously worked at Deloitte & Touche for thirteen years where he performed primarily audit services. Mr. Hough received a B.A. in accounting from Rowan University in 1975 and received his certification as a CPA in 1978. He is currently on the Board of the National Kidney Foundation.

Jay Margolis. Mr. Margolis has significant knowledge and experience in consumer products retailing, merchandising, consumer insights, strategic planning, and corporate governance. Most recently, he served as the Chairman and CEO of Cache, Inc., a publicly-held specialty chain of women’s apparel stores headquartered in New York. Previously, he was the Chairman of Intuit Consulting LLC, a consulting firm specializing in retail, fashion, and consumer products. Prior to his time with Intuit, Mr. Margolis served as the President and CEO of Apparel Group of Limited Brands Corporation where he oversaw operations of Limited Brands' Apparel Division. Before assuming that position, he had been President and Chief Operating Officer of Massachusetts-based Reebok International. Mr. Margolis also has held executive positions at Esprit de Corp USA, Tommy Hilfiger Inc., and Liz Claiborne, Inc. He received a B.A. from Queens College, a part of The City University of New York. Mr. Margolis currently serves as an active Board Member at Boston Beer Company and NFP Off Broadway Theater Company. He had previously served on the Boards of both Godiva Chocolatier, Inc. and Burlington Coat Factory.
 
Executive Officers who are not Directors

Sally F. Dornaus. Ms. Dornaus is Chief Financial Officer of the Company. She is a Managing Director, the Chief Financial Officer and a Risk & Oversight Committee member of Bain Capital Credit. Previously, Ms. Dornaus was a Senior Manager at PricewaterhouseCoopers in their Investment Management practice focusing on alternative investment products. Ms. Dornaus received an M.S./M.B.A from Northeastern University and a B.A. from Brandeis University. Ms. Dornaus is a Certified Public Accountant.

James Goldman. Mr. Goldman is Chief Compliance Officer of the Company. He is a Vice President in Compliance responsible for providing compliance support to Bain Capital Credit. Previously, Mr. Goldman served as Senior Counsel in the Enforcement Division of the U.S. Securities and Exchange Commission and as an attorney at the law firm of WilmerHale. Mr. Goldman received a J.D. magna cum laude from Boston College Law School and a B.A. magna cum laude in History from Harvard University. Mr. Goldman is admitted to the bar of Massachusetts.

James S. Athanasoulas. Mr. Athanasoulas is a Vice President and Treasurer of the Company. He is a Managing Director in the Private Credit Group of Bain Capital Credit. Previously, Mr. Athanasoulas was a Manager at Bain & Company where he led case teams in the firm’s Private Equity Practice performing strategic due diligence and post-acquisition strategy assessments. Mr. Athanasoulas received an M.B.A. from the Amos Tuck School of Business at Dartmouth College and a B.S. from Georgetown University where he won the Shandwick Scholar award.

Ranesh Ramanathan. Mr. Ramanathan is a Vice President and Secretary of the Company. He is a Managing Director, the General Counsel and a Risk & Oversight Committee member of Bain Capital Credit. Previously, Mr. Ramanathan was the General Counsel of Citi Private Equity and Associate General Counsel of Citi Alternative Investments at Citigroup. Prior to that, Mr. Ramanathan was an Associate at Cleary Gottlieb Steen & Hamilton LLP. Mr. Ramanathan received a J.D. from New York University School of Law and a B.A. from The Johns Hopkins University.
 
Committees of the Board

Our Board has established an Audit Committee and a Nominating and Corporate Governance Committee, and may establish additional committees in the future. All directors are expected to attend at least 75% of the aggregate number of meetings of our Board and of the respective committees on which they serve. We require each director to make a diligent effort to attend all Board and committee meetings as well as each annual meeting of our stockholders.

Audit Committee

The Audit Committee is currently composed of Mr. Fubini, Mr. Hough and Mr. Margolis, all of whom are not considered “interested persons” of our company as that term is defined in Section 2(a)(19) of the 1940 Act. Mr. Hough serves as Chairman of the Audit Committee. Our Board has determined that Mr. Hough is an “audit committee financial expert” as that term is defined under Item 407 of Regulation S-K, as promulgated under the Exchange Act. Mr. Fubini, Mr. Hough and Mr. Margolis meet the current independence and experience requirements of Rule 10A-3 under the Exchange Act. The Audit Committee operates pursuant to a charter approved by our Board, which sets forth the responsibilities of the Audit Committee. The Audit Committee’s responsibilities include establishing guidelines and making recommendations to our Board regarding the valuation of our loans and investments, selecting our independent registered public accounting firm, reviewing with such independent registered public accounting firm the planning, scope and results of their audit of our financial statements, pre-approving the fees for services performed, reviewing with the independent registered public accounting firm the adequacy of internal control systems, reviewing our annual financial statements, overseeing internal audit staff and periodic filings and receiving our audit reports and financial statements.

Nominating and Corporate Governance Committee

The members of the Nominating and Corporate governance committee are our independent directors. Mr. Fubini serves as chairman of the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee is responsible for selecting, researching and nominating directors for election by our stockholders, selecting nominees to fill vacancies on the board or a committee of the board, developing and recommending to the board a set of corporate governance principles and overseeing the evaluation of the board and our management.

The Nominating and Corporate Governance Committee seeks candidates who possess the background, skills and expertise to make a significant contribution to our Board, our company and our stockholders. In considering possible candidates for election as a director, the Nominating and Corporate Governance Committee takes into account, in addition to such other factors as it deems relevant, the desirability of selecting directors who:

· are of high character and integrity;

· are accomplished in their respective fields, with superior credentials and recognition;

· have relevant expertise and experience upon which to be able to offer advice and guidance to management;

· have sufficient time available to devote to our affairs;

· are able to work with the other members of our Board and contribute to our success;

· can represent the long-term interests of our stockholders as a whole; and

· are selected such that our Board represents a range of backgrounds and experience.

The Nominating and Corporate Governance Committee has not adopted a formal policy with regard to the consideration of diversity in identifying director nominees. In determining whether to recommend a director nominee, the Nominating and Corporate Governance Committee considers and discusses diversity, among other factors, with a view toward the needs of our Board as a whole. The Nominating and Corporate Governance Committee generally conceptualizes diversity expansively to include, without limitation, concepts such as race, gender, national origin, differences of viewpoint, professional experience, education, skill and other qualities that contribute to our Board, when identifying and recommending director nominees. The Nominating and Corporate Governance Committee believes that the inclusion of diversity as one of many factors considered in selecting director nominees is consistent with the goal of creating a board of directors that best serves our needs and the interests of our stockholders.
 
Item 6.
Executive Compensation.

(a) Compensation of Executive Officers

We do not currently have any employees. None of our officers receives direct compensation from us. We have agreed to reimburse the Administrator for our allocable portion of the compensation paid to or compensatory distributions received by our Chief Financial Officer and Chief Compliance Officer, and any of their respective staff who provide services to us, operations staff who provide services to us, and any internal audit staff, to the extent internal audit performs a role in our Sarbanes-Oxley internal control assessment. In addition, to the extent that the Administrator outsources any of its functions, we will pay the fees associated with such functions at cost. As discussed under “ Item 7. Certain Relationships and Related Transactions, and Director Independence ,” we will agree to reimburse the Administrator for our allocable portion of the compensation of any personnel that it provides for our use.

(b) Compensation of Directors

Our independent directors’ annual fee is $75,000. The independent directors also receive   $2,500 plus reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each regular Board meeting and $1,000 for each special meeting.  They also receive $1,000 plus reimbursement of reasonable out-of-pocket expenses incurred in connection with each committee meeting attended. In addition, the Chairman of the Audit Committee receives an additional annual fee of $7,500. The Chairman of the Nominating and Corporate Governance Committee receives an additional annual fee of $2,500. No compensation is expected to be paid to directors who are “interested persons” with respect   to us, as such term is defined in Section 2(a)(19) of the 1940 Act.

Item 7.
Certain Relationships and Related Transactions, and Director Independence.

(a) Transactions with Related Persons; Review, Approval or Ratification of Transaction with Related Persons

As a diversified private investment firm, Bain Capital and its affiliates, including Bain Capital Credit and the Advisor, engage in a broad range of activities, including investment activities for their own account and for the account of other investment funds or accounts, and provide investment banking, advisory, management and other services to funds and operating companies.  Bain Capital Credit is a wholly-owned subsidiary of Bain Capital and the Advisor is a majority-owned subsidiary of Bain Capital Credit.

Bain Capital currently has a number of affiliated advisors including Bain Capital Credit and the Advisor (collectively, the “Affiliate Advisors”), each of which focuses primarily on a different investment strategy, although such investment strategies overlap from time to time.

The funds and accounts managed by the Affiliate Advisors (including the Advisor’s funds) are referred to as the “Related Funds.” The funds and accounts managed by Bain Capital Credit are referred to as the “Bain Capital Credit Funds” or “Bain Capital Credit Clients.” In the ordinary course of conducting its activities, the interests of the Company or the stockholders may conflict with the interests of the Advisor, Bain Capital Credit Funds, Related Funds or their respective affiliates.
 
Resolution of Conflicts

Each of the Advisor and the other Affiliate Advisors will deal with all conflicts of interest using its best judgment, but in its sole discretion. When conflicts arise between the Company, on the one hand, and a Related Fund, on the other hand, the Advisor will represent the interests of the Company, and the other participating Affiliate Advisor will represent the interests of the Related Fund it advises. In resolving conflicts, the Advisor and the other Affiliate Advisors may consider various factors, including applicable restrictions under the 1940 Act, the interests of the funds and accounts they advise in the context of both the immediate issue at hand and the longer term course of dealing among the Company and the Related Fund. In the case of all conflicts involving the Company, the Advisor’s determination as to which factors are relevant, and the resolution of such conflicts will be made in the Advisor’s sole discretion except as required by the 1940 Act or by the governing documents of the Company. There can be no assurance that the Advisor will be able to resolve all conflicts in a manner that is favorable to the Company. By acquiring the Company’s stock, a stockholder acknowledges and represents that it has carefully reviewed this “Certain Relationships and Conflicts of Interest” section and understands and consents to the existence of potential conflicts of interest including, without limitation, those described in this section and to the operation of the Company subject to these conflicts.

Sources of Conflicts of Interest

There are numerous perceived and actual conflicts of interest among the Company, the Bain Capital Credit Funds, the Affiliate Advisors, and the Related Funds. The conflicts of interest that may be encountered by the Company include those discussed below and elsewhere throughout this Registration Statement, although such discussions do not describe all of the conflicts that may be faced by the Company. Dealing with conflicts of interest is complex and difficult, and new and different types of conflicts may subsequently arise.

Conflicts Relating to the Advisor and Certain Affiliate Advisors

Investment Advisory Agreement

The Advisor is entitled to a management and incentive fee under the terms of the Investment Advisory Agreement. The existence of the incentive fee may create an incentive for the Advisor to cause the Company to make more speculative investments than it would otherwise make in the absence of performance-based compensation. In calculating the incentive fee and management fee and making corresponding distributions, the Advisor will value the Company’s investments to determine how distributions should be made, subject at all times to the oversight and approval of our Board. If the valuations conducted by the Advisor are incorrect, the amount and timing of the payment of the incentive fee and management fee to the Advisor could be incorrect. In addition, the method of calculating the incentive fee and management fee may result in conflicts of interest between the Advisor, on the one hand, and the stockholders on the other hand, with respect to the management, disposition and valuation of investments.

Valuation; Incentive Fee

Some of the Company’s investments may be valued at estimated fair value as determined in good faith by the Board. Due to the generally illiquid nature of the securities held, fair values determined by the Board may not reflect the prices that actually would be received when such investments are realized. The process of valuing securities for which reliable market quotations are not available is based on inherent uncertainties and the resulting values may differ from values that would have been determined had an active market existed for such securities and may differ from the prices at which such securities may ultimately be sold. In addition, the Board may or may not value the investments consistently with how the same or similar investments are valued by the other Related Funds.

Advisor Personnel
 
It is expected that most or all of the Bain Capital Credit officers and employees responsible for managing the Company will have responsibilities with respect to other funds or accounts managed by Bain Capital Credit, including funds and accounts that may be raised in the future. Substantial time will be spent by such officers and employees monitoring the investments of Bain Capital Credit Funds. Conflicts of interest may arise in allocating time, services or functions of these officers and employees.
 
Advisory Services

In compliance with applicable law, the other Affiliate Advisers often perform a variety of services for actual or prospective portfolio companies or other deal-related investment vehicles of the Affiliate Advisors, including financial, operational and transactional services (such as advice and consulting in connection with mergers, acquisitions, add-on acquisitions, refinancings, public offerings, sales and similar transactions), as well as management consulting services (the “Other Services”) for, and, to the extent permitted by applicable law, will receive compensation from (and expenses reimbursed by), a number of entities, which may include entities in which the Bain Capital Credit Funds have interests. In connection with performance of the Other Services, such Affiliate Adviser typically enters into a management agreement with the entity to which the Other Services are provided. The terms of these management agreements may vary but they often extend for a significant period of time (e.g., five to ten years or more) and typically terminate upon a change of control of, or upon an initial public offering by, such entity. It is possible that Affiliate Advisers receive certain termination fees when a management agreement is terminated upon an entity’s initial public offering. These fees are often substantial, particularly in the event such circumstances occur early in the life of the Related Fund’s investment in such portfolio company. The appropriate fees for certain advisory services is determined by such Affiliate Adviser providing such Other Services, following negotiation with management of such entity receiving such Other Services and other investors, in consultation with lenders, prior to the investment in a portfolio company being closed. The starting point for such fee is typically based on the relevant operating metric for the such entity (e.g., EBITDA or revenue) which the Affiliate Adviser believes are indicative proxies for the amount of resources that it expects it will provide to the portfolio company, but other factors are considered such as additional effort that may be required in a turnaround situation. Because an independent third-party is not always involved on behalf of the relevant entity receiving the Other Services, a conflict will exist in determination of any such fees and other related terms in the applicable management agreement with such entities. Bain Capital Credit does not participate in the negotiation or approval of these arrangements, and these fees will not be shared with Bain Capital Credit or the Bain Capital Credit Clients unless otherwise required by applicable law.

The Affiliate Advisors have existing and potential advisory and other relationships with a significant number of portfolio companies and other clients, and have in the past and may in the future provide financing, services, advice or otherwise deal with third parties whose interests conflict with the interests of a company in which a Bain Capital Credit Client has invested, such as competitors, suppliers or customers of a company in which the Bain Capital Credit Client has invested. On occasion, an Affiliate Advisor will recommend or cause such a third party to take actions that are adverse to a Bain Capital Credit Client or companies in which it has invested.

The other Affiliate Advisors have in the past and may in the future also engage and retain advisers, consultants and similar professionals who are not employees or affiliates of such Affiliate Advisor and who, from time to time, receive payments from such Affiliate Advisor or receive payments from or allocations of investment opportunities with respect to, entities, which have in the past and may in the future include entities in which the Bain Capital Credit Clients have interests. These fees will not be shared by the Bain Capital Credit Clients or the investors in the Bain Capital Credit Funds.
 
Personnel of Affiliate Advisors invest in one or more Bain Capital Credit Funds. Conflicts will arise to the extent such personnel manage other funds, the interests of which conflict with those of the Bain Capital Credit Funds.

Conflicts Relating to the Purchase and Sale of Investments

Allocation of Investment Opportunities

The Advisor, Bain Capital Credit and Bain Capital sponsor and manage various investment vehicles, and may form new investment vehicles in the future. Bain Capital Credit Funds and/or Related Funds may make certain investments that are appropriate for the Company and the Company may receive a smaller allocation of any such investment or no allocation at all. The investment policies, fee arrangements, carried interest, investments owned by employees of the Advisor or the other Affiliate Advisors, and other circumstances of the Company, may vary from those of the Bain Capital Credit Funds or the Related Funds. These relationships may present conflicts of interest in determining how much, if any, of certain investment opportunities to offer to the Company. Subject to any requirements of the governing instruments of the Company (and, if applicable, the SEC exemptive order), the Bain Capital Credit Funds and the Related Funds, opportunities for investments will be allocated between the Company, the Bain Capital Credit Funds and the Related Funds in a manner that the Advisor and the other Affiliate Advisors believe in their sole discretion to be appropriate given factors they believe to be relevant. Such factors may include the investment objectives, geography, nature of the target’s business, scale, transaction sourcing, liquidity, diversification, lender covenants and other limitations of the Company, the Bain Capital Credit Funds and the Related Funds, the amount of capital each then has available for such investment, the expected duration of the investment in light of the term of the Bain Capital Credit Funds and the Related Funds, regulatory and tax considerations, the degree of risk arising from an investment, the expected investment return and such other factors as the Advisor, Bain Capital Credit and other Affiliate Advisors deem to be appropriate. The foregoing methodology for allocation of investment opportunities will likely vary over time and will be on a case-by-case basis. The Advisor also reserves the right to make independent decisions with regard to when the Company should purchase and sell investments, and Bain Capital Credit and the other Affiliate Advisors reserve similar rights with respect to the Bain Capital Credit Funds or Related Funds that they advise. As a result, the Company may be purchasing an investment at a time when a Bain Capital Credit Fund or a Related Fund is selling the same or a similar investment, or vice versa. The Company may invest in opportunities that Bain Capital Credit Funds or Related Funds have declined, and likewise, the Company may decline to invest in opportunities in which the Bain Capital Credit Funds or Related Funds have invested. The Bain Capital Credit Funds and Related Funds may pursue similar investment strategies as the Company and may compete with the Company for investment opportunities. See “ Item 1A.   Risk Factors—Risks Relating to Our Business and Structure— Conflicts Related to Obligations of Bain Capital Credit or the Advisor’s Credit Committee .”
 
Investments Alongside the Bain Capital Credit Funds and/or Related Funds

We may invest alongside the Bain Capital Credit Funds and/or Related Funds in certain circumstances where doing so is consistent with our investment strategy, as well as applicable law and SEC staff interpretations. We and one or more other Affiliate Advisors have submitted a request for exemptive relief to the SEC to permit greater flexibility to negotiate the terms of co-investments if our Board determines that it would be advantageous for us to co-invest with investment funds, accounts and investment vehicles managed by Bain Capital Credit or other Affiliate Advisors in a manner consistent with our investment objectives, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors.

We are seeking exemptive relief, and it is expected that we would undertake that, in connection with any commitment to a co-investment, a “required majority” (as defined in Section 57(o) of the 1940 Act) of our independent directors would make certain conclusions, including that (1) the terms of the proposed transaction are reasonable and fair to us and our stockholders and do not involve overreaching of us or our stockholders on the part of any person concerned and (2) the transaction is consistent with the interests of our stockholders and is consistent with our investment strategies and policies. There is no assurance that our application for exemptive relief will be granted by the SEC or that, if granted, it will be on the terms set forth above.

In addition, in the absence of exemptive relief granted by the SEC, generally we will not be permitted to invest in securities of an issuer where entities advised by Bain Capital Credit or other Affiliate Advisors have invested in different securities of that issuer, and hence may not be eligible to be allocated a portion of such investment. Our inability to participate in such investment may negatively impact our performance.

Allocation of Fees and Expenses

The appropriate allocation among the Company, the Bain Capital Credit Funds and/or the Related Funds of expenses and fees generated in the course of evaluating and making investments often may not be clear, especially where more than one fund participates. For instance, if the Company and a Bain Capital Credit Fund or Related Fund are considering making an investment that is not consummated, allocation of the expenses generated for the account of the Company and such Bain Capital Credit Fund or Related Fund (such as expenses of common counsel and other professionals) will be made in good faith. When the Advisor, Bain Capital Credit and the other Affiliate Advisors incur expenses that were related to the Company, the Bain Capital Credit Funds and/or Related Funds, they will typically allocate such expenses among all funds eligible to reimburse expenses of the applicable nature. In general, the Advisor and each other affected Affiliate Advisor will participate in the resolution of all such matters using its best judgment, considering all factors it deems relevant, but in its sole discretion.

Investments sourced and evaluated by the Advisor that are deemed inappropriate and rejected for investment by the Company have in the past and may in the future be offered to the Affiliate Advisers for investment by the other Related Funds or for investment directly by Affiliated Advisor personnel. The Related Funds or Affiliated Advisor personnel will, for some investments, benefit from the evaluation and due diligence undertaken by the Advisor on behalf of the Company. In such circumstances, the Related Funds and/or Affiliated Adviser personnel that have invested will be allocated the expenses, as determined in good faith by the applicable general partners of the other Related Funds, incurred by the Company and/or the other Related Funds as they relate to such investment.
 
Conflicts Relating to Existing Investments

Private Placements

At times, a portion of a Related Funds’ investments will consist of securities that are subject to restrictions on resale by such Related Fund because they were acquired in a “private placement” transaction or because such Related Fund is deemed to be an affiliate of the issuer of such securities. Generally, a Related Fund will be able to sell such securities only under Rule 144 under the Securities Act, which permits limited sales under specified conditions, or pursuant to a registration statement under the Securities Act. When restricted securities are sold to the public, there is a risk that the Related Fund will be deemed to be an “underwriter,” or possibly a controlling person, with respect thereto for the purposes of the Securities Act and be subject to liability as such under that Act.

Incentive to Recommend Affiliate Products

The Affiliate Advisors have an incentive to recommend the products or services of certain investors in other Bain Capital Credit Funds or Related Funds or their related businesses to other Bain Capital Credit Funds or Related Funds or their portfolio companies, even though they may not necessarily be the best available to other Bain Capital Credit Funds or Related Funds or the portfolio companies. Such recommendations will only be made if permitted by applicable law.

Other Conflicts of Interest

Legal Counsel

The Related Funds will generally engage common legal counsel and other advisors to represent all of the Related Funds in a particular transaction. In the event of a significant dispute or divergence of interest between a the Company and other Related Funds, such as in a work-out or other distressed situation, separate representation may become desirable, in which case the Advisor and the other Affiliate Advisors may hire separate counsel in their sole discretion, and in litigation and other circumstances, separate representation may be required. Partners of the law firms engaged to represent the Related Funds are investors in certain Related Funds, and could also represent one or more portfolio companies or investors of the Related Funds. Additionally, the Advisor and the Company and the portfolio companies may engage other common service providers. In such circumstances, there may be a conflict of interest between the Advisor, on the one hand, and the Company and portfolio companies, on the other hand, in determining whether to engage such service providers, including the possibility that the Advisor may favor the engagement or continued engagement of such persons if it receives a benefit from such service providers, such as lower fees, that it would not receive absent the engagement of such service provider by the Company and/or the portfolio companies.

Diverse Investor Base of the Company, the Bain Capital Credit Funds and the Related Funds

The Company, the Bain Capital Credit Funds and the Related Funds may have tax-exempt, taxable, non-U.S. and other investors, whereas most members of the Advisor and of the general partners of the Bain Capital Credit Funds and the Related Funds are taxable at individual U.S. rates. Potential conflicts exist with respect to various structuring, investment and other decisions because of divergent tax, economic or other interests, including conflicts among the interests of taxable and tax-exempt investors, conflicts among the interests of U.S. and non-U.S. investors, and conflicts between the interests of investors and management with regard to the Company, Bain Capital Credit Funds and the Related Funds. For these reasons, among others, decisions may be more beneficial for one investor than for another investor, particularly with respect to investors’ individual tax situations.
 
Material, Non-Public Information; Trading Restrictions

From time to time, the Advisor or another Affiliate Advisor may come into possession of material, nonpublic information, and such information may limit the ability of the Company to buy and sell investments. Although Bain Capital currently maintains “ethical walls” which reduce the likelihood that the Advisor will be deemed to possess material, non-public information possessed by other Affiliate Advisors, there is no guarantee that Bain Capital will maintain “ethical walls” for the life of the Company. Furthermore, the Advisor and the other Affiliate Advisors may agree from time to time to “cross” ethical walls, and Bain Capital may from time to time impose restrictions on transactions involving particular issuers in its sole discretion taking into account all factors it deems relevant in the collective interest of the Advisor and the other Affiliate Advisors. In such cases, the Company, the Bain Capital Credit Funds and the Related Funds could be restricted indefinitely in transactions involving a particular issuer. Consequently, the possession of material, non-public information by other Affiliate Advisors may limit the ability of the Company to buy and sell investments. In addition, the Advisor may be restricted by contract from using confidential information that it, or another Affiliate Advisor, has for the benefit of the Company.

Fees

In the course of our investing activities, we will pay management fees and incentive fees to the Advisor, incur direct expenses and will reimburse the Advisor for certain expenses it incurs. See “ Item 1(c). Description of Business—General—The Investment Advisor .”

Certain Business Relationships

Certain of the current directors and officers of the Company are directors or officers of the Advisor. See Item 7(b) below for a description of the Investment Advisory Agreement.

Indebtedness of Management

None.

(b) Promoters and Certain Control Persons

The Advisor may be deemed a promoter of the Company. The Company will enter into the Investment Advisory Agreement with the Advisor.

Pursuant to the Investment Advisory Agreement, the Advisor will act as the investment adviser to the Company and manage the investment and reinvestment of the assets of the Company, subject to the supervision of the Board, in accordance with the investment objective, policies and restrictions set forth in this Registration Statement, in accordance with all applicable federal and state laws, rules and regulations, and the Company’s certificate of incorporation and bylaws (as amended from time to time), and in accordance with the 1940 Act. In carrying out its duties as the investment adviser to the Company pursuant to the Investment Advisory Agreement, the Advisor will:

· determine the composition of the portfolio of the Company, the nature and timing of the changes therein and the manner of implementing such changes;

· identify/source, research, evaluate and negotiate the structure of the investments made by the Company;

· close and monitor the Company’s investments;

· determine the assets that the Company will originate, purchase, retain, or sell;

· perform due diligence on prospective portfolio companies; and

· provide the Company with such other investment advisory, research, and related services as the Company may, from time to time, reasonably require for the investment of its funds, including providing operating and managerial assistance to the Company and its portfolio companies as required.
 
Our primary operating expenses will include the payment of fees to the Advisor under the Investment Advisory Agreement, our allocable portion of overhead expenses under the Administration Agreement and other operating costs described below. We will bear all other out-of-pocket costs and expenses of our operations and transactions, including:

· our initial organization costs incurred prior to the commencement of our operations up to a maximum of $1.5 million;

· operating costs incurred prior to the commencement of our operations;

· the cost of calculating our net asset value, including our Advisor’s or its affiliates’ travel expenses, research costs and the cost of any third-party valuation services;

· the cost of effecting sales and repurchases of shares of our common stock and other securities;

· fees payable to third parties relating to making investments, including out-of-pocket fees and expenses associated with performing due diligence and reviews of prospective investments;

· interest expense and other costs associated with Company indebtedness;

· transfer agent and custodial fees;

· out-of-pocket fees and expenses associated with marketing efforts;

· federal and state registration fees and any stock exchange listing fees;

· U.S. federal, state and local taxes;

· independent directors’ fees and expenses;

· brokerage commissions and markups;

· fidelity bond, directors’ and officers’ liability insurance and other insurance premiums;

· direct costs, such as printing, mailing, long distance telephone and staff;

· fees and expenses associated with independent audits and outside legal costs;

· costs associated with our reporting and compliance obligations under the 1940 Act and other applicable U.S. federal and state securities laws; and

· other expenses incurred by the Administrator or us in connection with administering our business, including payments under the Administration Agreement that will be based upon our allocable portion (subject to the review and approval of our Board) of overhead.

All of the foregoing expenses are borne indirectly by our stockholders.

We have agreed to repay the Advisor for initial organization costs incurred prior to the commencement of our operations up to a maximum of $1.5 million and operating costs incurred prior to the commencement of our operations.
 
From time to time, the Administrator or its affiliates may pay third-party providers of goods or services . We   will reimburse the Administrator or such affiliates thereof for any such amounts paid on our behalf. The Administrator will waive its right to be reimbursed in the event that such reimbursements would cause any distributions to our stockholders to constitute a return of capital. All of these expenses will ultimately be borne by our stockholders.

The Advisor, for its services to the Company, will be entitled to receive fees as described under “ Item 1(c). Description of Business—General—Investment Advisory Agreement; Administration Agreement .”
 
Under the Investment Advisory Agreement, the Company expects, to the extent permitted by applicable law and in the discretion of the Board, to indemnify the Advisor and certain of its affiliates, as described under “ Item 1(c). Description of Business—General—Investment Advisory Agreement; Administration Agreement .”

Both the Investment Advisory Agreement and the Administration Agreement have been approved by our Board. Unless earlier terminated as described below, both the Investment Advisory Agreement and the Administration Agreement will remain in effect for a period from their effective date and will remain in effect from year to year thereafter if approved annually by (i) the vote of our Board, or by the vote of a majority of our outstanding voting securities, and (ii) the vote of a majority of our Independent Directors. The Investment Advisory Agreement and the Administration Agreement will automatically terminate in the event of assignment. See “ Item 1A. Risk Factors—Risks Relating to Our Business and Structure—   Dependence Upon Key Personnel of Bain Capital Credit and the Advisor .”

Notwithstanding the foregoing, the Investment Advisory Agreement and the Administration Agreement may be terminated at any time, without the payment of any penalty, upon sixty (60) days’ written notice, provided that such termination will be directed or approved by the vote of a majority of the outstanding voting securities of the Company, by the vote of the Company’s directors, or by the Advisor. The Investment Advisory Agreement will also immediately terminate in the event of its assignment. If the Investment Advisory Agreement is terminated, the Company will pay the Advisor a pro-rated portion of the management fee and incentive fee. The Company will engage at its own expense a firm acceptable to the Company and the Advisor to determine the maximum reasonable fair value as of the termination date of the Company’s consolidated assets (assuming each asset is readily marketable among institutional investors without minority discount and with an appropriate control premium for any control positions and ascribing an appropriate net present value to unamortized organizational and offering costs and going concern value).

Item 8.
Legal Proceedings

We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us. From time to time, we may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under loans to or other contracts with our portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations.

Item 9. Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters

Market Information

Until a public offering, our outstanding common stock will be offered and sold in transactions exempt from registration under the Securities Act under Section 4(a)(2) of the Securities Act and Regulation D thereunder. See “ Item 10. Recent Sales of Unregistered Securities ” for more information. There is currently no market for our common stock, and we can offer no assurances that a market for our shares of common stock will develop in the future.
 
Because shares of our common stock are being acquired by investors in one or more transactions “not involving a public offering,” they are “restricted securities” and may be required to be held indefinitely. Our common shares may not be sold, transferred, assigned, pledged or otherwise disposed of unless (i) our consent is granted, and (ii) the common shares are registered under applicable securities laws or specifically exempted from registration (in which case the stockholder may, at our option, be required to provide us with a legal opinion, in form and substance satisfactory to us, that registration is not required). Accordingly, an investor must be willing to bear the economic risk of investment in the common shares until we are liquidated. No sale, transfer, assignment, pledge or other disposition, whether voluntary or involuntary, of the common shares may be made except by registration of the transfer on our books. Each transferee will be required to execute an instrument agreeing to be bound by these restrictions and the other restrictions imposed on the common shares and to execute such other instruments or certifications as are reasonably required by us.
 
Holders

Please see “ Item 4. Security Ownership of Certain Beneficial Owners and Management” for disclosure regarding the holders of the Company’s common stock.

Valuation of Investments

Under procedures established by our Board, we intend to value investments for which market quotations are readily available at such market quotations. Assets listed on an exchange will be valued at their last sales prices as reported to the consolidated quotation service at 4:00 P.M. eastern time on the date of determination. If no such sales of such securities occurred, we will obtain the market values from an independent pricing service or at the mean between the bid and ask prices obtained from at least two brokers or dealers (if available, otherwise by a principal market maker or a primary market dealer).  Debt and equity securities that are not publicly traded or whose market prices are not readily available will be valued at fair value, subject at all times to the oversight and approval of our Board. Such determination of fair values may involve subjective judgments and estimates, although we will also engage independent valuation providers to review the valuation of each portfolio investment that constitutes a material portion of our portfolio and that does not have a readily available market quotation at least once annually. With respect to unquoted securities, our Advisor, together with our independent valuation advisors, and subject at all times to the oversight and approval of our Board, will value each investment considering, among other measures, discounted cash flow models, comparisons of financial ratios of peer companies that are public and other factors. The Company intends to retain one or more independent providers of financial advisory services to assist the Advisor and the Board by performing certain limited third-party valuation services.  The Company may appoint additional or different third-party valuation firms in the future.

When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, our Board will use the pricing indicated by the external event to corroborate and/or assist us in our valuation. Because we expect that there will not be a readily available market for many of the investments in our portfolio, we expect to value many of our portfolio investments at fair value as determined in good faith by our Board using a documented valuation policy and a consistently applied valuation process. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.

With respect to investments for which market quotations are not readily available, our Advisor will undertake a multi-step valuation process each quarter, as described below:

· Our quarterly valuation process will begin with each portfolio company or investment being initially valued by the investment professionals of our Advisor responsible for the portfolio investment;

· Preliminary valuation conclusions will then be documented and discussed with our senior management and our Advisor;

· The Audit Committee of our Board will then review these preliminary valuations;

· At least once annually, the valuation for each portfolio investment that constitutes a material portion of our portfolio and that does not have a readily available market quotation will be reviewed by an independent valuation firm; and

· Our Board will then discuss valuations and determine the fair value of each investment in our portfolio in good faith, based on the input of our Advisor, the respective independent valuation firms and the Audit Committee.
 
All values assigned to securities and other assets by the Board will be binding on all stockholders.

Distributions

To the extent that we have income available, we intend to distribute quarterly dividends to our stockholders. Our quarterly dividends, if any, will be determined by our Board. Any dividends to our stockholders will be declared out of assets legally available for distribution.

We intend to elect to be treated, and intend to qualify annually thereafter, as a RIC under the Code, beginning with our anticipated initial taxable year during 2016. To obtain and maintain RIC tax treatment, among other things, we must distribute dividends to our stockholders in respect of each taxable year of an amount at least equal to 90% of the sum of our net ordinary income and net short-term capital gains in excess of our net long-term capital losses (“investment company taxable income”), determined without regard to any deduction for dividends paid. In order to avoid certain excise taxes imposed on RICs, we currently intend to distribute dividends to our stockholders in respect of each calendar year of an amount at least equal to the sum of: (1) 98% of our net ordinary income (taking into account certain deferrals and elections) for such calendar year; (2) 98.2% of our capital gains in excess of capital losses (“capital gain net income”), adjusted for certain ordinary losses, generally for the one-year period ending on October 31 of such calendar year; and (3) any net ordinary income and capital gain net income for preceding years that were not distributed during such years and on which we previously paid no U.S. federal income tax.

We currently intend to distribute net capital gains (i.e., net long-term capital gains in excess of net short-term capital losses), if any, at least annually out of the assets legally available for such distributions. However, we may decide in the future to retain such capital gains for investment, incur a corporate-level tax on such capital gains, and elect to treat such capital gains as deemed distributions to you. If this happens, you will be treated for U.S. federal income tax purposes as if you had received an actual distribution of the capital gains that we retain and reinvested the net after tax proceeds in us. In this situation, you would be eligible to claim a tax credit equal to your allocable share of the tax we paid on the capital gains deemed distributed to you. We cannot assure you that we will achieve results that will permit us to pay any cash distributions, and if we issue senior securities, we will be prohibited from making distributions if doing so would cause us to fail to maintain the asset coverage ratios stipulated by the 1940 Act or if such distributions are limited by the terms of any of our borrowings.

Unless a stockholder elects to receive his or her dividends in cash, we intend to make such distributions in additional shares of our common stock under our dividend reinvestment plan. Although distributions paid in the form of additional shares of our common stock will generally be subject to U.S. federal, state and local taxes in the same manner as cash distributions, investors participating in our dividend reinvestment plan will not receive any corresponding cash distributions with which to pay any such applicable taxes. If a stockholder holds shares of our common stock in the name of a broker or financial intermediary, the stockholder should contact such broker or financial intermediary regarding his or her election to receive distributions in cash in lieu of shares of our common stock. Any dividends reinvested through the issuance of shares through our dividend reinvestment plan will increase our gross assets on which the base management fee and the incentive fee are determined and paid to the Advisor. See “ Item 1(c). Description of Business—Dividend Reinvestment Plan .”

Reports to Stockholders

We will furnish our stockholders with annual reports containing audited financial statements, quarterly reports, and such other periodic reports as we determine to be appropriate or as may be required by law. Upon the effectiveness of our Form 10 under the Exchange Act, we will be required to comply with all periodic reporting, proxy solicitation and other applicable requirements under the Exchange Act.

Item 10. Recent Sales of Unregistered Securities

On October 5, 2015, we issued and sold 1,000 shares of common stock at an aggregate purchase price of $1 to BCSFA. These shares were issued and sold in reliance upon the available exemptions from registration requirements of Section 4(a)(2) of the Securities Act. The Company intends to redeem these shares at cost immediately prior to the initial capital drawdown date and the issuance of shares of our common stock pursuant to the Private Offering.
 
Item 11. Description of Registrant’s Securities to be Registered

Description of our Shares

General.

Under the terms of our certificate of incorporation that was in effect from our formation until July 18, 2016 our authorized stock consisted of 1,000 shares of common stock, par value $0.001 per share.
 
Under the terms of our Amended and Restated Certificate of Incorporation, which was adopted on July 18, 2016 our authorized stock now consists solely of 100,000,000,000 shares of common stock, par value $0.001 per share, of which 1,000 shares remain outstanding as of the date of this Registration Statement, and 10,000,000,000 shares of preferred stock, par value $0.001 per share, of which no shares are outstanding as of the date of this Registration Statement.  There is currently no market for our common stock, and we can offer no assurances that a market for our shares of common stock will develop in the future. There are no outstanding options or warrants to purchase our stock. No stock has been authorized for issuance under any equity compensation plans. Under Delaware law, our stockholders generally are not personally liable for our debts or obligations.

Common Stock.

All shares of our common stock have equal rights as to earnings, assets, dividends and voting and, when they are issued, will be duly authorized, validly issued, fully paid and non-assessable. Distributions may be paid to the holders of our common stock if, as and when authorized by our Board and declared by us out of funds legally available therefor. Shares of our common stock have no preemptive, exchange, conversion or redemption rights and are freely transferable, except when their transfer is restricted by the Certificate of Incorporation, federal and state securities laws or by contract. In the event of our liquidation, dissolution or winding up, each share of our common stock would be entitled to share ratably in all of our assets that are legally available for distribution after we pay all debts and other liabilities and subject to any preferential rights of holders of our preferred stock, if any preferred stock is outstanding at such time. Each share of our common stock is entitled to one vote on all matters submitted to a vote of stockholders, including the election of directors. Except as provided with respect to any other class or series of stock, the holders of our common stock will possess exclusive voting power. There is no cumulative voting in the election of directors, which means that holders of a majority of the outstanding shares of common stock can elect all of our directors, and holders of less than a majority of such shares will not be able to elect any directors.

Preferred Stock.

Our Certificate of Incorporation authorizes our Board to classify and reclassify any unissued shares of preferred stock into other classes or series of preferred stock. Prior to issuance of shares of each class or series, the Board is required by Delaware law and by our Certificate of Incorporation, as amended, to set the powers, preferences and relative, participation, optional and other special rights, and the qualifications, limitations or restrictions thereof, for each class or series. Thus, the Board could authorize the issuance of shares of preferred stock with terms and conditions that could have the effect of delaying, deferring or preventing a transaction or a change in control that might involve a premium price for holders of our common stock or otherwise be in their best interest. Stockholders should note, however, that any issuance of preferred stock will be required to comply with the requirements of the 1940 Act. The 1940 Act requires that (1) immediately after issuance and before any dividend or other distribution is made with respect to our common stock and before any purchase of common stock is made, such preferred stock together with all other senior securities must not exceed an amount equal to 50% of our total assets after deducting the amount of such dividend, distribution or purchase price, as the case may be, and (2) the holders of shares of preferred stock, if any are issued, must be entitled as a class to elect two directors at all times and to elect a majority of the directors if dividends on such preferred stock are in arrears by two years or more. Some matters under the 1940 Act require the separate vote of the holders of any issued and outstanding preferred stock. For example, holders of preferred stock would be entitled to vote separately from the holders of common stock on a proposal to cease operations as a BDC. We believe that the availability for issuance of preferred stock will provide us with increased flexibility in structuring future financings and acquisitions. The Company does not currently intend to issue preferred stock. The issuance of preferred stock with dividend or conversion rights, liquidation preferences or other economic terms favorable to the holders of preferred stock could adversely affect our common stock by making an investment in the common stock less attractive.
 
Transferability of Shares

Unless and until a Qualified IPO occurs, our common shares will not be registered under the Securities Act. The common shares are exempt from registration requirements pursuant to Section 4(a)(2) of, and Regulation D under, the Securities Act.

Because our common shares will be acquired by investors in one or more transactions “not involving a public offering,” they will be “restricted securities” and may be required to be held indefinitely. Our common shares may not be sold, transferred, assigned, pledged or otherwise disposed of unless (i) our consent is granted, and (ii) the common shares are registered under applicable securities laws or specifically exempted from registration (in which case the stockholder may, at our option, be required to provide us with a legal opinion, in form and substance satisfactory to us, that registration is not required). Accordingly, an investor must be willing to bear the economic risk of investment in the common shares until we are liquidated. No sale, transfer, assignment, pledge or other disposition, whether voluntary or involuntary, of the common shares may be made except by registration of the transfer on our books. Each transferee will be required to execute an instrument agreeing to be bound by these restrictions and the other restrictions imposed on the common shares and to execute such other instruments or certifications as are reasonably required by us.

Dissolution of the Company

Prior to any Qualified IPO of the common stock that may occur, if the Company’s Board determines that there has been a significant adverse change in the regulatory or tax treatment of the Company or its stockholders that in its judgment makes it inadvisable for the Company to continue in its present form, then the Board will endeavor to restructure or change the form of the Company to preserve (insofar as possible) the overall benefits previously enjoyed by stockholders as a whole or, if the Board determines it appropriate (and subject to any necessary stockholder approvals and applicable requirements of the 1940 Act), (i) cause the Company to change its form and/or jurisdiction of organization or (ii) wind down and/or liquidate and dissolve the Company.

If the Company has not consummated a Qualified IPO of its common stock within three and a half years following the Initial Closing, then the Board (subject to any necessary stockholder approvals and applicable requirements of the 1940 Act) will use its best efforts to wind down and/or liquidate and dissolve the Company; provided that the term of the Company may be extended by the Board for an additional six-month period if (i) the Company has filed an IPO registration statement with the SEC and (ii) the Board reasonably expects such registration statement to be effective within six months of the end of such three and a half-year period.

Delaware Anti-takeover Law

The General Corporation Law of the State of Delaware, as amended (the “DGCL”), contains provisions that could make it more difficult for a potential acquirer to acquire us by means of a tender offer, proxy contest or otherwise. These provisions are expected to discourage certain coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of us to negotiate first with our Board. These measures may delay, defer or prevent a transaction or a change in control that might otherwise be in the best interests of our stockholders. We believe, however, that the benefits of these provisions outweigh the potential disadvantages of discouraging any such acquisition proposals because the negotiation of such proposals may improve their terms.

We are subject to the provisions of Section 203 of the DGCL regulating corporate takeovers. In general, these provisions prohibit a Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years following the date that the stockholder became an interested stockholder, unless:

· prior to such time, the board of directors approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;
 
· upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced; or

· at or subsequent to such time, the business combination is approved by the board of directors and authorized at a meeting of stockholders, by at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder.

Section 203 of the DGCL defines “business combination” to include the following:

· any merger or consolidation involving the corporation and the interested stockholder;

· any sale, transfer, pledge or other disposition (in one transaction or a series of transactions) of 10% or more of either the aggregate market value of all the assets of the corporation or the aggregate market value of all the outstanding stock of the corporation involving the interested stockholder;

· subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;

· any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation owned by the interested stockholder; or

· the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.

In general, Section 203 of the DGCL defines an interested stockholder as any entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation and any entity or person affiliated with or controlling or controlled by any of these entities or persons.

The statute could prohibit or delay mergers or other takeover or change in control attempts and, accordingly, may discourage attempts to acquire us.

Our Board will adopt a resolution exempting from Section 203 of the DGCL any business combination between us and any other person, subject to prior approval of such business combination by our Board, including approval by a majority of our directors who are not “interested persons.”

Classified Board of Directors

Our Certificate of Incorporation provides for a classified board of directors consisting of three classes of directors serving staggered three-year terms, with the term of office of only one of the three classes expiring each year. A classified board may render a change in control of us or removal of our incumbent management more difficult. We believe, however, that the longer time required to elect a majority of a classified board of directors will help to ensure the continuity and stability of our management and policies.

Election of Directors

Our Certificate of Incorporation and bylaws, provide that the affirmative vote of the holders of a majority of the votes cast by stockholders present in person or by proxy at an annual or special meeting of stockholders and entitled to vote at such meeting is required to elect a director. Under our Certificate of Incorporation, our Board may amend the bylaws to alter the vote required to elect directors.
 
Number of Directors; Vacancies; Removal

Our Certificate of Incorporation provides that the number of directors is set only by the Board in accordance with our bylaws. Our bylaws provide that a majority of our entire Board may at any time increase or decrease the number of directors. However, unless our bylaws are amended, the number of directors may never be less than four nor more than eight. Under the DGCL, unless the certificate of incorporation provides otherwise (which our Certificate of Incorporation does not), directors on a classified board such as our Board may be removed only for cause. Under our Certificate of Incorporation and bylaws, any vacancy on the Board, including a vacancy resulting from an enlargement of the Board, may be filled only by vote of a majority of the directors then in office. The limitations on the ability of our stockholders to remove directors and fill vacancies could make it more difficult for a third party to acquire, or discourage a third party from seeking to acquire, control of us.

Action by Stockholders

Our Certificate of Incorporation provides that stockholder action can be taken only at an annual or special meeting of stockholders or by unanimous written consent in lieu of a meeting. This may have the effect of delaying consideration of a stockholder proposal until the next annual meeting.

Advance Notice Provisions for Stockholder Nominations and Stockholder Proposals

Our bylaws provide that with respect to an annual meeting of stockholders, nominations of persons for election to the Board and the proposal of business to be considered by stockholders may be made only (1) by or at the direction of the Board, (2) pursuant to our notice of meeting or (3) by a stockholder who is entitled to vote at the meeting and who has complied with the advance notice procedures of the bylaws. Nominations of persons for election to the Board at a special meeting may be made only by or at the direction of the Board, and provided that the Board has determined that directors will be elected at the meeting, by a stockholder who is entitled to vote at the meeting and who has complied with the advance notice provisions of the bylaws.
 
The purpose of requiring stockholders to give us advance notice of nominations and other business is to afford our Board a meaningful opportunity to consider the qualifications of the proposed nominees and the advisability of any other proposed business and, to the extent deemed necessary or desirable by our Board, to inform stockholders and make recommendations about such qualifications or business, as well as to provide a more orderly procedure for conducting meetings of stockholders. Although our bylaws do not give our Board any power to disapprove stockholder nominations for the election of directors or proposals recommending certain action, they may have the effect of precluding a contest for the election of directors or the consideration of stockholder proposals if proper procedures are not followed and of discouraging or deterring a third party from conducting a solicitation of proxies to elect its own slate of directors or to approve its own proposal without regard to whether consideration of such nominees or proposals might be harmful or beneficial to us and our stockholders.

Stockholder Meetings

Our Certificate of Incorporation provides that any action required or permitted to be taken by stockholders at an annual meeting or special meeting of stockholders may only be taken if it is properly brought before such meeting. In addition, in lieu of such a meeting, any such action may be taken by the unanimous written consent of our stockholders. Our Certificate of Incorporation also provides that, except as otherwise required by law, special meetings of the stockholders can only be called by the Chairman of the Board, the Chief Executive Officer or the Board. In addition, our bylaws establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of stockholders, including proposed nominations of candidates for election to the Board. Stockholders at an annual meeting may only consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of the Board, or by a stockholder of record on the record date for the meeting who is entitled to vote at the meeting and who has delivered timely written notice in proper form to the secretary of the stockholder’s intention to bring such business before the meeting. These provisions could have the effect of delaying until the next stockholder meeting stockholder actions that are favored by the holders of a majority of our outstanding voting securities.

Calling of Special Meetings of Stockholders

Our Certificate of Incorporation provides that special meetings of stockholders may be called by our Board, the Chairman of the Board and our Chief Executive Officer.
 
Conflict with 1940 Act

Our bylaws provide that, if and to the extent that any provision of the DGCL or any provision of our Certificate of Incorporation or bylaws conflicts with any provision of the 1940 Act, the applicable provision of the 1940 Act will control.

Exclusive Forum

Our Certificate of Incorporation and bylaws provide that, to the fullest extent permitted by law, unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Company to the Company or the Company’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, the Certificate of Incorporation or bylaws or the securities, antifraud, unfair trade practices or similar laws of any international, national, state, provincial, territorial, local or other governmental or regulatory authority, including, in each case, the applicable rules and regulations promulgated thereunder, or (iv) any action asserting a claim governed by the internal affairs doctrine shall be a federal or state court located in the state of Delaware. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Company shall be deemed, to the fullest extent permitted by law, to have notice of and consented to these exclusive forum provisions and to have irrevocably submitted to, and waived any objection to, the exclusive jurisdiction of such courts in connection with any such action or proceeding and consented to process being served in any such action or proceeding, without limitation, by United States mail addressed to the stockholder at the stockholder’s address as it appears on the records of the Company, with postage thereon prepaid.

Item 12. Indemnification of Directors and Officers

The indemnification of our officers and directors is governed by Section 145 of the DGCL, our Certificate of Incorporation and bylaws. Subsection (a) of DGCL Section 145 empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if (1) such person acted in good faith, (2) in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation and (3) with respect to any criminal action or proceeding, such person had no reasonable cause to believe the person’s conduct was unlawful.

Subsection (b) of DGCL Section 145 empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner the person reasonably believed to be in, or not opposed to, the best interests of the corporation, and except that no indemnification may be made in respect of any claim, issue or matter as to which such person has been adjudged to be liable to the corporation unless and only to the extent that the Delaware Court of Chancery or the court in which such action or suit was brought determines upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court deems proper.
 
DGCL Section 145 further provides that to the extent that a present or former director or officer is successful, on the merits or otherwise, in the defense of any action, suit or proceeding referred to in subsections (a) and (b) of Section 145, or in defense of any claim, issue or matter therein, such person will be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with such action, suit or proceeding. In all cases in which indemnification is permitted under subsections (a) and (b) of Section 145 (unless ordered by a court), it will be made by the corporation only as authorized in the specific case upon a determination that indemnification of the present or former director, officer, employee or agent is proper in the circumstances because the applicable standard of conduct has been met by the party to be indemnified. Such determination must be made, with respect to a person who is a director or officer at the time of such determination, (1) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, (2) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, (3) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion or (4) by the stockholders. The statute authorizes the corporation to pay expenses incurred by an officer or director in advance of the final disposition of a proceeding upon receipt of an undertaking by or on behalf of the person to whom the advance will be made, to repay the advances if it is ultimately determined that he or she was not entitled to indemnification. DGCL Section 145 also provides that indemnification and advancement of expenses permitted under such Section are not to be exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors, or otherwise. DGCL Section 145 also authorizes the corporation to purchase and maintain liability insurance on behalf of its directors, officers, employees and agents regardless of whether the corporation would have the statutory power to indemnify such persons against the liabilities insured.

Our Certificate of Incorporation provides that our directors will not be liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director to the fullest extent permitted by the current DGCL or as the DGCL may hereafter be amended. DGCL Section 102(b)(7) provides that the personal liability of a director to a corporation or its stockholders for breach of fiduciary duty as a director may be eliminated except for liability (1) for any breach of the director’s duty of loyalty to the registrant or its stockholders, (2) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (3) under Section 174 of the DGCL, relating to unlawful payment of dividends or unlawful stock purchases or redemption of stock or (4) for any transaction from which the director derives an improper personal benefit.

Our bylaws provide for the indemnification of any person to the full extent permitted, and in the manner provided, by the current DGCL or as the DGCL may hereafter be amended.

As a BDC, we are not permitted to, and will not indemnify the Advisor, any of our executive officers and directors, or any other person against liability arising from willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such person’s office, or by reason of reckless disregard of obligations and duties of such person arising under contract or agreement.

Item 13. Financial Statements and Supplementary Data

We set forth below a list of our audited financial statements included in this Registration Statement.

Statement
Page
   
Report of Independent Registered Public Accounting Firm
F-2
   
Statement of Assets and Liabilities as of July 14, 2016
F-3
   
Statement of Operations for the period October 5, 2015 (Date of Inception) through July 14, 2016
F-4
   
Notes to Financial Statements
F-5
 
Item 14. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

There are not and have not been any disagreements between the Company and its accountant on any matter of accounting principles, practices, or financial statement disclosure.

Item 15. Financial Statements and Exhibits.

(a) List separately all financial statements filed

The financial statements included in this Registration Statement are listed in Item 13 and commence on page F-1.

(b) Exhibits

EXHIBIT INDEX

Amended and Restated Certificate of Incorporation

By-Laws

Investment Advisory Agreement

Administration Agreement

Form of Advisory Fee Waiver Agreement

Form of Subscription Agreement

Dividend Reinvestment Plan

Form of Custody Agreement
 
* Filed herewith.
 
 
SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

 
Bain Capital Specialty Finance, Inc.
       
 
By:
/s/ Ranesh Ramanathan
 
 
Name: Ranesh Ramanathan
 
 
Title: Vice President and Secretary
 
Date: October 6, 2016
     
 
Bain Capital Specialty Finance, Inc.
Financial Statements
For the period October 5, 2015 (Date of inception)
through July 14, 2016
 
Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholder of Bain Capital Specialty Finance, Inc.:

In our opinion, the accompanying statement of assets and liabilities and the related statement of operations present fairly, in all material respects, the financial position of Bain Capital Specialty Finance, Inc. (the "Company") at July 14, 2016, and the results of its operations for the period October 15, 2015 (date of inception) to July 14, 2016, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts
August 11, 2016
 
Bain Capital Specialty Finance, Inc.
Statement of Assets and Liabilities
July 14, 2016

Assets
     
Cash
 
$
-
 
Deferred offering cost
   
317,909
 
         
Total assets
 
$
317,909
 
         
Liabilities
       
Payable to affiliate
   
307,202
 
Accrued expenses and other liabilities
 
$
681,441
 
         
Total liabilities
   
988,643
 
         
Commitments and contingencies (Note 6)
       
         
Net assets
       
Common shares, $0.001 par value; 1000 shares authorized, issued and outstanding
   
1
 
Net asset receivable
   
(1
)
Accumulated net loss
   
(670,734
)
         
Total net assets
   
(670,734
)
         
Total liabilities and net assets
 
$
317,909
 
         
Net asset value per share
 
$
(670.73
)

The accompanying notes are an integral part of these financial statements.
 
Bain Capital Specialty Finance, Inc.
Statement of Operations
For the period October 5, 2015 (Date of inception)
through July 14, 2016

Investment Income
     
Income:
     
Interest
 
$
-
 
Dividend and other income
   
-
 
         
Total investment income
   
-
 
         
Expenses:
       
Advisory fee
   
-
 
Professional fees and operating expenses
   
5,000
 
Organization costs
   
665,734
 
         
Total expenses
   
670,734
 
         
Net investment loss
   
(670,734
)
         
Net decrease in net assets resulting from operations
 
$
(670,734
)
         
Issuance of common stock
   
-
 
         
Net assets, beginning of period
       
         
Net assets, end of period
 
$
(670,734
)
         
Loss Per Share (basic and diluted)
   
(671
)
Weighted average shares outstanding
   
1,000
 

The accompanying notes are an integral part of these financial statements.
 
Bain Capital Specialty Finance, Inc.
Notes to Financial Statements
July 14, 2016
 
1. Organization

Bain Capital Specialty Finance, Inc. (“BCSF” or the “Company”), formerly known as Sankaty Capital Corp, is a Delaware corporation which was formed on October 5, 2015. BCSF Advisors, LP (the “Advisor”) intends to be the investment adviser of the Company. The Advisor is registered as an investment adviser with the U.S. Securities and Exchange Commission (the “SEC”) under the Investment Advisers Act of 1940. The Company intends to register as a closed-end investment company that has filed an election to be regulated as a Business Development Company (“BDC”) under the Investment Company Act of 1940. As of July 14, 2016, the total number of the shares of all classes of capital stock which the Company has the authority to issue is 1,000 shares of common stock, par value $0.001 per share. During the period between October 5, 2015 (Date of Inception) and July 14, 2016, the Advisor committed to contribute $1 of capital to the Company. In exchange for this contribution, the Advisor received 1,000 shares of Common Stock of the Company at $0.001 per share.

The Company will seek to provide risk-adjusted returns and current income to investors by investing primarily in middle-market companies. The Company intends to focus on senior investments with a first or second lien on collateral and strong structures and documentation intended to protect the lender. Investments are likely to include, among other things, (i) senior first lien, stretch senior, senior second lien, unitranche, (ii) mezzanine debt and other junior investments and (iii) secondary purchases of assets or portfolios that primarily consist of middle-market corporate debt. The Company had not commenced operations as of July 14, 2016.

The Company is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standard Board (FASB) Accounting Standard Codification (“ASC”) Topic 946 Financial Services – Investment Companies.

2. Significant Accounting Policies

Basis of Presentation
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies of the Company.

Cash
Cash consists of deposits held at a custodian bank. There was no cash held as of July 14, 2016.

Organization Costs
Organizational costs, primarily for legal expenses associated with the establishment of the Company, are expensed as incurred and are shown in the accompanying Statement of Operations. The Company has agreed to repay the Advisor for initial organization costs incurred prior to the commencement of our operations up to a maximum of $1.5 million and operating costs incurred prior to the commencement of our operations.

Offering Costs
Prior to the initial drawdown date, offering costs in connection with the continuous offering of common shares of the Company are recognized as a deferred charge and will be amortized on a straight line basis over 12 months beginning on the date of commencement of operations.
 
Bain Capital Specialty Finance, Inc.
Notes to Financial Statements
July 14, 2016
 
Expenses
The Company is responsible for investment expenses, legal expenses, auditing fees and other expenses related to the Company’s operations. Such fees and expenses, including expenses incurred by the Advisor may be reimbursed by the Company.

New Accounting Pronouncements
Management does not believe any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying financial statements.

3. Federal Income Taxes

The Company intends to elect to be regulated as a BDC under the Investment Company Act of 1940, as amended. The Company intends to elect to be treated as a Regulated Investment Company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended. As a RIC, the Company generally will not have to pay corporate-level U.S. federal income taxes on any ordinary income or capital gains that is distributed timely to our stockholders as dividends. Therefore, no provision for federal income taxes is recorded in the financial statements. The Company evaluated tax positions it has taken, expects to take or that are otherwise relevant to the Company for purposes of determining whether any relevant tax positions would “more-likely-than-not” be sustained by the applicable tax authority. The Company has analyzed such tax positions and has concluded that no unrecognized tax benefits should be recorded for uncertain tax positions for tax years that may be open. The Company is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months. The Company records tax positions that are not deemed to meet a more-likely-than-not threshold as tax expenses as well as any applicable penalties or interest associated with such positions. During the period from October 5, 2015 (Date of Inception) to July 14, 2016 there were no tax expenses and no interest and penalties were incurred.

Prior to election to be treated as a RIC, the Company may be subject to income tax. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. To the extent the Company has a deferred tax asset, consideration is given to whether or not a valuation allowance, which would offset the value of some or all of the deferred tax asset balance, is required. A valuation allowance is required if based on the evaluation criterion provided by Accounting Standards Codification (“ASC”) 740, Income Taxes (ASC 740) it is more likely than not that some portion, or all, of the deferred tax asset will not be realized. The Company has a deferred tax asset of $ 100,610, as a result of a net of organizational cost and other expenses and an effective tax rate of 15%. The Company recorded a valuation allowance of $100,610 as of July 14, 2016 because the Company intends to register as a closed-end investment company that has filed an election to be regulated as a BDC. The deferred tax asset net of valuation allowance is zero.

4. Indemnification

In the normal course of business, the Company may enter into certain contracts that provide a variety of indemnities. The Company’s maximum exposure under these indemnities is unknown. The Company does not consider it necessary to record a liability in this regard.
 
Bain Capital Specialty Finance, Inc.
Notes to Financial Statements
July 14, 2016

5. Related Party Transactions

The Company intends to enter into an investment advisory agreement (the “Investment Advisory Agreement”) with the Advisor, pursuant to which the Advisor manages the Company’s investment program and related activities. The Company intends to enter into an administration agreement with the Advisor, pursuant to which administrative services necessary for the Company to operate will be provided.

The advisory services fees will consist of an advisory fee and an incentive fee. The cost of both the advisory fee and the incentive fee will ultimately be borne by the Company’s shareholders.

There were no advisory fees or incentive fee incurred as of July 14, 2016.

During the period from October 5, 2015 (Date of Inception) to July 14, 2016, $307,202 of the Company’s expenses were paid by a related party of the Advisor and will be reimbursed by the Company after the commencement of operations. This payable is included as a “Payable to affiliate” on the Statement of Assets and Liabilities.

6. Commitments and Contingencies

In the normal course of business, the Company enters into contracts that provide a variety of general indemnifications. Any exposure to the Company under these arrangements could involve future claims that may be made against the Company. Currently, no such claims exist or are expected to arise and, accordingly, the Company has not accrued any liability in connection with such indemnifications.

7. Subsequent Events

Management has performed an evaluation of subsequent events through August 11, 2016, the date of issuance of the financial statements. Other than the items discussed below, there were no items which require adjustment or disclosure.

On July 18, 2016, the Company adopted an Amended and Restated Certificate of Incorporation, under which our authorized stock now consists solely of 100,000,000,000 shares of common stock, par value $0.001 per share, and 10,000,000,000 shares of preferred stock, par value $0.001 per share.
 
 
F-7
Exhibit 3.1
 
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
BAIN CAPITAL SPECIALTY FINANCE, INC.

BAIN CAPITAL SPECIALTY FINANCE, INC., a corporation duly organized and existing under the General Corporation Law of the State of Delaware (the “ Corporation ”), was incorporated and its original Certificate of Incorporation was filed under the name “Sankaty Capital Corporation” with the Secretary of State of the State of Delaware on October 5, 2015 and amended as of April 21, 2016 and as of July 18, 2016.

This Amended and Restated Certificate of Incorporation (the “ Certificate of Incorporation ”) has been duly adopted by the stockholders of the Corporation in accordance with the provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware and by resolution of the Board of Directors of the Corporation at a meeting duly held.  Upon the filing of this Certificate with the Secretary of State of the State of Delaware, the Certificate of Incorporation of the Corporation shall be amended and restated in its entirety to read as follows:

ARTICLE I

1.1          The name of the Corporation is Bain Capital Specialty Finance, Inc.

ARTICLE II

2.1            The address of the Corporation’s registered office in the State of Delaware is 4001 Kennett Pike, Suite 302, Wilmington, New Castle County, Delaware 19807.  The name of the Corporation’s registered agent at such address is Maples Fiduciary Services (Delaware) Inc.

ARTICLE III

3.1            The purposes for which the Corporation is formed are to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware, as amended (the “ Delaware General Corporation Law ”), and to possess and exercise all of the powers and privileges granted by such law and any other law of the State of Delaware.

ARTICLE IV

4.1            Authorized Stock .  The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is 110,000,000,000 of which 100,000,000,000 shares shall be common stock having a par value of $0.001 per share (the “ Common Stock ”) and 10,000,000,000 shares shall be preferred stock having a par value of $0.001 per share (the “ Preferred Stock ”).
 
4.2            Common Stock .  Except as otherwise required by law or as otherwise provided in any Preferred Stock Designation (as defined below), the holders of the Common Stock shall exclusively possess all voting power, and each share of Common Stock shall have one vote.

4.3            Preferred Stock .  To the extent permitted by the Investment Company Act of 1940, as amended (the “ Investment Company Act ”), the Board of Directors is expressly granted authority to issue shares of Preferred Stock, in one or more series, and to fix for each such series such voting powers, full or limited, and such designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issue of such series (each, a “ Preferred Stock Designation ”) and as may be permitted by the Delaware General Corporation Law. The Board of Directors may classify any unissued shares of Preferred Stock of any class or series from time to time, in one or more classes or series of Preferred Stock, without a separate vote of the holders of the Preferred Stock, or any series thereof, unless a vote of any such holders is required pursuant to any Preferred Stock Designation. Unless otherwise provided in this Certificate of Incorporation , the powers, preferences and relative, participating, optional and other special rights, and the qualifications, limitations or restrictions thereof, of each series of Preferred Stock, if any, may differ from those of any and all other series of Preferred Stock at any time outstanding. Notwithstanding anything to the contrary set forth herein or in any certificate of designation relating to any series of Preferred Stock, if one or more series of Preferred Stock is entitled, either separately or together with the holders of one or more other such series, to elect one or more directors, all series of Preferred Stock shall be entitled to participate in the vote to elect such directors, voting as a single class.

ARTICLE V

5.1            Powers of the Board of Directors .  The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.  The Board of Directors shall have the power, without the assent or vote of the stockholders, to make, alter, amend, change, add to or repeal the bylaws of the Corporation (the “ Bylaws ”) as provided in the Bylaws, subject to the power of the stockholders to alter or repeal any Bylaw whether adopted by them or otherwise.

The directors in their discretion may submit any contract or act for approval or ratification at any annual meeting of the stockholders or at any meeting of the stockholders called for the purpose of considering any such act or contract, and any contract or act that shall be approved or be ratified by a majority of the votes cast by stockholders present in person or by proxy at such meeting and entitled to vote thereat (provided that a lawful quorum of stockholders be there represented in person or by proxy), unless a higher vote is required by applicable law, shall be as valid and binding upon the Corporation and upon all the stockholders as though it had been approved or ratified by every stockholder of the Corporation, whether or not the contract or act would otherwise be open to legal attack because of directors’ interests, or for any other reason.
 
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The Board of Directors may authorize the issuance from time to time of shares of stock of the Corporation of any class or series, whether now or hereafter authorized, or securities or rights convertible into shares of its stock of any class or series, whether now or hereafter authorized, for such consideration as the Board of Directors may deem advisable (or without consideration in the case of a stock split or stock dividend), subject to such restrictions or limitations, if any, as may be set forth in the Bylaws.

In addition to the powers and authorities hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject to the provisions of the statutes of Delaware, of this Certificate of Incorporation, and to the Bylaws; provided, however, that no Bylaw so made shall invalidate any prior act of the directors which would have been valid if such Bylaw had not been made.

5.2            Number of Directors .  The number of directors of the Corporation shall be fixed from time to time by the Board of Directors either by resolution or bylaw adopted by the affirmative vote of a majority of the entire Board of Directors.

5.3            Classes of Directors .  The Board of Directors (other than any Additional Preferred Directors (as defined below)) shall be divided into three classes, designated Class I, Class II and Class III, as nearly equal in number as possible, and the term of office of directors of one class shall expire at each annual meeting of stockholders, and in all cases as to each director such term shall extend until his or her successor shall be elected and shall qualify or until his or her earlier resignation, removal from office, death or incapacity. Additional directorships resulting from an increase in number of directors shall be apportioned among the classes as equally as possible. The initial term of office of directors of Class I shall expire at the annual meeting of stockholders in 2017, the initial term of office of directors of Class II shall expire at the annual meeting of stockholders in 2018 and the initial term of office of directors of Class III shall expire at the annual meeting of stockholders in 2019.  At each annual meeting of stockholders a number of directors equal to the number of directors of the class whose term expires at the time of such meeting (or, if less, the number of directors properly nominated and qualified for election) shall be elected to hold office until the third succeeding annual meeting of stockholders after their election.

At each annual election, directors chosen to succeed those whose terms then expire shall be of the same class as the directors they succeed, unless by reason of any intervening changes in the authorized number of directors, the Board of Directors shall designate one or more directorships whose term then expires as directorships of another class in order to more nearly achieve equality of number of directors among the classes.

Notwithstanding the rule that the three classes shall be as nearly equal in number of directors as possible, in the event of any change in the authorized number of directors, each director then continuing to serve as such shall nevertheless continue as a director of the class of which such director is a member until the expiration of his or her current term, or his or her prior death, resignation or removal. If any newly created directorship may, consistently with the rule that the three classes shall be as nearly equal in number of directors as possible, be allocated to any class, the Board of Directors shall allocate it to that of the available class whose term of office is due to expire at the earliest date following such allocation.
 
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5.4            Vacancies .  Subject to applicable requirements of the Investment Company Act, including Section 16(b) thereunder, and except as may be provided by the Board of Directors in setting the terms of any class or series of Preferred Stock, any and all vacancies on the Board of Directors may be filled only by the affirmative vote of a majority of the remaining directors in office, even if the remaining directors do not constitute a quorum, and any director elected to fill a vacancy shall serve for the remainder of the full term of the directorship in which such vacancy occurred and until a successor is duly elected and qualifies.  Subject to the provisions of this Certificate of Incorporation, no decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.

5.5            Elections .  Except as may otherwise be provided in the Bylaws, directors shall be elected by the affirmative vote of the holders of a majority of the votes cast by stockholders present in person or by proxy at an annual or special meeting duly called for such purpose and entitled to vote thereat.  Election of directors to the Board of Directors need not be by ballot unless the Bylaws so provide.

5.6            Additional Preferred Stock Directors .  During any period when the holders of one or more series of Preferred Stock, due to the occurrence of an event or events, have the special right to elect additional directors who, together with the directors elected by the separate vote of the holders of one or more series of Preferred Stock prior to such event or events, constitute a majority of the total number of directors (the additional directors elected by the separate vote of such holders following such event, the “ Additional Preferred Directors ”), then upon commencement and for the duration of the period during which such right continues: (i) the then otherwise total authorized number of directors of the Corporation shall automatically be increased by such specified number of directors, and the holders of such Preferred Stock shall be entitled to elect the Additional Preferred Directors so provided for or fixed pursuant to said provisions, and (ii) each such Additional Preferred Director shall serve until the next meeting at which directors are elected and until his or her successor is duly elected and qualified, or until his or her right to hold such office terminates pursuant to said provisions, whichever occurs earlier, subject to his or her earlier death, resignation, retirement, disqualification or removal. Except as otherwise provided by the Board of Directors in the resolution or resolutions establishing such series, whenever the holders of any series of Preferred Stock having such right to elect Additional Preferred Directors are divested of such right pursuant to the provisions of such stock, the terms of office of all such additional directors elected by the holders of such stock, or elected to fill any vacancies resulting from the death, resignation, disqualification or removal of such additional directors, shall forthwith terminate, all such additional directors shall automatically cease to be qualified to serve as directors, and the total authorized number of directors of the Corporation shall be automatically reduced accordingly.
 
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ARTICLE VI

6.1            Limitation on Liability .  The directors of the Corporation shall be entitled to the benefits of all limitations on the liability of directors generally that are now or hereafter become available under the Delaware General Corporation Law, as amended from time to time.  Without limiting the generality of the foregoing, no director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit.  Any repeal or modification of this Article VI shall be prospective only, and shall not affect, to the detriment of any director, any limitation on the personal liability of a director of the Corporation existing at the time of such repeal or modification.

6.2            Indemnification .  The Corporation, to the full extent permitted by Section 145 of the Delaware General Corporation Law, as amended from time to time, shall indemnify all persons whom it may indemnify pursuant thereto.  Expenses (including attorneys’ fees) incurred by an officer or director in defending any civil, criminal, administrative, or investigative action, suit or proceeding for which such officer or director may be entitled to indemnification hereunder shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized hereby.

ARTICLE VII

7.1            Powers of Stockholders to Act by Written Consent .  Any action required or permitted to be taken at any annual or special meeting of the stockholders may be taken without a meeting if a unanimous consent which sets forth the action is given in writing or by electronic transmission by each stockholder entitled to vote on the matter and is filed with the records of the meetings of the stockholders.

7.2            Special Meetings of Stockholders .  Special meetings of the stockholders of the Corporation may be called only by the Chairman of the Board or the Chief Executive Officer/President of the Corporation or by a resolution adopted by the affirmative vote of a majority of the Board of Directors.

ARTICLE VIII

8.1            Transfer Restrictions .  A stockholder shall not transfer (whether by sale, gift, merger, by operation of law or otherwise), exchange, assign, pledge, hypothecate or otherwise dispose of or encumber (collectively, “ Transfer ”) any shares of Common Stock until 180 days after an initial public offering of the Corporation’s Common Stock that results in an unaffiliated public float of at least the lower of $75 million or 15% of the aggregate capital commitments received prior to the date of such initial public offering (a “ Qualified IPO ”) to any person or entity unless (i) the Corporation provides prior written consent and (ii) the Transfer is made in accordance with applicable securities and other laws. The Corporation may impose certain conditions in connection with granting its consent to a Transfer. Any purported Transfer of any shares of Common Stock effected in violation of this Article VIII shall be void ab initio and shall have no force or effect, and the Corporation shall not register or permit registration of (and shall direct its transfer agent, if any, not to register or permit registration of) any such purported Transfer on its books and records. This Article VIII, and the transfer restrictions set forth herein, shall automatically terminate upon a date established by the Corporation (which date shall be included in a notice to stockholders or disclosed in a public announcement) that is not more than 180 days after the consummation of a Qualified IPO.
 
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ARTICLE IX

9.1            Amendment .  The Corporation reserves the right to amend any provision contained in this Certificate as the same may from time to time be in effect in the manner now or hereafter prescribed by law, and all rights conferred on stockholders or others hereunder are subject to such reservation

9.2            Miscellaneous .  If any provision or provisions of this Certificate of Incorporation shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever: (i) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Certificate of Incorporation (including, without limitation, each portion of any paragraph of this Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (ii) to the fullest extent possible, the provisions of this Certificate of Incorporation (including, without limitation, each such portion of any paragraph of this Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Corporation to protect its directors, officers, employees and agents from personal liability in respect of their good faith service or for the benefit of the Corporation to the fullest extent permitted by law.
 
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9.3            Exclusive Forum . To the fullest extent permitted by law, unless the Corporation consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, the Bylaws or this Certificate of Incorporation, or the securities, antifraud, unfair trade practices or similar laws of any international, national, state, provincial, territorial, local or other governmental or regulatory authority, including, in each case, the applicable rules and regulations promulgated thereunder, or (iv) any action asserting a claim governed by the internal affairs doctrine shall be a federal or state court located in the state of Delaware. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed, to the fullest extent permitted by law, to have notice of and consented to the provisions of this Section 9.3 and to have irrevocably submitted to, and waived any objection to, the exclusive jurisdiction of such courts in connection with any such action or proceeding and consented to process being served in any such action or proceeding, without limitation, by United States mail addressed to the stockholder at the stockholder’s address as it appears on the records of the Corporation, with postage thereon prepaid.

[Remainder of Page Intentionally Left Blank]
 
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IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated Certificate of Incorporation to be executed by a duly authorized officer this 15 th day of August, 2016.

 
/s/ Sally F. Dornaus
 
Name: Sally F. Dornaus
 
Title: Chief Financial Officer
 
 
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Exhibit 3.2
 
BYLAWS

OF

BAIN CAPITAL SPECIALTY FINANCE, INC.

ARTICLE I.

OFFICES

1.1            Registered Office .  The registered office of Bain Capital Specialty Finance, Inc. (the “ Corporation ”) in the State of Delaware shall be established and maintained at Corporation Trust Center, 1209 Orange Street, Wilmington, County of New Castle, Delaware 19801 and The Corporation Trust Company shall be the registered agent of the Corporation in charge thereof.

1.2            Other Offices .  The Corporation may also have offices at such other places both within and without the State of Delaware as the board of directors of the Corporation (the “ Board of Directors ”) may from time to time determine or the business of the Corporation may require.

ARTICLE II.
 
MEETINGS OF STOCKHOLDERS

2.1            Place of Meetings .  All meetings of the stockholders shall be held at such time and place, either within or without the State of Delaware, as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting or in a duly executed waiver of notice thereof.

2.2            Annual Meetings .  The annual meeting of stockholders shall be held on such date and at such time as may be fixed by the Board of Directors and stated in the notice of the meeting, for the purpose of electing Directors and for the transaction of only such other business as is properly brought before the meeting in accordance with these bylaws (the “ Bylaws ”).

Written notice of an annual meeting stating the place, date and hour of the meeting, shall be given to each stockholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the annual meeting.

To be properly brought before the annual meeting, business must be either (i) brought before the annual meeting by or at the direction of the Board of Directors, (ii) pursuant to the notice of meeting or (iii) otherwise properly brought before the annual meeting by a stockholder who is entitled to vote at the meeting and who has complied with the advance notice procedures of these Bylaws.  In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation.  To be timely, the stockholder’s notice must be delivered by a nationally recognized courier service or mailed by first class United States mail, postage or delivery charges prepaid, and received at the principal executive offices of the Corporation addressed to the attention of the Secretary of the Corporation not less than ninety (90) days nor more than one hundred twenty (120) days in advance of the anniversary of the date the Corporation’s proxy statement was released to the stockholders in connection with the previous year’s annual meeting of stockholders; provided, however, that in the event that no annual meeting was held in the previous year or the date of the annual meeting has been changed by more than thirty (30) days from the date contemplated at the time of the previous year’s proxy statement, notice by the stockholder must be received by the Secretary of the Corporation not later than the close of business on the later of (x) the ninetieth (90th) day prior to such annual meeting and (y) the seventh (7th) day following the day on which public announcement of the date of such meeting is first made.  A stockholder’s notice to the Secretary shall set forth (i) as to each matter the stockholder proposes to bring before the annual meeting (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting and (b) any material interest of the stockholder in such business, and (ii) as to the stockholder giving the notice (a) the name and record address of the stockholder and (b) the class, series and number of shares of capital stock of the Corporation which are beneficially owned by the stockholder.  Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at the annual meeting except in accordance with the procedures set forth in this Section 2.2.  The officer of the Corporation presiding at an annual meeting shall, if the facts warrant, determine and declare to the annual meeting that business was not properly brought before the annual meeting in accordance with the provisions of this Section 2.2, and, if such officer should so determine, such officer shall so declare to the annual meeting and any such business not properly brought before the meeting shall not be transacted.
 
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2.3            Special Meetings .  Special meetings of the stockholders may be called for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation of the Corporation, as amended and/or restated from time to time (the “ Certificate of Incorporation ”), by the Secretary only at the request of the Chairman of the Board, the Chief Executive Officer/President or by a resolution duly adopted by the affirmative vote of a majority of the Board. Such request shall state the purpose or purposes of the proposed meeting. Business transacted at any special meeting shall be limited to matters relating to the purpose or purposes stated in the notice of meeting.

Unless otherwise provided by law, written notice of a special meeting of stockholders, stating the time, place and purpose or purposes thereof, shall be given to each stockholder entitled to vote at such meeting, not less than ten (10) or more than sixty (60) days before the date fixed for the meeting.  Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.

Nominations of persons for election to the Board of Directors at a special meeting may be made only (1) by or at the direction of the Board of Directors, (2) provided that the Board of Directors has determined that Directors will be elected at the meeting, by a stockholder who is entitled to vote at the meeting and who has complied with the advance notice provisions of the Bylaws.

2.4            Quorum .  The holders of at least one-third of the capital stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the Certificate of Incorporation.  If, however, such quorum shall not be present or represented at any meeting of the stockholders, the holders of a majority of the votes entitled to be cast by the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented.  At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed.  If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder entitled to vote at the meeting.
 
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2.5            Organization .  The Chairman of the Board of Directors shall act as chairman of meetings of the stockholders.  The Board of Directors may designate any other officer or Director of the Corporation to act as chairman of any meeting in the absence of the Chairman of the Board of Directors, and the Board of Directors may further provide for determining who shall act as chairman of any stockholders meeting in the absence of the Chairman of the Board of Directors and such designee.

The Secretary of the Corporation shall act as secretary of all meetings of the stockholders, but, in the absence of the Secretary, the presiding officer may appoint any other person to act as secretary of any meeting.

2.6            Voting .  Unless otherwise required by law, the Certificate of Incorporation or these Bylaws, any question (other than the election of Directors) properly brought before any meeting of stockholders shall be decided by the affirmative vote of the holders of a majority of the votes cast by stockholders present in person or by proxy at an annual or special meeting duly called for such purpose and entitled to vote thereat.  At all meetings of stockholders for the election of Directors, Directors shall be elected by the affirmative vote of the holders of a majority of the votes cast by stockholders present in person or by proxy at an annual or special meeting duly called for such purpose and entitled to vote thereat.  Each stockholder represented at a meeting of stockholders shall be entitled to cast one vote for each share of the capital stock entitled to vote thereat held by such stockholder, unless otherwise provided by the Certificate of Incorporation.  Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize any person or persons to act for him, her or it by proxy.  All proxies shall be executed in writing and shall be filed with the Secretary of the Corporation not later than the day on which exercised.  No proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period.  The Board of Directors, in its discretion, or the officer of the Corporation presiding at a meeting of stockholders, in his or her discretion, may require that any votes cast at such meeting shall be cast by written ballot.

2.7            Action of Shareholders Without Meeting .  Except as may otherwise be required by law or in the Certificate of Incorporation, any action required or permitted to be taken by stockholders at an annual meeting or special meeting of stockholders may only be taken if it is properly brought before such meeting and may not be taken by written action in lieu of a meeting.
 
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2.8            Voting List .  The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, showing the address of each stockholder and the number of shares registered in the name of each stockholder.  Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the election, either at a place within the city, town or village where the election is to be held, which place shall be specified in the notice of the meeting, or, if not specified, at the place where said meeting is to be held. The list shall be produced and kept at the time and place of election during the whole time thereof and may be inspected by any stockholder of the Corporation who is present.

2.9            Stock Ledger .  The stock ledger of the Corporation shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by Section 2.8 or the books of the Corporation, or to vote in person or by proxy at any meeting of stockholders.

2.10          Adjournment .  Any meeting of the stockholders, including one at which Directors are to be elected, may be adjourned for such periods as the presiding officer of the meeting or the stockholders present in person or by proxy and entitled to vote shall direct.

2.11          Ratification .  Any transaction questioned in any stockholders’ derivative suit, or any other suit to enforce alleged rights of the Corporation or any of its stockholders, on the ground of lack of authority, defective or irregular execution, adverse interest of any Director, officer or stockholder, nondisclosure, miscomputation or the application of improper principles or practices of accounting may be approved, ratified and confirmed before or after judgment by the Board of Directors or by the holders of common stock and, if so approved, ratified or confirmed, shall have the same force and effect as if the questioned transaction had been originally duly authorized, and said approval, ratification or confirmation shall be binding upon the Corporation and all of its stockholders and shall constitute a bar to any claim or execution of any judgment in respect of such questioned transaction.

2.12          Inspectors of Election .  The Corporation shall, in advance of any meeting of stockholders, appoint one or more inspectors to act at the meeting and make a written report thereof. The Corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his ability. The inspector shall: (1) decide upon the qualifications of voters; (2) ascertain the number of shares outstanding and the voting power of each; (3) determine the shares represented at a meeting and the validity of the proxies of ballots; (4) count all votes and ballots; (5) declare the results; (6) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors; and (7) certify their determination of the number of shares represented at the meeting, and their count of all votes and ballots. The inspectors may appoint or retain other persons or entities to assist the inspectors in the performance of the duties of the inspectors.
 
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ARTICLE III.
 
DIRECTORS

3.1            Powers; Number; Qualifications .  The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors, except as may be otherwise provided by law or in the Certificate of Incorporation.  The number of Directors which shall constitute the Board of Directors shall be not less than four (4) nor more than eight (8). The exact number of Directors shall be fixed from time to time, within the limits specified in this Section 3.1 or in the Certificate of Incorporation, by a majority of the Board of Directors.  Directors need not be stockholders of the Corporation.  The Board of Directors shall be divided into classes as more fully set forth in the Certificate of Incorporation.

3.2            Election; Term of Office; Resignation; Removal; Vacancies .  Each Director shall hold office until the next annual meeting of stockholders at which his or her class stands for election or until such Director’s earlier resignation, removal from office, death or incapacity.  Unless otherwise provided in the Certificate of Incorporation, vacancies and newly created directorships resulting from any increase in the authorized number of Directors or from any other cause may be filled by a majority of the Directors then in office, although less than a quorum, and each Director so chosen shall hold office until the next annual meeting and until such Director’s successor shall be duly elected and shall qualify, or until such Director’s earlier resignation, removal from office, death or incapacity.

3.3            Nominations .  Nominations of persons for election to the Board of Directors of the Corporation at a meeting of stockholders of the Corporation may be made only (i) by or at the direction of the Board of Directors, (ii) pursuant to the notice of meeting or (iii) by a stockholder who is entitled to vote at the meeting and who has complied with the advance notice procedures of these Bylaws.  Such nominations by any stockholder shall be made pursuant to timely notice in writing to the Secretary of the Corporation.  To be timely, the stockholder’s notice must be delivered by a nationally recognized courier service or mailed by first class United States mail, postage or delivery charges prepaid, and received at the principal executive offices of the Corporation addressed to the attention of the Secretary of the Corporation not less than ninety (90) days nor more than one hundred twenty (120) days in advance of the anniversary of the date the Corporation’s proxy statement was released to the stockholders in connection with the previous year’s annual meeting of stockholders; provided, however, that in the event that no annual meeting was held in the previous year or the date of the annual meeting has been changed by more than thirty (30) days from the date contemplated at the time of the previous year’s proxy statement, notice by the stockholder must be received by the Secretary of the Corporation not later than the close of business on the later of (x) the ninetieth (90th) day prior to such annual meeting and (y) the seventh (7th) day following the day on which public announcement of the date of such meeting is first made.  Such stockholder’s notice to the Secretary shall set forth (i) as to each person whom the stockholder proposes to nominate for election or reelection as a Director, (a) the name, age, business address and residence address of the person, (b) the principal occupation or employment of the person, (c) the class and number of shares of capital stock of the Corporation which are beneficially owned by the person and (d) any other information relating to the person that is required to be disclosed in solicitations for proxies for election of Directors pursuant to the rules and regulations of the Securities and Exchange Commission under Section 14 of the Securities Exchange Act of 1934, as amended, and (ii) as to the stockholder giving the notice (a) the name and record address of the stockholder and (b) the class and number of shares of capital stock of the Corporation which are beneficially owned by the stockholder.  The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as a Director of the Corporation.  No person shall be eligible for election as a Director of the Corporation unless nominated in accordance with the procedures set forth herein.  The officer of the Corporation presiding at an annual meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if he or she should so determine, he or she shall so declare to the meeting and the defective nomination shall be disregarded.
 
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3.4            Meetings .  The Board of Directors may hold meetings, both regular and special, either within or without the State of Delaware.  The first meeting of each newly elected Board of Directors shall be held immediately after and at the same place as the meeting of the stockholders at which it is elected and no notice of such meeting shall be necessary to the newly elected Directors in order to legally constitute the meeting, provided a quorum shall be present.  Regular meetings of the Board of Directors may be held without notice at such time and place as shall from time to time be determined by the Board of Directors.  Special meetings of the Board of Directors may be called by the Chief Executive Officer/President or a majority of the entire Board of Directors.  Notice thereof stating the place, date and hour of the meeting shall be given to each Director either by mail not less than forty-eight (48) hours before the date of the meeting, by telephone, facsimile or e-mail on twenty-four (24) hours’ notice, or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances.

3.5            Quorum .  Except as may be otherwise specifically provided by law, the Certificate of Incorporation or these Bylaws, at all meetings of the Board of Directors or any committee thereof, a majority of the entire Board of Directors or such committee, as the case may be, shall constitute a quorum for the transaction of business and the act of a majority of the Directors present at any meeting at which there is a quorum shall be the act of the Board of Directors.  If a quorum shall not be present at any meeting of the Board of Directors or of any committee thereof, a majority of the Directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

3.6            Organization of Meetings .  The Board of Directors shall elect one of its members to be Chairman of the Board of Directors.  The Chairman of the Board of Directors shall lead the Board of Directors in fulfilling its responsibilities as set forth in these Bylaws, including its responsibility to oversee the performance of the Corporation, and shall determine the agenda and perform all other duties and exercise all other powers which are or from time to time may be delegated to him or her by the Board of Directors.

Meetings of the Board of Directors shall be presided over by the Chairman of the Board of Directors, or in his or her absence, by the Chief Executive Officer/President to the extent he or she is a Director, or in the absence of the Chairman of the Board of Directors and the Chief Executive Officer/President by such other person as the Board of Directors may designate or the members present may select.
 
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3.7            Actions of Board of Directors Without Meeting .  Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board of Directors or of such committee, as the case may be, consent thereto in writing, or by electronic transmission, and the writing or writings or electronic transmission are filed with the minutes of proceedings of the Board of Directors or committee.

3.8            Removal of Directors by Stockholders .  The entire Board of Directors or any individual Director may be removed from office for cause by a 66 2/3% vote of the holders of the outstanding shares then entitled to vote at an election of Directors.  In case the Board of Directors or any one or more Directors be so removed, new Directors may be elected at the same time for the unexpired portion of the full term of the Director or Directors so removed.

3.9            Resignations .  Any Director may resign at any time by submitting his or her written resignation to the Board of Directors or Secretary of the Corporation.  Such resignation shall take effect at the time of its receipt by the Corporation unless another time be fixed in the resignation, in which case it shall become effective at the time so fixed.  The acceptance of a resignation shall not be required to make it effective.

3.10          Committees .  The Board of Directors may designate one or more committees, each committee to consist of one or more of the Directors of the Corporation.  In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he, she or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.  Any such committee, to the extent provided by law and in the resolution of the Board of Directors establishing such committee, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation’s property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution or amending the Bylaws; and, unless the resolution expressly so provides, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a merger.  Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required.

3.11          Compensation .  Unless restricted by the Certificate of Incorporation or these Bylaws, the Directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed amount (in cash or other form of consideration) for attendance at each meeting of the Board of Directors or a stated salary as Director, as determined by the Board of Directors from time to time.  No such payment shall preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor.  Members of special or standing committees may be allowed like compensation for attending committee meetings, as determined by the Board of Directors from time to time.
 
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3.12          Interested Directors .  No contract or transaction between the Corporation and one or more of its Directors or officers, or between the Corporation and any other corporation, partnership, association, or other organization in which one or more of its Directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the Director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because his, her or their votes are counted for such purpose, if (i) the material facts as to his, her or their relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested Directors, even though the disinterested Directors be less than a quorum, (ii) the material facts as to his, her or their relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders or (iii) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee thereof or the stockholders.  Common or interested Directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction.

3.13          Meetings by Means of Conference Telephone .  Members of the Board of Directors or any committee designed by the Board of Directors may participate in a meeting of the Board of Directors or of a committee of the Board of Directors by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 3.13 shall constitute presence in person at such meeting.

ARTICLE IV.
 
OFFICERS

4.1            General .  The officers of the Corporation shall be elected by the Board of Directors and may consist of: a Chief Executive Officer/President, Chief Financial Officer, Chief Compliance Officer, Secretary and Treasurer.  The Board of Directors, in its discretion, may also elect one or more Vice Presidents (including Executive Vice Presidents and Senior Vice Presidents), Assistant Secretaries, Assistant Treasurers, a Controller and such other officers as in the judgment of the Board of Directors may be necessary or desirable.  Any number of offices may be held by the same person and more than one person may hold the same office, unless otherwise prohibited by law, the Certificate of Incorporation or these Bylaws.  The officers of the Corporation need not be stockholders of the Corporation, nor need such officers be Directors of the Corporation.

4.2            Election .  The Board of Directors at its first meeting held after each annual meeting of stockholders shall elect the officers of the Corporation who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors; and all officers of the Corporation shall hold office until their successors are chosen and qualified, or until their earlier resignation or removal.  Any vacancy occurring in any office of the Corporation shall be filled by the Board of Directors.  The salaries of all officers who are Directors of the Corporation shall be fixed by the Board of Directors or a committee thereof.
 
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4.3            Voting Securities Owned by the Corporation .  Powers of attorney, proxies, waivers of notice of meeting, consents and other instruments relating to securities owned by the Corporation may be executed in the name of and on behalf of the Corporation by the Chief Executive Officer/President or any Vice President, and any such officer may, in the name and on behalf of the Corporation, take all such action as any such officer may deem advisable to vote in person or by proxy at any meeting of security holders of any corporation in which the Corporation may own securities and at any such meeting shall possess and may exercise any and all rights and powers incident to the ownership of such securities and which, as the owner thereof, the Corporation might have exercised and possessed if present.  The Board of Directors may, by resolution, from time to time confer like powers upon any other person or persons.

4.4            Chief Executive Officer/President .  Subject to the provisions of these Bylaws and to the control of the Board of Directors, the Chief Executive Officer/President shall have general supervision, direction and control of the business and the officers of the Corporation. He or she shall have the general powers and duties of management usually vested in the chief executive officer and president of a corporation, including general supervision, direction and control of the business and supervision of other officers of the Corporation, and shall have such other powers and duties as may be prescribed by the Board of Directors.

4.5            Chief Compliance Officer .  The Chief Compliance Officer shall have general responsibility for the compliance matters of the Corporation and shall perform such other duties and exercise such other powers which are or from time to time may be delegated to him or her by the Board of Directors or these Bylaws, all in accordance with policies as established by and subject to oversight of the Board of Directors.  Additionally, the Chief Compliance Officer shall, no less than annually, (i) provide a written report to the Board of Directors, the content of which shall comply with Rule 38a-1 of the Investment Company Act of 1940, as amended (the “ 1940 Act ”), and (ii) meet separately with the Corporation’s independent Directors.

4.6            Chief Financial Officer .  The Chief Financial Officer shall have general supervision, direction and control of the financial affairs of the Corporation and shall perform such other duties and exercise such other powers which are or from time to time may be delegated to him or her by the Board of Directors or these Bylaws, all in accordance with policies as established by and subject to the oversight of the Board of Directors.  In the absence of a named Treasurer, the Chief Financial Officer shall also have the powers and duties of the Treasurer as hereinafter set forth and shall be authorized and empowered to sign as Treasurer in any case where such officer’s signature is required.

4.7            Vice Presidents. In the absence or disability of the Chief Executive Officer/President, the Vice Presidents, if any, in order of their rank as fixed by the Board of Directors, or, if not ranked, a vice president designated by the Board of Directors, shall perform all the duties of the chief executive officer and president and when so acting shall have all the powers of, and be subject to all the restrictions upon, the Chief Executive Officer/President. The Vice Presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board of Directors, these Bylaws, the Chief Executive Officer/President or the Chairman of the Board of Directors.
 
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4.8            Secretary .  The Secretary shall attend all meetings of the Board of Directors and all meetings of stockholders and record all the proceedings thereat in a book or books to be kept for that purpose; the Secretary shall also perform like duties for the standing committees when required.  The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or the Chief Executive Officer/President, under whose supervision the Secretary shall be.  If the Secretary shall be unable or shall refuse to cause to be given notice of all meetings of the stockholders and special meetings of the Board of Directors, then any Assistant Secretary shall perform such actions.  If there is no Assistant Secretary, then the Board of Directors or the Chief Executive Officer/President may choose another officer to cause such notice to be given.  The Secretary shall have custody of the seal of the Corporation and the Secretary or any Assistant Secretary, if there is one, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by the signature of the Secretary or by the signature of any such Assistant Secretary.  The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by his signature.  The Secretary shall see that all books, reports, statements, certificates and other documents and records required by law to be kept or filed are properly kept or filed, as the case may be.

4.9            Treasurer .  The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors.  The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the Chief Executive Officer/President and the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all his transactions as Treasurer and of the financial condition of the Corporation.  If required by the Board of Directors, the Treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his or her office and for the restoration to the Corporation, in case of his or her death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his or her possession or under his or her control belonging to the Corporation.

4.10          Assistant Secretaries .  Except as may be otherwise provided in these Bylaws, Assistant Secretaries, if there are any, shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, the Chief Executive Officer/President, any Vice President, if there is one, or the Secretary, and in the absence of the Secretary or in the event of his or her disability or refusal to act, shall perform the duties of the Secretary, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Secretary.
 
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4.11          Assistant Treasurers .  Assistant Treasurers, if there are any, shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, the Chief Executive Officer/President, any Vice President, if there is one, or the Treasurer, and in the absence of the Treasurer or in the event of his or her disability or refusal to act, shall perform the duties of the Treasurer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Treasurer.  If required by the Board of Directors, an Assistant Treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his or her office and for the restoration to the Corporation, in case of his or her death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his or her possession or under his or her control belonging to the Corporation.

4.12          Controller .  The Controller shall establish and maintain the accounting records of the Corporation in accordance with generally accepted accounting principles applied on a consistent basis, maintain proper internal control of the assets of the Corporation and shall perform such other duties as the Board of Directors, the Chief Executive Officer/President or any Vice President of the Corporation may prescribe.

4.13          Other Officers .  Such other officers as the Board of Directors may choose shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors.  The Board of Directors may delegate to any other officer of the Corporation the power to choose such other officers and to prescribe their respective duties and powers.

4.14          Vacancies .  The Board of Directors shall have the power to fill any vacancies in any office occurring from whatever reason.

4.15          Resignations .  Any officer may resign at any time by submitting his or her written resignation to the Corporation.  Such resignation shall take effect at the time of its receipt by the Corporation, unless another time be fixed in the resignation, in which case it shall become effective at the time so fixed.  The acceptance of a resignation shall not be required to make it effective.

4.16          Removal .  Subject to the provisions of any employment agreement approved by the Board of Directors, any officer of the Corporation may be removed at any time, with or without cause, by the affirmative vote of a majority of the Board of Directors.

4.17          Contracts and Other Documents .  The Chief Executive Officer/President, Chief Financial Officer and the Secretary, or such other officer or officers as may from time to time be authorized by the Board of Directors or any other committee given specific authority in the premises by the Board of Directors during the intervals between the meetings of the Board of Directors, shall have power to sign and execute on behalf of the Corporation deeds, conveyances and contracts, and any and all other documents requiring execution by the Corporation.
 
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ARTICLE V.
 
CAPITAL STOCK

5.1            Uncertificated Stock .  The interest of each stockholder of the Corporation shall be evidenced by shares of stock which are in uncertificated form, unless otherwise required by law, and such stock shall be entered on the books of the Corporation and registered as issued.  Within a reasonable time after the issuance or transfer of uncertificated stock, the Corporation shall send to the registered owner thereof a written notice that shall contain such information as required under Delaware law.  If the Corporation provides for certificated stock, any certificates representing stock shall be in such form as the appropriate officers of the Corporation may from time to time prescribe and such certificates shall be signed, countersigned and registered in such manner as the Board of Directors may by resolution prescribe.

5.2            Transfers .  Stock of the Corporation shall be transferable in the manner prescribed by law and in these Bylaws.  Transfers of stock shall be made on the books of the Corporation only by the registered owner, or by his, her or its attorney lawfully constituted in writing. Stock of the Corporation which is uncertificated shall, upon the receipt of proper transfer instructions from the registered owner of uncertificated stock, be cancelled and issuance of new equivalent uncertificated stock shall be made to the stockholder entitled thereto. It shall be the duty of the Corporation to issue evidence of the issuance of uncertificated stock to the stockholder entitled thereto and record the transaction upon the Corporation’s books, unless the Corporation has a duty to inquire as to adverse claims with respect to such transfer which has not been discharged.  The Corporation shall have no duty to inquire into adverse claims with respect to such transfer unless (i) the Corporation has received a written notification of an adverse claim at a time and in a manner which affords the Corporation a reasonable opportunity to act on it prior to the registration of the stock on the books of the Corporation and the notification identifies the claimant, the registered owner and the issue of which the share or shares is a part and provides an address for communications directed to the claimant or (ii) the Corporation has required and obtained, with respect to a fiduciary, a copy of a will, trust, indenture, articles of co-partnership, bylaws or other controlling instruments, for a purpose other than to obtain appropriate evidence of the appointment or incumbency of the fiduciary, and such documents indicate, upon reasonable inspection, the existence of an adverse claim.  The Corporation may discharge any duty of inquiry by any reasonable means, including notifying an adverse claimant by registered or certified mail at the address furnished by him, her or its, if there be no such address, at his, her or its residence or regular place of business that the security has been presented for registration of transfer by a named person, and that the transfer will be registered unless within thirty days from the date of mailing the notification, either (i) an appropriate restraining order, injunction or other process issues from a court of competent jurisdiction or (ii) an indemnity bond, sufficient in the Corporation’s judgment to protect the Corporation and any transfer agent, registrar or other agent of the Corporation involved from any loss which it or they may suffer by complying with the adverse claim, is filed with the Corporation.

5.3            Fixing Record Date .  In order that the Corporation may determine the stockholders entitled to notice or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than ten (10) days after the date upon which the resolution fixing the record date of action without a meeting is adopted by the Board of Directors, nor more than sixty (60) days prior to any other action.  If no record date is fixed:
 
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(a)            The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held;

(b)            The record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is necessary, shall be the first date on which a signed written consent is delivered to the Corporation; or

(c)            The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

5.4            Registered Stockholders .  Prior to due presentment for transfer of any share or shares, the Corporation shall treat the registered owner thereof as the person exclusively entitled to vote, to receive notifications and to all other benefits of ownership with respect to such share or shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State Delaware.

ARTICLE VI.
 
NOTICES

6.1            Form of Notice .  Notices to Directors and stockholders other than notices to Directors of special meetings of the Board of Directors which may be given by any means stated in Section 3.4, shall be in writing and delivered personally or mailed to the Directors or stockholders at their addresses appearing on the books of the Corporation.  Notice by mail shall be deemed to be given at the time when the same shall be mailed.

6.2            Waiver of Notice .  Whenever any notice is required to be given under the provisions of law or the Certificate of Incorporation or by these Bylaws, a written waiver, signed by the person or persons entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice.  Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.  Neither the business to be transacted at, nor the purpose of, any regular, or special meeting of the stockholders, Directors, or members of a committee of Directors need be specified in any written waiver of notice unless so required by the Certificate of Incorporation.
 

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ARTICLE VII.
 
INDEMNIFICATION OF DIRECTORS AND OFFICERS

7.1            The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he or she is or was a Director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful.  The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful.

7.2            The Corporation shall indemnify any person who was or is a party, or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he or she is or was a Director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by him or her in connection with the defense or settlement of such action or suit if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

7.3            To the extent that a present or former Director or officer of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 7.1 or 7.2, or in defense of any claim, issue or matter therein, he or she shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him or her in connection therewith.
 
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7.4            Any indemnification under Sections 7.1 or 7.2 (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the Director or officer is proper in the circumstances because he or she has met the applicable standard of conduct set forth in such section.  Such determination shall be made:

(a)            by the Board of Directors by a majority vote of a quorum consisting of Directors who were not parties to such action, suit or proceeding, even though less than a quorum;

(b)            by a committee of such Directors designated by majority vote of such Directors, even though less than a quorum;

(c)            by independent legal counsel in a written opinion, if there are no such Directors, or such Directors so direct; or

(d)            by the stockholders.

7.5            Expenses (including attorneys’ fees) incurred by an officer or Director in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such Director or officer to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Corporation as authorized in this Section.  Such expenses (including attorneys’ fees) incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the Board of Directors deems appropriate.

7.6            The indemnification and advancement of expenses provided by, or granted pursuant to the other sections of this Article shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested Directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office.

7.7            The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a Director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under the provisions of this Article.

7.8            For purposes of this Article, references to “the Corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this Article with respect to the resulting or surviving corporation as he or she would have with respect to such constituent corporation if its separate existence had continued.
 
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7.9            For purposes of this Article, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to “serving at the request of the Corporation” shall include any service as a Director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such Director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he or she reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation” as referred to in this Article.

7.10          The indemnification and advancement of expenses provided by, or granted pursuant to, this Article shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a Director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

7.11          No Director or officer of the Corporation shall be personally liable to the Corporation or to any stockholder of the Corporation for monetary damages for breach of fiduciary duty as a Director or officer, provided that this provision shall not limit the liability of a Director or officer (i) for any breach of the Director’s or the officer’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the General Corporation Law of the State of Delaware or (iv) for any transaction from which the Director or officer derived an improper personal benefit.

ARTICLE VIII.
 
GENERAL PROVISIONS

8.1            Reliance on Books and Records .  Each Director, each member of any committee designated by the Board of Directors, and each officer of the Corporation, shall, in the performance of his or her duties, be fully protected in relying in good faith upon the books of account or other records of the Corporation, including reports made to the Corporation by any of its officers, by an independent certified public accountant or by an appraiser selected with reasonable care.

8.2            Maintenance and Inspection of Records .  The Corporation shall, either at its principal executive office or at such place or places as designated by the Board of Directors, keep a record of its stockholders listing their names and addresses and the number and class of shares held by each stockholder, a copy of these Bylaws, as may be amended to date, minute books, accounting books and other records.
 
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Any such records maintained by the Corporation may be kept on, or by means of, or be in the form of, any information storage device or method, provided that the records so kept can be converted into clearly legible paper form within a reasonable time. The Corporation shall so convert any records so kept upon the request of any person entitled to inspect such records pursuant to the provisions of the General Corporation Law of the State of Delaware. When records are kept in such manner, a clearly legible paper form produced from or by means of the information storage device or method shall be admissible in evidence, and accepted for all other purposes, to the same extent as an original paper form accurately portrays the record.

Any stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the Corporation’s stock ledger, a list of its stockholders and its other books and records and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person’s interest as a stockholder. In every instance where an attorney or other agent is the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing that authorizes the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to the Corporation at its registered office in Delaware or at its principal executive office.

8.3            Inspection by Directors .  Any Director shall have the right to examine the Corporation’s stock ledger, a list of its stockholders and its other books and records for a purpose reasonably related to his or her position as a Director.

8.4            Dividends and Distributions .  Subject to the provisions of the Certificate of Incorporation, if any, dividends and other distributions upon the capital stock of the Corporation may be declared by the Board of Directors at any regular or special meeting, pursuant to applicable law.  Dividends and other distributions may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the Certificate of Incorporation.  Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purpose as the Directors shall think conducive to the interest of the Corporation, and the Directors may modify or abolish any such reserve in the manner in which it was created.

8.5            Annual Statement .  The Board of Directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the Corporation.

8.6            Checks .  All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other persons as the Board of Directors may from time to time designate.

8.7            Fiscal Year .  The fiscal year of the Corporation shall be as determined by the Board of Directors.  If the Board of Directors shall fail to do so, the Chief Executive Officer/President shall fix the fiscal year.
 
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8.8            Seal .  The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the words “Corporate Seal, Delaware.”  The seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any manner reproduced.

8.9            Amendments .  The original or other bylaws may be adopted, amended or repealed by the stockholders entitled to vote thereon at any regular or special meeting or, if the Certificate of Incorporation so provides, by the Board of Directors.  The fact that such power has been so conferred upon the Board of Directors shall not divest the stockholders of the power nor limit their power to adopt, amend or repeal bylaws.

8.10          Interpretation of Bylaws .  All words, terms and provisions of these Bylaws shall be interpreted and defined by and in accordance with the General Corporation Law of the State of Delaware, as amended, and as amended from time to time hereafter.

8.11          Conflict with 1940 Act .  If and to the extent that any provision of the General Corporation Law of the State of Delaware, as amended, or any provision of these Bylaws shall conflict with any provision of the 1940 Act, the applicable provision of the 1940 Act shall control.

July 12, 2016
 

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Exhibit 10.1
 
INVESTMENT ADVISORY AGREEMENT

BETWEEN

BAIN CAPITAL SPECIALTY FINANCE, INC.

AND

BCSF ADVISORS, LP

Investment Advisory Agreement made this [   ] day of October, 2016 (this “Agreement”), by and between BAIN CAPITAL SPECIALTY FINANCE, INC., a Delaware corporation (the “Company”), and BCSF ADVISORS, LP, a Delaware limited partnership (the “Advisor”).

WHEREAS, the Company operates as a closed-end, non-diversified management investment company;

WHEREAS, the Company has filed an election to be treated as a business development company under the Investment Company Act of 1940, as amended (the “Investment Company Act”);

WHEREAS, the Advisor is registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Investment Advisers Act”);

WHEREAS, the Company and the Advisor desire to enter into this Agreement to set forth the terms and conditions for the provision by the Advisor of investment advisory services to the Company.

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the parties hereby agree as follows:

1.               Duties of the Advisor.

(a)             The Company hereby employs the Advisor to act as the investment adviser to the Company and to manage the investment and reinvestment of the assets of the Company, subject to the supervision of the board of directors of the Company (the “Board of Directors”), for the period and upon the terms herein set forth, (i) in accordance with the investment objective, policies and restrictions that are set forth in the Registration Statement of the Company, as the same may be amended from time to time, (ii) in accordance with the Investment Company Act, the Investment Advisers Act and all other applicable federal and state law and (iii) in accordance with the Company’s certificate of incorporation and bylaws. Without limiting the generality of the foregoing, the Advisor shall, during the term and subject to the provisions of this Agreement, (i) determine the composition of the portfolio of the Company, the nature and timing of the changes therein and the manner of implementing such changes; (ii) identify, evaluate and negotiate the structure of the investments made by the Company (including performing due diligence on prospective portfolio companies); (iii) execute, close, service and monitor the Company’s investments; (iv) determine the securities and other assets that the Company will purchase, retain or sell; and (v) provide the Company with such other investment advisory, research and related services as the Company may, from time to time, reasonably require for the investment of its funds. The Advisor shall have the power and authority on behalf of the Company to effectuate its investment decisions for the Company, including the execution and delivery of all documents relating to the Company’s investments and the placing of orders for other purchase or sale transactions on behalf of the Company. In the event that the Company determines to acquire debt financing or to refinance existing debt financing, the Advisor shall arrange for such financing on the Company’s behalf, subject to the oversight and approval of the Board of Directors. If it is necessary for the Advisor to make investments on behalf of the Company through a subsidiary or special purpose vehicle, the Advisor shall have authority to create or arrange for the creation of such subsidiary or special purpose vehicle and to make such investments through such subsidiary or special purpose vehicle in accordance with the Investment Company Act.
 
(b)             The Advisor hereby accepts such employment and agrees during the term hereof to render the services described herein for the amounts of compensation provided herein.

(c)             Subject to the requirements of the Investment Company Act, the Advisor is hereby authorized, but not required, to enter into one or more sub-advisory agreements with other investment advisers (each, a “Sub-Advisor”) pursuant to which the Advisor may obtain the services of the Sub-Advisor(s) to assist the Advisor in fulfilling its responsibilities hereunder. Specifically, the Advisor may retain a Sub-Advisor to recommend specific securities or other investments based upon the Company’s investment objective and policies, and work, along with the Advisor, in structuring, negotiating, arranging or effecting the acquisition or disposition of such investments and monitoring investments on behalf of the Company, subject in all cases to the oversight of the Advisor and the Company. The Advisor, and not the Company, shall be responsible for any compensation payable to any Sub-Advisor. Any sub-advisory agreement entered into by the Advisor shall be in accordance with the requirements of the Investment Company Act, the Investment Advisers Act and other applicable federal and state law.

(d)             For all purposes herein provided, the Advisor shall be deemed to be an independent contractor and, except as expressly provided or authorized herein, shall have no authority to act for or represent the Company in any way or otherwise be deemed an agent of the Company.

(e)             The Advisor shall keep and preserve, in the manner and for the period that would be applicable to investment companies registered under the Investment Company Act, any books and records relevant to the provision of its investment advisory services to the Company, shall specifically maintain all books and records with respect to the Company’s portfolio transactions and shall render to the Board of Directors such periodic and special reports as the Board of Directors may reasonably request. The Advisor agrees that all records that it maintains for the Company are the property of the Company and shall surrender promptly to the Company any such records upon the Company’s request, provided that the Advisor may retain a copy of such records.

2.               Company’s Responsibilities and Expenses Payable by the Company.

(a)             All investment professionals of the Advisor and their respective staffs, when and to the extent engaged in providing investment advisory and management services hereunder, and the compensation and routine overhead expenses of such personnel allocable to such services, shall be provided and paid for by the Advisor and not by the Company. The Company shall bear all other costs and expenses of its operations and transactions, including, without limitation, those relating to: (a) initial organization costs incurred prior to the commencement of the Company’s operations (up to an aggregate of $1,500,000, it being understood and agreed that the Adviser shall bear all organizational expenses of the Company in excess of such amount); (b) operating costs incurred prior to the commencement of the Company’s operations; (c) calculating the Company’s net asset value (including the cost and expenses of any independent valuation firm); (d) fees and expenses, including travel expenses, incurred by the Advisor or payable to third parties in performing due diligence on prospective portfolio companies, monitoring the Company’s investments and, if necessary, enforcing the Company’s rights; (e) interest payable on debt, if any, incurred to finance the Company’s investments; (f) costs of effecting sales and repurchases of the Company’s common stock and other securities; (g) the Base Management Fee and any Incentive Fee (each as defined below); (h) distributions on the Company’s common stock; (i) administration fees payable to BSCF Advisors, LP in its capacity as administrator (the “Administrator”) under the Administration Agreement dated as of October [  ], 2016 (the “Administration Agreement”); (j) transfer agent and custody fees and expenses; (k) the allocated costs incurred by the Administrator in providing managerial assistance to those portfolio companies that request it; (l) other expenses incurred by the Advisor, the Administrator, the sub-administrator or the Company in connection with administering its business, including payments made to third-party providers of goods or services and payments to the Administrator that will be based upon the Company’s allocable portion of overhead; (m) amounts payable to third parties relating to, or associated with, evaluating, making and disposing of investments; (n) brokerage fees and commissions; (o) federal and state registration fees; (p) any stock exchange listing fees; (q) taxes; (r) independent director fees and expenses; (s) costs associated with the Company’s reporting and compliance obligations under the Investment Company Act and applicable U.S. federal and state securities laws; (t) the costs of any reports, proxy statements or other notices to the Company’s stockholders, including printing costs; (u) costs of holding stockholder meetings; (v) the Company’s fidelity bond; (w) directors and officers/errors and omissions liability insurance, and any other insurance premiums; (x) litigation, indemnification and other non-recurring or extraordinary expenses; (y) direct costs and expenses of administration and operation, including printing, mailing, long distance telephone, staff, audit and legal costs; (z) fees and expenses associated with marketing efforts; (aa) dues, fees and charges of any trade association of which the Company is a member; and (bb) all other expenses reasonably incurred by the Company, the Administrator or the sub-administrator in connection with administering the Company’s business, such as the allocable portion of overhead under the Administration Agreement, including rent and the Company’s allocable portion of the costs and expenses of its chief compliance officer, chief financial officer and their respective staffs.
 
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(b)             To the extent that expenses to be borne by the Company are paid by the Advisor, the Company will reimburse the Advisor for such expenses; provided, however, that the Advisor agrees to waive its right to reimbursement to the extent that it would cause any distributions to the Company’s stockholders to constitute a return of capital.

3.               Compensation of the Advisor. The Company agrees to pay, and the Advisor agrees to accept, as compensation for the investment advisory and management services provided by the Advisor hereunder, a fee consisting of two components:  a base management fee (the “Base Management Fee”) and an incentive fee (the “Incentive Fee”), each as hereinafter set forth. The Company shall make any payments due hereunder to the Advisor or to the Advisor’s designee as the Advisor may otherwise direct. To the extent permitted by applicable law, the Advisor may elect, or adopt a deferred compensation plan pursuant to which it may elect to defer all or a portion of its fees hereunder for a specified period of time.

(a)             The Base Management Fee shall be calculated at an annual rate equal to 1.50% of the gross assets of the Company, including assets purchased with borrowed funds or other forms of leverage but excluding cash and cash equivalents. For services rendered under this Agreement, the Base Management Fee shall be payable quarterly in arrears. The Base Management Fee shall be calculated based on the average carrying value of the gross assets of the Company at the end of the two most recently completed calendar quarters. Such amount shall be appropriately adjusted (based on the actual number of days elapsed relative to the total number of days in such calendar quarter) for any share issuances or repurchases by the Company during a calendar quarter. The Base Management Fee for any partial month or quarter shall be appropriately pro-rated (based on the number of days actually elapsed at the end of such partial month or quarter relative to the total number of days in such month or quarter). For purposes of this Agreement, cash equivalents shall mean U.S. government securities and commercial paper instruments maturing within one year of purchase of such instrument by the Company. The fair value of derivative financial instruments held in the Company's portfolio will be included in the calculation of gross assets of the Company.
 
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(b)             The Incentive Fee shall consist of two parts—an incentive fee based on income and an incentive fee based on capital gains, as follows:

(i) The part of the Incentive Fee based on income (the “Income Fee”) will be calculated and payable quarterly in arrears based on the Company’s Pre-Incentive Fee Net Investment Income for the immediately preceding calendar quarter. For this purpose, Pre-Incentive Fee Net Investment Income means the Company’s interest income, distribution income and any other income (including any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies but excluding fees for providing managerial assistance) accrued during the calendar quarter, minus the Company’s operating expenses for the quarter (including the Base Management Fee, expenses payable under the Administration Agreement with the Administrator and any interest expense and distributions paid on any issued and outstanding debt or preferred stock, but excluding the Incentive Fee). Pre-Incentive Fee Net Investment Income includes, in the case of investments with a deferred interest feature (such as market discount, original issue discount, debt instruments with payment-in-kind (“PIK”) interest, preferred stock with PIK dividends and zero coupon securities), accrued income that the Company has not yet received in cash. Pre-Incentive Fee Net Investment Income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation.

Pre-Incentive Fee Net Investment Income will be compared to a “Hurdle Amount” equal to the product of (i) the “hurdle rate” of 1.50% per quarter (6.00% annualized) and (ii) the Company’s net assets (defined as total assets less indebtedness and before taking into account any Incentive Fees payable during the period) at the end of the immediately preceding calendar quarter. There is also a “catch-up” feature described in detail below.

For purposes of computing Pre-Incentive Fee Net Investment Income, the calculation methodology will look through derivative financial instruments or swaps as if the Company owned the reference assets directly. Therefore, net interest income, if any, associated with a derivative financial instrument or swap (which represents the difference between (i) the interest income and fees received in respect of the reference assets of the derivative financial instrument or swap and (ii) the interest expense or financing charges paid by the Company to the derivative or swap counterparty) will be included in the calculation of Pre-Incentive Fee Net Investment Income for purposes of the Income Fee.

Prior to the occurrence of an initial public offering of the Company’s common stock that results in an unaffiliated public float of at least the lower of (i) $75 million and (ii) 15% of the aggregate capital commitments received by the Company prior to the date of such initial public offering (a “Qualified IPO”), the Company will pay the Income Fee in each calendar quarter as follows:
 
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1.            no Income Fee in any calendar quarter in which the Company’s Pre-Incentive Fee Net Investment Income does not exceed the Hurdle Amount;

2.            100% of the Company’s Pre-Incentive Fee Net Investment Income with respect to that portion of such Pre-Incentive Fee Net Investment Income, if any, that exceeds the Hurdle Amount but is less than or equal to an amount (the “Pre-Qualified IPO Catch-Up Amount”) determined on a quarterly basis by multiplying 1.7647% by the Company’s net asset value at the beginning of each applicable calendar quarter. The Pre-Qualified IPO Catch-Up Amount is intended to provide the Advisor with an incentive fee of 15% on all of the Company’s Pre-Incentive Fee Net Investment Income when the Company’s Pre-Incentive Fee Net Investment Income reaches the Pre-Qualified IPO Catch-Up Amount in any calendar quarter; and

3.            for any calendar quarter in which the Company’s Pre-Incentive Fee Net Investment Income exceeds the Pre-Qualified IPO Catch-Up Amount, the Income Fee shall equal 15% of the amount of the Company’s Pre-Incentive Fee Net Investment Income for the calendar quarter.

On and after the occurrence of a Qualified IPO, the Company will pay the Income Fee in each calendar quarter as follows:

1.            no Income Fee in any calendar quarter in which the Company’s Pre-Incentive Fee Net Investment Income does not exceed the Hurdle Amount;

2.            100% of the Company’s Pre-Incentive Fee Net Investment Income with respect to that portion of such Pre-Incentive Fee Net Investment Income, if any, that exceeds the Hurdle Amount but is less than or equal to an amount (the “Post-Qualified IPO Catch-Up Amount”) determined on a quarterly basis by multiplying 1.8182% by the Company’s net asset value at the beginning of each applicable calendar quarter. The Post-Qualified IPO Catch-Up Amount is intended to provide the Advisor with an incentive fee of 17.5% on all of the Company’s Pre-Incentive Fee Net Investment Income when the Company’s Pre-Incentive Fee Net Investment Income reaches the Post-Qualified IPO Catch-UP Amount in any calendar quarter; and

3.            for any calendar quarter in which the Company’s Pre-Incentive Fee Net Investment Income exceeds the Post-Qualified IPO Catch-Up Amount, the Income Fee shall equal 17.5% of the amount of the Company’s Pre-Incentive Fee Net Investment Income for the calendar quarter.

These calculations will be appropriately pro-rated for any period of less than three months and adjusted for any share issuances or repurchases by the Company during the current quarter. If the Qualified IPO occurs on a date other than the first day of a calendar quarter, the Income Fee shall be calculated for such calendar quarter at a weighted rate calculated based on the fee rates applicable before and after a Qualified IPO based on the number of days in such calendar quarter before and after a Qualified IPO.
 
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(ii) The second part of the Incentive Fee (the “Capital Gains Fee”) will be determined and payable in arrears in cash as of the end of each fiscal year (or upon termination of this Agreement as set forth below), commencing on December 31, 2016, and will equal (i) prior to a Qualified IPO, 15.0% of the Company’s realized capital gains on a cumulative basis from inception through the end of the fiscal year, and (ii) following a Qualified IPO, 17.5% of the Company’s realized capital gains on a cumulative basis from inception through the end of the fiscal year, in each case computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid Capital Gains Fees.

For purposes of computing the Capital Gains Fee, the calculation methodology will look through derivative financial instruments or swaps as if the Company owned the reference assets directly. Therefore, realized gains and realized losses on the disposition of any reference assets, as well as unrealized depreciation on reference assets retained in the derivative financial instrument or swap, will be included on a cumulative basis in the calculation of the Capital Gains Fee.

If a Qualified IPO occurs on a date other than the first day of a fiscal year, a Capital Gains Fee shall be calculated as of the day before the Qualified IPO, with such Capital Gains Fee paid to the Advisor following the end of the fiscal year in which the Qualified IPO occurred. For the avoidance of doubt, such Capital Gains Fee shall be equal to 15.0% of the Company’s realized capital gains on a cumulative basis from inception through the day before the Qualified IPO, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid Capital Gains Fees.

Following a Qualified IPO, solely for the purposes of calculating the Capital Gains Fee, the Company will be deemed to have previously paid Capital Gains Fees prior to a Qualified IPO equal to the product obtained by multiplying (a) the actual aggregate amount of previously paid Capital Gains Fees for all periods prior to a Qualified IPO by (b) the number obtained by dividing (x) 17.5% by (y) 15.0%.

In the event that this Agreement shall terminate as of a date that is not a fiscal year end, the termination date shall be treated as though it were a fiscal year end for purposes of calculating and paying a Capital Gains Fee.

(c)             In the event that this Agreement is terminated, to calculate the Base Management Fee and Incentive Fee through the termination date, the Company will engage at its own expense a firm acceptable to the Company and the Advisor to determine the maximum reasonable fair value as of the termination date of the Company’s consolidated assets (assuming each asset is readily marketable among institutional investors without minority discount and with an appropriate control premium for any control positions and ascribing an appropriate net present value to unamortized organizational and offering costs and going concern value).
 
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4.               Covenants of the Advisor. The Advisor hereby covenants that it is registered as an investment adviser under the Investment Advisers Act. The Advisor hereby agrees that its activities shall at all times be in compliance in all material respects with all applicable federal and state laws governing its operations and investments.

5.               Excess Brokerage Commissions. The Advisor is hereby authorized, to the fullest extent now or hereafter permitted by law, to cause the Company to pay a member of a national securities exchange, broker or dealer an amount of commission for effecting a securities transaction in excess of the amount of commission another member of such exchange, broker or dealer would have charged for effecting such transaction if the Advisor determines, in good faith and taking into account such factors as price (including the applicable brokerage commission or dealer spread), size of order, difficulty of execution, and operational facilities of the firm and the firm’s risk and skill in positioning blocks of securities, that the amount of such commission is reasonable in relation to the value of the brokerage and/or research services provided by such member, broker or dealer, viewed in terms of either that particular transaction or its overall responsibilities with respect to the Company’s portfolio, and constitutes the best net result for the Company.

6.              Proxy Voting. The Advisor shall be responsible for voting any proxies solicited by an issuer of securities held by the Company in the best interest of the Company and in accordance with the Advisor’s proxy voting policies and procedures, as any such proxy voting policies and procedures may be amended from time to time. The Company has been provided with a copy of the Advisor’s proxy voting policies and procedures and has been informed as to how it can obtain further information from the Advisor regarding proxy voting activities undertaken on behalf of the Company. The Advisor shall be responsible for reporting the Company’s proxy voting activities, as required, through periodic filings on Form N-PX.

7.               Limitations on the Employment of the Advisor. The services of the Advisor to the Company are not, and shall not be, exclusive. The Advisor may engage in any other business or render similar or different services to others including, without limitation, the direct or indirect sponsorship or management of other investment based accounts or commingled pools of capital, however structured, having investment objectives similar to those of the Company; provided that its services to the Company hereunder are not impaired thereby. Nothing in this Agreement shall limit or restrict the right of any manager, partner, officer or employee of the Advisor to engage in any other business or to devote his or her time and attention in part to any other business, whether of a similar or dissimilar nature, or to receive any fees or compensation in connection therewith (including fees for serving as a director of, or providing consulting services to, one or more of the portfolio companies of the Company, subject at all times to applicable law). So long as this Agreement or any extension, renewal or amendment hereof remains in effect, the Advisor shall be the only investment adviser for the Company, subject to the Advisor’s right to enter into sub-advisory agreements. The Advisor assumes no responsibility under this Agreement other than to render the services called for hereunder. It is understood that directors, officers, employees and stockholders of the Company are or may become interested in the Advisor and its affiliates, as directors, officers, employees, partners, stockholders, members, managers or otherwise, and that the Advisor and directors, officers, employees, partners, stockholders, members and managers of the Advisor and its affiliates are or may become similarly interested in the Company as stockholders or otherwise.
 
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Subject to any restrictions prescribed by law, by the provisions of the Code of Ethics of the Company and the Advisor and by the Advisor’s Allocation Policy, the Advisor and its members, officers, employees and agents shall be free from time to time to acquire, possess, manage and dispose of securities or other investment assets for their own accounts, for the accounts of their family members, for the account of any entity in which they have a beneficial interest or for the accounts of others for whom they may provide investment advisory, brokerage or other services (collectively, “Managed Accounts”), in transactions that may or may not correspond with transactions effected or positions held by the Company or to give advice and take action with respect to Managed Accounts that differs from advice given to, or action taken on behalf of, the Company; provided that the Advisor allocates investment opportunities to the Company, over a period of time on a fair and equitable basis compared to investment opportunities extended to other Managed Accounts. The Advisor is not, and shall not be, obligated to initiate the purchase or sale for the Company of any security that the Advisor and its members, officers, employees or agents may purchase or sell for its or their own accounts or for the account of any other client if, in the opinion of the Advisor, such transaction or investment appears unsuitable or undesirable for the Company. Moreover, it is understood that when the Advisor determines that it would be appropriate for the Company and one or more Managed Accounts to participate in the same investment opportunity, the Advisor shall seek to execute orders for the Company and for such Managed Account(s) on a basis that the Advisor considers to be fair and equitable over time. In such situations, the Advisor may (but is not required to) place orders for the Company and each Managed Account simultaneously or on an aggregated basis. If all such orders are not filled at the same price, the Advisor may cause the Company and each Managed Account to pay or receive the average of the prices at which the orders were filled for the Company and all relevant Managed Accounts on each applicable day. If all such orders cannot be fully executed under prevailing market conditions, the Advisor may allocate the investment opportunities among participating accounts in a manner that the Advisor considers equitable, taking into account, among other things, the size of each account, the size of the order placed for each account and any other factors that the Advisor deems relevant.

8.               Responsibility of Dual Directors, Officers and/or Employees. If any person who is a manager, partner, officer or employee of the Advisor or the Administrator is or becomes a director, officer and/or employee of the Company and acts as such in any business of the Company, then such manager, partner, officer and/or employee of the Advisor or the Administrator shall be deemed to be acting in such capacity solely for the Company and not as a manager, partner, officer and/or employee of the Advisor or the Administrator or under the control or direction of the Advisor or the Administrator, even if paid by the Advisor or the Administrator.

9.               Limitation of Liability of the Advisor; Indemnification. The Advisor (and its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with the Advisor, including without limitation the Administrator) shall not be liable to the Company for any action taken or omitted to be taken by the Advisor in connection with the performance of any of its duties or obligations under this Agreement or otherwise as an investment adviser of the Company, except to the extent specified in Section 36(b) of the Investment Company Act concerning loss resulting from a breach of fiduciary duty (as the same is finally determined by judicial proceedings) with respect to the receipt of compensation for services, and the Company shall indemnify, defend and protect the Advisor (and its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with the Advisor, including without limitation the Administrator, each of whom shall be deemed a third party beneficiary hereof) (collectively, the “Indemnified Parties”) and hold them harmless from and against all damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) incurred by the Indemnified Parties in or by reason of any pending, threatened or completed action, suit, investigation or other proceeding (including an action or suit by or in the right of the Company or its security holders) arising out of or otherwise based upon the performance of any of the Advisor’s duties or obligations under this Agreement or otherwise as an investment adviser of the Company. Notwithstanding the preceding sentence of this Paragraph 9 to the contrary, nothing contained herein shall protect or be deemed to protect the Indemnified Parties against or entitle or be deemed to entitle the Indemnified Parties to indemnification in respect of, any liability to the Company or its security holders to which the Indemnified Parties would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of the Advisor’s duties or by reason of the reckless disregard of the Advisor’s duties and obligations under this Agreement (as the same shall be determined in accordance with the Investment Company Act and any interpretations or guidance by the Securities and Exchange Commission or its staff thereunder).
 
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10.             Effectiveness, Duration and Termination of Agreement. This Agreement shall become effective as of the date the Company commences its investment operations following the effectiveness of the Company’s Registration Statement. This Agreement shall remain in effect for two years, and thereafter shall continue automatically for successive annual periods, provided that such continuance is specifically approved at least annually by (a) the vote of the Board of Directors, or by the vote of a majority of the outstanding voting securities of the Company and (b) the vote of a majority of the Company’s Directors who are not parties to this Agreement or “interested persons” (as such term is defined in Section 2(a)(19) of the Investment Company Act) of any such party, in accordance with the requirements of the Investment Company Act. This Agreement may be terminated at any time, without the payment of any penalty, upon 60 days’ written notice, by the vote of a majority of the outstanding voting securities of the Company, or by the vote of the Company’s Directors or by the Advisor. This Agreement shall automatically terminate in the event of its “assignment” (as such term is defined for purposes of Section 15(a)(4) of the Investment Company Act). Upon termination of this Agreement, the Company shall immediately delete the term “Bain Capital” from its corporate name. The provisions of Section 9 of this Agreement shall remain in full force and effect, and the Advisor shall remain entitled to the benefits thereof, notwithstanding any termination of this Agreement. Further, notwithstanding the termination or expiration of this Agreement as aforesaid, the Advisor shall be entitled to any amounts owed under Section 3 through the date of termination or expiration and Section 9 shall continue in force and effect and apply to the Advisor and its representatives as and to the extent applicable.

11.            No Third Party Beneficiaries. This Agreement is made for the benefit of and shall be enforceable by, each of the parties hereto and nothing in this Agreement shall confer any rights upon, nor shall this Agreement be construed to create any rights in, any person that is not a party (except as herein otherwise specifically provided) to this Agreement.

12.             Notices. Any notice under this Agreement shall be given in writing, addressed and delivered or mailed, postage prepaid, to the other party at its principal office.

13.             Amendments. This Agreement may be amended by mutual consent, but the consent of the Company must be obtained in conformity with the requirements of the Investment Company Act.

14.             Entire Agreement; Governing Law. This Agreement and the Advisory Fee Waiver Agreement between the parties hereto contain the entire agreement of the parties and supersede all prior agreements, understandings and arrangements with respect to the subject matter hereof. This Agreement shall be construed in accordance with the laws of the State of Delaware and the applicable provisions of the Investment Company Act. To the extent the applicable laws of the State of Delaware, or any of the provisions herein, conflict with the provisions of the Investment Company Act, the latter shall control.

*            *            *           *
 
9
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the date above written.

 
BAIN CAPITAL SPECIALTY FINANCE, INC.
 
 
 
 
 
 
By:  
 
 
 
Name:
 
 
Title:
 
 
 
BCSF ADVISORS, LP
 
 
 
 
 
By: 
 
 
 
Name:
 
 
Title:
 
 

Exhibit 10.2
 
ADMINISTRATION AGREEMENT

AGREEMENT (this “Agreement”) made as of this [  ] day of October, 2016, by and between Bain Capital Specialty Finance, Inc., a Delaware corporation (hereinafter referred to as the “Company”), and BCSF Advisors, LP, a Delaware limited partnership (the “Administrator”).

W I T N E S S E T H:

WHEREAS, the Company is a newly formed, closed-end non-diversified management investment company that intends to file a notice with the Securities and Exchange Commission to elect to be treated as a business development company under the Investment Company Act of 1940, as amended (the “Investment Company Act”);

WHEREAS, the Company desires to retain the Administrator to provide administrative services to the Company in the manner and on the terms hereinafter set forth; and

WHEREAS, the Administrator is willing to provide administrative services to the Company on the terms and conditions hereafter set forth.

NOW, THEREFORE, in consideration of the premises and the covenants hereinafter contained and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Company and the Administrator hereby agree as follows:

1.
Duties of the Administrator

(a) Employment of Administrator . The Company hereby employs the Administrator to act as administrator of the Company, and to furnish, or arrange for others to furnish, the administrative services, personnel and facilities described below, subject to review by and the overall control of the Board of Directors of the Company, for the period and on the terms and conditions set forth in this Agreement. The Administrator hereby accepts such employment and agrees during such period to render, or arrange for the rendering of, such services and to assume the obligations herein set forth subject to the reimbursement of costs and expenses provided for below. The Administrator and such others shall for all purposes herein be deemed to be independent contractors and shall, unless otherwise expressly provided or authorized herein, have no authority to act for or represent the Company in any way or otherwise be deemed agents of the Company.

(b) Services. The Administrator shall perform (or oversee, or arrange for, the performance of) the administrative services necessary for the operation of the Company. Without limiting the generality of the foregoing, the Administrator shall provide the Company with office facilities, equipment, clerical, bookkeeping and record keeping services at such facilities and such other services as the Administrator, subject to review by the Board of Directors of the Company, shall from time to time determine to be necessary or useful to perform its obligations under this Agreement. The Administrator shall also, on behalf of the Company, conduct relations with custodians, depositories, transfer agents, dividend disbursing agents, other stockholder servicing agents, accountants, attorneys, underwriters, brokers and dealers, corporate fiduciaries, insurers, banks and such other persons in any such other capacity deemed to be necessary or desirable. The Administrator shall make reports to the Board of Directors of its performance of obligations hereunder and furnish advice and recommendations with respect to such other aspects of the business and affairs of the Company as it shall determine to be desirable; provided that nothing herein shall be construed to require the Administrator to, and the Administrator shall not, provide any advice or recommendation relating to the securities and other assets that the Company should purchase, retain or sell or any other investment advisory services to the Company. The Administrator shall be responsible for the financial and other records that the Company is required to maintain and shall prepare reports to stockholders, and reports and other materials filed with the Securities and Exchange Commission (the “SEC”). The Administrator will provide on the Company’s behalf significant managerial assistance to those portfolio companies to which the Company is required to provide such assistance. In addition, the Administrator will assist the Company in determining and publishing the Company’s net asset value, oversee the preparation and filing of the Company’s tax returns, and the printing and dissemination of reports to stockholders of the Company, and generally oversee the payment of the Company’s expenses and the performance of administrative and professional services rendered to the Company by others. The Administrator is hereby authorized, but not required, to enter into one or more sub-administration agreements with other administrators (each, a “Sub-Administrator”) pursuant to which the Administrator may obtain the services of the Sub-Administrator(s) to assist the Administrator in fulfilling its responsibilities hereunder. To the extent the Administrator outsources any of its functions, the Company will pay the fees associated with such functions on a direct basis without profit to the Administrator.
 
2.
Records

The Administrator agrees to maintain and keep all books, accounts and other records of the Company that relate to activities performed by the Administrator hereunder and, if required by the Investment Company Act, will maintain and keep such books, accounts and records in accordance with that Act. In compliance with the requirements of Rule 31a-3 under the Investment Company Act, the Administrator agrees that all records which it maintains for the Company shall at all times remain the property of the Company, shall be readily accessible during normal business hours, and shall be promptly surrendered upon the termination of this Agreement or otherwise on written request. The Administrator further agrees that all records which it maintains for the Company pursuant to Rule 31a-1 under the Investment Company Act will be preserved for the periods prescribed by Rule 31a-2 under the Investment Company Act unless any such records are earlier surrendered as provided above. Records shall be surrendered in usable machine-readable form. The Administrator shall have the right to retain copies of such records subject to observance of its confidentiality obligations under this Agreement.

3.
Confidentiality

The parties hereto agree that each shall treat confidentially the terms and conditions of this Agreement and all information provided by each party to the other regarding its business and operations. All confidential information provided by a party hereto, including nonpublic personal information pursuant to Regulation S-P of the SEC, shall be used by any other party hereto solely for the purpose of rendering services pursuant to this Agreement and, except as may be required in carrying out this Agreement, shall not be disclosed to any third party, without the prior consent of such providing party. The foregoing shall not be applicable to any information that is publicly available when provided or thereafter becomes publicly available other than through a breach of this Agreement, or that is required to be disclosed by any regulatory authority, any authority or legal counsel of the parties hereto, by judicial or administrative process or otherwise by applicable law or regulation.
 
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4.
Compensation; Allocation of Costs and Expenses

In full consideration of the provision of the services of the Administrator, the Company shall reimburse the Administrator for the costs and expenses incurred by the Administrator in performing its obligations and providing personnel and facilities hereunder. The Administrator shall waive its right to be reimbursed in the event that any such reimbursements would cause any distributions to the Company’s stockholders to constitute a return of capital. If requested to perform significant managerial assistance to portfolio companies of the Company, the Administrator will be paid an additional amount based on the services provided, which shall not exceed the amount the Company receives from the portfolio companies for providing this assistance.

The Company will bear all costs and expenses that are incurred in its operation and transactions and not specifically assumed by the Company’s investment adviser (the “Advisor”), pursuant to that certain Investment Advisory Agreement, dated as of October [  ], 2016 by and between the Company and the Advisor. Costs and expenses to be borne by the Company include, but are not limited to, those relating to: (a) initial organization costs incurred prior to the commencement of the Company’s operations up to a maximum of $1.5 million; (b) operating costs incurred prior to the commencement of the Company’s operations; (c) calculating the Company’s net asset value (including the cost and expenses of any independent valuation firm); (d) fees and expenses, including travel expenses, incurred by the Advisor or payable to third parties in performing due diligence on prospective portfolio companies, monitoring the Company’s investments and, if necessary, enforcing the Company’s rights; (e) interest payable on debt, if any, incurred to finance the Company’s investments; (f) costs of effecting sales and repurchases of the Company’s common stock and other securities; (g) the base management fee and any incentive fee; (h) distributions on the Company’s common stock; (i) transfer agent and custody fees and expenses; (j) the allocated costs incurred by the Administrator in providing managerial assistance to those portfolio companies that request it; (k) other expenses incurred by the Advisor, the Administrator or the Company in connection with administering its business, including payments made to third-party providers of goods or services; (l) amounts payable to third parties relating to, or associated with, evaluating, making and disposing of investments; (m) brokerage fees and commissions; (n) federal and state registration fees; (o) any stock exchange listing fees; (p) taxes; (q) independent director fees and expenses; (r) costs associated with the Company’s reporting and compliance obligations under the Investment Company Act and applicable U.S. federal and state securities laws; (s) the costs of any reports, proxy statements or other notices to the Company’s stockholders, including printing costs; (t) costs of holding stockholder meetings; (u) the Company’s fidelity bond; (v) directors and officers/errors and omissions liability insurance, and any other insurance premiums; (w) litigation, indemnification and other non-recurring or extraordinary expenses; (x) direct costs and expenses of administration and operation, including printing, mailing, long distance telephone, staff, audit and legal costs; (y) fees and expenses associated with marketing efforts; (z) dues, fees and charges of any trade association of which the Company is a member; and (aa) all other expenses reasonably incurred by the Company or the Administrator in connection with administering the Company’s business, such as the allocable portion of overhead under this Agreement, including rent and the Company’s allocable portion of the costs and expenses of its chief compliance officer, chief financial officer and their respective staffs, operations staff who provide services to the Company, and any internal audit staff, to the extent internal audit performs a role in the Company’s internal control assessment required under the Sarbanes-Oxley Act of 2002, as amended. To the extent the Administrator outsources any of its functions, the Company will pay the fees associated with such functions on a direct basis without profit to the Administrator.
 
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5.
Limitation of Liability of the Administrator; Indemnification

The Administrator (and its officers, managers, partners, agents, employees, controlling persons, members, and any other person or entity affiliated with the Administrator, including without limitation its members) shall not be liable to the Company or its stockholders for any action by the Administrator (and its officers, managers, partners, agents, employees, controlling persons, members, and any other person or entity affiliated with the Administrator, including without limitation its members) in connection with the performance of any of its duties or obligations under this Agreement or otherwise as administrator for the Company, and the Company shall indemnify, defend and protect the Administrator (and its officers, managers, partners, agents, employees, controlling persons, members, and any other person or entity affiliated with the Administrator, including without limitation the Advisor, each of whom shall be deemed a third party beneficiary hereof) (collectively, the “Indemnified Parties”) and hold them harmless from and against all damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) incurred by the Indemnified Parties in or by reason of any pending, threatened or completed action, suit, investigation or other proceeding (including an action or suit by or in the right of the Company or its security holders) arising out of or otherwise based upon the performance of any of the Administrator’s duties or obligations under this Agreement or otherwise as administrator for the Company. Notwithstanding the preceding sentence of this Paragraph 5 to the contrary, nothing contained herein shall protect or be deemed to protect the Indemnified Parties against or entitle or be deemed to entitle the Indemnified Parties to indemnification in respect of, any liability to the Company or its security holders to which the Indemnified Parties would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of its obligations in the performance of the Administrator’s duties or by reason of the reckless disregard of the Administrator’s duties and obligations under this Agreement (to the extent applicable, as the same shall be determined in accordance with the Investment Company Act and any interpretations or guidance by the SEC or its staff thereunder).

6.
Activities of the Administrator

The services of the Administrator to the Company are not to be deemed to be exclusive, and the Administrator and each affiliate is free to render services to others. It is understood that directors, officers, employees and stockholders of the Company are or may become interested in the Administrator and its affiliates, as directors, officers, members, managers, employees, partners, stockholders or otherwise, and that the Administrator and directors, officers, members, managers, employees, partners and stockholders of the Administrator and its affiliates are or may become similarly interested in the Company as stockholders or otherwise.
 
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7.
Duration and Termination of this Agreement

This Agreement shall become effective as of the date hereof, and shall remain in force with respect to the Company for two years thereafter, and thereafter continue from year to year, but only so long as such continuance is specifically approved at least annually by (i) the Board of Directors of the Company and (ii) a majority of those Directors who are not “interested persons” (as defined in the Investment Company Act) of a party to this Agreement.

This Agreement may be terminated at any time, without the payment of any penalty, by the Company, or by the Administrator, upon 60 days’ written notice to the other party. This Agreement may not be assigned by a party without the prior consent of the other party.

8.
Amendments to this Agreement

This Agreement may be amended pursuant to a written instrument by mutual consent of the parties.

9.
Governing Law

This Agreement shall be construed in accordance with laws of the State of Delaware and the applicable provisions of the Investment Company Act, if any. To the extent that the applicable laws of the State of Delaware, or any of the provisions herein, conflict with the applicable provisions of the Investment Company Act, if any, the latter shall control.

10.
Entire Agreement

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

11.
Notices

Any notice under this Agreement shall be given in writing, addressed and delivered or mailed, postage prepaid, to the other party at its principal office.
 
5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the date above written.
 
 
BAIN CAPITAL SPECIALTY FINANCE, INC.
 
 
 
 
 
 
By:
 
 
       
 
Name:
 
 
       
 
Title:
 
 

 
 
BCSF ADVISORS, LP
 
 
 
 
 
 
By:
 
 
       
 
Name:
 
 
       
 
Title:
 
 
 
[Signature page for Administration Agreement]
 
 
6
Exhibit 10.3
 
FORM OF ADVISORY FEE WAIVER AGREEMENT

BAIN CAPITAL SPECIALTY FINANCE, INC.
 
THIS AGREEMENT is hereby made as of October [  ], 2016 (the “ Agreement ”) between Bain Capital Specialty Finance, Inc., a Delaware corporation (the “ Company ”), and BCSF Advisors, LP, a Delaware limited partnership (the “ Advisor ”).

WHEREAS , the Advisor has been appointed the investment adviser of the Company pursuant to an Investment Advisory Agreement, by and between the Company and the Advisor (the “ Advisory Agreement ”);

WHEREAS , the Company has furnished to investors a Private Placement Memorandum, dated June 2016 (the “ Private Placement Memorandum ”), for the purposes of providing such investors with certain information about an investment in the Company;

WHEREAS , the Company and the Advisor desire to enter into the arrangements described herein relating to certain expenses of the Company;

NOW, THEREFORE , the Company and the Advisor hereby agree as follows:

1. Advisory Fee Waiver .  For the period beginning on the effective date of the Advisory Agreement and ending upon a Qualified IPO (as defined in the Private Placement Memorandum) (the “ Waiver Period ”), subject to the terms hereof, the Advisor agrees to waive any amount of the Company’s Base Management Fees (as defined in the Advisory Agreement), borne by the Company during the Waiver Period, to the extent such Base Management Fees exceed 0.75% of the aggregate gross assets of the Company excluding cash and cash equivalents (including capital drawn to pay the Company’s expenses) for any such measurement period used for the purposes of calculating the Base Management Fees. For the avoidance of doubt, if the Company does not complete a Qualified IPO, the Waiver Period shall continue until the termination of this Agreement.
 
2. Term .  This Agreement shall become effective on the effective date of the Advisory Agreement. This Agreement shall terminate automatically upon the earlier of (i) the end of the Waiver Period or (ii) in the event of the termination of the Advisory Agreement unless a new investment advisory agreement with the Advisor (or with an affiliate under common control with the Advisor) becomes effective upon such termination. In the event a new investment advisory agreement between the Company and the Advisor becomes effective, this Agreement shall continue to apply with respect to the arrangements under the new investment advisory agreement. In the event that a new investment advisory agreement between the Company and an affiliate under common control with the Advisor (the "Affiliate") becomes effective, or the Advisory Agreement is assigned by the Advisor to an Affiliate, the Advisor shall procure that the Affiliate is bound by the terms of this Agreement with respect to the arrangements under the new investment advisory agreement or the Advisory Agreement, as applicable.
 
3. No Recoupment . The Advisor shall not be entitled to recoup the amount of such waived Base Management Fees from the Company.
 
4. Entire Agreement; Amendment .  This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof, and supersedes all prior agreements between the parties hereto relating to the matters contained herein and may not be modified, waived or terminated orally and may only be amended by an agreement in writing signed by the parties hereto.
 
5. Construction and Forum .  This Agreement shall be governed by the laws of the State of Delaware, without regard to its conflicts of law principles.  Each of the parties hereto irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any Delaware state court or Federal court of the United States of America sitting in Delaware, in any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, and each of the parties hereto irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such Delaware state court or, to the extent permitted by law, in such Federal court.
 
6. Counterparts .  This Agreement may be executed in any number of separate counterparts, each of which shall be deemed an original, but the several counterparts shall together constitute but one and the same agreement of the parties hereto.  The exchange of copies of this Agreement and of signature pages by facsimile transmission or “portable document format” (commonly referred to as “PDF”) shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes.  Signatures of the parties transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.
 
7. Severability .  If any one or more of the covenants, agreements, provisions or texts of this Agreement shall be held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement.
 
[Signature Page Follows]
 
- 2 -
IN WITNESS WHEREOF , the parties hereto have executed this Agreement as of the date first above written.
 
 
BCSF ADVISORS, LP
 
 
 
   
 
By: 
   
 
Name:
 
 
Title:
 

  BAIN CAPITAL SPECIALTY FINANCE, INC.
   
 
 
 
By:
 
 
 
Name:
 
 
Title:
 
 
[Signature Page to Advisory Fee Waiver Agreement of Bain Capital Specialty Finance, Inc.]
 

- 3 -
Exhibit 10.4
 
BAIN CAPITAL SPECIALTY FINANCE, INC.
SUBSCRIPTION BOOKLET
 
BAIN CAPITAL SPECIALTY FINANCE, INC.

Subscription Instructions

Basic Subscription Documents

Enclosed are the following documents for use in subscribing to be a stockholder of Bain Capital Specialty Finance, Inc. (the “Company”):

(a) Bain Capital Credit Subscriber Information Form;

(b) Anti-Money Laundering Questionnaire;

(c) Subscription Agreement; and

(d) Income Tax Classification Form.

Execution of Documents

Subscriptions to invest as a stockholder of the Company may be made only by completing, executing and delivering the basic subscription documents as provided below.

(a) Bain Capital Credit Subscriber Information form :  Please complete one (1) copy .

(b) Anti-Money Laundering Questionnaire :   Please complete one (1) copy .

(c) Subscription Agreement :   Please complete one (1) copy .
 
In order to properly complete the Subscription Agreement, please note the following:
 
1. Execution Pages : The subscription signature pages (S-1, S-4, S-5, S-6 and S-7) should be completed; additionally, page S-1 (and S-2 or S-3, if additional signature pages used) must be signed.  Please be sure to complete all aspects of the Execution pages.

2. Annex A :  Please review the definitions and exhibit.

3. Annex B :  IRS Tax Forms.  Attached please find copies of IRS Forms W-9 and W-8. Please determine which IRS tax form is appropriate for the Subscriber, and complete and sign such IRS Form W-9 or W-8. Please note that the Company only accepts IRS Forms W-9 and W-8 released in 2014 (or later).  

4. Annex C :  Income Tax Classification Form.  Please complete and sign one (1) copy .

5. Annex D :  Cost-Basis Election Form.
 
Delivery Instructions
 
Fully completed subscription documents should be delivered via email to the address listed below:
 
U.S. Bank, Investor Services
investorservices@usbank.com

Notice of Subscriptions
 
Written notice of any initial or additional subscription must be given to the Company at least 5 business days prior to the proposed subscription date, unless this requirement is waived by the Company, in its sole and absolute discretion.  All basic subscription documents will be returned to the Subscriber if this subscription is not accepted.

Acceptance of Subscription and Capital Contributions
 
The acceptance of subscriptions is within the absolute discretion of the Company, which may require additional information prior to making a determination.  The Company will seek to notify the Subscriber of its acceptance or rejection of the subscription, in whole or in part, prior to the date of the proposed investment.

If the Company accepts the Subscriber’s subscription, the notice of acceptance may include information ( e.g. , timing, amount, wiring instructions) regarding the funding of your first capital contribution.  Subsequently, the Company will issue a capital call notice when the Company wishes to draw down additional capital.  Capital contributions, after the initial capital contribution, are payable in installments upon not fewer than ten business days’ prior written notice from the Company.  Payments for the amount called must be made by wire transfer to an account designated by the Company.

Subscribers

The Company is accepting subscriptions from U.S. taxable, U.S. tax-exempt and non-U.S. investors. Subscribers are encouraged to consult with their legal and tax advisors as to whether an investment through the Company is appropriate for them.

Additional Information
 
For additional information concerning subscriptions, prospective investors should contact Investor Onboarding (creditonboarding@baincapital.com, 617-516-2350) at the office of the Company.
 
*****************************
 
ANTI-MONEY LAUNDERING (AML) QUESTIONNAIRE
(the “AML Questionnaire”)

Bain Capital Specialty Finance, Inc. (the “Company”)

Please complete this AML Questionnaire in accordance with the instructions below.  Failure to do so could delay or prevent the processing of your subscription to the Company.

Completion of this AML Questionnaire

Step 1
Insert the full name of the proposed investor (the “Subscriber”) in the box below.
   
   
   
   
 
If the Subscriber is acting as an agent on behalf of another underlying investor (other than a fund manager regulated in the European Economic Area (the “EEA”) or the United States acting on behalf of a fund that it manages), please contact Monica Comyns   at mcomyns@baincapital.com .
   
Step 2
Please review Page 2.  Identify the section of this AML Questionnaire that relates to the Subscriber.  Complete only that applicable section .
 
If more than one section listed on page 2 applies to the Subscriber, complete the first applicable section only.
   
Step 3
The completed AML Questionnaire and accompanying documents should be e-mailed to Investor Onboarding at the address below.
 
Please note additional information may be required and the Subscriber’s subscription may not be accepted until a fully completed AML Questionnaire is reviewed and approved.
 
Certified copies of documents :  If this AML Questionnaire asks for certified documents to be supplied, a certified copy must be sent unless the document is publicly available , in which case a hyperlink must be provided.
 
The document should be certified by a lawyer (other than a lawyer for Bain Capital Credit), an accountant, a notary, an official from an embassy, a consulate or a high commission of the country to which the document relates. You may not self-certify your own documents.
 
If you have any questions, please contact:
     
 
BCSF Advisors, LP
Email:
 
Attn: Investor Onboarding
creditonboarding@baincapital.com
 
200 Clarendon Street
Telephone: 617-516-2350
 
Boston, MA 02116
 
 
1
Identify the relevant section of the form here.

Check the first applicable box and proceed to complete the relevant section as specified below.

☐  
A fund manager that is (i) regulated in the EEA and which is subject to the EU Money Laundering Directive; or (ii) regulated in the U.S. under the Investment Advisers Act of 1940 (the “Advisors Act”)
Section A
 
(Page 3)
☐  
An institution or entity that is (i) regulated in the EEA and which is subject to the EU Money Laundering Directive;  or (ii) a credit or financial institution regulated in a non-EEA country subject to equivalent requirements to those in the EU Money Laundering Directive
Section B
 
(Page 5)
☐  
A company listed on (i) an EEA regulated market (see:  http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2004:072:0003:0007:EN:PDF for a list of applicable EEA regulated markets), (ii) the New York Stock Exchange or NASDAQ Stock Market, or (iii) a non-EEA market that is subject to specified disclosure obligations, or a majority-owned and consolidated subsidiary of such a listed company
Section C
 
(Page 6)
☐  
A sovereign wealth fund
Section D
 
(Page 7)
☐  
A company, limited liability partnership, limited partnership, partnership or limited liability company (unlisted and unregulated)
Section E
 
(Page 8)
☐  
Individual (including directors, officers, trustees, members, partners of a Subscriber (or equivalent) where noted in this AML Questionnaire)
Section F
 
(Page 10)
☐  
Employee Benefit/Pension Plans
Section G
 
(Page 11)
☐  
Trust or Foundation
Section H
 
(Page 12)
☐  
Public Authority (e.g. a government, state-owned company, supranational, or local authority)
Section I
 
(Page 13)

If you do not fit into any of the categories above or if you require further guidance on the information requested, please contact:
 
EEA Investors:   Monica Comyns at mcomyns@baincapital.com or +44 (20) 7514 5771 .
 
All Other Investors: Jim Goldman   at JGoldman@baincapital.com or 617-516-2828.
 
2
SECTION A:   Fund Managers
 
Note: Use this form if the Subscriber is managed by a fund manager (i) regulated in the EEA and subject to the EU Money Laundering Directive or (ii) regulated in the U.S. under the Advisors Act.  Please contact Jim Goldman (US) or Monica Comyns (EEA) at the email address or telephone number above if the Subscriber is managed by a fund manager regulated in another jurisdiction.
 
Complete either Part 1 OR 2 as appropriate

Part 1:   Please complete this Part 1 if the Subscriber is managed by an EEA regulated fund manager subject to the EU Money Laundering Directive
 
1.  List country of regulation and name of regulator:
 
 
 
2.  Name of fund(s) and registration number(s):
 
 
 
3.  Registered address and (if different) business address of fund(s):
 
 
 
4.  Please attach the following:
 
 
(i)          Evidence of the fund manager’s regulatory status (i.e. a copy of regulatory authority’s public register);
Attached
☐
 
(ii)         A certified copy of a board resolution or similar document confirming all directors, members, officers and partners (or equivalent) authorized to act on the fund manager’s behalf in relation to investing in the Fund; and
Attached
☐
     
 
(iii)        A certified copy of (a) a board resolution providing the names of the fund manager’s authorized signatories or (b) an authorized signatory list (only required if all such names are not included in 4(ii) above).
Attached  N/A 
☐       ☐ 
 
3
Part 2:   Please complete this Part 2 if the Subscriber is managed by a U.S. regulated fund manager subject to the Advisors Act
 
1.  Name of fund(s) and registration number(s):
 
 
 
2.  Registered address and (if different) business address of fund(s):
 
 
 
3.  Please attach the following:
 
 
(i)          Evidence of the fund manager’s regulatory status (i.e. a copy of the fund manager’s most recently filed Form ADV);
 
Attached
☐
     
 
(ii)        A certified copy of a board resolution or similar document confirming all directors, members, officers and partners (or equivalent) authorized to act on the fund manager’s behalf in relation to investing in the Fund;
 
Attached
☐
     
 
(iii)        A certified copy of (a) a board resolution providing the names of the fund manager’s authorized signatories or (b) an authorized signatory list (only required if all such names are not included in 3(ii) above);
 
Attached  N/A 
☐            ☐
     
 
(iv)        A certificate addressed to Bain Capital Credit and signed by a director or officer of the fund manager confirming each of the following:
Attached
☐

· the fund manager acts as the agent of the fund(s);
 
· the fund manager has identified the underlying beneficial investors in respect of the fund(s) and carried out customer due diligence on all of the investors in the fund(s);
 
· to its actual knowledge, the fund(s) have no undisclosed or anonymous principals;
 
· the fund manager is not aware of any activities on the part of the investors that would lead it to suspect an investor has been involved in money laundering or other criminal conduct;
 
· if the fund manager becomes suspicious of any such activity then, subject to legal constraints, it will inform the relevant regulatory authorities promptly;
 
· to the fund manager’s actual knowledge, there is no natural person who is the beneficial owner of more than 10% of the capital or voting rights in the funds(s);
 
· it will retain all documentation required to identify beneficial investors in the fund(s) and will provide this directly to any regulatory authority where Bain Capital Credit is required to disclose it to such regulatory authority; and
 

 
(v)         A certified copy of the fund’s certificate of limited partnership (or equivalent).
Attached
☐
 
4
SECTION B: Regulated Entity
 
Note: Use this form if the Subscriber is (i) regulated in the EEA (the list of regulators can be found at http://www.jmlsg.org.uk/other-helpful-material/useful-information-resources) and subject to the EU Money Laundering Directive; (ii) regulated in the United States and subject to the United States Bank Secrecy Act, the United States Money Laundering Control Act of 1986, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, as amended, and regulations thereunder (“Money Laundering Laws”); or (iii) a credit or financial institution regulated in a non-EEA country which is subject to equivalent requirements to the EU Money Laundering Directive.  If you have any questions, please contact Jim Goldman at   JGoldman@baincapital.com or 617-516-2828 or Monica Comyns at mcomyns@baincapital.com or +44 (20) 7514 5771.

1.  List the name of regulator:
 
 

2.  Please attach the following:
 
 
(i)          Evidence of the Subscriber’s regulatory status (copy of regulatory authority’s public register);
Attached
☐
     
 
(ii)         A certified copy of a board resolution or similar document confirming all directors, members, officers and partners (or equivalent) authorized to act on the Subscriber’s behalf in relation to investing in the Company; and
Attached
☐
     
 
(iii)        A certified copy of (a) a board resolution providing the names of the Subscriber’s authorized signatories or (b) an authorized signatory list (only required if all such names are not included in 2(ii) above).
Attached N/A
☐           ☐   
 
5
SECTION C:  Listed company or majority-owned and consolidated subsidiary of Listed Company

Please complete Parts A and B.
 
Part A
 
If the Subscriber is a company listed on (i) an EEA regulated market ( List of EEA regulated markets can be found at http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2004:072:0003:0007:EN:PDF), (ii) the New York Stock Exchange or NASDAQ Stock Market or (iii) a non-EEA market that is subject to specified disclosure obligations, or if the Subscriber is a majority-owned and consolidated subsidiary of a company described in (i) through (iii) above, state:
 
1.  Name of the market:
 
2.  Registration number/CIK:
 
 
 
3.  If the Subscriber is a majority-owned and consolidated subsidiary of a company described in (i) or (ii) above, state the name of the Subscriber’s listed holding company:
 
 
 
 
Part B
 
Please attach the following:
 
1.  A certified copy of a board resolution or similar document confirming all directors, members, officers and partners (or equivalent) authorized to act on the Subscriber’s behalf in relation to investing in the Company;
Attached
☐
   
2.  A certified copy of (a) a board resolution providing the names of the Subscriber’s authorized signatories or (b) an authorized signatory list (only required if all such names are not included in B(1) above); and
Attached  N/A
☐           ☐
   
3. A list of each direct and indirect beneficial owner of the Subscriber
    that owns more than a 10% beneficial interest in the capital or
    profits of such Subscriber or controls more than 10% of the vote of
    the Subscriber.
Attached  N/A
☐           ☐
 
6
SECTION D:  Sovereign Wealth Funds
 
Please complete ALL sections:
 
1.  Full name of entity:
 
 

2.  Address of entity:
 
 

3.  Name of the national government:
 
 
 
4.  Please attach the following:
 
 
(i)          A certified copy of a board resolution or similar document confirming all directors, officers and trustees (or equivalent) authorized to act on the sovereign wealth fund’s behalf in relation to investing in the Fund;
Attached
☐
 
     
 
(ii)        A certified copy of (a) a board resolution providing the names of the sovereign wealth fund’s authorized signatories or (b) an authorized signatory list (only required if all such names are not included in 4(i) above);
Attached  N/A
☐        ☐
    
     
 
(iii)        A list of the names of all directors, officers and trustees (or equivalent) of the sovereign wealth fund (only required if all such names are not included in 4(i) and 4(ii) above); and
Attached  N/A
☐       ☐
     
     
 
(iv)       A copy of the sovereign wealth fund’s constitutional documents.
Attached
☐
 
7
SECTION E:  Company, Limited Liability Partnership, Limited Partnership, Partnership or Limited Liability Company (unlisted and unregulated)
 
Please complete ALL sections:
 
1.  Country of incorporation/establishment:
 
 
 
2.  Registered number (if applicable):
 
 

3.  Address of registered office in country of incorporation/establishment:
 
 
 
4.  Business address (if different from registered office):
 
 
 
5.  Please attach the following:
 
 
(i)          Certificate of incorporation (or equivalent) or certified copy of the certificate of partnership/deed with any certificates of change of name;
Attached
☐
     
 
(ii)         A certified copy of a board resolution or similar document confirming all directors, members, officers and partners (or equivalent) authorized to act on the Subscriber’s behalf in relation to investing in the Company (general partners must be identified);
Attached
☐
 
 
     
 
(iii)        A certified copy of (a) a board resolution providing the names of the Subscriber’s authorized signatories or (b) an authorized signatory list (only required if all such names are not included in 5(ii) above);
Attached  N/A
☐          ☐
   
     
 
(iv)        A list of the names of all directors/partners (or equivalent) of the Subscriber and, a separate completed applicable section of the AML Questionnaire (see page 2 to identify the applicable section) for each such director/partner (identifying which partners are general partners);
Attached
☐
     
 
(v)         A separate completed applicable section of the AML Questionnaire (see page 2 to identify the applicable section) for each direct and indirect beneficial owner of the Subscriber that owns more than a 10% beneficial interest in the capital or profits of such Subscriber or controls more than 10% of the vote of the Subscriber.
 
Officers, directors, members (or equivalents), direct and indirect beneficial owner of the Subscriber that that owns more than a 10% beneficial interest in the capital or profits of such Subscriber or controls more than 10% of the vote of the Subscriber who is an individual must also complete a separate AML Questionnaire (Section F); and
Attached  N/A
☐           ☐
 
8
 
(vi)      I/we confirm we have provided all information requested in Section 5(v) above, and completed a separate completed AML Questionnaire (Section F) for any officers, directors, members (or equivalents) direct and indirect beneficial owners of the Subscriber that own more than 10% beneficial interest in the capital or profits of such Subscriber or controls more than 10% of the vote of the Subscriber.
Confirmed
☐
 
9
SECTION F:  Individual
 
Please complete ALL paragraphs.
 
1.  Please state:
 
(i)  Full name:
 
   
(ii) Residential address:
 
 
   
(iii) Date of birth:
 
 
2.  Please provide a certified copy of one of the following documents:
 
 
(i)          Subscriber’s passport
Attached
☐
     
 
(ii)         Subscriber’s valid driver’s license
Attached
☐
     
 
(iii)        Subscriber’s national identity card
Attached
☐
 
The document selected should include a full name, photograph and either or both residential address and date of birth.
 
10
SECTION G:  Employee Benefit/Pension Plans
 
Please complete this section if the Subscriber is an employee benefit/pension plan or similar Subscriber.
 
Please complete ALL paragraphs.
 
1.  Please state:
 
(i)  Full name:
   
     
(ii) Address of Subscriber and address of the principal employer to which the plan applies, if applicable:
   
 
2.  Please confirm:
 
I/we confirm that we provide retirement benefits for employees, where contributions are made by an employer or by way of deduction from an employee’s wage and the plan rules do not permit the assignment of a member’s interest under the plan.
Confirmed
☐
 
3.  Please attach the following:
 
 
(i)          A certified copy of a board resolution or similar document confirming all directors, members and officers (or equivalent) authorized to act on the Subscriber’s behalf in relation to investing in the Company;
Attached
☐
     
 
(ii)          A certified copy of (a) a board resolution providing the names of the Subscriber’s authorized signatories or (b) an authorized signatory list (only required if all such names are not included in 3(i) above);
Attached  N/A
☐         ☐
     
 
(iii)       A list of the names of all directors, members and officers (or equivalent) of the Subscriber (only required if all such names are not included in 3(i) and 3(ii) above). Directors, members and officers (or equivalent) of the Subscriber must complete a separate AML Questionnaire (Section F); and
Attached  N/A
☐          ☐
     
 
(iv)       I/we confirm we have provided a separate completed AML Questionnaire (Section F) for any officers, directors and members (or equivalents).
Confirmed
☐
 
11
SECTION H: Trusts and Foundations
 
1.  Please complete ALL sections .
 
(i) Full name of trust or foundation:
 
   
(ii) Country and state of establishment:
 
 
 
2.  Please attach the following:
 
 
(i)         A certified copy of a board resolution or similar document confirming all trustees (or equivalent) authorized to act on the Subscriber’s behalf in relation to investing in the Company;
Attached
☐
     
 
(ii)         A certified copy of (a) a board resolution providing the names of the Subscriber’s authorized signatories or (b) an authorized signatory list (only required if all such names are not included in 2(i) above);
Attached N/A
☐          ☐
     
 
(iii)        A list of the names of all trustees (or equivalent) of the Subscriber (only required if all such names are not included in 2(i) and 2(ii) above).  Trustees (or equivalent) of the Subscriber must complete a separate AML Questionnaire (Section F);
Attached N/A
☐          ☐
     
 
(iv)       A certified copy of the trust document evidencing the name of the trust, its country of establishment and the names of the trustees; and
Attached
☐
     
 
(v)         A list of the names of all beneficial owners of the Trust/Foundation and, a separate completed AML Questionnaire (Section F) for the following individuals:
Attached N/A
☐          ☐
 
12
· Any individual who is entitled to a specified interest (which is a vested, not contingent, interest) in at least 10% of the capital of the trust property; and
· Any individual who controls the trust.
 
In the case of a foundation which is not also a trust, the beneficial owners required to submit a separate completed AML Questionnaire will include the following:
 
· If beneficiaries are known, those beneficiaries who benefit from at least 10% of the property of the foundation; and
· Any individual who exercises control over at least 10% of the property of the foundation.
 
13
SECTION I:  Public Authorities (e.g. governments, state-owned companies, supranationals and local authorities)
 
Note:  This section includes state schools, colleges, universities and National Health Service trusts, but not independent schools and colleges.  Independent schools and colleges should be treated as trusts companies or private companies (as appropriate).
 
 
Please complete ALL parts.
 
1.  Full name of entity:
 
 
 
2.  Nature and status of the entity (e.g. overseas government, treaty organization):
 
 

3.  Address of the entity:
 
 

4.  Name of the home state authority:
 
 
 
5.  Please attach the following:
 
 
(i)          A certified copy of a board resolution or similar document confirming all directors and officers (or equivalent) authorized to act on the Subscriber’s behalf in relation to investing in the Company;
 Attached
☐
     
 
(ii)        A certified copy of (a) a board resolution providing the names of the Subscriber’s authorized signatories or (b) an authorized signatory list (only required if all such names are not included in 5(i) above);
Attached  N/A
☐          ☐
 
     
 
(iii)       A list of the names of all directors and officers (or equivalent) of the Subscriber (only required if all such names are not included in 5(i) and 5(ii) above). Directors and officers (or equivalent) of the Subscriber must complete a separate AML Questionnaire (Section F); and
Attached  N/A
☐         ☐
 
14
 
(iv)        if the entity is a state-owned company, a certified certificate of incorporation (or equivalent) and, if relevant, any certificates of name change; and
Attached N/A
    ☐          ☐ 
     
 
(v)         I/we confirm we have provided all information requested in Section 5 (iii) above, including a separate AML Questionnaire (Section F) for all officers, directors and members (or equivalents).
Confirmed
☐
 
15
BAIN CAPITAL SPECIALTY FINANCE, INC.
SUBSCRIPTION AGREEMENT

  Parties
 
The parties to this Subscription Agreement (the “Agreement”, together with subscription agreements executed by the other subscribers to the Company, the “Subscription Agreements”) are Bain Capital Specialty Finance, Inc., a Delaware corporation (the “Company”), and the undersigned subscriber (the “Subscriber”).  Capitalized terms not defined herein shall have the meanings ascribed to them in the most recent Private Placement Memorandum of the Company, as such document may be amended, amended and restated or supplemented from time to time (the “Private Placement Memorandum”).

  Recitals
 
1.  The Subscriber wishes to subscribe to the offering described in the Private Placement Memorandum, subject to the terms described or appearing in the Private Placement Memorandum, the Company’s Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) and the Company’s Bylaws (the “Bylaws” and together with the Certificate of Incorporation, the “Governing Documents”) by committing to contribute capital to the Company in an amount up to the Requested Capital Commitment set forth on the signature page hereto, though the Company may, in its sole discretion, decline to accept any or all of such Requested Capital Commitment.  The Subscriber represents and warrants to the Company that the Subscriber will not execute or deliver this Agreement unless and until the Subscriber has carefully read and considered the Private Placement Memorandum, the Governing Documents and the subscription materials herein, including this Agreement, and fully understands and is in agreement with all the terms and conditions thereof.  The Subscriber acknowledges and agrees that it has received full and adequate consideration, on the date that this Agreement (having been properly and fully completed and signed by the Subscriber) has been accepted by the Company (the “Closing Date”), for the entirety of its Capital Commitment and hereby waives any and all defenses of non-consideration as to any capital drawdown occurring after the Closing Date, including any defenses resulting from any insolvency or bankruptcy proceeding of the Company, any material or total decrease in value of the Shares or any inability of the Company to actually issue Shares.
 
2.  The Company desires to accept all or part of the Subscriber’s Requested Capital Commitment (the “Capital Commitment”) in an amount set forth by the Company below its signature hereto, which amount may not exceed the Requested Capital Commitment, and to admit such Subscriber as a stockholder of the Company, all as more fully described in, and upon the terms and conditions of, this Agreement.
 
1
  Agreement
 
The Company and the Subscriber hereby agree as follows:
 
1.  Representations and Warranties of the Company .  The Company hereby represents and warrants to the Subscriber as follows:
 
(a) The Company is a corporation duly formed, legally existing and in good standing under the laws of the State of Delaware.  BCSF Advisors, LP, the investment adviser to the Company (the “Advisor”), is a limited liability company duly formed, legally existing and in good standing under the laws of the State of Delaware.
 
(b) Copies of the Private Placement Memorandum (as in effect as of the date hereof) and the Governing Documents have been provided to the Subscriber.
 
(c) The Company has all requisite power and authority to execute and deliver this Agreement, to carry out all of the terms and provisions of this Agreement to be carried out by it, and to conduct its business as described in this Agreement, the Private Placement Memorandum and the Governing Documents.
 
(d) The execution, delivery and performance by the Company of this Agreement have been duly authorized by all necessary action on its behalf.  This Agreement has been duly executed and delivered on behalf of the Company and constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except to the extent that the enforcement of the rights and remedies created thereby is subject to (i) bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).
 
(e) Neither the execution and delivery of this Agreement by the Company, nor the consummation of any of the transactions contemplated hereby will (i) conflict with, result in a breach of, or constitute a default under, any indenture, mortgage, lease or other agreement to which the Company is a party or by which it or any of its properties may be bound, or (ii) result in a violation of any order, writ, injunction, decree or award of any court or governmental authority to which the Company or any of its properties may be subject.  The execution and delivery by the Company of this Agreement does not require any filing with, or approval or consent of, any governmental authority which has not already been made or obtained, except, if deemed necessary or advisable by the Company, the filings under applicable securities laws.
 
(f) The Company has not, either directly or indirectly through any agent, sold or offered shares in the Company (“Shares”) to, or solicited offers to buy Shares from, or otherwise approached or negotiated in respect of Shares with, any persons or entities so as to make necessary the registration of the Shares under the Securities Act of 1933, as amended (the “1933 Act”).  The Company’s representations and warranties in this clause (f) are made in reliance on the representations and warranties of the Subscriber under this Agreement and the other subscribers under the other Subscription Agreements.
 
2
(g) There is no material litigation pending or, to the best knowledge of the Company, threatened against the Company.
 
(h) The Shares of the Company have been duly authorized for issuance and, when issued and delivered against payment therefore in accordance with the terms, conditions, requirements and procedures described in the Governing Documents and the Subscription Agreement, will be validly issued and fully paid and non-assessable.
 
(i) The Company confirms that all service and other contractual arrangements (excluding arrangements specifically contemplated in the Governing Documents or the Subscription Agreements) that involve the payment of any fee or expense by the Company between (i) the Company and (ii) the Advisor or its affiliates, shall be reviewed by the Board of Directors of the Company (the “Board”) in accordance with the Investment Company Act of 1940, as amended (“1940 Act”) and the rules and regulations promulgated thereunder.
 
2.  Representations and Warranties of the Subscriber .  The Subscriber hereby represents and warrants to the Company as follows:
 
(a) The Subscriber is, if applicable, duly and validly formed, validly existing and in good standing under the laws of the jurisdiction in which it is organized and has all requisite power and authority to execute and deliver this Agreement and to carry out all of the terms and provisions of this Agreement.
 
(b) The execution and delivery of this Agreement and the performance of this Agreement by the Subscriber have been duly authorized by all necessary corporate or other action on its behalf.  This Agreement has been duly executed and delivered on behalf of the Subscriber, and this Agreement constitutes the legal, valid and binding obligation of the Subscriber, enforceable against it in accordance with its terms, except to the extent that the enforcement of the rights and remedies created thereby is subject to (i) bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).
 
3
(c) The Subscriber is, with respect to the Company, an “accredited investor” within the meaning of Rule 501 of Regulation D under the 1933 Act, as amended by Section 413(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act.  The Subscriber is acquiring the Subscriber’s Shares for the Subscriber’s own account (or for the account of the trust or plan or other entity referred to in the signature block at the end of this Agreement), for investment and not with a view to any resale or distribution thereof within the meaning of the 1933 Act, in whole or in part.  The Subscriber understands that the Shares have not been registered under the 1933 Act or any state securities laws and may not be assigned, sold or otherwise transferred without registration under the 1933 Act or any relevant state securities laws or exemption therefrom; that the Company has no obligation to register any of the Shares under the 1933 Act or state securities laws, or to permit sales pursuant to Regulation A under the 1933 Act; and that the Subscriber must therefore bear the economic risk of holding its Shares in the Company for an indefinite period of time.  The Subscriber is not a party to, nor does it have any current intention to enter any into contract, agreement or other obligation pursuant to which it would transfer the Shares. No non-U.S., U.S. federal or state authority has made any finding or determination as to the fairness for investment of the Shares and no non-U.S., U.S. federal or state authority has recommended or endorsed or will recommend or endorse this offering.
 
(d) The Subscriber is a “qualified purchaser” (or a “knowledgeable employee” or an entity owned exclusively by “knowledgeable employees”) as defined in Section 2(a)(51) of the 1940 Act and various rules relating thereto and promulgated thereunder, except as otherwise disclosed to the Company below.  The definition of “qualified purchaser” contained in Section 2(a)(51) of the 1940 Act requires that certain “excepted investment companies” obtain the consent of their direct and indirect beneficial owners in order to qualify as a “qualified purchaser”.  The Subscriber, if it is a corporation, partnership, trust, limited liability company or other form of entity, has received all consents required by subparagraph (C) of Section 2(a)(51) of the 1940 Act and rules and regulations thereunder in order for the Subscriber to be a “qualified purchaser”.  The Subscriber agrees that the foregoing representation and warranty shall be true each time it makes a capital contribution in accordance with this Agreement.  (See Annex A for the definition of “qualified purchaser.”)
 
The Subscriber is not a “qualified purchaser.” ☐

(e) The Subscriber or, to the extent designated, its “purchaser representative” (as such term is defined in Rule 501(h) of Regulation D under the 1933 Act) currently has and, unless the Subscriber has a purchaser representative, the Subscriber had immediately prior to receipt of any offer regarding the Shares, such knowledge and experience in financial and business matters as to be able to evaluate the merits and risks of an investment in the Shares.  If the Subscriber has a purchaser representative, the Subscriber has previously given the Company notice in writing of such fact, specifying that such representative will be acting as the Subscriber’s “purchaser representative”.
 
4
(f) The Subscriber has received the Private Placement Memorandum, the Governing Documents and, not less than 48 hours prior to signing this Agreement, Part 2 of Form ADV (the “Form ADV Part 2”) of the Advisor, and has been given access to all information regarding the financial condition and the proposed business and operations of the Company that such Subscriber has requested in order to evaluate its investment in the Company.  During the course of the offering of the Shares and prior to the date hereof, the Company has made available to the Subscriber the opportunity to ask questions of, and to receive answers from, persons acting on behalf of the Company concerning the terms and conditions of the offering of Shares, and to obtain any additional information desired by the Subscriber with respect to the Company.  The Subscriber acknowledges that no such answer or additional information was inconsistent in any material respect with the Private Placement Memorandum, the Governing Documents or the Form ADV Part 2.  The Subscriber acknowledges that, if its requested subscription hereunder is accepted, it will be admitted as a stockholder of the Company.
 
(g) The Subscriber hereby consents to the treatment of the Company as a “qualified purchaser” for purposes of Section 3(c)(7) of the 1940 Act with respect to any and all possible future investments, whether or not known or contemplated at this time.   The Subscriber, if it is a corporation, partnership, trust, limited liability company or other form of entity, has received all consents required by subparagraph (C) of Section 2(a)(51) of the 1940 Act and rules and regulations thereunder in order for the Company to be treated as a “qualified purchaser” with respect to any such investment.
 
(h) The Subscriber acknowledges and understands that  that the Advisor is exempt from registration with the Commodity Futures Trading Commission (the “CFTC”) as a “commodity pool operator” with respect to the Company pursuant to no-action relief provided for in CFTC Letter No. 12-40 because of the Company’s limited trading in commodity interests, and, as a result, the Advisor, unlike a registered commodity pool operator, is not required to deliver a disclosure document (as defined in the CFTC’s rules) or a certified annual report to investors.
 
(i) The Subscriber specifically acknowledges and agrees that the Company intends, for U.S. federal income tax purposes, to be taxed as a corporation.
 
(j) In the event that any of the information provided on the signature pages hereto becomes inaccurate, the Subscriber will promptly inform the Company that the information has become inaccurate and will accurately set forth in writing the updated information requested on the signature pages hereto.
 
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(k) If the Subscriber is a United States person (as defined in Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended (“Code”)), the Subscriber has fully and accurately completed and delivered to the Company United States Internal Revenue Service (“IRS”) Form W-9 (or any successor form thereof), a copy of which is attached hereto in Annex B.  If the Subscriber is not a United States person (as defined in Section 7701(a)(30) of the Code), the Subscriber has fully and accurately completed and delivered to the Company the applicable IRS Form W-8 (or any successor form thereto, respectively), copies of which are attached hereto in Annex B. In addition, the Subscriber will complete and deliver an applicable Form W-8 or W-9 (or successor form) upon the expiration of any previously submitted Form W-8 or W-9.    The Subscriber agrees to provide the Company or the Advisor with such additional information, documentation, waivers and certifications as the Company may request, including (i) any information, documentation, waivers and certifications to comply with FATCA, similar (including non-U.S.) laws or other tax matters and (ii) any information the Company believes is required to enable it or any affiliate of the foregoing to comply with or mitigate any of their respective tax reporting, tax withholding and/or tax compliance obligations or which may arise as a result of a change in law or the interpretation thereof.  “FATCA” means Sections 1471 through 1474 of the Code and the U.S. Treasury regulations thereunder, including any successor provisions, subsequent amendments and administrative guidance thereunder, any applicable intergovernmental agreement (“IGA”) and related statutes, regulations or rules, and any agreement entered into by or with respect to the Company (or any of its affiliates) and/or any similar automatic tax information exchange arrangements. The Subscriber agrees that any such information, documentation, waivers and certifications shall be true, correct and complete in all material respects and may be disclosed as necessary or advisable to the IRS, other taxing authorities and other third parties as appropriate in the judgment of the Company and the Advisor to comply with any such requirements. In the event of any change in the applicable status of the Subscriber or any change in circumstances that causes any information, form, certification, waiver or other documentation previously provided by the Subscriber to be incorrect, obsolete or invalid, the Subscriber will promptly inform the Company thereof, and execute and deliver to the Company updated and valid documentation, forms, waivers or certifications, as applicable.  The Subscriber agrees to waive any provision of law of any non-U.S. jurisdiction that would, absent a waiver, prevent compliance with FATCA by the Company or any affiliate thereof, including, but not limited to, the Subscriber’s provision of any requested information and/or documentation.
 
(l) The Subscriber, if a natural person who is not a United States citizen or resident, has accurately set forth his or her country of residence on the signature pages hereto where indicated.  The Subscriber, if a corporation, partnership, trust or other entity not organized under the laws of a state of the United States or the District of Columbia, has accurately set forth such Subscriber’s jurisdiction of organization on the signature pages hereto where indicated, and is not, and will not become (i) a trust any portion of which is treated (under subpart E of part I of subchapter J of chapter 1 of subtitle A of the Code) as owned by a natural person (e.g., a grantor trust) or (ii) an entity disregarded for U.S. federal income tax purposes and owned (or treated as owned) by a natural person or a trust described in clause (i) hereof (e.g., a limited liability company with a single member).
 
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(m) The Subscriber has fully and accurately completed the “Plan Asset Questionnaire” that follows the signature page (the “Plan Asset Questionnaire”).  The Subscriber (i) acknowledges that in view of developments in the law and applicable regulations, or other circumstances, the Company may require additional information from the Subscriber to comply with or qualify for an exemption under the requirements of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) or the Code, or to comply with or qualify for an exemption from any similar law, rule, regulation or other guidance similar to Section 406 of ERISA or Section 4975 of the Code (“Similar Law”), and (ii) agrees to provide additional information reasonably requested by the Company from time to time to determine whether the Company is treated as holding plan assets subject to ERISA, the Code, or any Similar Law and is complying with such laws, if applicable.  The Subscriber acknowledges that the Company will rely on the information and representations given by the Subscriber, including those set forth herein and in the Plan Asset Questionnaire and those that may hereafter be given by the Subscriber, in determining whether assets of the Company include assets subject to ERISA, the Code, or any Similar Law.  If the Subscriber has checked “yes” under the caption “Plan Assets” in the Plan Asset Questionnaire or is subject to any law similar to Title I of ERISA or Section 4975 of the Code, the Subscriber represents that:
 
(i)         it is either (A) a named fiduciary (who is not an affiliate of the Company or its sponsors) with authority to cause the Subscriber to invest in, or withdraw from, the Company, or (B) executing this Agreement pursuant to the proper directions of such a named fiduciary;
 
(ii)        it is aware of and has taken into consideration its fiduciary duties including the diversification requirements of Section 404(a)(1)(C) of ERISA or any Similar Law; and that it understands and agrees that none of the Company, the Advisor or any of their affiliates shall be responsible for compliance by the Subscriber with the provisions of ERISA or any Similar Law requiring that investments of the Subscriber be diversified so as to minimize the risk of large losses and it has determined that an investment in the Company provides exposure to assets classes that are appropriate for the Subscriber, taking into account its fiduciary obligations;
 
(iii)       the decision to invest in the Company was made in accordance with all requirements applicable to the Subscriber under its governing instruments, ERISA, Section 4975 of the Code and any applicable Similar Law, by fiduciaries independent of the Advisor and the Company, which fiduciaries are duly authorized to make such investment decisions and have not relied on any advice or recommendation of the Advisor and the Company or any of their employees, representatives, partners, members, managers or agents;
 
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(iv)       it has concluded that, taking into account all relevant facts and circumstances (including but not limited to the incentive fee arrangement and any restrictions on withdrawal and/or transfer or other disposition of the interests), its proposed investment in the Company is a prudent one;
 
(v)          this subscription and the investment contemplated hereby are in accordance with all requirements applicable to the Subscriber under its governing instruments, ERISA, the Code, and any Similar Law; and

(vi)         if the Subscriber is a “governmental plan” or “church plan” within the meaning of ERISA or is otherwise in the nature of an employee benefit plan or trust that is not subject to ERISA, none of the assets of the Company will be construed to be assets of the Subscriber by virtue of the Subscriber’s investment in the Company, and the Advisor is not a “fiduciary” with respect to any assets of the Subscriber by reason of the Subscriber’s investment in the Company.

(n) The Subscriber hereby acknowledges and agrees that, for so long as the Company is not deemed to hold “plan assets” (within the meaning of the Department of Labor’s plan asset regulations, 29 C.F.R. § 2510.3-101, as modified by Section 3(42) of ERISA (the “Plan Asset Regulations” and such assets “Plan Assets”)), the Advisor is not a “fiduciary” (within the meaning of Section 3(21) of ERISA or any Similar Law) under ERISA or such applicable similar law with respect to any assets of the Subscriber by reason of the Subscriber’s investment in the Company and that the Subscriber has not relied and is not relying on the Advisor to provide, and that the Advisor has not provided, any kind of investment advice with respect to the Subscriber's purchase or commitment to purchase an interest in the Company.
 
(o) The Subscriber acknowledges that the Company is subject to certain legal requirements that require the Company to verify the source of funds paid to the Company by the Subscriber and/or the identity of the Subscriber and persons associated with the Subscriber.  The Subscriber agrees to provide such information and materials as may from time to time be requested by the Company for such purposes.
 
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(p) The Subscriber hereby acknowledges that the Company seeks to comply with all applicable laws concerning money laundering and related activities.  In furtherance of such efforts, the Subscriber hereby represents, warrants and agrees that to the best of the Subscriber’s knowledge based upon reasonable diligence and investigation: (i) no consideration that the Subscriber has contributed or will contribute to the Company has been or shall be derived from, or related to, any activity that is deemed criminal under United States law; (ii) no consideration that the Subscriber has contributed or will contribute to the Company shall cause the Company or the Advisor to be in violation of the United States Bank Secrecy Act, the United States Money Laundering Control Act of 1986 or any other applicable law or regulation related to money laundering or similar activities to which the Company or the Advisor may from time to time be subject, including without limitation the United States International Money Laundering Abatement and Anti-Terrorism Financing Act of 2001 and regulations thereunder; and (iii) none of (1) the Subscriber; (2) any person controlling or controlled by the Subscriber; or (3) any shareholder, partner or other beneficial owner of equity interests in the Subscriber (each, a “Beneficial Owner”) appears on the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control of the United States Department of the Treasury (“OFAC”), or is otherwise a party with which the Company is prohibited to deal under the laws of the United States.
 
(q) The Subscriber further represents and warrants that the monies used to fund its investment in the Company are not derived from, invested for the benefit of, or related in any way to, the governments of, or persons within, (i) any jurisdiction under a U.S. embargo enforced by OFAC, (ii) that has been designated as a “non-cooperative jurisdiction or territory” by the Financial Action Task Force on Money Laundering, or (iii) that has been designated by the U.S. Secretary of the Treasury as a “primary money laundering concern.”
 
(r) The Subscriber represents and warrants that it has implemented, complies with and will comply with anti-money laundering policies and procedures that satisfy and will continue to satisfy the requirements of applicable anti-money laundering laws and regulations, including, if the Subscriber is subject to the laws of the United States, the International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001, as it may be amended from time to time.
 
(s) The Subscriber represents that in the event that it is, receives deposits from, makes payments to or conducts transactions relating to a non-U.S. banking institution (a “Non-U.S. Bank”) in connection with Subscriber’s investment in Shares, such Non-U.S. Bank: (i) has a fixed address, other than an electronic address or a post office box, in a country in which it is authorized to conduct banking activities; (ii) employs one or more individuals on a full-time basis; (iii) maintains operating records related to its banking activities; (iv) is subject to inspection by the banking authority that licensed it to conduct banking activities; and (v) does not provide banking services to any other Non-U.S. Bank that does not have a physical presence in any country and that is not a registered affiliate.
 
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(t) The Subscriber further agrees: (i) that the Subscriber shall promptly notify the Company if any of these representations cease to be true and accurate with respect to the Subscriber; (ii) to provide to the Company any additional information regarding the Subscriber that the Company deems necessary or appropriate to ensure compliance with all applicable laws, including those concerning money laundering and similar activities; and (iii) that if at any time it is discovered that any of the foregoing representations are incorrect, or if otherwise required by applicable law or regulation related to money laundering and similar activities, the Company may, in its sole discretion, undertake appropriate actions to ensure compliance with applicable law or regulation, including but not limited to freezing, segregating or requiring a Subscriber to withdraw such Subscriber’s Shares.  The Subscriber further understands that the Company or the Advisor may release confidential information about the Subscriber and, if applicable, any underlying beneficial ownership, to proper authorities if the Advisor, in its sole discretion, determines that it is in the best interests of the Company in light of relevant rules and regulations concerning money laundering, foreign asset transfers and similar activities or in light of FATCA, or similar laws.
 
(u) The Subscriber is not relying on any written or oral advice, counsel or representations of the Company, the Advisor or their respective affiliates or agents other than in the Private Placement Memorandum and this Agreement.  The Subscriber has consulted with its own legal, regulatory, tax, business, investment, financial and accounting advisers to the extent it has deemed necessary, and has made its own investment decisions based upon its own judgment and upon any advice from such advisers as it has deemed necessary and not upon any view expressed by the Company, the Advisor or any of their respective affiliates or agents.  The Subscriber is a sophisticated investor and is purchasing the Shares with a full understanding of all of the terms, conditions and risks thereof, and it is capable of assuming and willing to assume those risks.
 
(v) The Subscriber understands and acknowledges that the Subscriber may not transfer the Shares except in compliance with this Agreement.  The Subscriber further understands and acknowledges that any attempted transfer of the Shares not made in accordance with this Agreement shall be null and void.  Without in any way limiting the generality of the foregoing, the Subscriber acknowledges that (i) until 180 days after a Qualified IPO (as defined in the Private Placement Memorandum), the Subscriber may not sell, offer for sale, exchange, transfer, assign, pledge, hypothecate or otherwise dispose of (each, a “Transfer”) any of its Shares or its Capital Commitment unless the Company and the Advisor provides provide prior written consent, provided, that the Company and the Advisor shall not unreasonably withhold, condition or delay their consent to any Transfer by the Subscriber to an affiliate of the Subscriber; (ii) unless consented to by the Advisor in its sole discretion, no purchase of Shares or proposed Transfer of Shares will be permitted to the extent that, after giving effect to such purchase or Transfer, persons that have represented that they are Benefit Plan Investors would own 25% or more of the outstanding Shares of the Company immediately after such purchase or proposed Transfer (such percentage determined in accordance with the Plan Assets Regulation); and (iii) Transfers of Shares may be further restricted as provided in this Agreement or the Governing Documents.
 
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(w) If the Subscriber is an individual, the Subscriber has reached the age of majority in the state or jurisdiction in which the Subscriber resides, has adequate means of providing for the Subscriber’s current needs and personal contingencies, has no need for liquidity in its investment in the Shares, and, at the present time, could afford a complete loss of such investment.
 
(x) The Subscriber agrees to provide any additional information or documents that the Company reasonably requests.
 
(y) The Subscriber agrees that the foregoing representations and warranties in this Section 2 and the other representations and warranties made herein may be used as a defense in any actions relating to the Company or the offering of the Shares, and that it is only on the basis of such representations and warranties that the Advisor, on behalf of the Company, or any placement agent with respect to the offering of the Shares may be willing to accept the Subscriber’s subscription for the Shares.
 
(z) The Subscriber understands and agrees that the information, acknowledgements, representations and warranties set forth in the AML Questionnaire and this Agreement (including, without limitation, all information provided in Annex C) shall be deemed, repeated and reaffirmed as of each date that the Subscriber is required to make a contribution of capital to the Company pursuant to this Agreement, and if at any time while the Subscriber holds Shares in the Company any of such information, acknowledgements, representations and warranties shall cease to be true, the Subscriber shall promptly notify the Company.
 
(aa) Neither the Subscriber (nor any Person who would, through the Subscriber’s ownership in the Company, be deemed to beneficially own an interest in the Company) is or has been subject to, is experiencing or has experienced (in each case, within the period of time prescribed by the applicable disqualifying or disclosable event under Rule 506(d) under the 1933 Act) any of the events described in Rule 506(d)(1)(i)-(viii) under the 1933 Act (a “Disqualifying Event”).  The Subscriber shall promptly notify the Company in writing if the Subscriber or any such other Person becomes subject to or experiences a Disqualifying Event or becomes the subject of a formal proceeding that would, if adversely determined, constitute a Disqualifying Event.
 
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3.  Capital Drawdowns .
 
(a) Definitions .  On each Capital Drawdown Date (as defined below), the Subscriber shall purchase from the Company, and the Company shall issue to the Subscriber, a number of Shares equal to the Drawdown Share Amount at an aggregate price equal to the Drawdown Purchase Price; provided, however, that in no circumstance will a Subscriber be required to purchase Shares for an amount in excess of its Unfunded Capital Commitment.
 
“ Drawdown Purchase Price ” shall mean, for each Capital Drawdown Date, an amount in U.S. dollars determined by multiplying (i) the aggregate amount of Capital Commitments being drawn down by the Company from all Subscribers on that Capital Drawdown Date, by (ii) a fraction, the numerator of which is the Unfunded Capital Commitment of the Subscriber and the denominator of which is the aggregate Unfunded Capital Commitments of all Subscribers that are not Defaulting Subscribers (as defined in Section 4) or Excluded Subscribers (as defined in Section 3(c)(vi)).
 
“ Drawdown Share Amount ” shall mean, for each Capital Drawdown Date, a number of Shares determined by dividing (i) the Drawdown Purchase Price for that Capital Drawdown Date by (ii) the applicable Price Per Share.
 
“ Price Per Share ” shall mean, for any Capital Drawdown Date or Catch-Up Date (as defined below), the Price Per Share determined by the Company’s Board of Directors (the “ Board ”) in accordance with the procedures set out in the Private Placement Memorandum (as those procedures may be changed from time to time in a manner consistent with the limitations of the 1940 Act) as of the last day of the Company’s fiscal quarter or such other date as determined by the Board preceding the Capital Drawdown Date.  The Price Per Share shall be at least equal to the net asset value per Share in accordance with the limitations under Section 23 of the 1940 Act, and nothing in this Agreement shall prohibit the Company from issuing Shares at a per share price greater than the net asset value per Share.  The Board may set the Price Per Share above the net asset value per Share based on a variety of factors, including without limitation the total amount of the Company’s organizational and other expenses.
 
“ Unfunded Capital Commitment ” shall mean, with respect to a Subscriber, the amount of such Subscriber’s Capital Commitment as of any date reduced by the aggregate amount of contributions made by that Subscriber at all previous Capital Drawdown Dates and all Catch-Up Dates pursuant to Section 3(a) and Section 3(b), respectively.
 
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(b) Subsequent Closings.  The Company may enter into other Subscription Agreements with other subscribers after the Closing Date, with any closing thereunder referred to as a “Subsequent Closing” and any other subscriber whose subscription has been accepted at such Subsequent Closing referred to as a “Subsequent Subscriber.” Notwithstanding the provisions of Sections 3(a) and 3(c), on one or more dates to be determined by the Company that occur on or following the Subsequent Closing but no later than the next succeeding Drawdown Date (each, a “Catch-Up Date”), each Subsequent Subscriber shall be required to purchase from the Company a number of Shares with an aggregate purchase price necessary to ensure that, upon payment of the aggregate purchase price for such Shares by the Subsequent Subscriber in the aggregate over all applicable Catch-Up Dates, such Subsequent Subscriber’s Invested Percentage shall be equal to the Invested Percentage of all prior Subscribers (other than any Defaulting Subscribers or Excluded Subscribers) (the “Catch-Up Purchase Price”).  For the purposes of this Section 3(b), “Invested Percentage” means, with respect to a Subscriber, the quotient determined by dividing (i) the aggregate amount of contributions made by such Subscriber pursuant to Section 3(a) and this Section 3(b) by (ii) such Subscriber’s Capital Commitment.  Upon payment of all or a portion of the Catch-Up Purchase Price by the Subscriber on a Catch-Up Date, the Company shall issue to each such Subsequent Subscriber a number of Shares determined by dividing (i) the portion of the Catch-Up Purchase Price contributed at such Catch-Up Date by (ii) the Price Per Share as of the Catch-Up Date.  For the avoidance of doubt, in the event that a Catch-Up Date and a Capital Drawdown Date occur on the same calendar day, the Catch-Up Date (and the application of the provisions of this Section 3(b)) shall be deemed to have occurred immediately prior to the relevant Capital Drawdown Date.
 
At each Capital Drawdown Date following any Subsequent Closing, all Subscribers, including Subsequent Subscribers, shall purchase Shares in accordance with the provisions of Section 3(a); provided, however, that notwithstanding the foregoing, the definition of Drawdown Share Amount and the provisions of Section 3(c), nothing in this Agreement shall prohibit the Company from issuing Shares to Subsequent Subscribers at a per share price greater than the net asset value per Share.
 
In the event that any Subscriber is permitted by the Company to make an additional capital commitment to purchase Shares on a date after its initial subscription has been accepted, such Subscriber will be required to enter into a separate subscription agreement with the Company (such separate agreement may be a short form subscription agreement), it being understood and agreed that such separate subscription agreement will be considered to be an other subscription agreement for the purposes of this Agreement.
 
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(c) Funding Notices.
 
(i)         Subject to Section 3(c)(v), purchases of Shares will take place on dates selected by the Company in its sole discretion (each, a “Capital Drawdown Date”) and shall be made in accordance with the provisions of Section 3(a).
 
(ii)        The Company shall deliver to the Subscriber, at least ten (10) Business Days prior to each Capital Drawdown Date or Catch-Up Date, a notice (each, a “Funding Notice”) setting forth (i) the Capital Drawdown Date (or Catch-Up Date, as applicable), (ii) a description of the proposed use of proceeds, (iii) the aggregate number of Shares to be sold to all Subscribers on such date and the aggregate purchase price for such Shares, (iv) the applicable Drawdown Share Amount, Drawdown Purchase Price (or Catch-Up Purchase Price, as applicable) and Price Per Share and (v) the account to which the Drawdown Purchase Price or Catch-Up Purchase Price should be wired.  Notwithstanding the ten (10) Business Day notice requirement set forth in the previous sentence, the Subscriber agrees that the Funding Notice for the first Capital Drawdown Date following the Initial Closing Date shall require only five (5) Business Days’ notice.
 
For the purposes of this Agreement, the term “Business Day” shall have the meaning ascribed to it in Rule 14d-1(g)(3) under the Securities Exchange Act of 1934, as amended (“1934 Act”).
 
(iii)       The delivery of a Funding Notice to the Subscriber shall be the sole and exclusive condition to the Subscriber’s obligation to pay the Drawdown Share Purchase Price or Catch-Up Purchase Price, as applicable, identified in each Funding Notice.
 
(iv)      On each Capital Drawdown Date or Catch-Up Date, as applicable, the Subscriber shall pay the Drawdown Purchase Price or Catch-Up Purchase Price to the Company by bank wire transfer in immediately available funds in U.S. dollars to the account specified in the Funding Notice.
 
(v)       Except as provided below, after three (3) years following the initial closing in which the Company accepts the capital commitment of at least one investor who is not an affiliate of the Company or the Advisor (such date, the “Initial Closing Date” and such period, the “Commitment Period”), any Unfunded Capital Commitment (other than any Defaulted Commitment, as defined in Section 4) shall automatically be reduced to zero, except to the extent necessary to pay amounts due under Funding Notices that the Company may thereafter issue to: (A) pay Company expenses, including management fees, any amounts that may become due under any borrowings or other financings or similar obligations and any other liabilities, contingent or otherwise, in each case to the extent they relate to the Commitment Period, (B) complete investments in any transactions for which there are binding written agreements as of the end of the Commitment Period (including investments that are funded in phases), (C) fund follow-on investments made in existing portfolio companies that, in the aggregate, do not exceed 10% of total Capital Commitments, (D) fund obligations under any Company guarantee or indemnity made during the Commitment Period and/or (E) fund any Defaulted Commitments.  The Commitment Period shall terminate earlier upon a “Qualified IPO” (as defined in the Private Placement Memorandum) and any Unfunded Capital Commitment (other than any Defaulted Commitment, as defined in Section 4) shall automatically be reduced to zero.
 
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(vi)       Notwithstanding anything to the contrary contained in this Agreement, the Company shall have the right (a “Limited Exclusion Right”) to exclude any Subscriber (such Subscriber, an “Excluded Subscriber”) from purchasing Shares from the Company on any Capital Drawdown Date if, in the reasonable discretion of the Company, such Subscriber’s purchase of Shares at such time could (i) result in a violation by the Subscriber, the Advisor or the Company (or any of their affiliates) of any law, order, decree or judgment of any court or governmental agency applicable to the Subscriber, the Advisor or the Company (or any of their affiliates), or any investment policy or similar constraint applicable to the Subscriber, the Advisor or the Company (or any of their affiliates), or create a conflict of interest between a Subscriber (or any of its affiliates) and the Company, (ii) have a material adverse effect on the Company, or (iii) cause the investments of “Benefit Plan Investors” (within the meaning of Section 3(42) of ERISA and certain Department of Labor regulations) to be significant and the assets of the Company to be considered Plan Assets. The Company, in its sole discretion, may, in lieu of exercising the Limited Exclusion Right, reduce the amount of the Capital Commitment of the Subscriber.
 
(vii)      If at any time the Company determines, after consultation with the affected Subscriber and counsel to the Company, that there is a reasonable likelihood that the continuing participation in the Company by such Subscriber would cause a Material Burden, (i) such Subscriber will, upon the written request of the Company, use commercially reasonable efforts to dispose of such Subscriber’s Shares in the Company (or such portion of its Shares as the Company shall determine is sufficient to prevent or remedy such Material Burden) to any person at a price per Share equal to or greater than the net asset value per Share, in a transaction that complies with Section 2(v) (in which case the Company shall use commercially reasonable efforts to work with such Subscriber to facilitate the transaction).
 
“Material Burden” shall mean (i) a material violation of a statute, rule, regulation or governmental administrative policy of a U.S. federal or state or non-U.S. governmental authority or stock exchange regulatory organization applicable to a Subscriber that is reasonably likely to have a material adverse effect on a portfolio company or any affiliate thereof or on the Company, any related investment fund, the Advisor or any of their respective affiliates or on any Subscriber or any affiliate of any such Subscriber or, with respect to a Stockholder that is an “employee benefit plan” (as defined in ERISA) that is subject to ERISA or a “plan” (as defined in Section 4975 of the Code) that is subject to Section 4975 of the Code (an “ERISA Stockholder”), on the ERISA Stockholder, the sponsor of such ERISA Stockholder or any of such sponsor’s affiliates, (ii) an occurrence, without the Company’s consent, that is reasonably likely to subject a portfolio company or any affiliate thereof or the Company, the Advisor or any of their respective affiliates or any Subscriber or any affiliate of any such Subscriber or, with respect to an ERISA Stockholder, the ERISA Stockholder, the sponsor of such ERISA Stockholder or any of such sponsor’s affiliates, to any material non-tax regulatory requirement to which it would not otherwise be subject, or that is reasonably likely to materially increase any such regulatory requirement beyond what it would otherwise have been or (iii) an occurrence that is reasonably likely to constitute or otherwise result in a non-exempt “prohibited transaction” under ERISA or Section 4975 of the Code or a violation of any Similar Law.
 
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(viii)     If any Subscriber is excused from funding a capital drawdown pursuant to Sections 3(c)(vi) or 3(c)(vii) above, the Company is authorized to issue an additional capital drawdown on the non-excused Subscribers sufficient to make up such shortfall, provided that no Subscriber shall ever be required to fund capital drawdowns in excess of its Unfunded Capital Commitment.
 
4.  Remedies Upon Subscriber Default.
 
In the event that a Subscriber fails to pay all or any portion of the purchase price due from such Subscriber on any Capital Drawdown Date (such amount, together with the full amount of such Subscriber’s remaining Capital Commitment, a “Defaulted Commitment”) and such default remains uncured for a period of ten (10) Business Days, the Company shall be permitted to declare such Subscriber to be in default of its obligations under this Agreement (any such Subscriber, a “Defaulting Subscriber”) and shall be permitted to pursue one or any combination of the following remedies:
 
(i)         The Company may prohibit the Defaulting Subscriber from purchasing additional Shares on any future Capital Drawdown Date;
 
(ii)        Twenty-five percent (25%) of the Shares then held by the Defaulting Subscriber may be automatically transferred on the books of the Company, without any further action being required on the part of the Company or the Defaulting Subscriber, to the other subscribers (other than any defaulting other subscriber), pro rata in accordance with their respective Capital Commitments; provided, however, that notwithstanding anything to the contrary contained in this Agreement, no Shares shall be transferred to any other subscriber pursuant to this Section 4(ii) in the event that such transfer would (i) violate the 1933 Act or any state (or other jurisdiction) securities or “Blue Sky” laws applicable to the Company or such Transfer, (ii) constitute or otherwise result in a non-exempt “prohibited transaction” under Section 406 of ERISA or Section 4975 of the Code or a violation of any Similar Law or (iii) cause all or any portion of the assets of the Company to constitute “plan assets” under ERISA or Section 4975 of the Code (it being understood that this proviso shall operate only to the extent necessary to avoid the occurrence of the consequences contemplated herein and shall not prevent the Subscriber from receiving a partial allocation of its pro rata portion of Shares); provided further, that any Shares that have not been transferred to one or more other subscribers pursuant to the previous proviso shall be allocated among the participating other subscribers pro rata in accordance with their respective Capital Commitments.  The mechanism described in this Section 4(ii) is intended to operate as a liquidated damage provision, since the damage to other subscribers resulting from a default by the Defaulting Subscriber is both significant and not easily susceptible to precise quantification.  By entry into this Agreement, the Subscriber agrees to this transfer and acknowledges that it constitutes a reasonable liquidated damage remedy for any default in the Subscriber’s obligation of the type described;
 
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(iii)       The Company may pursue any other remedies against the Defaulting Subscriber available to the Company, subject to applicable law; and
 
(iv)       If any Subscriber fails to pay all or any portion of the purchase price due on any Capital Drawdown Date, the Company is authorized to issue an additional capital drawdown on the non-defaulting or non-delinquent Subscribers to make up such shortfall, provided that no Subscriber shall ever be required to fund capital drawdowns in excess of its Unfunded Capital Commitment.
 
5.  Dividends; Dividend Reinvestment Plan .  As described more fully in the Private Placement Memorandum, the Company generally intends to distribute, out of assets legally available for distribution, substantially all of its available earnings, on a quarterly basis, as determined by the Board in its discretion.  Prior to the completion of a listing of the Company’s shares on an exchange (a “Listing”), Subscribers who “opt in” to the Company’s dividend reinvestment plan will have their cash dividends and distributions automatically reinvested in additional Shares, rather than receiving cash dividends and distributions, crediting to each such Subscriber a number of Shares equal to the quotient determined by dividing the cash value of the dividend payable to such Subscriber by the Price Per Share as of the last day of the Company’s fiscal quarter or such other date as determined by the Board preceding the date such dividend was declared.  After a Listing, Subscribers who do not “opt out” of the Company’s dividend reinvestment plan will have their cash dividends and distributions automatically reinvested in additional Shares, rather than receiving cash dividends and distributions. Subscribers can elect to “opt in” or “opt out” of the Company’s dividend reinvestment plan in this Agreement. The Subscriber and the Company agree and acknowledge that any dividends received by the Subscriber or reinvested by the Company on the Subscriber’s behalf shall have no effect on the amount of the Subscriber’s Unfunded Capital Commitment.
 
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6.  Credit Facility .  In connection with any financings, borrowings, indebtedness, or guarantees of the Company and any of its affiliates that are party to a Credit Facility, the Company shall be authorized to directly or indirectly collateralize such financings, borrowings, indebtedness or guaranty, and pledge, mortgage, assign, transfer and/or grant security interests directly or indirectly to the lender of such indebtedness or guaranty in (i) investments in portfolio companies and the proceeds thereof and any other assets, (ii) the Unfunded Capital Commitments; (iii) the Company’s right to initiate capital calls and collect on the Unfunded Capital Commitment of any Subscriber hereunder; (iv) the Capital Commitments made to the Company; (v) the Company’s rights to enforce the funding of a Capital Commitment hereunder and under the Other Subscription Agreements; and (vi) a Company collateral account into which the payment by any Subscriber of its Unfunded Capital Commitment is to be made (any financing, borrowing, indebtedness or guaranty, a “Credit Facility”).  Any such collateral pledge may be made directly by the Company to the lender of the Credit Facility or indirectly to such lender by first pledging such collateral to a subsidiary or agent of the Company, which subsidiary or agent then on pledges such rights ultimately to the lender under the Credit Facility.  To the extent that the Company or any of its subsidiaries has outstanding obligations under a Credit Facility that relies upon any of the collateral referred to in clauses (ii) through (vi) above, and with the knowledge that the Credit Facility lender is relying on each of the following agreements and undertakings of the Subscribers in this Section 6 in connection with the extension of credit to the Company, each Subscriber shall be obligated to fund any remaining portion of its Unfunded Capital Commitment when due pursuant to this Agreement (whether called by the Company or directly by the lender under the Credit Facility) without defense, counterclaim or offset of any kind, including any defense arising under Section 365(c) of the U.S. Bankruptcy Code, if applicable, provided that such agreement to fund shall not act as a waiver by such Subscriber of its right to assert independently any claim that the Subscriber may have against any other Subscriber or the Company. In the event that, as a result of any such pledge, mortgage, assignment, transfer or grant of a security interest, a Subscriber makes a payment directly to the Company account as requested by a lender under a Credit Facility, such payment shall be deemed to be a Capital Contribution of such Subscriber to the Company in all respects.
 
Each Subscriber hereby (i) acknowledges that the Company has informed such Subscriber that the Company may enter into a Credit Facility at any time, including before and after the investment period, and that such Credit Facility may include a pledge of collateral referred to in clauses (ii) through (iv) above and, directly or indirectly, grant the related lender the right to initiate capital calls in the name of the Company when an event of default under such Credit Facility exists, which each Subscriber shall fund, to the Company, consistent with the terms hereof and its obligations hereunder; (ii) acknowledges that for so long as the Credit Facility is in place, except with the prior consent of the lender, the Company has agreed not to amend, modify, cancel, terminate, reduce, suspend or waive any of such Subscriber’s obligations under this Agreement in a manner that could be materially adverse to the rights of the lender contemplated by this paragraph; and (iii) agrees, if requested by the Company, to provide to the Company: (A) to the extent publically available, as soon as reasonably available after the end of such Subscriber’s fiscal year, a copy of such Subscriber’s annual report, if available, or such Subscriber’s balance sheet as of the end of such fiscal year and the related statements of operations for such fiscal year prepared or reviewed by independent public accountants in connection with such Subscriber’s annual reporting requirements; (B) from time to time, a certificate confirming the remaining amount of such Subscriber’s Unfunded Capital Commitment; and (C) such other consents and documents as may be reasonably requested by the Company to acknowledge the same.
 
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7.  Power of Attorney: Appointment of Company as Attorney-in-Fact and Agent
 
(a) The Subscriber hereby constitutes and appoints the Company its true and lawful attorney-in-fact and agent with full power of substitution and resubstitution for the Subscriber and in the Subscriber’s name, place and stead, in any and all capacities and to take any and all other actions as are authorized by the power of attorney contained in this Agreement.  The power of attorney granted hereby shall be deemed an irrevocable special power of attorney, coupled with an interest, which the Company may exercise for the Subscriber by the signature of the Company or by listing the Subscriber as a stockholder executing any instrument with the signature of the Company as attorney-in-fact for the Subscriber.  This grant of authority shall survive the assignment by the Subscriber of the whole or any portion of the Subscriber’s Shares, except where the assignment is of all of the Subscriber’s Shares in the Company and the assignee thereof, with the consent of the Company, is admitted as a stockholder; provided, however, this power of attorney shall survive the delivery of such assignment for the sole purpose of enabling any such attorney-in-fact to effect such substitution. The Company, as attorney-in-fact for the Subscriber, may make, execute, sign, acknowledge, swear to, record and file:
 
(i)         all certificates and other instruments deemed advisable by the Company in order for the Company to enter into any borrowing or pledging arrangement, including any Credit Facility;
 
(ii)        all certificates and other instruments deemed advisable by the Company to comply with the provisions of this Agreement and applicable law or to permit the Company to become or to continue as a business development corporation, and
 
(iii)       all other instruments or papers not inconsistent with the terms of this Agreement which the Company considers advisable.
 
8.  Early Termination; Non-Consummation of a Qualified IPO
 
(a) Prior to any Qualified IPO that may occur, if the Company’s Board determines that there has been a significant adverse change in the regulatory or tax treatment of the Company or its stockholders that in its judgment makes it inadvisable for the Company to continue in its present form, then the Board will endeavor to restructure or change the form of the Company to preserve (insofar as possible) the overall benefits previously enjoyed by stockholders as a whole or, if the Board determines it appropriate (and subject to any necessary stockholder approvals and applicable requirements of the 1940 Act), (i) cause the Company to change its form and/or jurisdiction of organization or (ii) wind down and/or liquidate and dissolve the Company.
 
(b) If the Company has not consummated a Qualified IPO of its common stock within three (3) years following the initial Closing Date, then the Board (subject to any necessary stockholder approvals and applicable requirements of the 1940 Act) will use its best efforts to wind down and/or liquidate and dissolve the Company; provided that the term of the Company may be extended by the Board for an additional six-month period if (i) the Company has filed an IPO registration statement with the SEC and (ii) the Board reasonably expects such registration statement to be effective within six months of the end of such three-year period.
 
19
9.  No Third-Party Beneficiaries .  Except as provided with respect to a lender under a Credit Facility in accordance with Section 6, the provisions of this Agreement are not intended to be for the benefit of or enforceable by any third party.  Without limiting the foregoing, no third party shall, except as permitted by law and this Agreement, have any right to (i) enforce or demand enforcement of a Subscriber’s Capital Commitment, obligation to return distributions, or obligation to make other payments to the Company as set forth in this Agreement or (ii) demand that the Company issue any capital call.
 
10.    Subscription and Acceptance .
 
(a) The Subscriber hereby agrees (i) to become a stockholder of the Company and (ii) to be bound by all the provisions of this Agreement, as from time to time in effect, the definitive terms of which supersede the “Summary of Proposed Terms” contained in the Private Placement Memorandum, and (iii) to make capital contributions to the Company in an aggregate amount equal to the Subscriber’s Capital Commitment at the times and in the manner set forth in this Agreement and to make all other payments to the Company required under this Agreement upon acceptance by the Company.
 
(b) Though the Company may decline to accept any or all of the Requested Capital Commitment, in its sole discretion, the offer of subscription by the Subscriber shall be irrevocable upon execution and delivery by electronic submission of this Agreement by the Subscriber.  Such execution and delivery shall not constitute an agreement between the Company and the Subscriber until this Agreement is accepted by the Company, and then only in the amount of the Capital Commitment.
 
(c) Upon its execution hereof, the Company hereby accepts the Subscriber’s subscription for the Capital Commitment, and hereby agrees to admit the Subscriber as a stockholder of the Company with a capital subscription equal to the Capital Commitment.
 
11.    Execution of Subscription Agreement .  The Subscriber hereby (i) confirms the power of attorney granted in this Agreement and (ii) irrevocably makes, constitutes and appoints the Company as such Subscriber’s true and lawful attorney-in-fact, in such Subscriber’s name, place and stead to execute, sign and file each agreement, certificate and other document contemplated thereby on behalf of such Subscriber and agrees to adhere to and be bound by the terms of this Agreement.
 
20
12.    Survival .  The representations and warranties and covenants set forth in this Agreement shall survive the execution and delivery of this Agreement and the admission of the Subscriber as a stockholder of the Company.
 
13.    Confidentiality .  The Subscriber acknowledges that it has and will, from time to time, be provided with certain information by or concerning the Company and the Advisor and their respective investments and returns which is non-public, confidential or proprietary in nature and agrees not to disclose (except with respect to  disclosures to potential transferees of the Subscriber’s Shares so long as prior to such disclosure the recipient of such information agrees to be bound by the terms of this Section 13 and the Company has consented to such disclosure), use or enable others to use the information (including without limitation, in connection with the acquisition or disposition of securities).  Notwithstanding anything herein to the contrary, each Subscriber (and each employee, representative, or other agent of the Subscriber) may, to the extent necessary to prevent the Company and its investments from being described as a “confidential transaction” under Treasury Regulations Section 1.6011-4(b)(3), disclose the tax treatment and tax structure of the Company and its investments and any related tax strategies.
 
14.    Rejection of Subscription .  The Subscriber acknowledges and confirms that the Company has full right to accept or reject the subscription for the Shares contained in this Agreement, in whole or in part, if the Company determines in its sole discretion that an investment in the Shares will not be a suitable investment for the Subscriber.
 
15.    Indemnification .  The Subscriber understands the meaning and legal consequences of the representations, warranties, acknowledgements, agreements and information contained in this Agreement, and unless and except as expressly prohibited by applicable statute in effect on the date hereof, hereby agrees to indemnify and hold harmless the Company, the Advisor, any sub-advisor of the Advisor, any affiliate of the Company or the Advisor and any officer, director, member, employee, stockholder, partner, agent, stockholder, controlling person or representative of the Company, the Advisor or any such affiliate (each, an “Indemnified Party”), in each case to the fullest extent permitted by law, against any loss, liability, claim, damage or expense whatsoever (including, without limitation, any expense reasonably incurred in investigating, preparing or defending against any litigation commenced or threatened or any claim whatsoever) (any “Loss”) arising out of or based upon any false representation or warranty (including those contained on the signature page hereto) or any breach or failure by the Subscriber to provide any necessary information or to comply with any covenant or agreement made by the Subscriber herein or in any other document furnished by the Subscriber to any of the foregoing in connection with this transaction.  The Company shall have the authority to enter into agreements to give effect to the foregoing indemnity.
 
16.    Miscellaneous .
 
(a) This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and all such counterparts shall together constitute but one and the same instrument.
 
(b) The parties:
 
21
(i)         Irrevocably submit to the nonexclusive jurisdiction of the state courts of the State of Delaware and The Commonwealth of Massachusetts and to the nonexclusive jurisdiction of the United States District Courts for the Districts of Delaware and Massachusetts for the purpose of any suit, action or other proceeding arising out of or based upon this Agreement or the subject matter hereof or in any way connected to the dealings of the Subscriber or the Company in connection with any of the above;
 
(ii)        Waive to the extent not prohibited by applicable law, and agree not to assert, by way of motion, as a defense or otherwise, in any such proceeding brought in any of the above-named courts, any claim that such party is not subject personally to the jurisdiction of such court, that such party’s property is exempt or immune from attachment or execution, that such proceeding is brought in an inconvenient forum, that the venue of such proceeding is improper, or that this Agreement or the subject matter hereof, may not be enforced in or by such court; and
 
(iii)       Consent to service of process in any such proceeding in any manner permitted by the laws of the State of Delaware or the Commonwealth of Massachusetts, agree that service of process by registered or certified mail, return receipt requested, at the address specified pursuant to Section 16(d) of this Agreement is reasonably calculated to give actual notice, and waives and agrees not to assert by way of motion, as a defense or otherwise, in any such proceeding any claim that service of process made in accordance with this paragraph does not constitute good and sufficient service of process.
 
(c) TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, EACH PARTY WAIVES, AND COVENANTS THAT SUCH PARTY WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM OR PROCEEDING ARISING OUT OF THIS AGREEMENT OR THE SUBJECT MATTER HEREOF OR IN ANY WAY CONNECTED WITH THE DEALINGS OF THE COMPANY IN CONNECTION WITH ANY OF THE ABOVE, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT, TORT OR OTHERWISE.  Either party may file an original counterpart or a copy of this Section 16(c) with any court as written evidence of the consent of the party to the waiver of their rights to trial by jury.
 
(d) Any notice, demand or other communication given to a party under this Agreement shall be deemed to be given if given in writing (including telex, telecopy, e-mail, website delivery by the Company or its agents, or similar transmission) addressed as provided below (or to the addressee at such other address as the addressee shall have specified by notice actually received by the addressor), and if either (i) actually delivered in fully legible form to such address (evidenced, in the case of a telex, by receipt of the correct answerback and, in the case of delivery by overnight courier, by confirmation of delivery from the overnight courier service making such delivery) or (ii) in the case of a letter, five days shall have elapsed after the same shall have been deposited in the United States mails, with first-class postage prepaid and registered or certified.
 
22
If to the Company, to it at 200 Clarendon Street, Boston, MA 02116, Attention: Ranesh Ramanathan.
 
If to the Subscriber, to him at his address set forth in this Agreement.
 
(e) This Agreement shall be binding on the executors, administrators, estates, heirs, legal representatives, successors and assigns of the parties.
 
(f) This Agreement constitutes the entire agreement among the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and understandings pertaining thereto.
 
(g) This Agreement and the rights of the parties hereunder shall be interpreted in accordance with the laws of the State of Delaware, and all rights and remedies shall be governed by such laws without regard to principles of conflict of laws.
 
(h) To the fullest extent permitted by law, the parties hereby agree that no punitive or consequential damages shall be awarded in any suit, action or other proceeding arising out of or based upon this Agreement or the subject matter hereof or in any way connected to the dealings of the Subscriber or the Company in connection with any of the above.
 
(i) The Subscriber hereby consents to the electronic delivery and/or submission via e-mail and/or through the use of a secure internet site of documents relating to the Company generally (the “Documents”), including, without limitation, this Agreement, the Private Placement Memorandum, the Governing Documents, privacy policy and financial statements.  The Subscriber acknowledges that the Documents may be attached to an e-mail, or may be posted on a secure internet site, in one or more electronic formats, including Microsoft Word, Microsoft Excel, PDF and/or such other format as may be appropriate (“Electronic Communication”), and that the Subscriber must therefore use the appropriate computer program to open, view and print them.  The Subscriber understands that Electronic Communication presents a risk that delivery and/or submission may be delayed or not completed for various reasons, including, without limitation, system outages, and that there may be certain costs associated with electronic delivery and/or submission not otherwise associated with delivery and/or submission in paper form, including, without limitation, online charges and printing costs.  There may be periods from time to time when the internet site is not available for access. The Subscriber acknowledges and accepts the risk that even with secure internet sites there is a risk of unauthorized access of such information, transmission delays, errors, data corruption, or unauthorized access of such information and the internet site is used solely at the Subscriber’s own risk.  If the Subscriber does not have the necessary computer programs required to access the Documents delivered electronically via e-mail or posting on a secure internet site, the Subscriber may contact the Company to obtain the required program.  The Subscriber acknowledges that the consent to Electronic Communication provided by the Subscriber pursuant to this Section 16(i) is effective until revoked by the Subscriber.  The Subscriber may revoke its consent to Electronic Communication of the Documents at any time by sending written notice of such revocation to the Company at 200 Clarendon Street, Boston, MA 02116.
 
23
(j) The Company may disclose information concerning the Company or the stockholders to the extent necessary to comply with applicable laws, including ERISA (if applicable), and regulations or policies, including any anti-money laundering or anti-terrorist laws or regulations or policies related thereto.  Each Subscriber hereby agrees to provide the Company, promptly upon request, all information that the Company reasonably deems necessary to enable the Company and/or the Advisor to comply with applicable laws, including, without limitation, ERISA (if applicable) and the 1940 Act, and regulations or policies thereunder.  The Subscriber consents to disclosure by the Company and its agents of information pertaining to the Subscriber to relevant third parties as the Company or its agents reasonably deem appropriate or necessary in connection with the operations of the Company  including, without limitation, (i) to service providers (such as the Advisor, administrator and/or sub-administrator), and (ii) to governmental, regulatory, national security, courts, law enforcement or other authorities, and (ii) to banks, financial intermediaries and counterparties, including, without limitation, to third parties anywhere in the world and specifically the United States or other countries outside of the jurisdiction in which the information was initially collected by the Company (which may not offer a similar level of protection as that jurisdiction). The Subscriber hereby agrees to provide the Company, the administrator and/or sub-administrator promptly upon request, all information requested in connection with their anti-money laundering and know-your-customer requirements. Each Subscriber hereby represents and warrants that the Subscriber has obtained all consents and approvals, as required by all applicable laws, regulations, by-laws and ordinances that regulate the collection, processing, use or disclosure of information concerning the Subscriber, necessary to disclose such information to the Company, and as required for the Company to use and disclose such information in connection with the performance of its obligations hereunder, and that the disclosure of such information does not violate any applicable laws, regulations, by-laws or ordinances. The Subscriber shall fully indemnify the Company and the Company shall have no liability for any action taken or omitted by it in reliance upon the foregoing representation and warranty for claims or complaints for failure to comply with any applicable law that regulates the collection, processing, use or disclosure of information concerning the Subscriber.
 
**************************
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
24
EXECUTION


Intending to be legally bound hereby, the Subscriber has executed this Agreement as of the date first above written.

Name of Subscriber (include the name of trust, plan or other form of entity and the name of the trustee or other representative, if any)
 
By:
   
 
Signature of person signing for Subscriber or for its trustee or other representative
 
Street Address
       
 
Name of person signing
 
City, State/Province/County and
Zip Code/Postal Code
       
 
Title of person signing
 
Country
       
 
Date of signature
     

To be Completed by All Subscribers to Bain Capital Specialty Finance, Inc.

Dollar amount of
Requested Capital Commitment:
$____________________
 
S-1
SUPPLEMENTAL SIGNATURE PAGE
(use only if needed)

Intending to be legally bound hereby, the Subscriber has executed this Agreement as of the date first above written.

Name of Subscriber (include the name of trust, plan or other form of entity and the name of the trustee or other representative, if any)

By:
   
 
Signature of person signing for Subscriber or for its trustee or other representative
 
Street Address
       
 
Name of person signing
 
City, State/Province/County and
Zip Code/Postal Code
       
 
Title of person signing
 
Country
       
 
Date of signature
     
 
S-2
SUPPLEMENTAL SIGNATURE PAGE

ADDITIONAL SIGNATURES REQUIRED FOR
OWNERS OF DISREGARDED ENTITIES

By signing below, and intending to be legally bound, the undersigned has duly executed this Agreement and understands and agrees to be bound by all of its provisions.
 
Name of Subscriber (include the name of trust, plan or other form of entity and the name of the trustee or other representative, if any)
 
By:
   
 
Signature of person signing for Subscriber or for its trustee or other representative
 
Street Address
       
 
Name of person signing
 
City, State/Province/County and
Zip Code/Postal Code
       
 
Title of person signing
 
Country
 
Date of signature
     
 
S-3
To Be Completed by ALL Subscribers

Please indicate whether the Subscriber is a natural person and a United States citizen or resident.
YES                  NO
☐                    ☐
 
In the case of a Subscriber who is a natural person and not a United States citizen or resident, such Subscriber’s country of residence:
                                                                                                                                                 
 
Please indicate whether the Subscriber is a corporation, partnership, trust or other form of entity organized under the laws of a state of the United States.
 
YES                  NO
☐                    ☐
 
In the case of a Subscriber that is a corporation, partnership, trust or other form of entity not organized under the laws of a state of the United States, the jurisdiction of organization of such Subscriber: _________________________________
 

Tax Status:
 
Please indicate whether the Subscriber is generally exempt from taxation pursuant to Section 501(a) of the Internal Revenue Code of 1986, as amended (for example, charitable foundations, Section 501(c)(3) organizations or trusts established by or for the benefit of such persons).
 
Do not check this box solely because the Subscriber is generally not subject to U.S. taxation on a net basis solely due to its foreign status.
 
    
YES                  NO
☐                    ☐
 
S-4
To Be Completed by ALL Subscribers
 
Plan Asset Questionnaire: 3 Questions

Plan Assets :
 
Do any of the assets of the Subscriber constitute “plan assets” under the Department of Labor’s regulations, 29 C.F.R. §2510.3-101, as amended by Section 3(42) of ERISA (the “Plan Asset Regulations”)?   Please note that IRAs must complete this questionnaire .
 
(The term “benefit plan investor” includes, for example, employee benefit plans subject to Part 4 of Subtitle B of Title I of ERISA, IRAs and any other plan to which Section 4975 of the Code applies and entities the underlying assets of which include plan assets by reason of a plan’s investment in such entity.)
 
   
☐    YES (If “Yes”, please check all boxes below, (a) through (d), which describe the Subscriber.)
☐    NO   (If “No”, go to the next question)
 
The Subscriber is :
☐(a) an “employee benefit plan” within the meaning of Section 3(3) of ERISA that is  subject to Part 4 of Subtitle B of Title I of ERISA or a “plan” within the meaning of Section 4975(e)(1) of the Code that is subject to Section 4975 of the Code.
 
☐ (b) an insurance company separate account that includes assets of an “employee benefit plan” within the meaning of Section 3(3) of ERISA or of a “plan” described in Section 4975(e) of the Code, and the “employee benefit plan” or “plan” is subject to Part 4 of Subtitle B of Title I of ERISA or to Section 4975 of the Code.
 
☐(c) an insurance company general account the assets of which include “plan assets” (as determined under Prohibited Transaction Class Exemption 95-60).  Such assets are:
 
         _____% subject to Part 4 of Subtitle B of Title I of ERISA or to Section 4975 of the Code.
 
☐ (d) a trust, partnership, fund, “fund of funds” or other entity, other than an insurance company separate or general account, at least a portion of whose partners or investors are “benefit plan investors” within the meaning of Section 3(42) of ERISA.
 
If option (d) is checked, provide the percentage attributable to “plan assets” subject to Part 4 of Subtitle B of Title I of ERISA or to Section 4975 of the Code, as determined under the Plan Asset Regulations:
 
☐ Less than 25%.  The percentage is _____%
☐25% or more.  The percentage is _____%
 
☐ If “ NO ” checked above and box (d) does not apply, please check here.
 
S-5
   
Is the Subscriber a trust, partnership, fund, “fund of funds” or other entity other than an insurance company separate or general account, the assets of which do not constitute “plan assets” under the Plan Asset Regulations?
 
☐    YES (Please indicate what percentage, if any, of the equity interests in Subscriber is held by benefit plan investors: -______%
 
☐   NO
Controlling Person Status :
 
Please indicate by checking the appropriate box below whether the Subscriber is a person who has discretionary authority or control with respect to the assets of the Company or any person who provides investment advice for a fee (direct or indirect) with respect to such assets or any affiliate of such person (hereinafter, a “Controlling Person”):
 
YES                          NO
☐                            ☐
 
S-6
Distributions
 
Please check the appropriate box to elect participation in the Company’s Dividend Reinvestment Plan:
 
 
☐
Please check here if the Subscriber wishes to “opt in” to the Company’s Dividend Reinvestment Plan prior to a Listing.
 
☐
Please check here if the Subscriber wishes to “opt out” of the Company’s Dividend Reinvestment Plan and receive cash distributions.
 
S-7
FOR COMPANY USE ONLY

ACCEPTANCE PAGE

The subscription of the Subscriber named below is hereby accepted in the amount set forth below and the Subscriber is hereby admitted as a stockholder of the Company on

_____________________, 201____.


Admitted Subscriber: ____________________________________________________________


Amount of Requested Capital Commitment of the Subscriber accepted by the Company:

$_________________________


BAIN CAPITAL SPECIALTY FINANCE, INC.

By:
 
 
 
A Duly Authorized Officer
 
 
ANNEX A
 
1. Generally, an “accredited investor” means:
 
(a) a natural person whose individual net worth, or joint net worth with that person’s spouse, at the time of purchase exceeds $1,000,000, excluding the value of the person’s primary residence; 1
 
(b) a natural person with individual income (without including any income of the person’s spouse) in excess of $200,000, or joint income with that person’s spouse in excess of $300,000, in each of the two most recent years and who reasonably expects to reach the same income level in the current year;
 
(c) an individual retirement account or a grantor trust and the owner of the individual retirement account or the grantor of the grantor trust is a natural person that meets the requirements described in (a) or (b) above;
 
(d) an entity with total assets in excess of $5,000,000 that was not formed for the purpose of investing in the Company and is one of the following: a corporation, a partnership, a limited liability company, a business trust, or a tax-exempt organization described in Section 501(c)(3) of the Code;
 
(e) a personal (non business) trust, other than an employee benefit trust, with total assets in excess of $5,000,000 that was not formed for the purpose of investing in the Company and whose decision to invest in the Company has been directed by a person who has such knowledge and experience in financial and business matters that such person is capable of evaluating the merits and risks of the investment;
 
(f) an employee benefit plan within the meaning of Title I of ERISA, (including an individual retirement account), which satisfies at least one of the following conditions: (i) it has total assets in excess of $5,000,000; (ii) the investment decision is being made by a plan fiduciary that is a bank, savings and loan association, insurance company or registered investment adviser; or (iii) it is a self directed plan (i.e., a tax qualified defined contribution plan in which a participant may exercise control over the investment of assets credited to his or her account) and the decision to invest is made by those participants investing, and each such participant qualifies as an accredited investor;
 
(g) an employee benefit plan established and maintained by a state, its political subdivisions or any agency or instrumentality of a state or its political subdivisions that has total assets in excess of $5,000,000;
 
(h) an entity licensed, or subject to supervision, by federal or state examining authorities such as a “bank,” “savings and loan association,” “insurance company,” or “small business investment company” (as such terms are used and defined in 17 CFR §230.501(a)) or is an account for which a bank or savings and loan association is subscribing in a fiduciary capacity;
 
1 An individual need not deduct from his or her net worth the amount of mortgage debt secured by an excluded primary residence other than (i) the amount by which the mortgage liability exceeds the fair value of the residence and (ii) any increase in the amount of the debt secured by the primary residence in the 60 days preceding the date hereof unless the increase was a result of the acquisition of the residence.
 
A-1
(i) an entity registered with the Securities and Exchange Commission as a broker or dealer or an investment company; or has elected to be treated or qualifies as a “business development company” (within the meaning of Section 2(a)(48) of the 1940 Act, or Section 202(a)(22) of the Investment Advisers Act of 1940, as amended); or
 
(j) an entity in which all of the equity owners are persons described in (d)-(i) above.
 
2. Generally, a “qualified purchaser” means:
 
(a) a natural person (alone or jointly with that person’s spouse) that owns not less than $5,000,000 in investments (as defined in Exhibit A to Annex A); or
 
(b) a company (as defined in Exhibit A to Annex A) that owns not less than $5,000,000 in investments (as defined in Exhibit A to Annex A) and that is owned directly or indirectly by or for 2 or more natural persons who are related as siblings or spouses (including former spouses), or direct lineal descendants by birth or adoption, spouses of such persons, the estates of such persons, or foundations, charitable organizations, or trusts established by or for the benefit of such persons, provided that such company was not formed for the specific purpose of acquiring Shares of the Company; or
 
(c) a trust that is not covered by paragraph (b) above and that was not formed for the specific purpose of acquiring Shares of the Company, as to which the trustee or other person authorized to make decisions with respect to the trust, and each settlor or other person who has contributed assets to the trust, is a person described in paragraphs (a), (b), or (d) hereof; or
 
(d) a natural person or company (as defined in Exhibit A to Annex A) not formed for the specific purpose of acquiring Shares of the Company, acting for its own account or the accounts of other qualified purchasers, who in the aggregate owns and invests on a discretionary basis not less than $25,000,000 in investments (as defined in Exhibit A to Annex A); or
 
(e) any company (as defined in Exhibit A to Annex A), each of the beneficial owners of which is a qualified purchaser; or
 
(f) any person that is a Qualified Institutional Buyer, as defined in Rule 144A under the 1933 Act, as amended, acting for its own account, the account of another qualified institutional buyer or the account of a qualified purchaser, except that:
 
(i) a dealer (as defined in Paragraph (a) (1) (ii) of Rule 144A under the 1933 Act) is a qualified purchaser only if it owns and invests on a discretionary basis at least $25,000,000 in securities of issuers that are not affiliated persons of the dealer; and
 
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(ii) a plan (as defined in Paragraph (a) (1) (i) (D) or (E) of Rule 144A under the 1933 Act) (or trust fund (as defined in Paragraph (a) (1) (i) (F) of Rule 144A under the 1933 Act) holding the assets of such a plan) is a qualified purchaser only with respect to investment decisions made solely by the plan’s fiduciary, trustee, or sponsor.
 
3. A company formed for the specific purpose of acquiring Shares in the Company will not be a qualified purchaser unless each beneficial owner of its securities is a qualified purchaser. Also, special rules apply if you are a company relying on Section 3(c)(1) or 3(c)(7) of the 1940 Act and any of your outstanding securities were acquired on or prior to April 30, 1996 or if you are an employee benefit or other type of pension or retirement plan or fund. You should consult your legal advisor for further information.
 
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EXHIBIT A TO ANNEX A

A. Definitions .  As used in Annex A, the following terms have the meanings specified:

1. “ company ” means a corporation, a partnership, an association, a joint-stock company, a trust, a fund, or any organized group of persons whether incorporated or not; or any receiver, trustee in bankruptcy or similar official or any liquidating agent for any of the foregoing, in his capacity as such;

2. “ investments ” means:

(a) Securities which means any note, stock, treasury stock, security future, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a “security,” or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing.

Securities of an issuer that controls, is controlled by, or under common control with you are excluded from “investments” unless the issuer of such securities, (i) is an investment company, a company that would be an investment company but for the exclusions provided by Sections 3(c)(l) through 3(c)(9) of the 1940 Act or the exemptions provided by Rule 3a-6 or 3a-7 thereunder or a commodity pool, (ii) is a public company filing with the SEC pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended or an issuer of a class of securities which are traded in certain “designated offshore securities markets” (as defined in Regulation S under the 1933 Act) or (iii) has shareholders equity of at least $50,000,000  determined in accordance with GAAP and reflected on its most recent financial statements which present information as of a date within a period of the 16 months prior to the acquisition of the Shares of the Company.

(b) Real estate   held for investment purposes ;

(c) Commodity Interests   held for investment purposes ;

Commodity Interests means commodity futures contracts, options on commodity futures contracts, and options on physical commodities traded on or subject to the rules of:
 
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(i)           any contract market designated for trading such transactions under the Commodity Exchange Act and the rules thereunder; or

(ii)          any board of trade or exchange outside the United States, as contemplated in Part 30 of the rules under the Commodity Exchange Act.

(d) Physical Commodities   held for investment purposes ;

Physical Commodities means any physical commodity with respect to which a Commodity Interest is traded on a market specified in paragraph 2(c)(i) and (ii) above.

(e) To the extent not securities, financial contracts entered into for investment purposes ;

financial contract means any arrangement that:

(i)          takes the form of an individually negotiated contract, agreement, or option to buy, sell, lend, swap, or repurchase, or other similar individually negotiated transaction commonly entered into by participants in the financial markets;

(ii)          is in respect of securities, commodities, currencies, interest or other rates, other measures of value, or any other financial or economic interest similar in purpose or function to any of the foregoing; and

(iii)         is entered into in response to a request from a counter party for a quotation, or is otherwise entered into and structured to accommodate the objectives of the counter party to such arrangement.

(f) If you are a nonregistered investment company relying on Sections 3(c)(1) or 3(c)(7) of the 1940 Act or a commodity pool, any amounts payable to you pursuant to a firm agreement or similar binding commitment pursuant to which a person has agreed to acquire an interest in, or make capital contributions to, you upon your demand; and

(g) Cash and cash equivalents (including foreign currencies) held for investment purposes.  “Cash and cash equivalents” include:

(i)           bank deposits, certificates of deposit, bankers acceptances and similar bank instruments held for investment purposes; and

(ii)          the net cash surrender value of an insurance policy.
 
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3. “ held for investment purposes ”

(a) real estate is not considered to be held for investment purposes if it used by you, or in the case of a company described in paragraph 1(b) on page A-1 of Annex A hereto, by any owner of you (or by a person related to you or such owner as a sibling, spouse or former spouse, or is a direct lineal descendant or ancestor by birth or adoption of you or such owner or is a spouse of such descendant or ancestor) for personal purposes or as a place of business, or in connection with the conduct of the trade or business by you (or any such person) or such owner (or any such person thereof) provided that real estate owned by you or such owner if you or such owner are engaged primarily in the business of investing, trading or developing real estate in connection with such business may be deemed to be held for investment purpose.   Residential real estate shall not be deemed to be used for personal purposes if deductions with respect to such real estate are not disallowed by Section 280A of the Code.

(b) a Commodity Interest or Physical Commodity owned, or a financial contract entered into, by you if you are engaged primarily in the business of investing, reinvesting, or trading in Commodity Interests, Physical Commodities or financial contracts in connection with such business may be deemed to be held for investment purposes.

B. Valuation .  The aggregate amount of the investments owned and invested on a discretionary basis by you shall be the investments’ fair market value on the most recent practicable date or their cost, provided that :

(a)             In the case of Commodity Interests, the amount of investments shall be the value of the initial margin or option premium deposited in connection with such Commodity Interests; and

(b)             In each case, there shall be deducted from the amount of investments owned by you the amounts specified in paragraph C below, as applicable.

C. Deductions .

(a)             There shall be deducted from your investments the amount of any outstanding indebtedness incurred to acquire or for the purpose of acquiring the investments owned by you.

(b)             In determining the amount of investments owned by a company described in paragraph 1(b) on page A-1 of Annex A hereto, in addition to the amounts specified in (a), there shall be deducted from the value of such company’s investments any outstanding indebtedness incurred by an owner of such company to acquire such investments.

D. Joint Investments .  There may be included in the amount of a natural person’s investments any investments held jointly with such person’s spouse, or investments in which such person shares with such person’s spouse a community property or similar shared ownership interest.  If both spouses are making a joint investment, there may be included in the amount of each spouse’s investments any investments owned by the other spouse (whether or not such investments are held jointly).  In each case, there shall be deducted from the amount of any such investments the amounts specified in paragraph C(a) above incurred by each spouse.
 
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E. Investments by Subsidiaries .  For purposes of determining the amount of investments owned by a company described in paragraph 1(d) on page A-1 of Annex A hereto, there may be included investments owned by majority-owned subsidiaries of the company and investments owned by a parent company of which the company is a majority owned subsidiary, or by a majority-owned subsidiary of the company and other majority-owned subsidiaries of the parent company.

F. Certain Retirement Plans and Trusts .  There may be included in the amount of a natural person’s investments any investments held in an individual retirement account or similar account the investments of which are directed by and held for the benefit of such person.
 
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ANNEX B

IRS TAX FORMS

INSTRUCTIONS:

Anyone subscribing for an Interest in the Company is required to submit appropriate tax certifications under penalties of perjury. With respect to Subscribers purchasing an Interest as either joint tenants with right of survivorship or tenants-in-common, please note that each individual must sign and complete the appropriate IRS Form. Subscribers who are grantors of a “grantor trust,” and “grantor trusts” with multiple grantors, must provide appropriate tax forms for each grantor.

W-9 : Please complete and sign an IRS Form W-9, as appropriate.

W-8 : Please complete and sign an applicable IRS Form W-8  (i.e., IRS Form W-8BEN, IRS Form W-8BEN-E, IRS Form W-8IMY, IRS Form W-8EXP, or IRS Form W-8ECI), as appropriate.
 
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ANNEX C

INCOME TAX CLASSIFICATION FORM

(Please complete Sections I, II, III and IV. Sign and date on page C-7.)

Section I:  U.S. Federal Income Tax Classification of Subscriber
 
Please indicate the U.S. federal income tax classification and related information under one of the following eight categories for the Subscriber:
 
1.
Corporate Entities (not including tax-exempt organizations)
 
☐
I am signing on behalf of an entity classified as a “corporation” for purposes of U.S. federal income tax law (other than a tax-exempt organization but including a limited liability company that has elected to be taxed as a corporation) that holds a direct beneficial interest in the Company, or, if specified below, that indirectly holds a beneficial interest in the Company through an entity that is disregarded for U.S. federal income tax purposes.
If so, choose each of the following categories that apply to the corporate entity:
 
 
☐
The entity is organized in the United States.
 
☐
The entity is organized outside of the U.S. under the laws of the following country:___________________________.
 
☐
The entity is a resident for income tax purposes in the following country:           __________________________.
 
☐
The investment in the Company has been made through a branch office of the entity located in the following country:____________________.
 
☐
I am signing on behalf of a limited liability company or other business entity that is disregarded for U.S. federal income tax purposes and that is treated for such purposes as wholly-owned by a corporation. I have provided the applicable information above with respect to such corporation.

2. Company, Limited Liability Company or other “Pass-Through” Entity, as well as Nominees, Agents or Custodians
 
Select one of the following four choices to describe the direct investor in the Company, or if specified below, an investor that owns its interest indirectly through an entity that is disregarded for U.S. federal income tax purposes:
 
☐ a. I am signing on behalf of a general or limited partnership formed or organized in the United States that is classified as a partnership for U.S. federal income tax purposes.
☐ b. I am signing on behalf of a U.S. limited liability company that is classified as a partnership for U.S. federal income tax purposes.
☐ c. I am signing on behalf of the following type of U.S. entity that is classified as a partnership for U.S. federal income tax purposes:______________________________.
☐ d. I am signing on behalf of a non-U.S. entity that is classified as a non-U.S. partnership for U.S. federal income tax purposes.
 
(i) Type of entity:_________________________
 
(ii) Entity formed under the laws of (country): _________________
 
☐
e.
I am a U.S. nominee, agent or custodian that is signing on behalf of one or more interest holders.
☐
f.
I am a non- U.S. nominee, agent or custodian that is signing on behalf of one or more interest holders.
☐
g.
I am signing on behalf of a limited liability company or other business entity that is disregarded for U.S. federal income tax purposes and that is treated for such purposes as wholly-owned by a partnership. I have provided the applicable information above with respect to such partnership.
 
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After checking a, b, c, d, e, f above and, if applicable, g, please complete each blank below , to the extent possible, concerning the partners or interest holders.   If only approximate information is available, please provide such information.  For this purpose, “indirect ownership” refers to interests held through intermediate partnerships, limited liability companies or other “pass-through” entities as well as through intermediary nominees, agents or custodians.
 
· The percentage of the partnership, limited liability company or other “pass-through” entity (or the percentage of the interest held by the nominee, agent or custodian)that is beneficially owned, directly or indirectly, by individuals, corporations, or other entities that are classified for U.S. federal income tax purposes as residents of:

United States: _____%
Non-U.S. Countries*:  _____%

*For the percentage of the partnership, limited liability company or other “pass-through” entity (or the percentage of the interest held by the nominee, agent or custodian) that is beneficially owned, directly or indirectly, by residents of non-U.S. countries, please indicate the breakdown of such ownership by country:
 
 
  %
 
 
%
(Country)
   
(Country)
   
 
 
  %
 
 
%
(Country)
   
(Country)
   
 
 
  %
 
 
  %
(Country)
 
   
(Country)
 
☐
Check here if more space is required to indicate the breakdown of such ownership by country.  Please attach a schedule providing this additional information.

· The percentage of the partnership, limited liability company or other “pass-through” entity (or the percentage of the interest held by the nominee, agent, or custodian) that is beneficially owned, directly or indirectly, by U.S. tax-exempt organizations:
 ______%

· The percentage of the partnership, limited liability company or other “pass-through” entity (or the percentage of the interest held by the nominee, agent, or custodian) that is beneficially owned, directly or indirectly, by non-U.S. tax-exempt organizations or non-U.S. governments:
______%
☐
The partnership, limited liability company or other “pass-through” entity does not maintain records of the residence of its direct and indirect interest holders.

3.
U.S. Tax Exempt Organizations
☐
I am signing on behalf of a tax-exempt organization organized in the United States that holds a direct beneficial interest in the Company or, if specified below, that indirectly holds a beneficial interest in the Company through an entity that is disregarded for U.S. federal income tax purposes.

If so, indicate which of the following categories best describes the organization:
☐
The organization is a pension fund, retirement account, or other employee pension arrangement.
 
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☐
The organization is a charity, educational institution, or other tax-exempt entity described in Internal Revenue Code Section 501(c)(3).
☐
The organization is not described in the two choices above, but is a U.S. tax-exempt organization of the following type:  _________________________.
☐
I am signing on behalf of a limited liability company or other business entity that is disregarded for U.S. federal income tax purposes and that is treated for such purposes as wholly-owned by a U.S. tax-exempt organization. I have provided the applicable information above with respect to such tax-exempt organization.
 
4.
Non-U.S. Governments or Non-U.S. Tax-Exempt Organizations
☐
I am signing on behalf of a non-U.S. tax-exempt organization that holds a direct beneficial interest in the Company, or, if specified below, that indirectly holds a beneficial interest in the Company through an entity that is disregarded for U.S. federal income tax purposes, and is organized in the following country:
 _________________________
If so, indicate which of the following categories best describes the organization:
☐
a.     The organization is a “foreign government” within the meaning of Internal Revenue Code Section 892 and the Treasury Regulations promulgated thereunder..
 
☐
b.     The organization is an international organization.
 
☐
c.      The organization is a non-U.S. central bank of issue.
 
☐
d.      The organization is a non-U.S. pension fund.
 
☐
e.      The organization is a non-U.S. charity, educational institution, or other entity described in Internal Revenue Code Section 501(c)(3).
 
☐
f.       The organization is a non-U.S. charity, educational institution, or other tax-exempt organization not described in Internal Revenue Code Section 501(c)(3).
 
☐
g.      The organization is not described in the above categories; its income tax classification is as follows:
                                                                                                                                                        
 
☐
I am signing on behalf of a limited liability company or other business entity that is disregarded for U.S. federal income tax purposes and that is treated for such purposes as wholly-owned by the entity I indicated by checking one of b through g above.

5.
Trusts

Select one of the following two choices to describe the direct investor in the Company or, if specified below, an investor that owns its interest in the Company indirectly through an entity that is disregarded for U.S. federal income tax purposes:
 
☐
a.     I am signing on behalf of a trust that is classified as a “domestic trust” for U.S. federal income tax purposes.
☐
b.     I am signing on behalf of an entity that is classified as a “foreign trust” for U.S. federal income tax purposes and is resident for income tax purposes in the following country:    ____________________

After choosing one of the above two choices, indicate which of the following U.S. federal income tax categories best describes the trust and if you are signing on behalf of a disregarded entity:

☐
“Simple trust” (generally, one that is required to distribute all current income).
 
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☐
“Complex trust” (generally, a trust that may accumulate current income).
 
☐
I am signing on behalf of a limited liability company or other business entity that is disregarded for U.S. federal income tax purposes and that is treated for such purposes as wholly-owned by a trust and I have checked the applicable box above with respect to such trust.

If you check b above, indicate which of the following categories best describes the beneficial owners of the foreign trust.
☐
For U.S. federal tax purposes, a “United States person” is not   treated as an owner or beneficiary of the trust.
☐
For U.S. federal tax purposes, a “United States person” is treated as an owner or beneficiary of the trust.

6.
Estates
☐
I am signing on behalf of an entity classified as an “estate” for U.S. federal income tax purposes that holds a direct beneficial interest in the Company, or, if specified below, that indirectly holds a beneficial interest in the Company through an entity that is disregarded for U.S. federal income tax purposes.
If so, the estate is further classified for U.S. federal income tax purposes as:
☐
A U.S. person; or

☐
A non-U.S. estate resident in the following country:___________________.

☐
I am signing on behalf of a limited liability company or other business entity that is disregarded for U.S. federal income tax purposes and that is treated for such purposes as wholly-owned by an estate. I have provided the applicable information above with respect to such estate.
 
7.
Individuals
 
☐
I am an individual/We are a joint tenancy holding a direct beneficial interest in the Company.
 
If so, indicate which of the following categories applies to you (or, if you are a joint tenancy, please check all boxes that apply to either joint tenant):
 
☐
I am a U.S. citizen, U.S. green card holder, or otherwise a resident of the U.S. for U.S. federal income tax purposes.
☐
I am not a U.S. citizen, green card holder or resident, and I am a resident for income tax purposes in the following country:_____________________
☐
I am not a resident for income tax purposes of any country.

☐
I am signing on behalf of a trust that is classified as a “grantor trust” for U.S. federal income tax purposes (generally, a trust that is revocable or one in which the grantor or certain beneficiaries hold specified types of control or retained interests) and that is treated for such purposes as not distinct from one or more individuals. I have provided the applicable information above with respect to such grantor trust.
 
☐
I am signing on behalf of a limited liability company or other business entity that is disregarded for U.S. federal income tax purposes and that is treated for such purposes as wholly-owned by an individual. I have provided the applicable information above with respect to such individual.
 
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8.
Other
☐
I am signing on behalf of a person or entity that cannot be classified under the foregoing categories due to the following factors, or is otherwise subject to the following special circumstances that are relevant in determining its treatment and classification under U.S. federal income tax law:________________________________
 
Section II: Eligibility of Subscriber under Income Tax Treaties Certificates of Residency
(To be completed by all Subscribers)
 
In connection with certain investments that the Company may make, it may be beneficial to you and the Company to obtain a certificate of tax residence from the tax authorities in your country of residence.  (For U.S. investors, this process would involve applying for an IRS residency certification on Form 8802.)  While obtaining the certifications may be useful in claiming certain treaty benefits, you may, for example, not wish to obtain them for your beneficial owners (if you are a pass-through entity), or for other reasons.  If you indicate a willingness to provide a certificate of residency, you do NOT need to provide a certificate at this time. Instead, a request may be made in the future for such certificate.
Please complete A or B:

A. Individual Subscribers and Non Pass-Through Entities : Please check one box.
☐   Willing to provide (or assist with obtaining) tax residency certificate.
☐   Not willing.

B. Pass-Through Entities : Please check one box.
☐   Willing to provide (or assist with obtaining) tax residency certificates for the beneficial owners of the pass-through entity.
☐   Not willing.
 
Section III: Additional Documentation Requirements
 
The following documentation is gathered solely to assist the Partnership in complying with information reporting requirements of the United States and jurisdictions participating in the Common Reporting Standards issued by the Organization for Economic Co-operation and Development.  Guidance continues to be developed with respect to such reporting rules, and therefore, the Partnership may request additional information as necessary to comply with its obligations.
 
1. Select one of the following four items that accurately describes the Subscriber.
 
☐ I have attached a copy of Subscriber’s organizational documents filed with a governmental body.
 
☐ I have attached a color copy of Subscriber’s passport.
 
☐ I have attached a certificate of residence issued by the tax authority of Subscriber’s country of residence indicating that Subscriber has filed its most recent income tax returns as a  resident of that country.
 
☐ Subscriber is a disregarded entity for U.S. federal income tax purposes, and I have attached a copy of Subscriber’s organizational documents filed with a governmental body, as well as, with respect to the sole owner of the Subscriber, a color copy of his/her passport, a copy of its organizational documents filed with a governmental body or its certificate of residence issued by the tax authority.
 
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2. Select one of the following three categories that is applicable to the Subscriber.
 
☐ I am a signing on behalf of a Subscriber that is U.S. person.
 
☐ I am a signing on behalf of a Subscriber that is a non-U.S. person for U.S. federal income tax purposes and, in connection with its subscription to the Partnership, the Subscriber has provided (a) a street address or mailing address in the United States, (b) contact information for an employee or agent in the United States, (c) bank or brokerage account information at an institution in the United States and/or (d) any other indicia of a connection between Subscriber and the United States.
 
☐ I am a signing on behalf of a Subscriber that is a non-U.S. person for U.S. federal income tax purposes and, in connection with its subscription to the Partnership, the Subscriber has not provided (a) a street address or mailing address in the United States, (b) contact information for an employee or agent in the United States, (c) bank or brokerage account information at an institution in the United States and/or (d) any other indicia of a connection between Subscriber and the United States.
 
Section IV: Subscriber Declaration and Undertaking
 
Subscriber Name:  
 
 
(Please print name of Subscriber)
 
Please sign and date below.

I hereby acknowledge that the Company may rely on the information contained in this Income Tax Classification Form for purposes of determining my U.S. federal income tax classification with respect to my investment in the Company, for purposes of assessing my eligibility for benefits under various income tax treaties, and for purposes of complying with withholding and reporting obligations in various jurisdictions.  I understand and agree that I will promptly notify the Company if any of the above information ceases to be true.

Authorized signature:
   
 Date:
   
           
Name (Print):
         
 
C-6
ANNEX D

COST-BASIS ELECTION FORM
 
 
C-1
Exhibit 10.5
 
DIVIDEND REINVESTMENT PLAN
OF
BAIN CAPITAL SPECIALTY FINANCE, INC.

Bain Capital Specialty Finance, Inc., a Delaware corporation (the “ Corporation ”), has adopted the following plan (the “ Plan ”), to be administered by U.S. Bank N.A. and its affiliates (the “ Plan Administrator ”), with respect to dividends and other distributions declared by its Board of Directors on shares of its common stock, par value $0.001 per share (the “ Common Stock ”).

Prior to a listing of the Common Stock on an exchange (a “ Listing ”), participation requires that a stockholder affirmatively “opt in” to the Plan.  Subsequent to a Listing, participation requires no action on the part of a stockholder, and a stockholder who does not wish to participate must “opt out” of the Plan.  The elections of stockholders that make an election prior to a Listing shall remain effective after the Listing.

Prior to a Listing, a stockholder can elect to “opt in” or “opt out” of the Plan in the stockholder’s subscription agreement relating to the Common Stock.  A stockholder who participates in the Plan, either by electing to (i) “opt in” to the Plan prior to a Listing or (ii) not “opt out” of the Plan following a Listing (each a “ Participant ”), will be subject to the terms below.

1.            All cash dividends or other distributions hereafter declared by the Board of Directors, net of any applicable withholding tax,   shall be automatically reinvested in additional shares of Common Stock, and no action shall be required on such Participant’s part to receive a distribution in Common Stock.

2.            Such distributions shall be payable on such date or dates as may be fixed from time to time by the Board of Directors to stockholders of record at the close of business on the record date established by the Board of Directors for the distribution involved. The Corporation generally expects for the record date to be the last calendar day of each calendar quarter and the payment date to be the end of the first month of the subsequent quarter, subject to the discretion of the Board of Directors.

3.            With respect to each distribution pursuant to this Plan, the Board of Directors reserves the right, subject to the provisions of the Investment Company Act of 1940, as amended, to either issue new shares of Common Stock or to make open market purchases of its shares for the accounts of Participants. Prior to a Listing, the Corporation generally expects to issue new shares of Common Stock, subject to the discretion of the Board of Directors. Prior to a Listing, the number of shares of Common Stock to be issued to a Participant is determined by dividing the total dollar amount of the distribution payable to such stockholder by the applicable price per share of Common Stock determined by the Board of Directors; the Plan Administrator shall be notified of the current price per share by the Corporation.  Following a Listing, the number of shares of Common Stock to be issued to a Participant is determined by dividing the total dollar amount of the distribution payable to such stockholder by the market price per share of Common Stock at the close of regular trading on the applicable stock exchange on the date of such distribution subject to the adjustments described below.  The market price per share of Common Stock on a particular date shall be the closing price for such shares on the applicable stock exchange on such date or, if no sale is reported for such date, at the average of their reported bid and asked prices.  However, if the market price per share exceeds the most recently computed net asset value per share, the Corporation shall issue shares at the greater of (i) the most recently computed net asset value per share and (ii) 95% of the current market price per share (or such lesser discount to the current market price per share that still exceeds the most recently computed net asset value per share).
 
4.            The Plan Administrator shall establish an account for shares of Common Stock acquired pursuant to the Plan for each Participant.  The Plan Administrator shall hold each Participant’s shares, together with the shares of other Participants, in non-certificated form.  The Plan Administrator shall not issue share certificates to any Participant.

5.            The Plan Administrator shall confirm to each Participant each acquisition made pursuant to the Plan as soon as practicable but not later than 30 business days after the payable date.  Each Participant may from time to time have an undivided fractional interest (computed to three decimal places) in a share of Common Stock, and distributions on fractional shares shall be credited to each Participant’s account.  In the event of termination of a Participant’s account under the Plan, the Plan Administrator shall adjust for any such undivided fractional interest in cash at the market value of the shares of Common Stock at the time of termination determined in accordance with Paragraph 3 hereof; provided , that, prior to a Listing, the market value shall be the applicable price per share of Common Stock determined by the Board of Directors.

6.            In the event that the Corporation makes available to its stockholders rights to purchase additional shares or other securities, the shares held by the Plan Administrator for each Participant under the Plan shall be added to any other shares held by the Participant in calculating the number of rights to be issued to the Participant.  Transaction processing may be either curtailed or suspended until the completion of any stock dividend, stock split or corporate action.

7.            The Plan Administrator’s service fee, if any, and expenses for administering the Plan shall be paid for by the Corporation.  Expect as explicitly provided herein, there will be no brokerage charges or other charges to Participants.

8.            Each Participant may elect to receive an entire distribution in cash by notifying the Plan Administrator in writing so that such notice is received by the Plan Administrator no later than the record date for such distribution to stockholders.

9.            Each Participant may terminate the Participant’s account under the Plan by so notifying the Plan Administrator by submitting a letter of instruction terminating the Participant’s account under the Plan to the Plan Administrator.  Such termination shall be effective immediately if the Participant’s notice is received by the Plan Administrator at least three days prior to any distribution date; otherwise, such termination shall be effective only with respect to any subsequent distribution.  The Plan may be terminated or amended by the Corporation upon notice in writing mailed to each Participant at least 30 days prior to any record date for the payment of any dividend by the Corporation.  Upon any termination, the Plan Administrator shall cause the shares of Common Stock held for the Participant under the Plan to be delivered to the Participant.
 
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10.          These terms and conditions may be amended or supplemented by the Corporation at any time but, except when necessary or appropriate to comply with applicable law or the rules or policies of the Securities and Exchange Commission or any other regulatory authority, only by mailing to each Participant appropriate written notice at least 30 days prior to the effective date thereof.  The amendment or supplement shall be deemed to be accepted by each Participant unless, prior to the effective date thereof, the Plan Administrator receives written notice of the termination of the Participant’s account under the Plan.  Any such amendment may include an appointment by the Plan Administrator in its place and stead of a successor agent under these terms and conditions, with full power and authority to perform all or any of the acts to be performed by the Plan Administrator under these terms and conditions.  Upon any such appointment of any agent for the purpose of receiving distributions, the Corporation shall be authorized to pay to such successor agent, for each Participant’s account, all distributions payable on shares of the Corporation held in the Participant’s name or under the Plan for retention or application by such successor agent as provided in these terms and conditions.

11.          The Plan Administrator shall at all times act in good faith and use its best efforts within reasonable limits to ensure its full and timely performance of all services to be performed by it with respect to purchases and sales of the Corporation’s Common Stock under this Plan and to comply with applicable law, but assumes no responsibility and shall not be liable for loss or damage due to errors unless such error is caused by the Plan Administrator’s negligence, bad faith or willful misconduct or that of its employees or agents.

12.          These terms and conditions shall be governed by the laws of the State of Delaware.
 
July 12, 2016
 
 
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Exhibit 10.6
 
EXECUTION VERSION
 
 
CUSTODY AGREEMENT
 
dated as of October [  ], 2016
by and between

BAIN CAPITAL SPECIALTY FINANCE, INC.
 (“Company”)

and
 
U.S. BANK NATIONAL ASSOCIATION
(“Custodian”)
 
EXECUTION VERSION
 
TABLE OF CONTENTS
 
   
Page
     
1.
DEFINITIONS
1
     
2.
APPOINTMENT OF CUSTODIAN
6
     
3.
DUTIES OF CUSTODIAN
7
     
4.
REPORTING
15
     
5.
DEPOSIT IN U.S. SECURITIES SYSTEMS
16
     
6.
SECURITIES HELD OUTSIDE OF THE UNITED STATES
16
     
7.
CERTAIN GENERAL TERMS
19
     
8.
COMPENSATION OF CUSTODIAN
21
     
9.
RESPONSIBILITY OF CUSTODIAN
21
     
10.
SECURITY CODES
24
     
11.
TAX LAW
24
     
12.
EFFECTIVE PERIOD AND TERMINATION
25
     
13.
REPRESENTATIONS AND WARRANTIES
25
     
14.
PARTIES IN INTEREST; NO THIRD PARTY BENEFIT
26
     
15.
NOTICES
26
     
16.
CHOICE OF LAW AND JURISDICTION
27
     
17.
ENTIRE AGREEMENT; COUNTERPARTS
27
     
18.
AMENDMENT; WAIVER
27
     
19.
SUCCESSOR AND ASSIGNS
28
     
20.
SEVERABILITY
28
     
21.
REQUEST FOR INSTRUCTIONS
28
     
22.
OTHER BUSINESS
28
     
23.
REPRODUCTION OF DOCUMENTS
29
     
24.
MISCELLANEOUS
29
     
SCHEDULES
 
   
 
SCHEDULE A –  Trade Confirmation
 
     
 
SCHEDULE B –  Initial Authorized Persons
 
 
THIS CUSTODY AGREEMENT (this “ Agreement ”) is dated as of October [  ], 2016 and is by and between Bain Capital Specialty Finance, Inc. (and any successor or permitted assign), a corporation organized under the laws of the State of Delaware, and U.S. BANK NATIONAL ASSOCIATION (or any successor or permitted assign acting as custodian hereunder, the “ Custodian ”), a national banking association.

RECITALS
 
WHEREAS, the Company is a closed-end management investment company under the Investment Company Act of 1940, as amended (the “ 1940 Act ”);
 
WHEREAS, the Company desires to retain U.S. Bank National Association to act as custodian for the Company and each Subsidiary hereafter identified to the Custodian;
 
WHEREAS, the Company desires that certain of the Company’s  Securities (as defined below) and cash be held and administered by the custodian pursuant to this Agreement; and
 
NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties hereto agree as follows:
 
1. DEFINITIONS
 
1.1             Defined Terms .  In addition to terms expressly defined elsewhere herein, the following words shall have the following meanings as used in this Agreement:
 
“ Account ” or “ Accounts ” means the Cash Account, the Securities Account, any Subsidiary Cash Account and any Subsidiary Securities Account, collectively.
 
“ Agreement ” means this Custody Agreement (as the same may be amended, modified, or supplemented from time to time in accordance with the terms hereof).
 
“ Authorized Person ” has the meaning set forth in Section 7.4.
 
“ Business Day ” means a day on which the Custodian or the relevant sub-custodian, including a Foreign Sub-custodian, is open for business in the market or country in which a transaction is to take place.
 
“ Cash Account ” means the trust accounts to be established at the Custodian pursuant to this Agreement to which the Custodian shall deposit and hold any cash Proceeds received by it from time to time from or with respect to the Securities or the sale of the common stock of the Company, as applicable, which accounts shall be designated the “Cash Interest Proceeds Account” and the “Cash Principal Proceeds Account.”
 
“ Company ” means Bain Capital Specialty Finance, Inc., its successors or permitted assigns.
 
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“ Confidential Information ” means all information provided by one party (the “ Disclosing Party ”) to the other party (the “ Receiving Party”) or learned by the Receiving Party as a result of and through performing or receiving services hereunder, regarding the Disclosing Party’s business and operations, including (i) information obtained through any databases, computer programs, (ii) screen formats, screen designs, report formats, interactive design techniques, and (iii) other similar or related information that may be furnished to the Company by the Custodian from time to time pursuant to this Agreement. Confidential Information shall not include information which is (i) already known by the Receiving Party prior to receipt from or on behalf of Disclosing Party, (ii) publicly known or becomes publicly known through no wrongful act of Receiving Party, (iii) rightfully received from a third party without Receiving Party having knowledge of a breach of any other relevant confidentiality obligation, or (iv) independently developed by Receiving Party.
 
“ Custodian ” has the meaning set forth in the first paragraph of this Agreement.
 
“ Eligible Investment ” means any investment that at the time of its acquisition is one or more of the following:
 
(a)            United States government and agency obligations;
 
(b)            commercial paper having a rating assigned to such commercial paper by Standard & Poor’s Rating Services or Moody’s Investor Service, Inc. (or, if neither such organization shall rate such commercial paper at such time, by any nationally recognized rating organization in the United States of America) equal to one of the two highest ratings assigned by such organization, it being understood that as of the date hereof such ratings by Standard & Poor’s Rating Services are “A1+” and “A1” and such ratings by Moody’s Investor Service, Inc. are “P1” and “P2”;
 
(c)            interest bearing deposits in United States dollars in United States banks with an unrestricted surplus of at least U.S. $250,000,000, maturing within one year; and
 
(d)            money market funds (including funds of the bank serving as Custodian or its affiliates) or United States government securities funds designed to maintain a fixed share price and high liquidity.
 
“ Eligible Securities Depository ” has the meaning set forth in Section (b)(1) of Rule 17f-7 under the 1940 Act.
 
“ Federal Reserve Bank Book-Entry System ” means a depository and securities transfer system operated by the Federal Reserve Bank of the United States on which are eligible to be held all United States Government direct obligation bills, notes and bonds.
 
“ Financing Documents ” has the meaning set forth in Section 3.3(b)(ii).
 
“ Foreign Intermediary ” means a Foreign Sub-custodian and Eligible Securities Depository.
 
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“ Foreign Sub-custodian ” means and includes (i) any branch of a “U.S. Bank,” as that term is defined in Rule 17f-5 under the 1940 Act, (ii) any “Eligible Foreign Custodian,” as that term is defined in Rule 17f-5 under the 1940 Act, having a contract with the Custodian in accordance with Section 6.6, which the Custodian has determined will provide reasonable care of assets of the Company based on the standards specified in Section 6.7 below.
 
“ Foreign Securities ” means Securities for which the primary market is outside the United States.
 
“ Loan ” means any U.S. dollar denominated commercial loan, or participation therein,  made by a bank or other financial institution that by its terms provides for payments of principal and/or interest, including discount obligations and payment-in-kind obligations, acquired by the Company from time to time.
 
“ Loan Assignment Agreement ” has the meaning set forth in Section 3.3(b)(ii).
 
“ Noteless Loan ” means a Loan with respect to which (i) the related loan agreement does not require the obligor to execute and deliver an Underlying Note to evidence the indebtedness created under such Loan and (ii) no Underlying Notes are outstanding with respect to the portion of the Loan transferred to the issuer or the prior holder of record.
 
“ Participation ” means an interest in a Loan that is acquired indirectly by way of a participation from a selling institution.
 
“ Person ” means any individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust (including any beneficiary thereof) unincorporated organization, or any government or agency or political subdivision thereof.
 
“ Proceeds ” means, collectively, (i) the net cash proceeds to the Company of the initial public offering by the Company and any subsequent offering by the Company of any class of securities issued by the Company, (ii) cash distributions, earnings, dividends, fees and other cash payments paid on the Securities (or, as applicable, Subsidiary Securities) by or on behalf of the issuer or obligor thereof, or applicable paying agent, (iii) the net cash proceeds of the sale or other disposition of the Securities (or, as applicable, Subsidiary Securities) pursuant to the terms of this Agreement (and any Reinvestment Earnings from investment of the foregoing, as defined in Section 3.6(b) hereof) and (iv) the net cash proceeds to the Company of any borrowing or other financing by the Company.
 
“ Proper Instructions ” means instructions (including Trade Confirmations) received by the Custodian in form reasonably acceptable to it, from the Company, or any Person duly authorized by the Company in any of the following forms acceptable to the  Custodian:
 
(a)            in writing signed by an Authorized Person (and delivered by hand, by mail, by overnight courier or by telecopier);
 
(b)           by electronic mail from an Authorized Person;
 
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(c)            in a communication utilizing access codes effected between electro mechanical or electronic devices; or
 
(d)           such other means as may be agreed upon from time to time by the Custodian and the party giving such instructions, including oral instructions.
 
“ Reinvestment Earnings ” has the meaning set forth in Section 3.6.
 
“ Securities ” means, collectively, the (i) investments, including Loans, acquired by the Company and delivered to the Custodian by the Company from time to time during the term of, and pursuant to the terms of, this Agreement and (ii) all dividends in kind (e.g., non-cash dividends) from the investments described in clause (i).
 
“ Securities Account ” means the segregated trust account to be established at the Custodian to which the Custodian shall deposit or credit and hold the Securities (other than Loans) received by it pursuant to this Agreement, which account shall be designated the “Securities Custody Account”.
 
“ Securities Depository ” means The Depository Trust Company and any other clearing agency registered with the Securities and Exchange Commission under Section 17A of the Securities Exchange Act of 1934, as amended (the “ 1934 Act ”), which acts as a system for the central handling of Securities where all Securities of any particular class or series of an issuer deposited within the system are treated as fungible and may be transferred or pledged by bookkeeping entry without physical delivery of the Securities.
 
“ Securities System ” means the Federal Reserve Book-Entry System, a clearing agency which acts as a Securities Depository, or another book entry system for the central handling of securities (including an Eligible Securities Depository).
 
“ Street Delivery Custom ” means a custom of the United States securities market to deliver securities which are being sold to the buying broker for examination to determine that the securities are in proper form.
 
“ Street Name ” means the form of registration in which the securities are held by a broker who is delivering the securities to another broker for the purposes of sale, it being an accepted custom in the United States securities industry that a security in Street Name is in proper form for delivery to a buyer and that a security may be re-registered by a buyer in the ordinary course.

“ Subsidiary ” means, collectively, any subsidiary of the Company identified to the Custodian by the Company.

“ Subsidiary Cash Account ” shall have the meaning set forth in Section 3.13(b).
 
4
“ Subsidiary Securities ” collectively, the (i) investments, including Loans, acquired by a Subsidiary and delivered to the Custodian  from time to time during the term of, and pursuant to the terms of, this Agreement and (ii) all dividends in kind (e.g., non-cash dividends) from the investments described in clause (i).

“ Subsidiary Securities Account ” shall have the meaning set forth in Section 3.13(a).

“ Trade Confirmation ” means a confirmation to the Custodian from the Company of the Company’s acquisition of a Loan, and setting forth applicable information with respect to such Loan, which confirmation may be in the form of Schedule A attached hereto and made a part hereof, subject to such changes or additions as may be agreed to by, or in such other form as may be agreed to by, the Custodian and the Company from time to time.
 
“ UCC ” shall have the meaning set forth in Section 3.3(b)(ii).

“ Underlying Note ” means the one or more promissory notes executed by an obligor to evidence a Loan.
 
1.2             Construction .  In this Agreement unless the contrary intention appears:
 
(a) any reference to this Agreement or another agreement or instrument refers to such agreement or instrument as the same may be amended, modified, supplemented or otherwise rewritten from time to time;
 
(b) a reference to a statute, ordinance, code or other law includes regulations and other instruments under it and consolidations, amendments, re-enactments or replacements of any of them;
 
(c) any term defined in the singular form may be used in, and shall include, the plural with the same meaning, and vice versa;
 
(d) a reference to a Person includes a reference to the Person’s executors, successors and permitted assigns;
 
(e) an agreement, representation or warranty in favor of two or more Persons is for the benefit of them jointly and severally;
 
(f) an agreement, representation or warranty on the part of two or more Persons binds them severally and not jointly;
 
(g) a reference to the term “including” means “including, without limitation,” and
 
(h) a reference to any accounting term is to be interpreted in accordance with generally accepted principles and practices in the United States, consistently applied, unless otherwise instructed by the Company.
 
1.3             Headings .  Headings are inserted for convenience and do not affect the interpretation of this Agreement.
 
5
2. APPOINTMENT OF CUSTODIAN
 
2.1             Appointment and Acceptance .  The Company hereby appoints the Custodian as custodian of certain Securities and cash owned by the Company and the Subsidiaries (as applicable) and delivered to the Custodian from time to time during the period of this Agreement, on the terms and conditions set forth in this Agreement (which shall include any addendum hereto which is hereby incorporated herein and made a part of this Agreement), and the Custodian hereby accepts such appointment and agrees to perform the services and duties set forth in this Agreement with respect to it subject to and in accordance with the provisions hereof.
 
2.2             Instructions .  The Company agrees that it shall from time to time provide, or cause to be provided, to the Custodian all necessary instructions and information, and shall respond promptly to all inquiries and requests of the Custodian, as may reasonably be necessary to enable the Custodian to perform its duties hereunder.
 
2.3             Company Responsible For Directions .  The Company is solely responsible for directing the Custodian with respect to deposits to, withdrawals from and transfers to or from the Account.  Without limiting the generality of the foregoing, the Custodian has no responsibility for the Company’s compliance with the 1940 Act, any restrictions, covenants, limitations or obligations to which the Company may be subject or for which it may have obligations to third-parties in respect of the Account, and the Custodian shall have no liability for the application of any funds made at the direction of the Company.  The Company shall be solely responsible for properly instructing all applicable payors to make all appropriate payments to the Custodian for deposit to the Account, and for properly instructing the Custodian with respect to the allocation or application of all such deposits.
 
3. DUTIES OF CUSTODIAN
 
3.1             Segregation .  All Securities and non-cash property held by the Custodian, as applicable, for the account of the Company (other than Securities maintained in a Securities Depository or Securities System) shall be physically segregated from other Securities and non-cash property in the possession of the Custodian and shall be identified as subject to this Agreement.
 
3.2             Securities Custody Account .  The Custodian shall open and maintain in its trust department a segregated trust account in the name of the Company, subject only to order of the Custodian, in which the Custodian shall enter and carry, subject to Section 3.3(b), all Securities (other than Loans), cash and other assets of the Company which are delivered to it in accordance with this Agreement.  For avoidance of doubt, the Custodian shall not be required to credit or deposit Loans in the Securities Account but shall instead maintain a register (in book-entry form or in such other form as it shall deem necessary or desirable) of such Loans, containing such information as the Company and the Custodian may reasonably agree.
 
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3.3             Delivery of Securities to Custodian.
 
(a) The Company shall deliver, or cause to be delivered, to the Custodian certain of the Company’s Securities, cash and other investment assets, including payments of income, payments of principal and capital distributions received by the Company with respect to such Securities, cash or other assets owned by the Company at any time during the period of this Agreement.  With respect to assets other than Loans, such assets shall be delivered to the Custodian in its role as, and (where relevant) at the address identified for, the Custodian.   Except to the extent otherwise expressly provided herein, delivery of Securities to the Custodian shall be in Street Name or other good delivery form.  The Custodian shall not be responsible for such Securities, cash or other assets until actually delivered to, and received by it.
 
 
 
(b)
(i)           In connection with its acquisition of a Loan or other delivery of a Security constituting a Loan, the Company shall deliver or cause to be delivered to the Custodian a properly completed Trade Confirmation containing such information in respect of such Loan as the Custodian may reasonably require in order to enable the Custodian to perform its duties hereunder in respect of such Loan on which the Custodian may conclusively rely without further inquiry or investigation, in such form and format as the Custodian reasonably may require.
 
(ii)          Notwithstanding any term hereof or elsewhere to the contrary, (a) it is hereby expressly acknowledged that (i) interests in Loans may be acquired by the Company from time to time which are not evidenced by, or accompanied by delivery of, a Security or an instrument, as that term is defined in Section 9-102(a)(4a) of the UCC, and may be evidenced solely by delivery to the Custodian of a facsimile copy of an assignment agreement (“ Loan Assignment Agreement ”) in favor of the Company as assignee, (ii) any such Loan Assignment Agreement (and the registration of the related Loan on the books and records of the applicable obligor or bank agent) shall be registered in the name of the Company (or its nominee), and (iii) any duty on the part of the Custodian with respect to such Loan shall be limited to the exercise of reasonable care by the Custodian in the physical custody of any such Loan Assignment Agreement, and any related instrument, security, credit agreement, assignment agreement and/or other agreements or documents, if any (collectively, “ Financing Documents ”), that may be delivered to it, and (b) nothing herein shall require the Custodian  to credit to the Securities Account or to treat as a financial asset (within the meaning of Section 8-102(a)(9) of the UCC) any such Loan or other asset in the nature of a general intangible (as defined in Section 9-102(a)(42) of the UCC) or to “maintain” a sufficient quantity thereof. The Custodian is not under a duty to examine any such Financing Documents, or any underlying credit agreements or loan documents for such Loan to determine the validity, sufficiency, marketability or enforceability of any Loan Assignment Agreement or other Financing Document (and shall have no responsibility for the genuineness or completeness thereof), or for the Company’s title to any related Loan. The Custodian may assume the genuineness of each such Financing Document it may receive and the genuineness and due authority of any signatures appearing thereon, and shall be entitled to assume that each such Financing Document it may receive is what it purports to be. If an original Security or Instrument  is or shall be or become available with respect to any such Loan, it shall be the sole responsibility of the Company to make or cause delivery thereof to the Custodian, and the Custodian shall not be under any obligation at any time to determine whether any such original security or instrument has been or is required to be issued or made available in respect of any Loan or to compel or cause delivery thereof to the Custodian.
 
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(iii)           If an original “security” or “instrument” as defined in Section 8-102 and Section 9-102(a)(47) of the UCC, respectively, is or shall be or become available with respect to any Loan to be held by the Custodian under this Agreement, it shall be the sole responsibility of the Company to make or cause delivery thereof to the Custodian, and the Custodian shall not be under any obligation at any time to determine whether any such original security or instrument   has been or is required to be issued or made available in respect of any Loan or to compel or cause delivery thereof to the Custodian.

(iv)          Contemporaneously with the acquisition of any Loan, the Company shall (1) cause any appropriate Financing Documents evidencing such Loan to be delivered to the Custodian; (2) if requested by the Custodian, provide to the Custodian an amortization schedule of principal payments and a schedule of the interest payable date(s) identifying the amount and due dates of all scheduled principal and interest payments for such Loan, (3) a properly completed Trade Confirmation containing such information in respect of such Loan as the Custodian may reasonably require in order to enable the Custodian to perform its duties hereunder in respect of such Loan on which the Custodian may conclusively rely without further inquiry or investigation, in such form and format as the Custodian reasonably may require; (4) take all actions necessary for the Company to acquire good title to such Loan; and (5) take all actions as may be necessary (including appropriate payment notices and instructions to bank agents or other applicable paying agents) to cause (A) all payments in respect of the Loan to be made to the Custodian and (B) all notices, solicitations and other communications in respect of such Loan to be directed to the Company.  The Custodian shall have no liability for any delay or failure on the part of the Company to provide necessary information to the Custodian, or for any inaccuracy therein or incompleteness thereof, or for any delay or failure on the part of the Company to give such effective payment instruction to bank agents and other paying agents, in respect of the Loans.  With respect to each such Loan, the Custodian shall be entitled to rely on any information and notices it may receive from time to time from the related bank agent, obligor or similar party with respect to the related Loan, and shall be entitled to update its records (as it may reasonably determine necessary or appropriate), or from the Company, on the basis of such information or notices received, without any obligation on its part independently to verify, investigate or recalculate such information.
 
8
3.4            Release of Securities .
(a) The Custodian shall release and ship for delivery, or direct its agents or sub-custodian to release and ship for delivery, as the case may be, Securities of the Company held by the Custodian, its agents or its sub-custodian from time to time upon receipt of Proper Instructions (which shall, among other things, specify the Securities to be released, with such delivery and other information as may be necessary to enable the Custodian to perform), which may be standing instructions (in form reasonably acceptable to the Custodian) in the following cases:
(i) upon sale of such Securities by or on behalf of the Company, and such sale may, unless and except to the extent otherwise directed by Proper Instructions, be carried out by the Custodian:
(A) in accordance with the customary or established practices and procedures in the jurisdiction or market where the transactions occur, including delivery to the purchaser thereof or to a dealer therefor (or an agent of such purchaser or dealer) against expectation of receiving later payment; or
(B) in the case of a sale effected through a Securities System, in accordance with the rules governing the operations of the Securities System;
(ii) upon the receipt of payment in connection with any repurchase agreement related to such Securities;
(iii) to a depositary agent in connection with tender or other similar offers for Securities;
(iv) to the issuer thereof or its agent when such Securities are called, redeemed, retired or otherwise become payable (unless otherwise directed by Proper Instructions, the cash or other consideration is to be delivered to the Custodian, its agents or its sub-custodian);
(v) to an issuer thereof, or its agent, for transfer into the name of the Custodian or of any nominee of the Custodian or into the name of any of its agents or sub-custodian or their nominees or for exchange for a different number of bonds, certificates or other evidence representing the same aggregate face amount or number of units;
(vi) to brokers clearing banks or other clearing agents for examination in accordance with the Street Delivery Custom;
(vii) for exchange or conversion pursuant to any plan of merger, consolidation, recapitalization, reorganization or readjustment of the Securities of the issuer of such Securities, or pursuant to any deposit agreement (unless otherwise directed by Proper Instructions, the new securities and cash, if any, are to be delivered to the Custodian, its agents or its sub-custodian);
 
9
(viii) in the case of warrants, rights or similar securities, the surrender thereof in the exercise of such warrants, rights or similar securities or the surrender of interim receipts or temporary securities for definitive securities (unless otherwise directed by Proper Instructions, the new securities and cash, if any, are to be delivered to the Custodian, its agents or its sub-custodian); and/or
(ix) for any other purpose, but only upon receipt of Proper Instructions.
3.5             Registration of Securities .  Securities held by the Custodian, its agents or its sub-custodian (other than bearer securities, securities held in a Securities System or Securities that are Noteless Loans or Participations) shall be registered in the name of the Company or its nominee; or, at the option of the Custodian, in the name of the Custodian or in the name of any nominee of the Custodian, or in the name of its agents or its sub-custodian or their nominees, in each case, for the benefit of the Company; or if directed by the Company by Proper Instruction, may be maintained in Street Name.  The Custodian, its agents and its sub-custodian shall not be obligated to accept Securities on behalf of the Company under the terms of this Agreement unless such Securities are in Street Name or other good deliverable form. Notwithstanding the foregoing, any Securities which are physical securities shall be held in the Company’s name.
3.6             Bank Accounts, and Management of Cash
(a) Proceeds from the Securities received by the Custodian from time to time shall be credited to the Cash Account.  All amounts credited to the Cash Account shall be subject to clearance and receipt of final payment by the Custodian.  Securities may also be delivered and held in the Cash Account by the Custodian.
(b) Amounts held in the Cash Account from time to time may be invested in Eligible Investments pursuant to specific written Proper Instructions (which may be standing instructions) received by the Custodian from an Authorized Person acting on behalf of the Company. Such investments shall be subject to availability and applicable transaction charges, as agreed between Custodian and the Company (which shall be at the Company’s expense). The Custodian shall have no liability for any loss incurred on any such investment. Absent receipt of such Proper Instructions from the Company, the Custodian shall have no obligation to and shall not invest (or otherwise pay interest on) amounts on deposit in the Cash Account. In no instance will the Custodian have any obligation to provide investment advice to the Company. Any earnings from such investment of amounts held in the Cash Account from time to time (collectively, “ Reinvestment Earnings ”) shall be redeposited in the Cash Account (and may be reinvested pursuant to specific Proper Instructions of the Company).
 
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(c) In the event that the Company shall at any time request a withdrawal of amounts from the Cash Account, the Custodian shall be entitled to liquidate, and shall have no liability for any loss incurred as a result of the liquidation of, any investment of the funds credited to such account as needed to provide necessary liquidity. Investment instructions may be in the form of standing instructions (in the form of Proper Instructions acceptable to Custodian).
(d) The Company acknowledges that cash deposited or invested with any bank (including the bank acting as Custodian) may make a margin or generate banking income for which such bank shall not be required to account to the Company.
(e) The Custodian shall be authorized to open such additional accounts as may be necessary or convenient for administration of its duties hereunder, with notice to be provided to the Company.

3.7             Foreign Exchange
(a) Upon the receipt of Proper Instructions, the Custodian, its agents or its sub-custodian may (but shall not be obligated to) enter into all types of contracts for foreign exchange on behalf of the Company, upon terms acceptable to the Custodian and the Company (in each case at the Company’s expense), including transactions entered into with the Custodian, its sub-custodian or any affiliates of the Custodian or the sub-custodian. The Custodian shall have no liability for any losses incurred in or resulting from the rates obtained in such foreign exchange transactions; and absent specific and acceptable Proper Instructions, the Custodian shall not be deemed to have any duty to carry out any foreign exchange on behalf of the Company. The Custodian shall be entitled at all times to comply with any legal or regulatory requirements applicable to currency or foreign exchange transactions.
(b) The Company acknowledges that the Custodian, any sub-custodian or any affiliates of the Custodian or any sub-custodian, involved in any such foreign exchange transactions may make a margin or generate banking income from foreign exchange transactions entered into pursuant to this section for which they shall not be required to account to the Company.
3.8             Collection of Income .  The Custodian, its agents or its sub-custodian shall use reasonable efforts to collect on a timely basis all income and other payments with respect to the Securities held hereunder to which the Company shall be entitled, to the extent consistent with usual custom in the securities custodian business in the United States. Such efforts shall include collection of interest income, dividends and other payments with respect to registered domestic securities if on the record date with respect to the date of payment by the issuer the Security is registered in the name of the Custodian or its nominee (or in the name of its agent or sub-custodian, or their nominee); and interest income, dividends and other payments with respect to bearer domestic securities if, on the date of payment by the issuer such securities are held by the Custodian or its sub-custodian or agent; provided, however, that in the case of Securities held in Street Name, the Custodian shall use commercially reasonable efforts only to timely collect income. In no event shall the Custodian’s agreement herein to collect income be construed to obligate the Custodian to (i) take action to effect collection of any amount if the Securities upon which such payment is due are in default, or if payment is refused after due demand and presentation or (ii) commence, undertake or prosecute any legal proceedings. If the Custodian receives notice of default or refusal to pay with respect to the Securities from an issuer or transfer agent, the Custodian shall forward such notice to the Company.
 
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3.9             Payment of Moneys .
(a) Upon receipt of Proper Instructions, which may be standing instructions, the Custodian shall pay out from the Cash Account (or remit to its agents or its sub-custodian, and direct them to pay out) moneys of the Company on deposit therein in the following cases:
(i) upon the purchase of Securities for the Company pursuant to such Proper Instruction; and such purchase may, unless and except to the extent otherwise directed by Proper Instructions, be carried out by the Custodian:
(A) in accordance with the customary or established practices and procedures in the jurisdiction or market where the transactions occur, including delivering money to the seller thereof or to a dealer therefor (or any agent for such seller or dealer) against expectation of receiving later delivery of such securities; or
(B) in the case of a purchase effected through a Securities System, in accordance with the rules governing the operation of such Securities System;
(ii) for the purchase or sale of foreign exchange or foreign exchange agreements for the accounts of the Company, including transactions executed with or through the Custodian, its agents or its sub-custodian, as contemplated by Section 3.8 above; and
(iii) for any other purpose directed by the Company, but only upon receipt of Proper Instructions specifying the amount of such payment, and naming the Person or Persons to whom such payment is to be made.
(b) At any time or times, the Custodian shall be entitled to pay (i) itself from the Cash Account, whether or not in receipt of express direction or instruction from the Company, any amounts due and payable to it pursuant to Section 8 hereof, and (ii) as otherwise permitted by Section 7.5, 9.4 or Section 12.5 below, provided, however, that in each case all such payments shall be accounted for to the Company.
 
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3.10           Proxies . The Custodian will, with respect to the Securities held hereunder, use reasonable efforts to cause to be promptly executed by the registered holder of such Securities proxies received by the Custodian from its agents or its sub-custodian or from issuers of the Securities being held for the Company, without indication of the manner in which such proxies are to be voted, and upon receipt of Proper Instructions shall promptly deliver such proxies, proxy soliciting materials and notices relating to such Securities. In the absence of such Proper Instructions, or in the event that such Proper Instructions are not received in a timely fashion, the Custodian shall be under no duty to act with regard to such proxies.
3.11           Communications Relating to Securities .  The Custodian shall transmit promptly to the Company all written information (including pendency of calls and maturities of Securities and expirations of rights in connection therewith) received by the Custodian, from its agents or its sub-custodian or from issuers of the Securities being held for the Company. The Custodian shall have no obligation or duty to exercise any right or power, or otherwise to preserve rights, in or under any Securities unless and except to the extent it has received timely Proper Instruction from the Company in accordance with the next sentence. The Custodian will not be liable for any untimely exercise of any right or power in connection with Securities at any time held by the Custodian, its agents or sub-custodian unless:
(i) the Custodian has received Proper Instructions with regard to the exercise of any such right or power; and
(ii) the Custodian, or its agents or sub-custodian are in actual possession of such Securities,
in each case, at least three (3) Business Days prior to the date on which such right or power is to be exercised. It will be the responsibility of the Company to notify the Custodian of the Person to whom such communications must be forwarded under this Section.
3.12           Records .  The Custodian shall create and maintain complete records relating to its activities under this Agreement with respect to the Securities, cash or other property held for the Company under this Agreement.  All such records shall be the property of the Company and shall at all times during the regular business hours of the Custodian be open for inspection by duly authorized officers, employees or agents of the Company, upon reasonable request and at least five Business Days’ prior written notice and at the Company’s expense. The Custodian shall, at the Company’s request, supply the Company with a tabulation of securities owned by the Company and held by the Custodian and shall, when requested to do so by the Company and for such compensation as shall be agreed upon between the Company and the Custodian, include, to the extent applicable, the certificate numbers in such tabulations, to the extent such information is available to the Custodian.
 
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3.13           Reserved.

3.14           Responsibility for Property Held by Sub-custodians .  The Custodian’s responsibility with respect to the selection or appointment of a sub-custodian shall be limited to a duty to exercise reasonable care in the selection of such sub-custodian in light of prevailing settlement and securities handling practices, procedures and controls in the relevant market. With respect to any costs, expenses, damages, liabilities, or claims (including attorneys’ and accountants’ fees) incurred as a result of the acts or the failure to act by any sub-custodian, the Custodian shall take reasonable action to recover such costs, expenses, damages, liabilities, or claims from such sub-custodian; provided that the Custodian’s sole liability in that regard shall be limited to amounts actually received by it from such sub-custodian (exclusive of related costs and expenses incurred by the Custodian).

4. REPORTING
(a) If requested by the Company, the Custodian shall render to the Company a monthly report of (i) all deposits to and withdrawals from the Cash Account during the month, and the outstanding balance (as of the last day of the preceding monthly report and as of the last day of the subject month) and (ii) an itemized statement of the Securities held pursuant to this Agreement as of the end of each month, as well as a list of all Securities transactions that remain unsettled at that time, and (iii) such other matters as the parties may agree from time to time.
(b) For each Business Day, the Custodian shall render to the Company a daily report of (i) all deposits to and withdrawals from the Cash Account for such Business Day and the outstanding balance as of the end of such Business Day, and (ii) a report of settled trades of Securities for such Business Day.
(c) The Custodian shall have no duty or obligation to undertake any market valuation of the Securities under any circumstance.
(d) The Custodian shall provide the Company with such reports as are reasonably available to it and as the Company may reasonably request from time to time, on the internal accounting controls and procedures for safeguarding securities, which are employed by the Custodian.
5. DEPOSIT IN U.S. SECURITIES SYSTEMS
The Custodian may deposit and/or maintain Securities in a Securities System within the United States in accordance with applicable Federal Reserve Board and Securities and Exchange Commission rules and regulations, and subject to the following provisions:
(a) The Custodian may keep domestic Securities in a U.S. Securities System provided that such Securities are represented in an account of the Custodian in the U.S. Securities System for the benefit of the Company which shall not include any assets of the Custodian other than assets held by it as a fiduciary, custodian or otherwise for customers;
 
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(b) The records of the Custodian with respect to Securities which are maintained in a U.S. Securities System shall identify by book-entry those Securities belonging to the Company;
(c) If requested by the Company, the Custodian shall provide to the Company copies of all notices received from the U.S. Securities System of transfers of Securities for the account of the Company; and
(d) Anything to the contrary in this Agreement notwithstanding, the Custodian shall not be liable to the Company for any direct loss, damage, cost, expense, liability or claim to the Company resulting from use of any Securities System (other than to the extent resulting from the gross negligence or willful misconduct of the Custodian itself, or from failure of the Custodian to enforce effectively such rights as it may have against the U.S. Securities System.)
6. SECURITIES HELD OUTSIDE OF THE UNITED STATES
6.1            Appointment of Foreign Sub-custodian .  The Company hereby authorizes and instructs the Custodian in its sole discretion to employ one or more Foreign Sub-custodians to act as Eligible Securities Depositories or as sub-custodian to hold the Securities and other assets of the Company maintained outside the United States, subject to the Company’s approval in accordance with this Section. If the Custodian wishes to appoint a Foreign Sub-custodian to hold property of the Company subject to this Agreement, it will so notify the Company and provide it with information reasonably necessary to determine any such new Foreign Sub-custodian’s eligibility under Rule 17f-5 under the 1940 Act, including a copy of the proposed agreement with such Foreign Sub-custodian. The Company shall at the meeting of its members next following receipt of such notice and information give a written approval or disapproval of the proposed action.
6.2            Assets to be Held .  The Custodian shall limit the Securities and other assets maintained in the custody of the Foreign Sub-custodian to: (a) Foreign Securities and (b) cash and cash equivalents in such amounts as the Company (through Proper Instructions) may determine to be reasonably necessary to effect the Company’s transactions in such investments.
6.3            Omnibus Accounts .  The Custodian may hold Foreign Securities and related Proceeds with one or more Foreign Sub-custodians or Eligible Securities Depositories in each case in a single account with such Sub-custodian or Securities Depository that is identified as belonging to the Custodian for the benefit of its customers; provided however, that the records of the Custodian with respect to Securities and related Proceeds that are property of the Company maintained in such account(s) shall identify by book-entry those Securities and other property as belonging to the Company.
6.4            Reports Concerning Foreign Sub-custodian .  The Custodian will supply to the Company, upon request from time to time, statements in respect of the Securities held by Foreign Sub-custodians or Eligible Securities Depositories, including an identification of the Foreign Sub-custodians and Eligible Securities Depositories having physical possession of the Foreign Securities.
 
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6.5            Transactions in Foreign Custody Account .  Notwithstanding any provision of this Agreement to the contrary, settlement and payment for Securities received by a Foreign Intermediary for the account of the Company may be effected in accordance with the customary established securities trading or securities processing practices and procedures in the jurisdiction or market in which the transaction occurs, including delivering securities to the purchaser thereof or to a dealer therefor (or an agent for such purchaser or dealer) against a receipt with the expectation of receiving later payment for such securities from such purchaser or dealer.
6.6            Foreign Sub-custodian .  Each contract or agreement pursuant to which the Custodian employs a Foreign Sub-custodian shall include provisions that provide: (i) for indemnification or insurance arrangements (or any combination of the foregoing) such that the Company will be adequately protected against the risk of loss of assets held in accordance with such contract; (ii) that the Company’s assets will not be subject to any right, charge, security interest, lien or claim of any kind in favor of the Sub-custodian or its creditors (except a claim of payment for their safe custody or administration) or, in the case of cash deposits, liens or rights in favor of creditors of the Sub-custodian arising under bankruptcy, insolvency, or similar laws; (iii) that beneficial ownership for the Company’s assets will be freely transferable without the payment of money or value other than for safe custody or administration; (iv) that adequate records will be maintained identifying the assets as belonging to the Company or as being held by a third party for the benefit of the Company; (v) that the Company’s independent public accountants will be given access to those records or confirmation of the contents of those records; and (vi) that the Company will receive periodic reports with respect to the safekeeping of the Company’s assets, including notification of any transfer to or from a Company’s account or a third party account containing assets held for the benefit of the Company. Such contract may contain, in lieu of any or all of the provisions specified above, such other provisions that the Custodian determines will provide, in their entirety, the same or a greater level of care and protection for Company assets as the specified provisions, in their entirety.
6.7            Custodian’s Responsibility for Foreign Sub-custodian .
(a) With respect to its responsibilities under this Section 6, the Custodian agrees to exercise reasonable care, prudence and diligence such as a person having responsibility for the safekeeping of property of the Company would exercise. The Custodian further agrees that the Foreign Securities will be subject to reasonable care, based on the standards applicable to the Custodian in the relevant market, if maintained with each Foreign Sub-custodian, after considering all factors relevant to the safekeeping of such assets, including: (i) the Foreign Sub-custodian’s practices, procedures, and internal controls, including the physical protections available for certificated securities (if applicable), the method of keeping custodial records, and the security and data protection practices; (ii) whether the Foreign Sub-custodian has the requisite financial strength to provide reasonable care for Company assets; (iii) the Foreign Sub-custodian’s general reputation and standing and, in the case of Eligible Securities Depository, the Eligible Securities Depository’s operating history and number of participants; and (iv) whether the Company will have jurisdiction over and be able to enforce judgments against the Foreign Sub-custodian, such as by virtue of the existence of any offices of the Foreign Sub-custodian in the United States or the Sub-custodian’s consent to service of process in the United States.
 
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(b) At the end of each calendar quarter, the Custodian shall provide written reports notifying the members of the Company as to the placement of the Foreign Securities and cash of the Company with a particular Foreign Sub-custodian and of any material changes in the Company’s foreign custody arrangements. The Custodian shall promptly take such steps as may be required to withdraw assets of the Company from any Foreign Sub-custodian that has ceased to meet the requirements of Rule 17f-5 under the 1940 Act.
(c) The Custodian shall establish a system to monitor the appropriateness of maintaining the Company’s assets with a particular Foreign Sub-custodian and the performance of the contract governing the Company’s arrangements with such Foreign Sub-custodian.
(d) The Custodian’s responsibility with respect to the selection or appointment of a Foreign Sub-custodian shall be limited to a duty to exercise reasonable care in the selection or retention of such Foreign Intermediaries in light of prevailing settlement and securities handling practices, procedures and controls in the relevant market. With respect to any costs, expenses, damages, liabilities, or claims (including attorneys’ and accountants’ fees) incurred as a result of the acts or the failure to act by any Foreign Sub-custodian, the Custodian shall take reasonable action to recover such costs, expenses, damages, liabilities, or claims from such Foreign Sub-custodian; provided that the Custodian’s sole liability in that regard shall be limited to amounts actually received by it from such Foreign Intermediaries (exclusive of related costs and expenses incurred by the Custodian). The Custodian shall have no responsibility for any act or omission (or the insolvency of) any Securities System (including an Eligible Securities Depository). In the event the Company incurs a loss due to the negligence, willful misconduct, or insolvency of a Securities System (including an Eligible Securities Depository), the Custodian shall make reasonable endeavors, in its discretion, to seek recovery from the Eligible Securities Depository.
7. CERTAIN GENERAL TERMS
7.1            No Duty to Examine Financing Documents .  Nothing herein shall obligate the Custodian to review or examine the terms of any underlying instrument, certificate, credit agreement, indenture, loan agreement, promissory note, or other financing document evidencing or governing any Security to determine the validity, sufficiency, marketability or enforceability of any Security or Loan (and shall have no responsibility for the genuineness or completeness thereof), or otherwise.
 
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7.2            Resolution of Discrepancies .  In the event of any discrepancy between the information set forth in any report provided by the Custodian to the Company and any information contained in the books or records of the Company, the Company shall promptly notify the Custodian thereof and the parties shall cooperate to diligently resolve the discrepancy.
7.3            Improper Instructions .  Notwithstanding anything herein to the contrary, the Custodian shall not be obligated to take any action (or forebear from taking any action), which it reasonably determines (at its sole option) to be contrary to the terms of this Agreement or applicable law.  In no instance shall the Custodian be obligated to provide services on any day that is not a Business Day.
7.4            Proper Instructions
(a) The Company will give a notice to the Custodian, in form acceptable to the Custodian, specifying the names and specimen signatures of persons authorized to give Proper Instructions (collectively, “ Authorized Persons ” and each is an “ Authorized Person ”) which notice shall be signed by an Authorized Person previously certified to the Custodian.  The Custodian shall be entitled to rely upon the identity and authority of such persons until it receives written notice from an Authorized Person of the Company to the contrary.  The initial Authorized Persons are set forth on Schedule B attached hereto and made a part hereof (as such Schedule B may be modified from time to time by written notice from the Company to the Custodian); and the Company hereby represents and warrants that the true and accurate specimen signatures of such initial Authorized Persons are set forth on the “funds transfer authorization” documentation that has been provided separately to the Custodian by the Company.  If such person elects to give the Custodian email or facsimile instructions (or instructions by a similar electronic method) and the Custodian in its reasonable discretion elects to act upon such instructions, the Custodian’s reasonable understanding of such instructions shall be deemed controlling.  The Custodian shall not be liable for any losses, costs or expenses arising directly or indirectly from the Custodian’s reliance upon and compliance with such instructions notwithstanding such instructions conflicting with or being inconsistent with a subsequent written instruction.  Any person providing such instructions or directions agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Custodian, including without limitation the risk of the Custodian acting on unauthorized instructions, and the risk of interception and misuse by third parties.
(b) The Custodian shall have no responsibility or liability to the Company (or any other person or entity), and shall be indemnified and held harmless by the Company, in the event that a subsequent written confirmation of an oral instruction fails to conform to the oral instructions received by the Custodian.  The Custodian shall not have an obligation to act in accordance with purported instructions to the extent that they conflict with applicable law or regulations, local market practice or the Custodian’s operating policies and practices. The Custodian shall not be liable for any loss resulting from a delay while it obtains clarification of any Proper Instructions.
 
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7.5            Actions Permitted Without Express Authority .  The Custodian may, at its discretion, without express authority from the Company:
(a) make payments to itself as described in or pursuant to Section 3.9(b), or to make payments to itself or others, to the extent reasonably incurred, for minor expenses of handling securities or other similar items relating to its duties under this agreement, provided that all such payments shall be accounted for to the Company;
(b) surrender Securities in temporary form for Securities in definitive form;
(c) endorse for collection cheques, drafts and other negotiable instruments; and
(d) in general attend to all nondiscretionary details in connection with the sale, exchange, substitution, purchase, transfer and other dealings with the securities and property of the Company.
7.6            Evidence of Authority .  The Custodian shall be protected in acting upon any Proper Instructions reasonably believed by it to be genuine and to have been properly executed or otherwise given by or on behalf of the Company by an Authorized Person.  The Custodian may receive and accept a certificate signed by any Authorized Person as conclusive evidence of:
(a)              the authority of any person to act in accordance with such certificate; or
(b)              any determination or of any action by the Company as described in such certificate,
and such certificate may be considered as in full force and effect until receipt by the Custodian of written notice to the contrary from an Authorized Person of the Company.
7.7            Receipt of Communications .  Any communication received by the Custodian on a day which is not a Business Day or after 3:30 p.m., Eastern time (or such other time as is agreed by the Company and the Custodian from time to time), on a Business Day will be deemed to have been received on the next Business Day (but in the case of communications so received after 3:30 p.m., Eastern time, on a Business Day the Custodian will use its best efforts to process such communications as soon as possible after receipt).
7.8            Actions on the Loans .  The Custodian shall have no duty or obligation hereunder to take any action on behalf of the Company, to communicate on behalf of the Company, to collect amounts or proceeds in respect of,  or otherwise to interact or exercise rights or remedies on behalf of the Company, with respect to any of the Loans.  All such actions and communications are the responsibility of the Company.
 
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7.9            Confidentiality . The parties hereto agree that they and their advisors, including legal counsel, shall not disclose to any other Person and shall keep confidential the terms and conditions of this Agreement (including fee arrangements) and any amendment, supplement, Schedule or Exhibit hereto (“ Confidential Information ”).  In the event that any party hereto or its advisors breaches any provision of this section, then, in addition to any other rights and remedies available to the non-breaching party, a non-breaching party shall be entitled to temporary and permanent injunctive relief against the breaching party without the necessity of proving actual damages.  Notwithstanding the foregoing, Confidential Information may be disclosed by a party to the extent that (i) such party reasonably deems necessary to do so in working with taxing authorities or other governmental agencies or regulatory bodies or in order to comply with any applicable laws, or (ii) any portion of the Confidential Information is required by law or requested by judicial or regulatory or supervisory process to be disclosed.

8. COMPENSATION OF CUSTODIAN
8.1            Fees .  The Custodian shall be entitled to compensation for its services in accordance with the terms of that certain fee letter dated February 22, 2016, between the Company and the Custodian.
8.2            Expenses .  The Company agrees to pay or reimburse to the Custodian upon its request from time to time all costs, disbursements, advances, and expenses (including reasonable  and documented fees and expenses of legal counsel) reasonably incurred, and any disbursements and advances made (including any account overdraft resulting from any settlement or assumed settlement, provisional credit, chargeback, returned deposit item, reclaimed payment or claw-back, or the like), in connection with the preparation or execution of this Agreement, or in connection with the transactions contemplated hereby or the administration of this Agreement or performance by the Custodian of its duties and services under this Agreement, from time to time (including costs and expenses of any action deemed necessary by the Custodian to collect any amounts owing to it under this Agreement).
9. RESPONSIBILITY OF CUSTODIAN
9.1            General Duties .  The Custodian shall have no duties, obligations or responsibilities under this Agreement or with respect to the Securities or Proceeds except for such duties as are expressly and specifically set forth in this Agreement, and the duties and obligations of the Custodian shall be determined solely by the express provisions of this Agreement.  No implied duties, obligations or responsibilities shall be read into this Agreement against, or on the part of, the Custodian.
9.2            Instructions
(a) The Custodian shall be entitled to refrain from taking any action unless it has such instruction (in the form of Proper Instructions) from the Company as it reasonably deems necessary, and shall be entitled to require, upon prior notice to the Company, that Proper Instructions to it be in writing.  The Custodian shall have no liability for any action (or forbearance from action) taken pursuant to the Proper Instruction of the Company.
 
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(b) Whenever the Custodian is entitled or required to receive or obtain any communications or information pursuant to or as contemplated by this Agreement, it shall be entitled to receive the same in writing, in form, content and medium reasonably acceptable to it and otherwise in accordance with any applicable terms of this Agreement; and whenever any report or other information is required to be produced or distributed by the Custodian it shall be in form, content and medium reasonably acceptable to it and the Company, and otherwise in accordance with any applicable terms of this Agreement.
9.3            General Standards of Care .  Notwithstanding any terms herein contained to the contrary, the acceptance by the Custodian of its appointment hereunder is expressly subject to the following terms, which shall govern and apply to each of the terms and provisions of this Agreement (whether or not so stated therein):
(a) The Custodian may rely on and shall be protected in acting or refraining from acting upon any written notice, instruction, statement, certificate, request, waiver, consent, opinion, report, receipt or other paper or document furnished to it (including any of the foregoing provided to it by telecopier or electronic means), not only as to its due execution and validity, but also as to the truth and accuracy of any information therein contained, which it in good faith believes to be genuine and signed or presented by the proper person (which in the case of any instruction from or on behalf of the Company shall be an Authorized Person); and the Custodian shall be entitled to presume the genuineness and due authority of any signature appearing thereon.  The Custodian shall not be bound to make any independent investigation into the facts or matters stated in any such notice, instruction, statement, certificate, request, waiver, consent, opinion, report, receipt or other paper or document, provided, however, that if the form thereof is specifically prescribed by the terms of this Agreement, the Custodian shall examine the same to determine whether it substantially conforms on its face to such requirements hereof.
(b) Neither the Custodian nor any of its directors, officers or employees shall be liable to anyone for any error of judgment, or for any act done or step taken or omitted to be taken by it (or any of its directors, officers of employees), or for any mistake of fact or law, or for anything which it may do or refrain from doing in connection herewith, unless such action constitutes gross negligence or willful misconduct on its part and in breach of the terms of this Agreement.  The Custodian shall not be liable for any action taken by it in good faith and reasonably believed by it to be within powers conferred upon it, or taken by it pursuant to any direction or instruction by which it is governed hereunder, or omitted to be taken by it by reason of the lack of direction or instruction required hereby for such action.  The Custodian shall not be under any obligation at any time to ascertain whether the Company is in compliance with the 1940 Act, the regulations thereunder, or the Company’s investment objectives and policies then in effect.
 
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(c) In no event shall the Custodian be liable for any indirect, special, punitive or consequential damages (including lost profits) whether or not it has been advised of the likelihood of such damages.
(d) The Custodian may consult with, and obtain advice from, legal counsel selected in good faith with respect to any question as to any of the provisions hereof or its duties hereunder, or any matter relating hereto, and the written opinion or advice of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by the Custodian in good faith in accordance with the opinion and directions of such counsel; the reasonable cost of such services shall be reimbursed pursuant to Section 8.2 above.
(e) The Custodian shall not be deemed to have notice of any fact, claim or demand with respect hereto unless actually known by an officer working in its Corporate Trust Services group and charged with responsibility for administering this Agreement or unless (and then only to the extent received) provided in writing by the Custodian at the applicable address(es) as set forth in Section 15 and specifically referencing this Agreement.
(f) No provision of this Agreement shall require the Custodian to expend or risk its own funds, or to take any action (or forbear from action) hereunder which might in its judgment involve any expense or any financial or other liability unless it shall be furnished with acceptable indemnification.  Nothing herein shall obligate the Custodian to commence, prosecute or defend legal proceedings in any instance, whether on behalf of the Company or on its own behalf or otherwise, with respect to any matter arising hereunder, or relating to this Agreement or the services contemplated hereby.
(g) The permissive right of the Custodian to take any action hereunder shall not be construed as duty.
(h) The Custodian may act or exercise its duties or powers hereunder through agents (including for the avoidance of doubt, sub-custodians) or attorneys, and the Custodian shall not be liable or responsible for the actions or omissions of any such agent or attorney appointed and maintained with reasonable due care.
(i) All indemnifications contained in this Agreement in favor of the Custodian shall survive the termination of this Agreement or earlier resignation of the Custodian.
9.4            Indemnification; Custodian’s Lien .
(a) The Company shall and does hereby indemnify and hold harmless each of the Custodian , and any Foreign Sub-custodian appointed pursuant to Section 6.1 above, for and from any and all costs and expenses (including reasonable attorney’s fees and expenses), and any and all losses, damages, claims and liabilities, that may arise, be brought against or incurred by the Custodian, whether direct, indirect or consequential, as a result of or arising from or in any way relating to any claim, demand, suit, action or proceeding (including any inquiry or investigation) by any person, including without limitation the Company or any Subsidiary, and any advances or disbursements made by the Custodian (including in respect of any Account overdraft, returned deposit item, chargeback, provisional credit, settlement or assumed settlement, reclaimed payment, claw-back or the like), as a result of, relating to, or arising out of this Agreement, or the administration or performance of the Custodian’s duties hereunder, or the relationship between the Company (including, for the avoidance of doubt, any Subsidiary) and the Custodian created hereby, other than such liabilities, losses, damages, claims, costs, expenses, advances and disbursements as are directly caused by the Custodian’s own action or inaction constituting gross negligence or willful misconduct on its part.
 
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(b) The Custodian shall have and is hereby granted a continuing lien upon and security interest in, and, in the event that the Company fails to satisfy any amount as and when due and payable hereunder, right of set-off against, the Account, and any funds (and investments in which such funds may be invested) held therein or credited thereto from time to time, whether now held or hereafter required, and all proceeds thereof, to secure the payment of any amounts that may be owing to the Custodian under or pursuant to the terms of this Agreement, whether now existing or hereafter arising. Notwithstanding anything to the contrary in this Agreement, none of the Custodian, the Securities Depository, or any sub-custodian shall  have any power or authority to assign, hypothecate, pledge, grant any third party any interest in, or otherwise dispose of the Company’s Securities or cash, except as provided herein or pursuant to Proper Instructions.
9.5            Force Majeure .  Without prejudice to the generality of the foregoing, the Custodian and the Company shall be without liability to the other party for any damage or loss resulting from or caused by events or circumstances beyond the Custodian’s reasonable control including nationalization, expropriation, currency restrictions, the interruption, disruption or suspension of the normal procedures and practices of any securities market, power, mechanical, communications or other technological failures or interruptions, computer viruses or the like, fires, floods, earthquakes or other natural disasters, civil and military disturbance, acts of war or terrorism, riots, revolution, acts of God, work stoppages, strikes, national disasters of any kind, or other similar events or acts; errors by the Company (including any Authorized Person) in its instructions to the Custodian; or changes in applicable law, regulation or orders.
10. SECURITY CODES
If the Custodian issues to the Company, security codes, passwords or test keys in order that it may verify that certain transmissions of information, including Proper Instructions, have been originated by the Company, the Company shall take all commercially reasonable steps to safeguard any security codes, passwords, test keys or other security devices which the Custodian shall make available.
 
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11. TAX LAW
11.1         Domestic Tax Law .  The Custodian shall have no responsibility or liability for any obligations now or hereafter imposed on the Company or the Custodian as custodian of the Securities or the Proceeds, by the tax law of the United States or any state or political subdivision thereof.  The Custodian shall be kept indemnified by and be without liability to the Company for such obligations including taxes, (but excluding any income taxes assessable in respect of compensation paid to the Custodian pursuant to this Agreement) withholding, certification and reporting requirements, claims for exemption or refund, additions for late payment interest, penalties and other expenses (including legal expenses) that may be assessed against the Company, or the Custodian as custodian of the Securities or Proceeds.
11.2          Foreign Tax Law .  It shall be the responsibility of the Company to notify the Custodian of the obligations imposed on the Company by the tax law of foreign (e.g., non-U.S.) jurisdictions, including responsibility for withholding and other taxes, assessments or other government charges, certifications and government reporting. The sole responsibility of the Custodian with regard to such tax law shall be to use reasonable efforts to cooperate with the Company with respect to any claims for exemption or refund under the tax law of the jurisdictions for which the Company has provided such information.
12. EFFECTIVE PERIOD AND TERMINATION
12.1          Effective Date .  This Agreement shall become effective as of its due execution and delivery by each of the parties.  This Agreement shall continue in full force and effect until terminated as hereinafter provided.  This Agreement may be terminated by the Custodian or the Company pursuant to Section 12.2.
12.2          Termination .  This Agreement shall terminate upon the earliest of (a) occurrence of the effective date of termination specified in any written notice of termination given by either party to the other not later than sixty (60) days prior to the effective date of termination specified therein, (b) such other date of termination as may be mutually agreed upon by the parties in writing.
12.3          Resignation .  The Custodian may at any time resign under this Agreement by giving not less than sixty (60) days advance written notice thereof to the Company.
12.4          Successor .  Prior to the effective date of termination of this Agreement, or the effective date of the resignation of the Custodian, as the case may be, the Company shall give Proper Instruction to the Custodian designating a successor Custodian, if applicable.
 
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12.5          Payment of Fees, etc .  Upon termination of this Agreement or resignation of the Custodian, the Company shall pay to the Custodian such compensation, and shall likewise reimburse the Custodian for its costs, expenses and disbursements, as may be due as of the date of such termination or resignation.  All indemnifications in favor of the Custodian under this Agreement shall survive the termination of this Agreement or any resignation of the Custodian.
12.6          Final Report .  In the event of any resignation of the Custodian, the Custodian shall provide to the Company a complete final report or data file transfer of any Confidential Information as of the date of such resignation.
13. REPRESENTATIONS AND WARRANTIES
13.1          Representations of the Company .  The Company represents and warrants to the Custodian that:
(a) it has the power and authority to enter into and perform its obligations under this Agreement, and it has duly authorized, executed and delivered this Agreement so as to constitute its valid and binding obligation; and
(b) in giving any instructions which purport to be “Proper Instructions” under this Agreement, the Company will act in accordance with the provisions of its certificate of incorporation and bylaws and any applicable laws and regulations.
13.2          Representations of the Custodian .  The Custodian hereby represents and warrants to the Company that:
(a) it has the power and authority to enter into and perform its obligations under this Agreement;
(b) it has duly authorized, executed and delivered this Agreement so as to constitute its valid and binding obligations; and
(c) that it maintains business continuity policies and standards that include data file backup and recovery procedures that comply with all applicable regulatory requirements.
14. PARTIES IN INTEREST; NO THIRD PARTY BENEFIT
This Agreement is not intended for, and shall not be construed to be intended for, the benefit of any third parties and may not be relied upon or enforced by any third parties (other than successors and permitted assigns pursuant to Section 19).
15. NOTICES
Any Proper Instructions shall be given to the following address (or such other address as either party may designate by written notice to the other party), and otherwise any notices, approvals and other communications hereunder shall be sufficient if made in writing and given to the parties at the following address (or such other address as either of them may subsequently designate by notice to the other), given by (i) certified or registered mail, postage prepaid, (ii) recognized courier or delivery service, or (iii) confirmed telecopier or telex, with a duplicate sent on the same day by first class mail, postage prepaid:
 
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(a) if to the Company or any Subsidiary, to
Bain Capital Credit
John Hancock Tower
200 Clarendon Street
Boston, MA 02116

(b) if to the Custodian, to
U.S. Bank National Association
Corporate Trust Services
190 South La Salle Street
Chicago, Illinois 60603
Attention: Justin Benoit
Telephone: (312) 332-7112
 
16. CHOICE OF LAW AND JURISDICTION
This Agreement shall be construed, and the provisions thereof interpreted under and in accordance with and governed by the laws of the State of New York for all purposes (without regard to its choice of law provisions); except to the extent such laws are inconsistent with federal securities laws, including the 1940 Act, in which case such federal securities laws shall govern.
17. ENTIRE AGREEMENT; COUNTERPARTS
17.1          Complete Agreement .  This Agreement constitutes the complete and exclusive agreement of the parties with regard to the matters addressed herein and supersedes and terminates as of the date hereof, all prior agreements, agreements or understandings, oral or written between the parties to this Agreement relating to such matters.
17.2          Counterparts .  This Agreement may be executed in any number of counterparts and all counterparts taken together shall constitute one and the same instrument.
17.3          Pdf Signatures .  The exchange of copies of this Agreement and of signature pages by pdf shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes.  Signatures of the parties transmitted by pdf shall be deemed to be their original signatures for all purposes.
 
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18. AMENDMENT; WAIVER
18.1          Amendment .  This Agreement may not be amended except by an express written instrument duly executed by each of the Company and the Custodian.
18.2          Waiver .  In no instance shall any delay or failure to act be deemed to be or effective as a waiver of any right, power or term hereunder, unless and except to the extent such waiver is set forth in an expressly written instrument signed by the party against whom it is to be charged.
19. SUCCESSOR AND ASSIGNS
19.1          Successors Bound .  The covenants and agreements set forth herein shall be binding upon and inure to the benefit of each of the parties and their respective successors and permitted assigns.  Neither party shall be permitted to assign their rights under this Agreement without the written consent of the other party; provided, however, that the foregoing shall not limit the ability of the Custodian to delegate certain duties or services to or perform them through agents or attorneys appointed with due care as expressly provided in this Agreement; provided further, that such delegation, or employment of agents and attorneys shall not relieve the Custodian of any of its obligations and duties hereunder.
19.2          Merger and Consolidation .  Any corporation or association into which the Custodian may be merged or converted or with which it may be consolidated, or any corporation or association resulting from any merger, conversion or consolidation to which the Custodian shall be a party, or any corporation or association to which the Custodian transfers all or substantially all of its corporate trust business, shall be the successor of the Custodian hereunder, and shall succeed to all of the rights, powers and duties of the Custodian hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto.
20. SEVERABILITY
The terms of this Agreement are hereby declared to be severable, such that if any term hereof is determined to be invalid or unenforceable, such determination shall not affect the remaining terms.
21. REQUEST FOR INSTRUCTIONS
If, in performing its duties under this Agreement, the Custodian is required to decide between alternative courses of action, the Custodian may (but shall not be obliged to) request written instructions from the Company as to the course of action desired by it.  If the Custodian does not receive such instructions within three (3) Business Days after it has requested them, the Custodian may, but shall be under no duty to, take or refrain from taking any such courses of action.  The Custodian shall act in accordance with instructions received from the Company in response to such request after such two-Business Day period except to the extent it has already taken, or committed itself to take, action inconsistent with such instructions.
 
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22. OTHER BUSINESS
Nothing herein shall prevent the Custodian or any of its affiliates from engaging in other business, or from entering into any other transaction or financial or other relationship with, or receiving fees from or from rendering services of any kind to the Company or any other Person.  Nothing contained in this Agreement shall constitute the Company and/or the Custodian (and/or any other Person) as members of any partnership, joint venture, association, syndicate, unincorporated business or similar assignment as a result of or by virtue of the engagement or relationship established by this Agreement.
23. REPRODUCTION OF DOCUMENTS
This Agreement and all schedules, exhibits, attachments and amendment hereto may be reproduced by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process.  The parties hereto each agree that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding, whether or not the original is in existence and whether or not such reproduction was made by a party in the regular course of business, and that any enlargement, facsimile or further production shall likewise be admissible in evidence.

24. MISCELLANEOUS
The Company acknowledges receipt of the following notice:

“ IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT .

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account.  For a non-individual person such as a business entity, a charity, a trust or other legal entity the Custodian will ask for documentation to verify its formation and existence as a legal entity.  The Custodian may also ask to see financial statements, licenses, identification and authorization documents from individuals claiming authority to represent the entity or other relevant documentation."

[PAGE INTENTIONALLY ENDS HERE. SIGNATURES APPEAR ON NEXT PAGE.]
 
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed and delivered by a duly authorized officer, intending the same to take effect as of the [   ] day of October 2016.
Witness:   BAIN CAPITAL SPECIALTY FINANCE, INC.
          
     
By:
 
 
Name:
       
Name:
 
 
Title:
      Title:
 
 

Witness:
 
U.S. BANK NATIONAL ASSOCIATION
         
 
 
By:
   
Name:
 
Name:
   
Title:
 
Title:
   
 
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SCHEDULE A
(Trade Confirmation)

[See Attached.]
 
SCHEDULE B

Any of the following persons (each acting singly) shall be an Authorized Person (as this list may subsequently be modified by the Company from time to time by written notice to the Custodian):


NAME:
SPECIMEN SIGNATURE: