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As filed with the Securities and Exchange Commission on May 24, 2022

Securities Act File No. 333-262875

Investment Company Act File No. 811-22591

 

 

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM N-2

Registration Statement

under

the Securities Act of 1933   
Pre-Effective Amendment No. 1   
Post-Effective Amendment No.       

and/or

Registration Statement

Under

the Investment Company Act of 1940   
Amendment No. 7   

 

 

Apollo Tactical Income Fund Inc.

(Exact Name of Registrant as Specified In Charter)

 

 

9 West 57th Street

New York, NY 10019

(Address of Principal Executive Offices)

Registrant’s Telephone Number, including Area Code: 212-515-3200

Joseph Moroney

Apollo Tactical Income Fund Inc.

9 West 57th Street

New York, NY 10019

(Name and Address of Agent For Service)

 

 

Copies of information to:

P. Jay Spinola, Esq.

Neesa P. Sood, Esq.

Willkie Farr & Gallagher LLP

787 Seventh Avenue

New York, New York 10019

 

 

Approximate Date of Commencement of Proposed Public Offering: From time to time after the effective date of this Registration Statement.

If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, check the following box  ☐

If any securities being registered on this Form will be offered on a delayed or continuous basis in reliance on Rule 415 under the Securities Act of 1933 (“Securities Act”), other than securities offered in connection with a dividend reinvestment plan, check the following box  ☒

If this Form is a registration statement pursuant to General Instruction A.2 or a post-effective amendment thereto, check the following box  ☒

If this Form is a registration statement pursuant to General Instruction B or a post-effective amendment thereto that will become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box  ☐

If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction B to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box  ☐

It is proposed that this filing will become effective (check appropriate box):

 

when declared effective pursuant to Section 8(c) of the Securities Act

If appropriate, check the following box:

 

This [post-effective] amendment designates a new effective date for a previously filed [post-effective amendment] [registration statement].

This Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, and the Securities Act registration statement number of the earlier effective registration statement for the same offering is:        .

This Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, and the Securities Act registration statement number of the earlier effective registration statement for the same offering is:         .

This Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, and the Securities Act registration statement number of the earlier effective registration statement for the same offering is:         .

Check each box that appropriately characterizes the Registrant:

 

Registered Closed-End Fund (closed-end company that is registered under the Investment Company Act of 1940 (the “Investment Company Act”)).

Business Development Company (closed-end company that intends or has elected to be regulated as a business development company under the Investment Company Act).

Interval Fund (Registered Closed-End Fund or a Business Development Company that makes periodic repurchase offers under Rule 23c-3 under the Investment Company Act).

A.2 Qualified (qualified to register securities pursuant to General Instruction A.2 of this Form).

Well-Known Seasoned Issuer (as defined by Rule 405 under the Securities Act).

Emerging Growth Company (as defined by Rule 12b-2 under the Securities and Exchange Act of 1934).

If an Emerging Growth Company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.

New Registrant (registered or regulated under the Investment Company Act for less than 12 calendar months preceding this filing).

 

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

 

 

 


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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

SUBJECT TO COMPLETION, DATED MAY 24, 2022

PROSPECTUS

 

LOGO

Apollo Tactical Income Fund Inc.

Up to $50,000,000 of Common Stock

 

 

The Fund. Apollo Tactical Income Fund Inc. (the “Fund”) is a corporation organized under the laws of the State of Maryland and registered with the U.S. Securities and Exchange Commission (the “SEC”) under the Investment Company Act of 1940 (the “Investment Company Act”) as a diversified, closed-end management investment company. The Fund commenced operations on February 25, 2013 following the initial public offering of the Fund’s shares of common stock (the “Common Shares”).

Investment Objectives and Strategies. The Fund’s primary investment objective is to seek current income with a secondary objective of preservation of capital. The Fund seeks to achieve its investment objectives primarily by allocating its assets among different types of credit instruments based on absolute and relative value considerations and its analysis of the credit markets. This ability to dynamically allocate the Fund’s assets may result in the Fund’s portfolio becoming concentrated in a particular type of credit instrument (such as senior loans or high yield corporate bonds) and substantially less invested in other types of credit instruments. Under normal market conditions, at least 80% of the Fund’s managed assets will be invested in credit instruments and investments with similar economic characteristics. For purposes of this policy, “credit instruments” will include senior loans, subordinated loans, high yield corporate bonds, notes, bills, debentures, distressed securities, mezzanine securities, structured products (including, without limitation, collateralized debt obligations (“CDOs”), collateralized loan obligations (“CLOs”) and asset-backed securities), bank loans, corporate loans, convertible and preferred securities, government and municipal obligations, mortgage-backed securities, repurchase agreements, and other fixed-income instruments of a similar nature that may be represented by derivatives such as options, forwards, futures contracts or swap agreements. This policy and the Fund’s investment objectives are not fundamental and may be changed by the board of directors of the Fund with at least 60 days’ prior written notice provided to shareholders. The Fund will seek to preserve capital to the extent consistent with its primary investment objective. The Fund’s ability to achieve capital preservation may be limited by its investment in credit instruments that have speculative characteristics. There can be no assurance that the Fund will achieve its investment objectives.

The Fund’s Common Shares are listed on the New York Stock Exchange (“NYSE”) under the symbol “AIF.” As of May 18, 2022, the net assets of the Fund attributable to Common Shares were $215,666,224 and the Fund had outstanding 14,464,026 Common Shares. The last reported sale price of the Fund’s Common Shares, as reported by the NYSE on May 18, 2022 was $12.84 per Common Share. The net asset value (“NAV”) of the Fund’s Common Shares at the close of business on May 18, 2022 was $14.91 per Common Share.

 

 

Investment in the Fund’s Common Shares involves certain risks. Before buying any of the Fund’s Common Shares, you should read the discussion of the principal risks of investing in the Fund in “Risk Factors” beginning on page 26 of this prospectus.

Shares of closed-end management investment companies frequently trade at a discount to their NAV. If the Fund’s Common Shares trade at a discount to their NAV, the risk of loss may increase for purchasers in a public offering.

Neither the U.S. Securities and Exchange Commission (the “SEC”) nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

 

The date of this prospectus is [●], 2022.

Leverage. The Fund utilizes leverage and may utilize leverage to the maximum extent permitted by law for investment and other general corporate purposes. The Fund has entered into an amended and restated credit facility (the “Amended Credit Facility”) with Sumitomo Mitsui Banking Corporation as lender. The use of leverage is a speculative technique that involves special risks associated with the leveraging of common stock. There can be no assurance that any leveraging strategy the Fund employs will be successful during any period in which it is employed. See “Leverage.”

The Offering. This prospectus is part of a registration statement that the Fund has filed with the SEC, using the “shelf” registration process. The Fund may offer, from time to time, in one or more offerings, up to $50,000,000 of Common Shares on terms to be determined at the time of the offering. This prospectus provides you with a general description of the Common Shares that the Fund may offer. Each time the Fund uses this prospectus to offer Common Shares, the Fund will provide a prospectus supplement that will contain specific information about the terms of that offering. The prospectus supplement may also add, update or change information contained in this prospectus. You should read this prospectus and the applicable prospectus supplement, which contain important information about the Fund, carefully before you invest in the Common Shares. Common Shares may be offered directly to one or more purchasers, through agents designated from time to time by the Fund, or to or through underwriters or dealers. The prospectus supplement relating to an offering will identify any agents, underwriters or dealers involved in the sale of Common Shares, and will set forth any applicable purchase price, fee, commission or discount arrangement between the Fund and its agents or underwriters or the basis upon which such amount may be calculated.

Please retain this prospectus and any prospectus supplement for future reference. They set forth concisely the information about the Fund you should know before investing. You should read the prospectus and prospectus supplement carefully before deciding whether to invest. The information required to be in the Fund’s statement of additional information is found in this prospectus. You may call (800) 882-0052 to request the Fund’s annual and semi-annual reports or other information about the Fund, and to make shareholder inquires. The Fund makes available the Fund’s annual and semi-annual reports, free of charge, at www.apollofunds.com. Information contained in, or that can be accessed through, the Fund’s website is not part of this prospectus. You may also obtain other information regarding the Fund on the SEC website (http://www.sec.gov) or with the payment of a duplication fee, by electronic request at publicinfo@sec.gov.

The Common Shares are not a deposit or obligation of, and are not guaranteed or endorsed by, any bank or other insured depository institution and are not federally insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency.


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TABLE OF CONTENTS

 

     Page  

PROSPECTUS SUMMARY

     1  

SUMMARY OF FUND EXPENSES

     6  

FINANCIAL HIGHLIGHTS

     8  

THE FUND

     10  

THE OFFERING

     10  

WHO MAY WISH TO INVEST

     10  

USE OF PROCEEDS

     11  

THE FUND’S INVESTMENTS

     12  

LEVERAGE

     22  

RISK FACTORS

     26  

LISTING OF SHARES

     37  

INVESTMENT RESTRICTIONS

     38  

MANAGEMENT OF THE FUND

     39  

AGREEMENTS WITH ADVISER

     41  

THE PORTFOLIO MANAGERS

     43  

CONTROL PERSONS AND PRINCIPAL SHAREHOLDERS

     47  

NET ASSET VALUE

     48  

DISTRIBUTIONS

     49  

DIVIDEND REINVESTMENT PLAN

     50  

PORTFOLIO TRANSACTIONS

     50  

CONFLICTS OF INTEREST

     52  

CODE OF ETHICS

     69  

PROXY VOTING POLICIES

     69  

DESCRIPTION OF SHARES

     69  

CLOSED-END FUND STRUCTURE

     75  

REPURCHASE OF COMMON SHARES

     77  

TAX MATTERS

     78  

PLAN OF DISTRIBUTION

     82  

ADMINISTRATIVE, CUSTODIAN AND TRANSFER AGENT SERVICES

     83  

LEGAL OPINIONS

     84  

FISCAL YEAR

     84  

FINANCIAL STATEMENTS

     84  

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

     84  

INCORPORATION BY REFERENCE

     84  

APPENDIX A

     A-1  

APPENDIX B

     B-1  

You should rely only on the information contained or incorporated by reference in this prospectus and any applicable prospectus supplement. The Fund has not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. The Fund is not making an offer to sell Common Shares in any jurisdiction where the offer or sale is not permitted. You should assume that the information in this prospectus and any applicable prospectus supplement is accurate only as of the date of this prospectus or the date of the applicable prospectus supplement. The Fund’s business, financial condition and prospects may have changed since that date.


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PROSPECTUS SUMMARY

This is only a summary. This summary may not contain all of the information that you should consider before investing in the Fund’s shares of common stock (“Common Shares”). You should review the more detailed information contained in this prospectus and the applicable prospectus supplement, especially the information set forth under the heading “Principal Risks of the Fund.”

 

The Fund

Apollo Tactical Income Fund Inc. is a diversified, closed-end management investment company registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (the “Investment Company Act”). Throughout this Prospectus, we refer to Apollo Tactical Income Fund Inc. as the “Fund” or as “we,” “us” or “our.” See “The Fund.”

 

  The Fund’s Common Shares are listed on the New York Stock Exchange (“NYSE”) under the symbol “AIF.” As of May 18, 2022, the net assets of the Fund attributable to Common Shares were $215,666,224 and the Fund had outstanding 14,464,026 Common Shares. The last reported sale price of the Fund’s Common Shares, as reported by the NYSE on May 18, 2022 was $12.84 per Common Share. The net asset value (“NAV”) of the Fund’s Common Shares at the close of business on May 18, 2022 was $14.91 per Common Share.

 

The Offering

The Fund may offer, from time to time, in one or more offerings, up to $50,000,000 of the Common Shares on terms to be determined at the time of the offering. This prospectus provides you with a general description of the Common Shares that the Fund may offer. Each time the Fund uses this prospectus to offer Common Shares, the Fund will provide a prospectus supplement that will contain specific information about the terms of that offering. The prospectus supplement may also add, update or change information contained in this prospectus. You should read this prospectus and the applicable prospectus supplement, which contain important information about the Fund, carefully before you invest in the Common Shares. Common Shares may be offered directly to one or more purchasers, through agents designated from time to time by the Fund, or to or through underwriters or dealers. The prospectus supplement relating to an offering will identify any agents, underwriters or dealers involved in the sale of Common Shares, and will set forth any applicable purchase price, fee, commission or discount arrangement between the Fund and its agents or underwriters or the basis upon which such amount may be calculated.

 

Investment Objectives and Policies

Please refer to the section of the Fund’s most recent annual report on Form N-CSR entitled “Fund Investment Objectives, Policies and Risks – AIF – Investment Objective and Policies”, which is incorporated by reference herein, for a discussion of the Fund’s investment objectives and policies.

 

Use of Leverage

The Fund utilizes leverage and may utilize leverage to the maximum extent permitted by law for investment and other general corporate

 

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purposes. The Fund has entered into an amended and restated credit facility (the “Amended Credit Facility”) with Sumitomo Mitsui Banking Corporation as lender, on April 4, 2022 which matures on April 4, 2024. Under the Amended Credit Facility, the Fund may borrow a single term loan not to exceed $110,000,000 and may borrow up to an additional $33,000,000 on a revolving basis (the “Revolving Loan”). Borrowings under this facility bear interest at a rate of the Secured Overnight Financing Rate (“SOFR”) plus 0.875%. The unused portion of the Revolving Loan would be subject to a quarterly commitment fee equal to 0.125% per annum on the average daily amount of available commitments. The Fund has granted a security interest in substantially all of its assets in the event of default under the Amended Credit Facility. As of April 30, 2022 the Fund has $121,000,000 of principal outstanding under the Amended Credit Facility or 34.79% of the Fund. The Fund may also obtain leverage by issuing preferred shares and/or notes and may also borrow funds from banks and other financial institutions. The Fund may also gain leverage synthetically through swaps and other derivatives.

 

  The use of leverage to purchase additional securities creates an opportunity for increased Common Share dividends, but also creates risks for shareholders, including increased variability of the Fund’s net income, distributions and/or NAV in relation to market changes. Leverage is a speculative technique that exposes the Fund to greater risk and increased costs than if it were not implemented. Increases and decreases in the value of the Fund’s portfolio will be magnified due to the use of leverage. In particular, leverage may magnify interest rate risk, which is the risk that the prices of portfolio securities will fall (or rise) if market interest rates for those types of securities rise (or fall). As a result, leverage may cause greater changes in the Fund’s NAV, which will be borne entirely by the Fund’s holders of Common Shares. If the Fund issues preferred shares and/or notes or engages in other borrowings, it will have to pay dividends on its shares or interest on its notes or borrowings, which will increase expenses and may reduce the Fund’s return. These dividend payments or interest expenses (which will be borne entirely by the holders of Common Shares) may be greater than the Fund’s return on the underlying investments. The Fund’s leveraging strategy may not be successful. See “Leverage.”

 

  The Amended Credit Facility contains certain customary affirmative and negative covenants, including limitations on debt, liens and restricted payments, as well as certain portfolio limitations and customary prepayment provisions, including a requirement to prepay loans or take certain other actions if certain asset value tests are not met.

 

Investment Adviser

Apollo Credit Management, LLC (the “Adviser”) serves as the Fund’s investment adviser. The Adviser provides certain investment advisory, management and administrative services to the Fund pursuant to an investment advisory and management agreement with

 

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the Fund (the “Investment Advisory Agreement”). For its services, the Fund pays the Adviser a monthly fee at the annual rate of 1.0% of the average daily value of the Fund’s Managed Assets. “Managed Assets” are defined as the total assets of the Fund (including any assets attributable to any preferred shares that may be issued or to money borrowed or notes issued by the Fund) minus the sum of the Fund’s accrued liabilities, including accrued interest and accumulated dividends (other than liabilities for money borrowed (including the liquidation preference of preferred shares) or notes issued). Since the Fund utilizes leverage, the fees paid to the Adviser for investment advisory and management services are higher than if the Fund did not utilize leverage because the fees paid are calculated based on the Fund’s Managed Assets. For the fiscal year ended December 31, 2021, the Adviser earned fees of $3,578,216 from the Fund.

 

  The Adviser may elect from time to time, in its sole discretion, to waive its receipt of the advisory fee from the Fund. If the Adviser elects to waive its compensation, such action may have a positive effect on the Fund’s performance or yield. The Adviser is under no obligation to waive its fees, may elect not to do so, may decide to waive its compensation periodically or may decide to waive its compensation on the Fund at any given time.

 

  The Fund and the Adviser have also entered into an Administrative Services and Reimbursement Agreement pursuant to which the Adviser provides certain administrative services, personnel and facilities to the Fund and performs operational services necessary for the operation of the Fund not otherwise provided by other service providers of the Fund. These services may include, without limitation, certain bookkeeping and recordkeeping services, compliance and legal services, investor relations assistance, and accounting and auditing support. Pursuant to this Agreement, the Fund reimburses the Adviser at cost, at the Adviser’s request, for certain costs and expenses incurred by the Adviser that are necessary for the administration and operation of the Fund. For the fiscal year ended December 31, 2021, the Adviser provided services under this Agreement totaling $864,157 for the Fund.

 

  See “Agreements with Adviser.”

 

Board of Directors

The board of directors of the Fund (the “Board of Directors” or the “Board”) is responsible for the overall supervision of the operations of the Fund and performs the various duties imposed on the directors of investment companies by the Investment Company Act and applicable Maryland law. The directors of the Fund (the “Directors”) are divided into three classes, serving staggered three-year terms. Any vacancy on the Board of Directors may be filled only by a majority of the remaining Directors, except to the extent that applicable law requires the election of directors by shareholders.

 

Distributions

The Fund intends to make regular monthly cash distributions of all or a portion of its net investment income available to holders of

 

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Common Shares. The Fund intends to pay shareholders at least annually all or substantially all of its capital gains and net investment income after the payment of dividends and interest owed with respect to outstanding preferred shares and/or notes or other forms of leverage utilized by the Fund, although for cash management purposes, the Fund may elect to retain distributable amounts and pay an excise tax. If the Fund makes a long-term capital gain distribution, it will be required to allocate such gain between the Common Shares and any preferred shares issued by the Fund in proportion to the total dividends paid to each class for the year in which the income is realized.

 

  The distributions for any full or partial year might not be made in equal amounts, and one distribution may be larger than the other. The Fund will make a distribution only if authorized by the Board and declared by the Fund out of assets legally available for these distributions. The Fund may pay a special distribution at the end of each calendar year, if necessary, to comply with U.S. federal income tax requirements. This distribution policy may, under certain circumstances, have certain adverse consequences to the Fund and its shareholders because it may result in a return of capital to shareholders, which would reduce the Fund’s NAV and, over time, potentially increase the Fund’s expense ratio. If the Fund distributes a return of capital, it means that the Fund is returning to shareholders a portion of their investment rather than making a distribution that is funded from the Fund’s earned income or other profits. The Board may elect to change the Fund’s distribution policy at any time.

 

  The Fund has adopted a dividend reinvestment plan that allows for reinvestment of dividend distributions on behalf of holders of Common Shares. As a result, if the Board of Directors authorizes, and the Fund declares, a cash dividend, then shareholders who have “opted in” to the dividend reinvestment plan will have their cash dividends automatically reinvested in additional Common Shares, rather than receiving the cash dividends.

 

  See “Distributions.”

 

Listing of Shares

The Fund’s Common Shares are listed on the NYSE under the symbol “AIF.” See “Description of Shares—Common Shares.”

 

Administrative, Custodian and Transfer Agent Services

The Fund has entered into an agreement with U.S. Bancorp Fund Services, LLC to provide accounting and administrative services, as well as a separate agreement with U.S. Bank National Association to provide custodial services (together, “U.S. Bank”). Under the terms of the agreements, U.S. Bank is responsible for providing services necessary in the daily operations of the Fund, such as maintaining the Fund’s books and records, calculating the Fund’s NAV, settling all portfolio trades, preparing regulatory filings and acting as corporate secretary.

 

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  The Fund has also entered into an agreement with American Stock Transfer & Trust Company, LLC (“AST”) to serve as the Fund’s transfer agent, dividend disbursing agent and reinvestment plan administrator.

 

  See “Administrative, Custodian and Transfer Agent Services.”

 

Market Price of Shares

Shares of closed-end investment companies that trade in a secondary market frequently trade at market prices that are lower than their NAVs. This is commonly referred to as “trading at a discount.” As a result, the Fund is designed primarily for long-term investors. Although the value of the Fund’s net assets is generally considered by market participants in determining whether to purchase or sell Common Shares, whether an investor will realize gains or losses upon the sale of the Common Shares will depend entirely upon whether the market price of the Common Shares at the time of sale is above or below the investor’s purchase price for the Common Shares. Because the market price of the Common Shares will be determined by factors such as relative supply of and demand for the Common Shares in the market, general market and economic conditions, and other factors beyond the control of the Fund, the Fund cannot predict whether the Common Shares will trade at, below or above NAV. As with any security, complete loss of investment is possible.

 

Risk Considerations

An investment in Common Shares of the Fund involves substantial risk. Please refer to the section of the Fund’s most recent annual report on Form N-CSR entitled “Fund Investment Objectives, Policies and Risks—AIF Risk Factors”, which is incorporated by reference herein, for a discussion of the risks of investing in the Fund. You should carefully consider those risks, which are described in more detail under “Risk Factors” beginning on page 26 of this Prospectus, along with additional risks relating to investments in the Fund.

 

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SUMMARY OF FUND EXPENSES

The purpose of the following table and example below is to help you understand the fees and expenses that you, as a holder of Common Shares, would bear directly or indirectly, as a result of an offering. The table reflects the use of leverage in the form of borrowings in an amount equal to 33% of the Fund’s Managed Assets (after the leverage is incurred), and shows Fund expenses as a percentage of net assets attributable to Common Shares. The Fund’s actual expenses may vary from the estimated expenses shown in the table. The extent of the Fund’s assets attributable to leverage following an offering, and the Fund’s associated expenses, are likely to vary (perhaps significantly) from these assumptions.

 

Shareholder Transaction Expenses    Percentage of
Offering Price
 

Sales load paid by you (as a percentage of offering price)

     1.00 % (1) 

Offering Expenses borne by Common Shareholders (as a percentage of offering price) (1)

     0.64

Dividend reinvestment plan fees

     None  (2) 

 

Annual Expenses    Percentage of Net Assets (6)
Attributable to Common Shares
(Includes Leverage)
 

Investment management fee (3)

     1.50

Interest payments on borrowed funds (4)

     0.63

Other expenses (5)

     0.76

Total annual Fund operating expenses

     2.89

 

(1)

If the Common Shares are sold to or through agents, a corresponding prospectus supplement will set forth any applicable sales load and the estimated offering expenses. Holders of Common Shares will pay all offering expenses involved with an offering.

(2)

There is no charge to participants for reinvesting dividends or capital gains distributions. The Fund’s plan agent service fee for handling the reinvestment of such dividends and capital gains distributions will be paid by the Fund. Shareholders will bear a proportionate share of brokerage commissions on all open market purchases.

(3)

The Adviser receives a monthly management fee for its advisory services equal to an effective annual rate of 1.0% of the average daily value of the Fund’s Managed Assets assuming that the amount of leverage of 33% of the Fund’s Managed Assets is used.

(4)

Interest expense assumes that leverage represents 33% of the Fund’s Managed Assets and is charged at an interest rate pursuant to the Amended Credit Facility. As of April 30, 2022, the annualized interest rate on the drawn balance is 1.13%. Because borrowings under the Amended Credit Facility are charged a variable interest rate of SOFR plus 0.875%, future interest payments will vary and may increase significantly if interest rates rise. Prior to April 4, 2022, borrowings under the Credit Facility were charged at an interest rate of LIBOR plus 0.875%.

(5)

“Other expenses” are based upon estimated amounts for the current fiscal year. Other expenses include amortized offering expenses.

(6)

For purposes of the Fee Table, the Fund’s net assets have been calculated as Managed Assets less the principal amount of borrowings under the Amended Credit Facility. As of the date of this prospectus, the Fund does not have any preferred shares outstanding.

 

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Example

The following example illustrates the hypothetical expenses (including the sales load of $10.00, estimated offering expenses of this offering of $6.41 and the estimated costs of borrowings with the Fund utilizing leverage representing 33% of the Fund’s Managed Assets) that you would pay on a $1,000 investment in Common Shares, assuming (1) total net annual expenses of 2.89% of net assets attributable to Common Shares and (2) a 5% annual return:

 

1 Year

 

3 Years

 

5 Years

 

10 Years

$39

  $99   $161   $328

 

*

The example above should not be considered a representation of future expenses. Actual expenses may be higher or lower. The example assumes that the estimated “Other expenses” set forth in the Fee Table is accurate and that all dividends and distributions are reinvested at NAV. Actual expenses may be greater or less than those assumed. Moreover, the Fund’s actual rate of return may be greater or less than the hypothetical 5% return shown in the example.

 

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FINANCIAL HIGHLIGHTS

The selected data below sets forth the per share operating performance and ratios and information regarding the Fund’s outstanding senior securities for the periods presented. The financial information was derived from and should be read in conjunction with the Financial Statements of the Fund and Notes thereto, which are incorporated by reference into this prospectus. The financial information for the five fiscal years ended December 31, 2021, 2020, 2019, 2018 and 2017 has been audited by Deloitte & Touche LLP, the Fund’s independent registered public accounting firm, whose unqualified report on such Financial Statements is incorporated by reference into this prospectus.

For a Common Share Outstanding

 

Per Common Share Operating Performance:

  For the
Year
Ended
December 31,

2021
    For the
Year
Ended
December 31,

2020
    For the
Year
Ended
December 31,

2019
    For the
Year
Ended
December 31,

2018
    For the
Year
Ended
December 31,

2017
 

Net Asset Value, Beginning of Year

  $ 16.27     $ 16.85     $ 16.07     $ 17.44     $ 17.18  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from Investment Operations:

         

Net investment income(a)

    0.94       1.02       1.25       1.33       1.27  

Net realized and unrealized gain/(loss) on investments and unfunded loan commitments

    0.33       (0.54     0.77       (1.38     0.28  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total from investment operations

    1.27       0.48       2.02       (0.05     1.55  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Less Distributions Paid to Common Shareholders from:

         

Net investment income

    (0.99     (1.06     (1.24     (1.32     (1.29

Return of capital

    (0.01     —         —         —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions paid to Common Shareholders

    (1.00     (1.06     (1.24     (1.32     (1.29
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Asset Value, End of Year

  $ 16.54     $ 16.27     $ 16.85     $ 16.07     $ 17.44  

Market Value, End of Year

  $ 15.32     $ 14.48     $ 15.10     $ 13.77     $ 15.75  

Total return based on net asset value(b)

    8.44     4.71     13.97     0.47     9.87

Total return based on market value(b)

    12.86     3.99     19.20     (4.67 )%      10.47

Ratios to Average Net Assets Applicable to Common Shareholders:

         

Ratio of total expenses to average net assets

    3.01     3.16     4.03     3.85     3.53

Ratio of net expenses to average net assets

    2.92     3.16     4.03     3.85     3.53

Ratio of net investment income to average net assets

    5.66     6.72     7.53     7.65     7.27

Supplemental Data:

         

Portfolio turnover rate

    137.5     96.4     112.3     130.9     111.8

Net assets at end of year (000’s)

  $ 239,227     $ 235,278     $ 243,751     $ 232,432     $ 252,265  

Senior Securities:

         

Principal loan outstanding (in 000’s)

  $ 121,000     $ 110,000     $ 126,500     $ 126,500     $ 138,000  

Asset coverage per $1,000 of loan outstanding(c)

  $ 2,977     $ 3,139     $ 2,927     $ 2,837     $ 2,828  

 

(a)

Based on the weighted average outstanding shares.

(b)

Total return based on net asset value and total return based on market value assuming all distributions reinvested at reinvestment rate.

(c)

Calculated by subtracting the Fund’s total liabilities (not including the borrowings outstanding) from the Fund’s total assets, and dividing this by the amount of borrowings outstanding.

 

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For a Common Share Outstanding

 

Per Common Share Operating Performance:

   For the
Year
Ended
December 31,
2016
    For the
Year
Ended
December 31,
2015
    For the
Year
Ended
December 31,

2014
    For the
Period
Ended
December 31,

2013(a)
 

Net Asset Value, Beginning of Period

   $ 15.97     $ 18.21     $ 19.51     $ 19.10 (b) 
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from Investment Operations:

        

Net investment income(c)

     1.50       1.48       1.50       1.03  

Net realized and unrealized gain/(loss) on investments

     1.23       (2.16     (1.14     0.39  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total from investment operations

     2.73       (0.68     0.36       1.42  
  

 

 

   

 

 

   

 

 

   

 

 

 

Less Distributions Paid to Common Shareholders from:

        

Net investment income

     (1.52     (1.55     (1.50     (0.96

Net realized gain on investments

     —         (0.01     (0.16     (0.01
  

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions paid to Common Shareholders

     (1.52     (1.56     (1.66     (0.97
  

 

 

   

 

 

   

 

 

   

 

 

 

Common share offering charges to paid-in capital

     —         —         —         (0.04

Net Asset Value, End of Period

   $ 17.18     $ 15.97     $ 18.21     $ 19.51  

Market Value, End of Period

   $ 15.43     $ 13.89     $ 15.96     $ 18.00  

Total return based on net asset value(d)

     19.34     (2.91 )%      2.63     7.94 %(e) 

Total return based on market value(d)

     23.24     (3.65 )%      (2.51 )%      (4.90 )%(e) 

Ratios to Average Net Assets Applicable to Common Shareholders:

        

Ratio of total expenses to average net assets

     3.36     2.97     2.90     2.58 %(f) 

Ratio of net expenses to average net assets

     3.36     2.97     2.90     2.55 %(f) 

Ratio of net investment income to average net assets

     9.20     8.22     7.63     6.38 %(f) 

Supplemental Data:

        

Portfolio turnover rate

     111.6     67.6     78.7     72.4 %(e) 

Net assets at end of period (000’s)

   $ 248,424     $ 230,995     $ 263,428     $ 282,177  

Senior Securities:

        

Principal loan outstanding (in 000’s)

   $ 138,000     $ 138,000     $ 138,000     $ 138,000  

Asset coverage per $1,000 of loan outstanding(g)

   $ 2,800     $ 2,674     $ 2,909     $ 3,045  

 

(a)

From February 25, 2013 (commencement of operations) to December 31, 2013.

(b)

Net of sales load of $0.90 per share of initial offering.

(c)

Based on weighted average outstanding shares.

(d)

Total return based on net asset value and total return based on market value assuming all distributions reinvested at reinvestment rate.

(e)

Not annualized.

(f)

Annualized.

(g)

Calculated by subtracting the Fund’s total liabilities (not including the borrowings outstanding) from the Fund’s total assets, and dividing this by the amount of borrowings outstanding.

 

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THE FUND

Apollo Tactical Income Fund Inc. (the “Fund”) is a corporation organized under the laws of the State of Maryland on July 25, 2011 and registered with the U.S. Securities and Exchange Commission (the “SEC”) under the Investment Company Act of 1940, as amended (the “Investment Company Act”), as a diversified, closed-end management investment company. The Fund commenced operations on February 25, 2013 following the initial public offering of the Fund’s shares of common stock (the “Common Shares”). The Fund’s principal office, including its office for service of process, is located at 9 West 57th Street, 43rd Floor, New York, New York 10019. Apollo Credit Management, LLC (the “Adviser”) serves as the investment adviser to the Fund. The Adviser has claimed an exclusion from the definition of the term “commodity pool operator” under the Commodity Exchange Act (“CEA”) with respect to the Fund in accordance with Commodity Futures Trading Commission Rule 4.5 and, as a result, the Adviser is not subject to registration or regulation as a commodity pool operator under the CEA.

THE OFFERING

The Fund may offer, from time to time, in one or more offerings, up to $50,000,000 of Common Shares on terms to be determined at the time of the offering. This prospectus provides you with a general description of the Common Shares that the Fund may offer. Each time the Fund uses this prospectus to offer Common Shares, the Fund will provide a prospectus supplement that will contain specific information about the terms of that offering. The prospectus supplement may also add, update or change information contained in this prospectus. You should read this prospectus and the applicable prospectus supplement, which contain important information about the Fund, carefully before you invest in the Common Shares. Common Shares may be offered directly to one or more purchasers, through agents designated from time to time by the Fund, or to or through underwriters or dealers. The prospectus supplement relating to an offering will identify any agents, underwriters or dealers involved in the sale of Common Shares, and will set forth any applicable purchase price, fee, commission or discount arrangement between the Fund and its agents or underwriters or the basis upon which such amount may be calculated.

WHO MAY WISH TO INVEST

The Fund may be an appropriate investment for:

 

   

Long-term investors seeking the potential for current income, with preservation of capital as a secondary objective.

 

   

Fixed income investors seeking the potential for additional diversification through investment in a fixed income portfolio with a duration lower than that of the overall “junk bond” market.

 

   

Investors who believe interest rates and inflation may rise in the future and want the benefits of a portfolio that can shift its allocation between fixed rate and floating rate credit investments over time.

 

   

Investors seeking access to the investment acumen of the Adviser and its affiliates.

Investors should consider their investment goals, time horizons and risk tolerance before investing in the Fund. An investment in the Fund is not appropriate for all investors, and the Fund is not intended to be a complete investment program. The Fund is designed as a long-term investment and not as a trading vehicle.

 

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USE OF PROCEEDS

The net proceeds from the issuance of Common Shares hereunder will be invested in accordance with the Fund’s investment objectives and policies as stated below. The net proceeds will be invested in accordance with the Fund’s investment objectives and policies as promptly as possible but no later than six months from the date on which the proceeds from an offering are received by the Fund. Pending such investments, those proceeds may be invested in cash, cash equivalents, government securities and short-term fixed income securities. See “Investment Objectives and Policies.”

 

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THE FUND’S INVESTMENTS

Investment Objectives and Policies

Please refer to the section of the Fund’s most recent annual report on Form N-CSR entitled “Fund Investment Objectives, Policies and Risks—AIF Investment Objective and Policies”, which is incorporated by reference herein, for a discussion of the Fund’s investment objective and policies.

Portfolio Composition

Under normal circumstances, the Fund’s portfolio is comprised principally of the following types of investments:

Senior and Subordinated Loans

Senior loans are senior secured loans made to companies whose debt is rated below investment grade (“Senior Loans”). Senior Loans typically hold a first lien priority and pay interest at rates that are determined periodically on the basis of a floating base lending rate, primarily the London-Interbank Offered Rate (“LIBOR”) or the Secured Overnight Financing Rate (“SOFR”), plus a premium. Senior Loans are typically made to U.S. and, to a limited extent, non-U.S. corporations, partnerships and other business entities that operate in various industries and geographical regions. Companies may obtain Senior Loans to, among other reasons, refinance existing debt and for acquisitions, dividends, leveraged buyouts and general corporate purposes. The Fund may also invest in subordinated loans. Subordinated loans generally have the same characteristics as Senior Loans except that such loans are subordinated in payment and/or lower in lien priority to first lien holders.

Senior Loans typically have rates of interest that are determined daily, monthly, quarterly or semi-annually by reference to a base lending rate, plus a premium or credit spread. As a result, as short-term interest rates increase, interest payable to the Fund from its investments in Senior Loans should increase, and as short-term interest rates decrease, interest payable to the Fund from its investments in Senior Loans should decrease. To the extent the Fund invests in Senior Loans with base lending rate floors, the Fund’s potential for decreased income in a flat or falling rate environment may be mitigated, but the Fund may not receive the benefit of increased coupon payments if the relevant interest rate increases but remains below the base lending rate floor. These base lending rates are primarily LIBOR; however SOFR or the prime rate offered by one or more major U.S. banks and the certificate of deposit rate or other base lending rates used by commercial lenders may also be used.

Senior Loans hold the most senior position in the capital structure of an issuer, are secured with specific collateral and have a claim on the assets and/or stock of the issuer that is senior to that held by unsecured creditors, subordinated debt holders and stockholders of the issuer. Typically, in order to borrow money pursuant to a Senior Loan, an issuer will, for the term of the Senior Loan, pledge collateral, including, but not limited to, (i) working capital assets, such as accounts receivable and inventory, (ii) tangible fixed assets, such as real property, buildings and equipment, (iii) intangible assets, such as trademarks and patent rights (but excluding goodwill) and (iv) security interests in shares of stock of subsidiaries or affiliates. In the case of Senior Loans made to non-public companies, the company’s shareholders or owners may provide collateral in the form of secured guarantees and/or security interests in assets that they own. In many instances, a Senior Loan may be secured only by stock in the issuer or its subsidiaries. Collateral may consist of assets that may not be readily liquidated, and there is no assurance that the liquidation of such assets would satisfy fully an issuer’s obligations under a Senior Loan.

A borrower must comply with various restrictive covenants contained in a loan agreement or note purchase agreement between the borrower and the holders of the Senior Loan (the “Loan Agreement”). In a typical Senior Loan, an agent (the “Agent”) administers the terms of the Loan Agreement. In such cases, the Agent is normally responsible for the collection of principal and interest payments from the borrower and the apportionment of

 

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these payments to the credit of all institutions that are parties to the Loan Agreement. The Fund will generally rely upon the Agent or an intermediate participant to receive and forward to the Fund its portion of the principal and interest payments on the Senior Loan. Additionally, the Fund normally will rely on the Agent and the other loan investors to use appropriate credit remedies against the borrower. The Agent is typically responsible for monitoring compliance with covenants contained in the Loan Agreement based upon reports prepared by the borrower. The Agent may monitor the value of the collateral and, if the value of the collateral declines, may accelerate the Senior Loan, may give the borrower an opportunity to provide additional collateral or may seek other protection for the benefit of the participants in the Senior Loan. The Agent is compensated by the borrower for providing these services under a Loan Agreement, and such compensation may include special fees paid upon structuring and funding the Senior Loan and other fees paid on a continuing basis. With respect to Senior Loans for which the Agent does not perform such administrative and enforcement functions, the Adviser may perform such tasks on the Fund’s behalf, although a collateral bank will typically hold any collateral on behalf of the Fund and the other loan investors pursuant to the applicable Loan Agreement.

Offerings of Senior Loans generally are not registered with the SEC, or any state securities commission, and are not listed on any national securities exchange. There is less readily available or reliable information about most Senior Loans than is the case for many other types of securities, including securities issued in transactions registered under the Securities Act of 1933, as amended (the “Securities Act”) or registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). No active trading market may exist for some Senior Loans, and some loans may be subject to restrictions on resale. Any secondary market for Senior Loans may be subject to irregular trading activity, wide bid/ask spreads and extended trade settlement periods, which may impair the ability of a seller to realize full value and thus cause a material decline in the Fund’s NAV. In addition, the Fund may not be able to readily dispose of its Senior Loans at prices that approximate those at which the Fund could sell such loans if they were more widely-traded and, as a result of such illiquidity, the Fund may have to sell other investments or engage in borrowing transactions if necessary to raise cash to meet its obligations. A limited supply or relative illiquidity of Senior Loans may adversely affect the Fund’s yield.

The Fund may purchase and retain in its portfolio Senior Loans where the borrower has experienced, or may be perceived to be likely to experience, credit problems, including involvement in or recent emergence from bankruptcy court proceedings or other forms of debt restructuring. Such distressed investments may provide opportunities for enhanced income as well as capital appreciation, although they also will be subject to greater risk of loss. At times, in connection with the restructuring of a Senior Loan either outside of bankruptcy court or in the context of bankruptcy court proceedings, the Fund may determine or be required to accept equity securities or junior credit securities in exchange for all or a portion of a Senior Loan.

In the process of buying, selling and holding Senior Loans, the Fund may receive and/or pay certain fees. These fees are in addition to interest payments received and may include facility fees, commitment fees, amendment fees, commissions and prepayment penalty fees. When the Fund buys a Senior Loan it may receive a facility fee and when it sells a Senior Loan it may pay a facility fee. On an ongoing basis, the Fund may receive a commitment fee based on the undrawn portion of the underlying line of credit portion of a Senior Loan. In certain circumstances, the Fund may receive a prepayment penalty fee upon the prepayment of a Senior Loan by a borrower. Other fees received by the Fund may include covenant waiver fees, covenant modification fees or other amendment fees.

Direct Assignments. The Fund may purchase Senior Loans on a direct assignment basis. If the Fund purchases a Senior Loan on direct assignment, it typically succeeds to all the rights and obligations under the Loan Agreement of the assigning lender and becomes a lender under the Loan Agreement with the same rights and obligations as the assigning lender. Investments in Senior Loans on a direct assignment basis may involve additional risks to the Fund. For example, if such loan is foreclosed, the Fund could become part owner of any collateral, and would bear the costs and liabilities associated with owning and disposing of the collateral.

Loan Participations. The Fund may transact in participations in Senior Loans. The participation by the Fund in a lender’s portion of a Senior Loan typically will result in the Fund’s having a contractual relationship only

 

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with such lender, not with the borrower. As a result, the Fund may have the right to receive payments of principal, interest and any fees to which it is entitled only from the lender selling the participation and only upon receipt by such lender of payments from the borrower. Such indebtedness may be secured or unsecured. In connection with purchasing participations, the Fund generally will have no right to enforce compliance by the borrower with the terms of the Loan Agreement, nor any rights with respect to any funds acquired by other investors through set-off against the borrower and the Fund may not directly benefit from the collateral supporting the Senior Loan in which it has purchased the participation. In the event of the insolvency of the entity selling a participation, the Fund may be treated as a general creditor of such entity. The selling entity and other persons interpositioned between such entity and the Fund with respect to such participations will likely conduct their principal business activities in the banking, finance and financial services industries. Persons engaged in these industries may be more susceptible to, among other things, fluctuations in interest rates, changes in the Federal Reserve Open Market Committee’s monetary policy, governmental regulations concerning these industries and concerning capital raising activities generally and fluctuations in the financial markets generally.

Prefunded Letter of Credit Loans. The Fund may transact in participations in prefunded letter of credit loans (a “Prefunded L/C Loan”). A Prefunded L/C Loan is a facility created by the borrower in conjunction with the agent bank as issuer of a loan, and the Prefunded L/C Loan is backed by letters of credit (each letter, an “L/C”). Each participant in a Prefunded L/C Loan (sometimes referred to as a funded letter of credit facility) fully funds its commitment amount to the agent bank for the facility. The funds are invested by the agent bank and held solely to satisfy a Prefunded L/C Loan lender’s obligation to the agent bank under the facility. The funds paid by the lenders are invested by the agent bank in deposits that pay interest, usually approximating a benchmark rate, such as LIBOR or SOFR, which goes to the borrower. Generally, the borrower, via the agent bank, pays the lenders an interest rate, equivalent to the fully drawn spread plus the benchmark rate. The funds are returned to the lender upon termination of the Prefunded L/C Loan (and upon satisfaction of all obligations). Under the terms of the Prefunded L/C Loan agreement, a lender often may sell and assign all or a portion of its interest in the loan to another lender so long as the other lender is eligible and agrees to the terms and conditions of the Prefunded L/C Loan agreement.

When the borrower needs funds, it may draw against the Prefunded L/C Loan and the agent bank makes payment to the borrower by withdrawing some of the amount invested as deposits. Consequently, the lenders do not have to advance any additional funds at the time the borrower draws against the Prefunded L/C Loan facility. The Prefunded L/C Loan can be structured from the standpoint of the borrower as either (i) a revolving credit facility, where the borrower can reborrow, during the term of the loan, moneys it has paid back to the facility during the term of the loan or (ii) a delayed draw term loan where the borrower may not reborrow moneys it has repaid to the facility during the term of the loan.

When the Fund purchases a participation in a Prefunded L/C Loan, the proceeds of the purchase are deposited in a collateral account, which backs an L/C loan by the agent bank to the borrower to support trade or other financing. The Fund typically receives interest on the cash collateral account equal to a reference rate, such as LIBOR or SOFR. Participations by the Fund in a Prefunded L/C Loan typically will result in the Fund’s having a contractual relationship only with the agent bank, not with the borrower. As a result, the Fund may have the right to receive interest, fees and any repayments, if any, to which it is entitled only from the agent bank selling the participation and only upon receipt by the agent bank of such payments from the borrower. In connection with purchasing the participation in a Prefunded L/C Loan, the Fund generally will have no right to enforce compliance by the borrower with the terms of the Prefunded L/C Loan. As a result, the Fund may assume the credit risk of both the borrower and the agent bank selling the participation in a Prefunded L/C Loan. In the event of the insolvency of the agent bank selling a participation in a Prefunded L/C Loan, the Fund may be treated as a general creditor of such agent bank. The agent bank will likely conduct its principal business activities in the banking, finance and financial services industries. Persons engaged in such industries may be more susceptible to, among other things, fluctuations in interest rates, changes in the Federal Reserve Open

 

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Market Committee’s monetary policy, governmental regulations concerning such industries and concerning capital raising activities generally and fluctuations in the financial markets generally.

Loan Origination

The Fund may also act as the originator for direct loans and engage in direct lending. Direct loans between the Fund and a borrower may not be administered by an underwriter or agent bank. The Fund may provide financing to commercial borrowers directly or through companies acquired (or created) and owned by or otherwise affiliated with the Fund. The terms of the direct loans are negotiated with borrowers in private transactions. Furthermore, a direct loan may be secured or unsecured.

As part of its lending activities, the Fund may originate loans to companies that are experiencing significant financial or business difficulties, including companies involved in bankruptcy or other reorganization and liquidation proceedings. Although the terms of such financing may result in significant financial returns to the Fund, they involve a substantial degree of risk. The level of analytical sophistication, both financial and legal, necessary for successful financing to companies experiencing significant business and financial difficulties is very high. Different types of assets may be used as collateral for the Fund’s loans and, accordingly, the valuation of and risks associated with such collateral will vary by loan. There is no assurance that the Fund will correctly evaluate the value of the assets collateralizing the Fund’s loans or the prospects for a successful reorganization or similar action. In any reorganization or liquidation proceeding relating to a company that the Fund funds, the Fund may lose all or part of the amounts advanced to the borrower or may be required to accept collateral with a value less than the amount of the loan advanced by the Fund or its affiliates to the borrower. Furthermore, in the event of a default by a borrower, the Fund may have difficulty disposing of the assets used as collateral for a loan.

Corporate Bonds

The Fund may invest in a wide variety of bonds of varying maturities issued by U.S. and foreign corporations, other business entities, governments and municipalities and other issuers. Corporate Bonds are issued with varying features and may differ in the way that interest is calculated, the amount and frequency of payments, the type of collateral, if any, and the presence of special features (e.g., conversion rights, call rights or other rights of the issuer). The Fund’s investments in Corporate Bonds may include, but are not limited to, senior, junior, secured and unsecured bonds, notes and other debt securities, and may be fixed rate, variable rate or floating rate, among other things.

The Adviser expects most of the Corporate Bonds in which the Fund invests will be high yield bonds (i.e., “junk bonds”). An issuer of Corporate Bonds typically pays the investor a fixed rate of interest and must repay the amount borrowed on or before maturity. The investment return of Corporate Bonds reflects interest on the security and changes in the market value of the security. The market value of a Corporate Bond generally may be expected to rise and fall inversely with interest rates. The value of intermediate- and longer-term Corporate Bonds normally fluctuates more in response to changes in interest rates than does the value of shorter-term Corporate Bonds. The market value of a Corporate Bond also may be affected by investors’ perceptions of the creditworthiness of the issuer, the issuer’s performance and perceptions of the issuer in the marketplace.

Below Investment Grade Credit Instruments

The credit instruments in which the Fund may invest typically will be rated below investment grade. Below investment grade instruments are regarded as having predominantly speculative characteristics and, while such obligations may not necessarily always have near-term vulnerability to default, they face major ongoing uncertainties or exposure to adverse business, financial or economic conditions, which could lead to inadequate capacity to meet timely interest and principal payments. In addition, lower quality debt securities tend to be more sensitive to general economic conditions.

 

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Lower grade instruments, though generally higher yielding, are characterized by higher risk. They may be subject to certain risks with respect to the issuing entity and to greater market fluctuations than certain lower yielding, higher rated instruments. The retail secondary market for lower grade instruments may be less liquid than that of higher rated instruments. Adverse conditions could make it difficult at times for the Fund to sell certain instruments or could result in lower prices than those used in calculating the Fund’s NAV.

The prices of credit instruments generally are inversely related to interest rate changes; however, the price volatility caused by fluctuating interest rates of instruments also is inversely related to the coupon of such instruments. Accordingly, lower grade instruments may be relatively less sensitive to interest rate changes than higher quality instruments of comparable maturity, because of their higher coupon. This higher coupon is what the investor receives in return for bearing greater credit risk. The higher credit risk associated with lower grade instruments potentially can have a greater effect on the value of such instruments than may be the case with higher quality issues of comparable maturity, and is expected to be a substantial factor in the Fund’s relative share price volatility.

Although the Adviser considers credit ratings in selecting investments for the Fund, the Adviser bases its investment decision for a particular instrument primarily on its own credit analysis and not on its credit rating. The Adviser will consider, among other things, the issuer’s financial resources and operating history, its sensitivity to economic conditions and trends, the ability of its management, its debt maturity schedules and borrowing requirements, and relative values based on anticipated cash flow, interest and asset coverage, and earnings prospects.

Because of the greater number of investment considerations involved in investing in high yield instruments, the ability of the Fund to meet its objectives depends more on the Adviser’s judgment and analytical abilities than would be the case if the Fund invested primarily in securities in the higher rating categories. While the Adviser will attempt to reduce the risks of investing in lower rated instruments through active portfolio management, diversification, credit analysis and attention to current developments and trends in the economy and the financial markets, there can be no assurance that a broadly diversified portfolio of such instruments would substantially lessen the risks of defaults brought about by an economic downturn or recession.

Derivatives

The Fund may use instruments referred to as derivatives (“Derivatives”) to gain investment exposure to credit instruments. Derivatives are financial instruments the value of which is derived from a security, commodity (such as gold or oil), currency or interest rate or index (a measure of value or rates, such as the S&P 500 Index or the prime lending rate). The Fund may, but is not required to, use Derivatives for hedging purposes or to seek to enhance returns, including speculation on changes in credit spreads, interest rates or other characteristics of the market, individual securities or groups of securities. Derivatives may allow the Fund to increase or decrease the level of risk to which the Fund is exposed more quickly and efficiently than transactions in other types of instruments. If the Fund invests in a Derivative for speculative purposes, the Fund will be fully exposed to the risks of loss of that Derivative, which frequently is greater than the Derivative’s cost. The use of Derivatives may involve substantial leverage. The Fund’s use of Derivatives may be limited by the Investment Company Act and the rules thereunder. In October 2020, the SEC adopted new regulations governing the use of Derivatives by registered investment companies. The Fund will need to comply with certain conditions depending on the extent of its use of Derivatives by the third quarter of 2022, including (as applicable) the adoption and implementation of policies and procedures designed to manage the Fund’s Derivatives risks, recordkeeping and reporting requirements, compliance with a limit on the amount of leverage-related risk that the Fund may obtain based on value-at-risk and maintaining a Derivatives risk management program and designating a Derivatives risk manager.

Under normal market conditions, the use of Derivatives by the Fund for investment or speculative purposes will not exceed 25% of the Fund’s Managed Assets. The Fund’s investments in Derivatives will be included

 

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under the 80% policy noted above so long as the underlying asset of the applicable Derivative is one or more of the types of credit instruments described in this prospectus or a related index or interest rate. The market value of a Derivative instrument will be used to calculate the Fund’s compliance with these policies. The Fund may also use Derivatives as a form of borrowing to leverage the Fund’s portfolio (i.e., economic leverage). Using Derivatives as a form of borrowing will not be subject to the Fund’s policy to limit its use of Derivatives (to 25% of its Managed Assets) for investment purposes.

Swap Agreements. The Fund may enter into swap agreements, including interest rate and index swap agreements, for hedging purposes, as a form of leverage or to seek to obtain a particular desired return at a lower cost to the Fund than if the Fund had invested directly in an instrument that yielded the desired return. Swap agreements are two party contracts entered into primarily by institutional investors for periods ranging from a few weeks to more than one year. In a standard “swap” transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or “swapped” between the parties are calculated with respect to a “notional amount” (i.e., the dollar amount invested at a particular interest rate, in a particular foreign currency, or in a group of securities representing a particular index). The “notional amount” of the swap agreement is only a basis on which to calculate the obligations that the parties to a swap agreement have agreed to exchange. The Fund’s obligations (or rights) under a swap agreement generally will be equal only to the “net amount” to be paid or received under the agreement based on the relative values of the positions held by each party to the agreement. The Fund’s obligations under a swap agreement generally will be accrued daily (offset against any amounts owing to the Fund).

Credit Default Swaps. The Fund may enter into credit default swap agreements and similar agreements. Among other purposes, credit default swaps provide investment exposure to changes in credit spreads and relative interest rates. A credit default swap agreement or similar instrument may have as reference obligations one or more securities that are not currently held by the Fund (including a group of securities representing an index). The protection “buyer” in a credit default contract may be obligated to pay the protection “seller” an up front payment or a periodic stream of payments over the term of the contract provided generally that no credit event on a reference asset has occurred. If a credit event occurs, the seller generally must pay the buyer the “par value” (full notional value) of the swap in exchange for an equal face amount of deliverable obligations of the reference asset described in the swap, or the seller may be required to deliver the related net cash amount, if the swap is cash settled. The value of a credit default swap may be highly volatile, whether or not a credit event occurs. These changes in value, which may be significant, may materially affect the Fund’s NAV and the market price for the Fund’s Common Shares.

The Fund may be either the buyer or seller in a credit default swap agreement. If the Fund is a buyer and no credit event occurs, the Fund recovers nothing if the swap is held through its termination date. However, if a credit event occurs, the Fund may elect to receive the full notional value of the swap in exchange for an equal face amount of deliverable obligations of the reference asset that may have little or no value. As a seller, the Fund generally receives an up front payment or a fixed rate of income throughout the term of the swap, which typically is between six months and three years, provided that there is no credit event. If a credit event occurs, the Fund, as the seller, must pay the buyer the full notional value of the swap in exchange for an equal face amount of deliverable obligations of the reference asset that may have little or no value.

Total Return Swaps. The Fund may enter into total return swaps. In a total return swap, the Fund pays another party a fixed or floating short-term interest rate and receives in exchange the total return of a portfolio of underlying securities. In entering into a total return swap, the Fund would obtain investment exposure to the portfolio of underlying securities in return for no initial payment or an initial payment that is substantially less than the aggregate purchase price of the underlying securities (the notional amount of the swap). If the other party to a total return swap defaults, the Fund’s risk of loss generally consists of the net amount of total return payments that the Fund is contractually entitled to receive. The Fund bears the risk of default on the underlying loans or debt securities or other assets constituting the underlying securities, based on the notional amount of the swap. The Fund may use total return swaps for leverage, hedging or investment purposes.

 

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Swaptions. The Fund, to the extent permitted under applicable law, may enter into “swaptions,” which are options on swap agreements on either an asset-based or liability-based basis. A swaption is a contract that gives a counterparty the right (but not the obligation) to enter into a new swap agreement or to shorten, extend, cancel or otherwise modify an existing swap agreement, at some designated future time on specified terms. The Fund may write (sell) and purchase put and call swaptions. Depending on the terms of the particular option agreement, the Fund generally will incur a greater degree of risk when it writes a swaption than it will incur when it purchases a swaption. When the Fund purchases a swaption, it risks losing only the amount of the premium it has paid should it decide to let the option expire unexercised. When the Fund writes a swaption, upon exercise of the option the Fund will become obligated according to the terms of the underlying agreement.

Credit-Linked Securities. Among the income producing securities in which the Fund may invest are credit- linked securities, which are issued by a limited purpose trust or other vehicle that, in turn, invests in a Derivative instrument or basket of Derivative instruments, such as credit default swaps, interest rate swaps and other securities, in order to provide exposure to certain fixed income markets. For instance, the Fund may invest in credit-linked securities as a cash management tool in order to gain exposure to a certain market and/or to remain fully invested when more traditional income producing securities are not available.

Options. The Fund may purchase put and call options on securities or currencies. A put option embodies the right of its purchaser to compel the writer of the option to purchase from the option holder an underlying security or currency or its equivalent at a specified price. In contrast, a call option gives the purchaser the right to buy the underlying security or currency covered by the option or its equivalent from the writer of the option at the stated exercise price.

As a holder of a put option, the Fund will have the right to sell the securities or currencies underlying the option and as the holder of a call option, the Fund will have the right to purchase the securities or currencies underlying the option, in each case at their exercise price. An American style put or call option may be exercised at any time during the option exercise period while a European style put or call option may be exercised only upon expiration. A Bermudan style put or call option may be exercised at any time on fixed dates occurring during the term of the option. The Fund may seek to terminate its option positions prior to their expiration by entering into closing transactions. The ability of the Fund to enter into a closing sale transaction depends on the existence of a liquid secondary market. There can be no assurance that a closing purchase or sale transaction can be effected when the Fund so desires.

Indexed and Inverse Floating Rate Securities. The Fund may invest in securities that provide a potential return based on a particular index or interest rates. To the extent the Fund invests in these types of securities, the Fund’s return on such securities will be subject to risk with respect to the value of the particular index: that is, if the value of the index falls, the value of the indexed securities owned by the Fund will fall. Interest and principal payable on certain securities may also be based on relative changes among particular indices. The Fund may invest in so-called “inverse floating obligations” or “residual interest bonds” on which the interest rates vary inversely with a floating rate (which may be reset periodically by a Dutch auction, a remarketing agent, or by reference to a short-term tax-exempt interest rate index). The Fund may purchase synthetically-created inverse floating rate bonds evidenced by custodial or trust receipts. Generally, income on inverse floating rate bonds will decrease when interest rates increase, and will increase when interest rates decrease.

Foreign Instruments

Under normal market conditions, the Fund may invest up to 20% of its Managed Assets in credit instruments issued by foreign issuers, including issuers in emerging markets. The Fund expects that its investment in non-U.S. issuers will be made primarily in U.S. dollar denominated securities but it reserves the right to purchase securities that are foreign currency denominated. Some non-U.S. securities may be less liquid and more volatile than securities of comparable U.S. issuers. Similarly, there is less volume and liquidity in most non-U.S. securities markets than in the United States and, at times, greater price volatility than in the United States.

 

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Because evidences of ownership of these securities usually are held outside the United States, the Fund will be subject to additional risks if it invests in non-U.S. securities, which include possible adverse political and economic developments, seizure or nationalization of foreign deposits and adoption of governmental restrictions that might adversely affect or restrict the payment of principal and interest on the foreign securities to investors located outside the country of the issuer, whether from currency blockage or otherwise. These risks will be heightened to the extent that the Fund invests in emerging markets. Because non-U.S. securities may trade on days when the Fund’s Common Shares are not traded on the exchange on which they are listed, the market value or NAV of the Fund’s shares can change at times when Common Shares cannot be sold.

Foreign Currency Transactions

The Fund may engage in foreign currency exchange transactions in connection with its investments in foreign securities, including in respect of the receipt of dividends and the settlement of securities denominated in foreign currencies. The Fund is not required to hedge its currency exposure, if any, and the Adviser may choose not to do so. The Fund generally will conduct its foreign currency exchange transactions either on a spot (i.e., cash) basis at the spot rate prevailing in the foreign currency exchange market or through forward contracts to purchase or sell foreign currencies.

A forward foreign currency exchange contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days (usually less than one year) from the date of the contract agreed upon by the parties, at a price and for an amount set at the time of the contract. These contracts are traded in the interbank market conducted directly between currency traders (usually large commercial banks) and their customers. A forward contract generally has a deposit requirement and no commissions are charged at any stage for trades. Although foreign exchange dealers do not charge a fee for conversion, they do realize a profit based on the difference (the spread) between the price at which they are buying and selling various currencies. At the consummation of a forward contract, the Fund may either make delivery of the foreign currency or terminate its contractual obligation to deliver the foreign currency by purchasing an offsetting contract obligating it to purchase, at the same maturity date, the same amount of such foreign currency. If the Fund chooses to make delivery of the foreign currency, it may be required to obtain the currency through the sale of portfolio securities denominated in such currency or through conversion of other assets of the Fund into such currency. If the Fund engages in an offsetting transaction, the Fund will incur a gain or loss to the extent that there is a difference between the forward contract price and the offsetting forward contract price.

It should be noted that this method of protecting the value of the Fund’s portfolio securities against a decline in the value of a currency, if used by the Fund, does not eliminate fluctuations in the underlying prices of the securities. Rather, it simply establishes a rate of exchange that can be achieved at some future point in time. Additionally, although such contracts tend to minimize the risk of loss due to a decline in the value of the hedged currency, at the same time they tend to limit any potential gain should the value of the currency increase.

Other Investment Companies

The Fund may invest in securities of other investment companies, including ETFs, to the extent that these investments are consistent with the Fund’s investment objectives, strategies and policies and permissible under the Investment Company Act or any applicable exemption therefrom. The Fund may invest in other investment companies to gain broad market or sector exposure, including during periods when it has large amounts of uninvested cash or when the Adviser believes share prices of other investment companies offer attractive values. The Fund may invest in investment companies that are advised by the Adviser or its affiliates to the extent permitted by applicable law.

Illiquid and Restricted Securities

The Fund may invest up to 25% of its Managed Assets in instruments that, at the time of investment, are illiquid (generally, those securities that cannot be disposed of within seven days in the ordinary course of

 

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business at approximately the value at which the Fund has valued the securities). The Fund may also invest, without limit, in securities that are unregistered (but are eligible for purchase and sale by certain qualified institutional buyers) or are held by control persons of the issuer and securities that are subject to contractual restrictions on their resale (“restricted securities”).

Collateralized Loan Obligations

A collateralized loan obligation (“CLO”) typically takes the form of a financing company (generally called a Special Purpose Vehicle or “SPV”), created to reapportion the risk and return characteristics of a pool of assets. While the assets underlying CLOs are often Senior Loans, the assets may also include (i) subordinated loans, (ii) debt tranches of other CLOs and (iii) equity securities incidental to investments in Senior Loans. The Fund may invest in lower tranches of CLOs, which typically experience a lower recovery, greater risk of loss or deferral or non-payment of interest than more senior tranches of the CLO. When investing in a CLO, the Fund intends, although is not required, to invest in a CLO consisting primarily of individual Senior Loans of borrowers and not repackaged CLO obligations from other high risk pools. A key feature of the CLO structure is the prioritization of the cash flows from a pool of debt securities among the several classes of the CLO. The SPV is a company founded for the purpose of securitizing payment claims arising out of this asset pool. On this basis, marketable securities are issued by the SPV which, due to a measure of diversification of the underlying risk, generally represent a lower level of risk than the original assets. The redemption of the securities issued by the SPV typically takes place at maturity out of the cash flow generated by the collected claims.

Distressed and Defaulted Securities

The Fund may invest in securities, including loans purchased in the secondary market, that are the subject of bankruptcy proceedings or otherwise in default or at risk of being in default as to the repayment of principal and/ or interest at the time of acquisition by the Fund (“Distressed Securities”). Investment in Distressed Securities is speculative and involves significant risks.

Equity Securities

From time to time, the Fund may invest in or hold common stock and other equity securities incident to the purchase or ownership of a Senior Loan or Corporate Bond or in connection with a reorganization of a borrower. Investments in equity securities incidental to investment in Senior Loans or Corporate Bonds entail certain risks in addition to those associated with investments in Senior Loans or Corporate Bonds. Common stock represents an equity ownership interest in a company. Historical trends would indicate that common stock is subject to higher levels of volatility and market and issuer-specific risk than debt securities. The value of equity securities may be affected more rapidly, and to a greater extent, by company-specific developments and general market conditions. These risks may increase fluctuations in the Fund’s NAV. In addition, the Fund frequently may possess material non-public information about an issuer as a result of its ownership of a Senior Loan or Corporate Bond of an issuer. Because of prohibitions on trading in securities while in possession of material non-public information, the Fund might be unable to enter into a transaction in a security of the issuer when it would otherwise be advantageous to do so. The equity interests held by the Fund, if any, may not pay dividends or otherwise generate income or appreciate in value and, in fact, may decline in value. Accordingly, the Fund may not be able to realize gains from its equity investments and any gains that the Fund does realize may not be sufficient to contribute materially to the Fund’s investment objective of seeking current income. Equity securities held by the Fund may be illiquid.

Repurchase Agreements

The Fund may engage in repurchase agreements with broker-dealers, banks and other financial institutions to earn incremental income on temporarily available cash that would otherwise be uninvested. A repurchase agreement is a short-term investment in which the purchaser (i.e., the Fund) acquires ownership of a security and

 

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the seller agrees to repurchase the obligation at a future time and set price, thereby determining the yield during the holding period. This creates a fixed return for the Fund and is, in effect, a loan by the Fund. Repurchase agreements involve risks in the event of default by the other party. The Fund may enter into repurchase agreements with broker-dealers, banks and other financial institutions deemed to be creditworthy by the Adviser. Repurchase agreements maturing in more than seven days may be considered illiquid.

Reverse Repurchase Agreements

The Fund may generate leverage by entering into reverse repurchase agreements, under which the Fund sells portfolio securities to financial institutions such as banks and broker-dealers and agrees to repurchase them at a particular date and price. Such agreements, which are in effect collateralized borrowings by the Fund and may be considered to be senior securities under the Investment Company Act.

 

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LEVERAGE

The Fund utilizes leverage and may utilize leverage to the maximum extent permitted by law for investment and other general corporate purposes. The Fund has entered into an amended and restated credit facility (the “Amended Credit Facility”) with Sumitomo Mitsui Banking Corporation (“SMBC”) as lender, that allows the Fund to borrow on a secured basis, which the Fund uses in the normal course of business as financial leverage, as described below under “Credit Facility.” The Fund also may borrow money as a temporary measure for extraordinary or emergency purposes, including the payment of dividends and the settlement of securities transactions, which otherwise might require untimely dispositions of Fund securities.

The use of leverage to purchase additional securities creates an opportunity for increased Common Share dividends, but also creates risks for holders of Common Shares, including increased variability of the Fund’s net income, distributions and/or NAV in relation to market changes. Leverage is a speculative technique that exposes the Fund to greater risk and increased costs than if it were not implemented. As a result, leverage may cause greater changes in the Fund’s NAV, which will be borne entirely by the Fund’s shareholders. If the Fund issues preferred shares and/or notes or engage in other borrowings, it will have to pay dividends on its shares or interest on their notes or borrowings, which will increase expenses and may reduce the Fund’s return. These dividend payments or interest expenses (which will be borne entirely by the holders of the Common Shares) may be greater than the Fund’s return on the underlying investments.

As discussed further below, the Fund’s ability to use leverage will be limited by the Investment Company Act and any agreements on debt limitations or asset coverage requirements imposed on the Fund by its lenders or necessary to obtaining ratings on any preferred stock or debt issued by the Fund. The Fund may issue preferred shares and/or notes or other forms of indebtedness, and it may also borrow funds from banks and other financial institutions. The Fund may also gain leverage synthetically through swaps and other Derivatives. The issuance of preferred shares or use of borrowings to leverage the Common Shares can create risks, including increased variability of the Fund’s net income, distributions and/or NAV in relation to market changes. Changes in the value of the Fund’s portfolio, including securities bought with the proceeds of leverage, will be borne entirely by holders of the Common Shares. All costs and expenses related to any form of leverage used by the Fund will be borne entirely by holders of the Common Shares. Increases and decreases in the value of the Fund’s portfolio will be magnified if the Fund uses leverage. In particular, leverage may magnify interest rate risk, which is the risk that the prices of portfolio securities will fall (or rise) if market interest rates for those types of securities rise (or fall). To the extent that the Fund makes investments in Senior Loans or other debt instruments structured with interest rate floors, the Fund will not realize additional income if rates increase to levels below the floor but the Fund’s cost of financing is expected to increase, resulting in the potential for a decrease in the level of income available for dividends or distributions made by the Fund. During periods when the Fund is using leverage, the fees paid to the Adviser for advisory services will be higher than if the Fund did not use leverage because the fees paid will be calculated on the basis of the Fund’s Managed Assets, which includes the assets purchased through leverage. In such case, the Adviser may have a financial incentive to increase the Fund’s use of leverage, which constitutes an inherent conflict of interest. In addition, the fees paid to the Adviser are borne exclusively by common shareholders. It is expected that preferred shareholders, noteholders and any lenders to the Fund will not bear any expenses of the Fund. The Fund’s leveraging strategy may not be successful.

Preferred Shares and Notes

The Fund may engage in leverage through the issuance of preferred shares and/or notes or other forms of indebtedness. Under the Investment Company Act, the Fund is not permitted to issue preferred shares unless immediately after such issuance the Fund will have an asset coverage of at least 200%. In general, the term “asset coverage” for this purpose means the ratio which the value of the total assets of the Fund, less all liabilities and indebtedness not represented by senior securities, bears to the aggregate amount of senior securities representing indebtedness of the Fund plus the aggregate of the involuntary liquidation preference of the preferred shares. The involuntary liquidation preference refers to the amount to which the preferred shares would be entitled on the

 

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involuntary liquidation of the Fund in preference to a security junior to them. In addition, the Fund is not permitted to declare any cash dividend or other distribution on its Common Shares or purchase its Common Shares unless, at the time of such declaration or purchase, the Fund satisfies this 200% asset coverage requirement after deducting the amount of the distribution or purchase price, as applicable.

Under the Investment Company Act, the Fund is not permitted to incur indebtedness, including through the issuance of debt securities, unless immediately thereafter the Fund will have an asset coverage of at least 300%. In general, the term “asset coverage” for this purpose means the ratio which the value of the total assets of the Fund, less all liabilities and indebtedness not represented by senior securities, bears to the aggregate amount of senior securities representing indebtedness of the Fund. In addition, the Fund may be limited in its ability to declare any cash distribution on its capital stock or purchase its capital stock unless, at the time of such declaration or purchase, the Fund has an asset coverage (on its indebtedness) of at least 300% after deducting the amount of such distribution or purchase price, as applicable. The Investment Company Act contains an exception, however, that permits dividends to be declared upon any preferred stock issued by the Fund if the Fund’s indebtedness has an asset coverage of at least 200% at the time of declaration after deducting the amount of the dividend. In addition, if the Fund issues non-public indebtedness (for example, if it enters into a loan agreement in a privately arranged transaction with a bank), it may be able to continue to pay dividends on its capital stock even if the asset coverage ratio on its indebtedness falls below 300%.

In addition, as a condition to obtaining financing or, if applicable, ratings on the preferred shares and/or notes or other forms of indebtedness, the terms of any preferred shares and/or notes or other forms of indebtedness issued would be expected to include asset coverage maintenance provisions that would require a reduction of indebtedness or the redemption of the preferred shares and/or notes or other forms of indebtedness in the event of non-compliance by the Fund and might also prohibit dividends and other distributions on the Common Shares in such circumstances. In order to meet such redemption requirements, the Fund might have to liquidate portfolio securities. These liquidations and redemptions, or reductions in indebtedness, would cause the Fund to incur related transaction costs and could result in capital losses to the Fund. Prohibitions on dividends and other distributions on the Common Shares could impair the Fund’s ability to qualify as a regulated investment company under the Internal Revenue Code of 1986, as amended (the “Code”).

If the Fund has preferred shares outstanding, two of the Fund’s directors will be elected by the holders of preferred shares voting separately as a class. The remaining directors of the Fund will be elected by holders of the Common Shares and preferred shareholders voting together as a single class. In the event dividends on the preferred shares are unpaid in an amount equal to two full years’ dividends on such securities, holders of preferred shares would be entitled to elect a majority of the directors of the Fund (subject to any prior rights of debt holders) and continue to be so represented until all dividends in arrears shall have been paid or otherwise provided for.

If the Fund issues preferred shares and/or notes or other forms of indebtedness, it may be subject to certain restrictions imposed by guidelines of one or more ratings agencies that may issue ratings for preferred shares issued by the Fund, or may be subject to loan covenants or other restrictions imposed by its lenders. These guidelines would be expected to impose asset coverage or portfolio composition requirements that would be more stringent than those imposed on the Fund by the Investment Company Act. It is not anticipated that these covenants or guidelines would impede the Adviser from managing the Fund’s portfolio in accordance with the Fund’s investment objectives and policies.

Total Return Swaps

The Fund can potentially use a total return swap or similar Derivative contract to leverage its portfolio. In a situation where the Fund enters into a total return swap to create leverage, it is expected that the contract will obligate the counterparty to the swap to pay the Fund all of the economic benefits of a reference portfolio of selected credit instruments and in return the Fund would pay the counterparty a fixed rate of return. The Fund

 

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would post collateral for the benefit of the counterparty in a fraction of the notional amount of the reference portfolio of credit instruments. Under this arrangement, the Fund would not actually own the assets included in the reference portfolio. Rather, it would be exposed to all of the economic characteristics of the portfolio on a levered basis.

Changes to Leverage

The Fund may, but is not required to, take certain actions if short-term interest rates increase or market conditions otherwise change (or the Fund anticipates such an increase or change) and the Fund’s use of leverage, if any, begins (or is expected) to adversely affect common shareholders. In order to attempt to offset such a negative effect of leverage on common shareholders, the Fund may engage in hedging transactions to attempt to mitigate interest rate risk. For example, the Fund may elect to enter into a swap or other derivative transaction with the objective of gaining the economic effect of obtaining its leverage on a floating rate basis, and vice versa. Other than as it may be limited by the Investment Company Act, the rules thereunder, or other applicable law, the Fund has no policy limitation on its use of Derivative instruments for hedging purposes or the creation of leverage as a form of borrowing. In addition, the Fund may shorten the average maturity of its investment portfolio (by, among other things, investing in short-term securities), may reduce its indebtedness or unwind other leveraged transactions. The Fund also may attempt to reduce the utilization of leverage by redeeming or otherwise purchasing outstanding preferred shares, if any, or prepaying debt or other borrowings. The types of leverage that the Fund utilizes will vary depending on market conditions. The Fund is not required to hedge the risks associated with the use of leverage and any attempt to do so may not be successful.

Credit Facility

The Fund has entered into the Amended Credit Facility with SMBC, as lender, on April 4, 2022 which matures on April 4, 2024. Under the Amended Credit Facility, the Fund may borrow a single term loan not to exceed $110,000,000 and may borrow up to an additional $33,000,000 on a revolving basis (the “Revolving Loan”). Borrowings under this facility bear interest at a rate of SOFR plus 0.875%. The unused portion of the Revolving Loan would be subject to a quarterly commitment fee equal to 0.125% per annum on the average daily amount of available commitments. The Fund has granted a security interest in substantially all of its assets in the event of default under the Amended Credit Facility. As of April 30, 2022 the Fund has $121,000,000 of principal outstanding under the Amended Credit Facility or 34.79% of the Fund, which is comprised of a term loan of $110,000,000 and a revolving loan of $11,000,000. The Fund may also obtain leverage by issuing preferred shares and/or notes and may also borrow funds from banks and other financial institutions.

Borrowings under the Amended Credit Facility constitute financial leverage and are be subject to the 300% asset coverage requirements imposed by the Investment Company Act described above with respect to the amount of the borrowings and the Fund’s ability to declare dividends and distributions or purchase its capital stock.

The Amended Credit Facility contains certain customary affirmative and negative covenants, including limitations on debt, liens and restricted payments, as well as certain portfolio limitations and customary prepayment provisions, including a requirement to prepay loans or take certain other actions if certain asset value tests are not met.

The Fund may borrow money in an amount equal to 5% of its total assets as a temporary measure for extraordinary or emergency purposes, including the payment of dividends and the settlement of securities transactions that otherwise might require untimely dispositions of portfolio securities.

Effects of Leverage

The following table is furnished in response to requirements of the SEC. It is designed to illustrate the effect of leverage on Common Share total return, assuming investment portfolio total returns (comprised of income and

 

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changes in the value of investments held in the Fund’s portfolio) of -10%, -5%, 0%, 5% and 10%. These assumed investment portfolio returns are hypothetical figures and are not necessarily indicative of the investment portfolio returns expected to be experienced by the Fund. The table assumes leverage in an aggregate amount equal to 33% of the Fund’s Managed Assets.

If the Fund uses leverage, the amount of fees paid to the Adviser for its services will be higher than if the Fund does not use leverage because the fees paid are calculated on Managed Assets, which include assets purchased with leverage. Therefore, the Adviser has a financial incentive to use leverage, which creates a conflict of interest between the Adviser and common shareholders, as only the common shareholders would bear the fees and expenses incurred through the Fund’s use of leverage. The Fund’s willingness to use leverage, and the extent to which leverage is used at any time, will depend on many factors, including among other things, the Adviser’s assessment of the yield curve, interest rate trends, market conditions and other factors.

 

Assumed Portfolio Total Return (net of expenses)

     -10     -5     0     5     10

Common Share Total Return

     -10.37     -5.37     -0.37     4.63     9.63

Common Share total return is comprised of two elements—the Common Share dividends paid by the Fund (the amount of which is largely determined by the net investment income of the Fund after paying dividends) and gains or losses on the value of the securities the Fund owns. As required by SEC rules, the table above assumes that the Fund is more likely to suffer capital losses than to enjoy capital appreciation. For example, to assume a total return of 0% the Fund must assume that the interest it receives on its investments is entirely offset by losses in the value of those investments.

 

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RISK FACTORS

An investment in the Fund’s Common Shares may be speculative in that it involves a high degree of risk and should not constitute a complete investment program. Before making an investment decision, you should carefully consider the following risk factors, together with the other information contained in this prospectus. At any point in time, an investment in the Fund’s Common Shares may be worth less than the original amount invested, even after taking into account the distributions paid, if any, and the ability of shareholders to reinvest dividends. If any of the risks discussed in this prospectus occurs, the Fund’s results of operations could be materially and adversely affected. If this were to happen, the price of the Fund’s Common Shares could decline significantly and you could lose all or a part of your investment.

General Risks

Please refer to the section of the Fund’s most recent annual report on Form N-CSR entitled “Fund Investment Objectives, Policies and Risks—AIF Risk Factors”, which is incorporated by reference herein other than as noted below, for a discussion of the general risks of investing in the Fund.

The following information supplements the section “Market Risk” in the Fund’s most recent annual report referenced above.

Current Events: On February 24, 2022, Russia commenced a full-scale invasion of Russia’s pre-positioned forces into Ukraine, which could have a negative impact on the economy and business activity globally (including in the countries in which the Fund invests), and therefore could adversely affect the performance of the Fund’s investments. Furthermore, the conflict between the two nations and the varying involvement of the United States and other NATO countries could preclude prediction as to their ultimate adverse impact on global economic and market conditions, and, as a result, presents material uncertainty and risk with respect to the Fund and the performance of its investments or operations, and the ability of the Fund to achieve its investment objectives.

Covenant Lite Loan Risk. Some of the loans or debt obligations in which the Fund may invest are “covenant-lite”, which means the loans or obligations contain fewer financial maintenance covenants than other loans or obligations (in some cases, none) and do not include terms which allow the lender to monitor the borrower’s performance and declare a default if certain criteria are breached. An investment by the Fund in a covenant-lite loan may potentially hinder the ability to reprice credit risk associated with the issuer and reduce the ability to restructure a problematic loan and mitigate potential loss. The Fund may also experience difficulty, expenses or delays in enforcing its rights on its holdings of covenant-lite loans or obligations. As a result of these risks, the Fund’s exposure to losses may be increased, which could result in an adverse impact on the Fund.

Other Risks

Loan Origination Risk

The Fund may also act as the originator for direct loans and engage in direct lending. The level of analytical sophistication, both financial and legal, necessary for successful financing to companies, particularly companies experiencing significant business and financial difficulties, is high. There can be no assurance that the Adviser and the Fund will correctly evaluate the value of the assets collateralizing these loans or the prospects for successful repayment or a successful reorganization or similar action.

In accordance with the Order, the Fund’s ability to acquire loans could be dependent on the existence and performance of the origination platform of Apollo (as defined below), which includes other Apollo-advised funds and enables Apollo to commit in size to multiple deals. Therefore, a decrease in Apollo’s origination platform or its inability to acquire investments suitable for the Fund could reduce or possibly eliminate the ability of the Fund

 

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to participate in certain loans within the Fund’s investment objectives and would have a material adverse effect on the Fund’s performance. Other Apollo-advised funds could be subject to certain restrictions on the types of investments they can make, and such restrictions may in effect limit the types of investments the Fund could make to the extent that the Fund is dependent on Apollo’s origination platform.

Loan origination involves a number of particular risks that may not exist in the case of secondary debt purchases. Apollo may have to rely more on its own resources to conduct due diligence of the borrower, and such borrower may in some circumstances present a higher credit risk and/or could not obtain debt financing in the syndicated markets. As a result, the diligence is likely to be more limited than the diligence conducted for a broadly syndicated transaction involving an underwriter. Loan origination may also involve additional regulatory risks given licensing requirements for certain types of lending in some jurisdictions, and the scope of these regulatory requirements (and certain permitted exemptions) may vary from jurisdiction to jurisdiction and may change from time to time. In addition, in originating loans, the Fund will compete with a broad spectrum of lenders, some of which may have greater financial resources than the Fund, and some of which may be willing to lend money on better terms (from a borrower’s standpoint) than the Fund. Increased competition for, or a diminution in the available supply of, qualifying loans may result in lower yields on such loans, which could reduce returns to the Fund. The level of analytical sophistication, both financial and legal, necessary for successful financing to companies, particularly companies experiencing significant business and financial difficulties is unusually high. There is no assurance that the Adviser will correctly evaluate the value of the assets collateralizing these loans or the prospects for successful repayment or a successful reorganization or similar action.

Direct Lending Risk

The Fund may make direct loans and engage in direct lending, which involves certain risks. If a loan is foreclosed, the Fund could become part owner of any collateral and would bear the costs and liabilities associated with owning and disposing of the collateral. As a result, the Fund may be exposed to losses resulting from default and foreclosure. Any costs or delays involved in the effectuation of a foreclosure of the loan or a liquidation of the underlying assets will further reduce the proceeds and thus increase the loss. There is no assurance that the Fund will correctly evaluate the value of the assets collateralizing the loan. In the event of a reorganization or liquidation proceeding relating to the borrower, the Fund may lose all or part of the amounts advanced to the borrower. There is no assurance that the protection of the Fund’s interests is adequate, including the validity or enforceability of the loan and the maintenance of the anticipated priority and perfection of the applicable security interests. Furthermore, there is no assurance that claims will not be asserted that might interfere with enforcement of the Fund’s rights.

Loans may be deemed to have substantial vulnerability to default in payment of interest and/or principal. There can be no assurance as to the levels of defaults and/or recoveries that may be experienced on loans in which the Fund has invested. Certain of the loans in which the Fund may invest have large uncertainties or major risk exposures to adverse conditions, and may be considered to be predominantly speculative. Generally, such loans offer a higher return potential than better quality loans, but involve greater volatility of price and greater risk of loss of income and principal. The market values of certain of these loans also tend to be more sensitive to changes in economic conditions than better quality loans.

Loans to issuers operating in workout modes or under Chapter 11 of the U.S. Bankruptcy Code or the equivalent laws of member states of the European Union are, in certain circumstances, subject to certain potential liabilities that may exceed the amount of the loan. For example, under certain circumstances, lenders who have inappropriately exercised control of the management and policies of a debtor may have their claims subordinated or disallowed or may be found liable for damages suffered by parties as a result of such actions.

Various state licensing requirements could apply to the Fund with respect to investments in, or the origination and servicing of, loans and similar assets. The licensing requirements could apply depending on the

 

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location of the borrower, the location of the collateral securing the loan, or the location where the Fund or the Adviser operates or has offices. In states in which it is licensed, the Fund or the Adviser will be required to comply with applicable laws and regulations, including consumer protection and anti-fraud laws, which could impose restrictions on the Fund’s or the Adviser’s ability to take certain actions to protect the value of its investments in such assets and impose compliance costs. Failure to comply with such laws and regulations could lead to, among other penalties, a loss of the Fund’s or the Adviser’s license, which in turn could require the Fund to divest assets located in or secured by real property located in that state. These risks will also apply to issuers and entities in which the Fund invests that hold similar assets, as well as any origination company or servicer in which the Fund owns an interest.

Loan origination and servicing companies are routinely involved in legal proceedings concerning matters that arise in the ordinary course of their business. These legal proceedings range from actions involving a single plaintiff to class action lawsuits with potentially tens of thousands of class members. In addition, a number of participants in the loan origination and servicing industry (including control persons of industry participants) have been the subject of regulatory actions by state regulators, including state Attorneys General, and by the federal government. Governmental investigations, examinations or regulatory actions, or private lawsuits, including purported class action lawsuits, may adversely affect such companies’ financial results. To the extent the Fund seeks to engage in origination and/or servicing directly, or has a financial interest in, or is otherwise affiliated with, an origination or servicing company, the Fund will be subject to enhanced risks of litigation, regulatory actions and other proceedings. As a result, the Fund may be required to pay legal fees, settlement costs, damages, penalties or other charges, any or all of which could materially adversely affect the Fund and its investments.

Co-Investment Activity and Allocation of Investment Opportunities

The Fund may have greater opportunities to make negotiated co-investments in accordance with the terms of an exemptive order from the SEC (the “Order”). The Order is subject to certain terms and conditions, so there can be no assurance that the Fund will be permitted to co-invest with certain of its affiliates other than in the circumstances currently permitted by regulatory guidance and the Order.

The Adviser and its affiliated investment managers may determine that an investment is appropriate both for the Fund and for one or more other funds. In such event, depending on the availability of such investment and other appropriate factors, the Adviser may determine that the Fund should invest on a side-by-side basis with one or more other funds. The Adviser may make all such investments subject to compliance with applicable regulations and interpretations, and its allocation procedures. The Adviser has adopted allocation procedures that are intended to ensure that each fund or account managed by it or certain of its affiliates (“Apollo-advised funds”) are treated in a manner that, over time, is fair and equitable. Allocations generally are made pro rata based on order size. In certain circumstances, the allocation policy provides for the allocation of investments pursuant to a predefined arrangement that is other than pro rata. As a result, in situations where a security is appropriate for certain Apollo-advised funds but is limited in availability, the Fund may receive a lower allocation than may be desired by its portfolio managers or no allocation if it is determined that the investment is more appropriate for a different Apollo-advised fund because of its investment mandate. Investment opportunities may be allocated on a basis other than pro rata to the extent it is done in good faith and does not, or is not reasonably expected to, result in an improper disadvantage or advantage to one participating Apollo-advised fund as compared to another participating Apollo-advised fund.

In the event that investment opportunities are allocated among the Fund and other Apollo-advised funds, the Adviser may not be able to structure the Fund’s investment portfolio in the manner desired. Although the Adviser endeavors to allocate investment opportunities in a fair and equitable manner, it is possible that the Fund may not be given the opportunity to participate in certain investments made by other Apollo-advised funds or portfolio managers affiliated with the Adviser. Furthermore, the Fund and the other Apollo-advised funds may make investments in securities where the prevailing trading activity may make impossible the receipt of the same price

 

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or execution on the entire volume of securities purchased or sold by it and such other Apollo-advised funds. When this occurs, the various prices may be averaged, and the Fund will be charged or credited with the average price. Thus, the effect of the aggregation may operate on some occasions to the Fund’s disadvantage. In addition, under certain circumstances, the Fund may not be charged the same commission or commission equivalent rates in connection with a bunched or aggregated order.

It is possible that other Apollo-advised funds may make investments in the same or similar securities at different times and on different terms than the Fund. From time to time, the Fund and the other Apollo-advised funds may make investments at different levels of an issuer’s capital structure or otherwise in different classes of an issuer’s securities. Such investments may inherently give rise to conflicts of interest or perceived conflicts of interest between or among the various classes of securities that may be held by such entities. Conflicts may also arise because portfolio decisions regarding the Fund may benefit such other Apollo-advised funds. For example, the sale of a long position or establishment of a short position by the Fund may impair the price of the same security sold short by (and therefore benefit) one or more Apollo-advised funds, and the purchase of a security or covering of a short position in a security by the Fund may increase the price of the same security held by (and therefore benefit) one or more Apollo-advised funds. In these circumstances the Adviser and its affiliates will seek to resolve each conflict in a manner that is fair to the various clients involved in light of the totality of the circumstances. In some cases the resolution may not be in the Fund’s best interests.

The Adviser is paid a fee based on a percentage of the Fund’s managed assets, which include leverage. The Adviser may have a conflict of interest in deciding whether to cause the Fund to incur leverage or to invest in more speculative investments or financial instruments, thereby potentially increasing the assets of the Fund and, accordingly, the fees received by the Adviser. Certain other Apollo-advised funds pay the Adviser or its affiliates performance-based compensation, which could create an incentive for the Adviser or an affiliate to favor such investment fund or account over the Fund.

The Adviser and its clients may pursue or enforce rights with respect to an issuer in which the Fund has invested, and those activities may have an adverse effect on the Fund. As a result, prices, availability, liquidity and terms of the Fund’s investments may be negatively impacted by the activities of the Adviser or its clients, and transactions for the Fund may be impaired or effected at prices or terms that may be less favorable than would otherwise have been the case.

Non-U.S. Securities Risk

The Fund may invest in securities of non-U.S. issuers. These investments involve certain risks not prevalent in domestic investments and may experience more rapid and extreme changes in value than investments in securities of U.S. companies. Markets for these investments in foreign countries often are not as developed, efficient or liquid as similar markets in the United States, and therefore the prices of non-U.S. securities may be more volatile. Certain foreign countries may impose restrictions on the ability of issuers of non-U.S. securities to make payments of principal and interest to investors located outside the country, whether from currency blockage or otherwise. In addition, the Fund will be subject to risks associated with adverse political and economic developments in foreign countries, including sanctions, seizure or nationalization of foreign deposits, different legal systems and laws relating to creditors’ rights and the potential inability to enforce legal judgments, all of which could cause the Fund to lose money on its investments in non-U.S. securities. Generally, there is less readily available and reliable information about non-U.S. issuers due to less rigorous disclosure or accounting standards and regulatory practices. Because non-U.S. securities may trade on days when the Fund’s Common Shares are not traded on an exchange, the market value or NAV of the Fund’s shares can change at times when the Fund’s Common Shares cannot be sold. Investments in so-called “emerging markets” (or lesser developed countries) are particularly speculative and entail all of the risks of investing in non-U.S. securities but to a heightened degree. Compared to developed countries, emerging market countries may have relatively unstable governments, economies based on only a few industries and securities markets that trade a small number of securities. Securities issued by companies located in emerging market countries tend to be especially volatile and may be less liquid than securities traded in developed countries.

 

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The ability of a foreign sovereign issuer to make timely payments on its debt obligations will also be strongly influenced by the sovereign issuer’s balance of payments, including export performance, its access to international credit facilities and investments, fluctuations of interest rates and the extent of its foreign reserves. The cost of servicing external debt generally will also be adversely affected by rising international interest rates, as many external debt obligations bear interest at rates that are adjusted based upon international interest rates.

Other Investment Company Risk

As a shareholder in an investment company, the Fund will bear its ratable share of that investment company’s expenses and would also remain subject to payment of the Fund’s investment management fees and other expenses with respect to the assets so invested. The Fund’s shareholders would therefore be subject to duplicative expenses to the extent the Fund invests in other investment companies. The investment companies that the Fund invests in may also use leverage, which would cause the Fund’s investment in such investment companies to be subject to greater risk and volatility.

Liquidity Risk

The Fund generally considers “illiquid securities” to be securities that cannot be sold within seven days in the ordinary course of business at approximately the value used by the Fund in determining its NAV. The Fund may not be able to readily dispose of such securities at prices that approximate those at which the Fund could sell the securities if they were more widely-traded and, as a result of that illiquidity, the Fund may have to sell other investments or engage in borrowing transactions if necessary to raise cash to meet its obligations. Limited liquidity can also affect the market price of securities, thereby adversely affecting the Fund’s NAV and ability to make dividend distributions.

Some credit instruments are not readily marketable and may be subject to restrictions on resale. These instruments generally are not listed on any national securities exchange and no active trading market may exist for the credit instruments in which the Fund may invest. When a secondary market exists, if at all, the market for some credit instruments may be subject to irregular trading activity, wide bid/ask spreads and extended trade settlement periods.

Structured Products Risk

The Fund may invest in structured products, including, without limitation, CLOs, CDOs, asset-backed securities, structured notes and credit-linked notes. Holders of structured products bear risks of the underlying investments, index or reference obligation and are subject to counterparty risk. The Fund has not adopted any percentage limitation on the amount of assets it may invest in structured products.

The Fund may have the right to receive payments only from the structured product and generally does not have direct rights against the issuer or the entity that sold the assets to be securitized. While certain structured products enable the investor to acquire interests in a pool of securities without the brokerage and other expenses associated with directly holding the same securities, investors in structured products generally pay their share of the structured product’s administrative and other expenses. Although it is difficult to predict whether the prices of indices and securities underlying structured products will rise or fall, these prices (and, therefore, the prices of structured products) will be influenced by the same types of political and economic events that affect issuers of securities and capital markets generally. If the issuer of a structured product uses shorter term financing to purchase longer term securities, the issuer may be forced to sell its securities at below market prices if it experiences difficulty in obtaining short-term financing, which may adversely affect the value of the structured products owned by the Fund.

Certain structured products may be thinly traded or have a limited trading market. CLOs are typically privately offered and sold. As a result, investments in CLOs may be characterized by the Fund as illiquid

 

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securities. In addition to the general risks associated with debt securities, CLOs carry additional risks, including, but not limited to: (i) the possibility that distributions from collateral securities will not be adequate to make interest or other payments, (ii) the quality of the collateral may decline in value or default, (iii) the possibility that the investments in CLOs are subordinate to other classes or tranches of the CLOs and (iv) the complex structure of the security may not be fully understood at the time of investment and may produce disputes with the issuer or unexpected investment results.

Investments in structured products involve risks, including credit risk and market risk. When the Fund’s investments in structured products (such as CDOs, CLOs and asset backed securities) are based upon the movement of one or more factors, including currency exchange rates, interest rates, reference bonds (or loans) and/or stock indices, depending on the factor used and the use of multipliers or deflators, changes in interest rates and movement of any factor may cause significant price fluctuations. Additionally, changes in the reference instrument or security may cause the interest rate on a structured product to be reduced to zero and any further changes in the reference instrument may then reduce the principal amount payable on maturity of the structured product. Structured products may be less liquid than other types of securities and more volatile than the reference instrument or security underlying the product.

Inflation/Deflation Risk

Inflation risk is the risk that the value of certain assets or income from the Fund’s investments will be worth less in the future as inflation decreases the value of money. As inflation increases, the real value of investments and distributions can decline. In addition, during any periods of rising inflation, the dividend rates or borrowing costs associated with the Fund’s use of leverage would likely increase, which would tend to further reduce returns to shareholders. Deflation risk is the risk that prices throughout the economy decline over time—the opposite of inflation. Deflation may have an adverse effect on the creditworthiness of issuers and may make issuer defaults more likely, which may result in a decline in the value of the Fund’s portfolio.

Derivatives Risks

Swap Agreements. Whether the Fund’s use of swap agreements will be successful in furthering its investment objectives will depend on the Adviser’s ability to correctly predict whether certain types of investments are likely to produce greater returns than other investments. Because they are two party contracts and because they may have terms of greater than seven days, some swap agreements may be considered by the Fund to be illiquid. Moreover, the Fund bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty. The Fund may seek to reduce this risk to some extent by entering into a transaction only if the counterparty meets the Adviser’s current credit standards for over-the-counter (“OTC”) option counterparties. Swap agreements also bear the risk that the Fund will not be able to meet its payment obligations to the counterparty. Swap transactions may involve substantial leverage. The ability to use swaps and other Derivatives, and the extent of such investments, is limited by the Investment Company Act and the rules thereunder.

Credit Default Swap Risk. The protection “buyer” in a credit default contract may be obligated to pay the protection “seller” an up front payment or a periodic stream of payments over the term of the contract provided generally that no credit event on a reference asset has occurred. If a credit event occurs, the seller generally must pay the buyer the “par value” (full notional value) of the swap in exchange for an equal face amount of deliverable obligations of the reference asset described in the swap, or the seller may be required to deliver the related net cash amount, if the swap is cash settled. The value of a credit default swap may be highly volatile, whether or not a credit event occurs. These changes in value, which may be significant, may materially affect the Fund’s NAV and the market price for the Fund’s Common Shares.

Swaptions. Depending on the terms of the particular option agreement, the Fund generally will incur a greater degree of risk when it writes a swaption than it will incur when it purchases a swaption. When the Fund

 

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purchases a swaption, it risks losing only the amount of the premium it has paid should it decide to let the option expire unexercised. When the Fund writes a swaption, upon exercise of the option, the Fund will become obligated according to the terms of the underlying agreement.

Credit-Linked Securities. Like an investment in a bond, investments in credit-linked securities represent the right to receive periodic income payments (in the form of distributions) and payment of principal at the end of the term of the security. However, these payments are conditioned on the issuer’s receipt of payments from, and the issuer’s potential obligations to, the counterparties to the Derivative instruments and other securities in which the issuer invests. For instance, the issuer may sell one or more credit default swaps, under which the issuer would receive a stream of payments over the term of the swap agreements provided that no event of default has occurred with respect to the referenced debt obligation upon which the swap is based. If a default occurs, the stream of payments may stop and the issuer would be obligated to pay the counterparty the par value (or other agreed upon value) of the referenced debt obligation. This, in turn, would reduce the amount of income and principal that the Fund would receive. The Fund’s investments in these instruments are indirectly subject to the risks associated with Derivative instruments, including, among others, credit risk and leverage risk. There may be no established trading market for these securities and they may constitute illiquid investments.

Options. The purchase or sale of options is a highly specialized activity which involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. The purchase of options involves the risk that the premium and transaction costs paid by the Fund in purchasing an option will be lost as a result of unanticipated movements in prices of the securities on which the option is based. The sale of an option potentially involves unlimited risk, as the price of an underlying security may continue to appreciate (in the case of a call option). Imperfect correlation between the options and securities markets may detract from the effectiveness of any attempt to use options for hedging purposes. Options transactions may result in significantly higher transaction costs and portfolio turnover for the Fund.

There is no assurance that a liquid secondary market on an options exchange will exist for any particular option at any particular time, and for some options, no secondary market on an exchange or elsewhere may exist. If the Fund is unable to effect a closing sale transaction with respect to options on securities that it has purchased, it would have to exercise the option in order to realize any profit and would incur transaction costs upon the purchase and sale of the underlying securities. The hours of trading for options may not conform to the hours during which the underlying securities are traded. To the extent that the options markets close before the markets for the underlying securities, significant price and rate movements can take place in the underlying markets that cannot be reflected in the options markets.

Indexed and Inverse Securities. Certain indexed and inverse securities have greater sensitivity to changes in interest rates or index levels than other securities and the Fund’s investment in such instruments may decline significantly in value if interest rates or index levels move in a way the Adviser does not anticipate.

General Risks Associated with Derivatives. Derivatives may be used for hedging purposes, as well as a form of leverage or for speculative purposes to seek to enhance returns, including speculation on changes in credit spreads, interest rates or other characteristics of the market, individual securities or groups of securities. If the Fund invests in a Derivative for speculative purposes, the Fund will be fully exposed to the risks of loss of that Derivative, which may sometimes be greater than the Derivative’s cost. The use of Derivatives may involve substantial leverage. The use of Derivatives may subject the Fund to the following risks, including but not limited to:

 

   

Credit Risk. The risk that the counterparty in a Derivative transaction will be unable to honor its financial obligation to the Fund, or the risk that the reference entity in a credit default swap or similar Derivative will not be able to honor its financial obligations. Certain participants in the Derivatives market, including larger financial institutions, have experienced significant financial hardship and deteriorating credit conditions. If the Fund’s counterparty to a Derivative transaction experiences a loss

 

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of capital, or is perceived to lack adequate capital or access to capital, it may experience margin calls or other regulatory requirements to increase equity. Under such circumstances, the risk that a counterparty will be unable to honor its obligations may be substantially increased.

 

   

Currency Risk. The risk that changes in the exchange rate between two currencies will adversely affect the value (in U.S. dollar terms) of a Derivative.

 

   

Leverage Risk. The risk associated with certain types of Derivative strategies that relatively small market movements may result in large changes in the value of an investment. Certain investments or trading strategies that involve leverage can result in losses that greatly exceed the amount originally invested.

 

   

Liquidity Risk. The risk that securities may be difficult or impossible to sell at the time that the seller would like or at the price that the seller believes the security is worth. This risk is heightened to the extent the Fund engages in OTC Derivative transactions. Although both OTC and exchange-traded Derivatives markets may experience a lack of liquidity, OTC non-standardized Derivative transactions are generally less liquid than exchange-traded instruments. The illiquidity of the Derivatives markets may be due to various factors, including concentration of market participants in a particular segment of the market, disorderly markets, limitations on deliverable supplies, the participation of speculators, government regulation and intervention, and technical and operational or system failures. In addition, the liquidity of a secondary market in an exchange-traded Derivative contract may be adversely affected by “daily price fluctuation limits” established by the exchanges that limit the amount of fluctuation in an exchange-traded contract price during a single trading day. Once the daily limit has been reached in the contract, no trades may be entered into at a price beyond the limit, thus preventing the liquidation of open positions. Prices have in the past moved beyond the daily limit on a number of consecutive trading days. If it is not possible to close an open Derivative position entered into by the Fund, the Fund would continue to be required to make daily cash payments of variation margin in the event of adverse price movements. In such a situation, if the Fund has insufficient cash, it may have to sell portfolio securities to meet daily variation margin requirements at a time when it may be disadvantageous to do so. The absence of liquidity may also make it more difficult for the Fund to ascertain a market value for such instruments. The inability to close options and futures positions also could have an adverse impact on the Fund’s ability to effectively hedge its portfolio.

 

   

Correlation Risk. The risk that changes in the value of a Derivative will not match the changes in the value of the portfolio holdings that are being hedged or of the particular market or security to which the Fund seeks exposure.

 

   

Index or Issuer Risk. If the Derivative is linked to the performance of an index, it will be subject to the risks associated with changes in that index. If the index changes, the Fund could receive lower interest payments or experience a reduction in the value of the Derivative to below what the Fund paid. Certain indexed securities, including inverse securities (which move in an opposite direction to the index), may create leverage, to the extent that they increase or decrease in value at a rate that is a multiple of the changes in the applicable index. To the extent the Fund is the seller of a credit default swap or similar Derivative, the Fund will be subject to the risk that the reference issuer will be unable to honor its financial obligations. An issuer’s actual or perceived financial hardship, deteriorating credit conditions, or loss of capital will increase the Fund’s risks where it is a seller of a credit default swap.

Investments in Equity Securities Incidental to Investments in Credit Instruments

From time to time, the Fund also may invest in or hold common stock and other equity securities, typically incidental to the purchase or ownership of a credit instrument or in connection with a reorganization of an issuer. Investments in equity securities incidental to investments in credit instruments entail certain risks in addition to those associated with the credit investments. Because equity is the residual value of an issuer after all claims and other interests, it is inherently more risky than the bonds or credit instruments of the same issuer. The value of

 

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the equity securities may be affected more rapidly, and to a greater extent, by company-specific developments and general market conditions. These risks may increase fluctuations in the Fund’s NAV. The Fund frequently may possess material non-public information about an issuer as a result of its ownership of a credit instrument of an issuer. Because of prohibitions on trading in securities while in possession of material non-public information, the Fund might be unable to enter into a transaction in a security of the issuer when it would otherwise be advantageous to do so.

Lender Liability Risk

A number of U.S. judicial decisions have upheld judgments of borrowers against lending institutions on the basis of various evolving legal theories, collectively termed “lender liability.” Generally, lender liability is founded on the premise that a lender has violated a duty (whether implied or contractual) of good faith, commercial reasonableness and fair dealing, or a similar duty owed to the borrower or has assumed an excessive degree of control over the borrower resulting in the creation of a fiduciary duty owed to the borrower or its other creditors or shareholders. Because of the nature of its investments, particularly its investments in Senior Loans, the Fund may 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 lender or bondholder (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 inequitable conduct to the detriment of the other creditors, (iii) engages in fraud with respect to, or makes misrepresentations to, the other creditors, or (iv) uses its influence as a stockholder to dominate or control a borrower to the detriment of other creditors of the borrower, a court may elect to subordinate the claim of the offending lender or bondholder to the claims of the disadvantaged creditor or creditors, a remedy called “equitable subordination.”

Because affiliates of, or persons related to, the Adviser may hold equity or other interests in obligors of the Fund, the Fund could be exposed to claims for equitable subordination or lender liability or both based on such equity or other holdings.

Foreign Currency Risk

Because the Fund may invest in securities denominated or quoted in currencies other than the U.S. dollar, changes in foreign currency exchange rates may affect the value of securities in the Fund and the unrealized appreciation or depreciation of investments. Currencies of certain countries may be volatile and therefore may affect the value of securities denominated in such currencies, which means that the Fund’s NAV could decline as a result of changes in the exchange rates between foreign currencies and the U.S. dollar. The Adviser may, but is not required to, elect for the Fund to seek to protect itself from changes in currency exchange rates through hedging transactions depending on market conditions. The Fund may incur costs in connection with the conversions between various currencies. In addition, certain countries may impose foreign currency exchange controls or other restrictions on the repatriation, transferability or convertibility of currency.

Repurchase Agreements and Reverse Repurchase Agreements Risk

Subject to its investment objectives and policies, the Fund may invest in repurchase agreements. Repurchase agreements are transactions in which the Fund purchases securities or other obligations from a bank or securities dealer (or its affiliate) and simultaneously commits to resell them to the counterparty at an agreed-upon date or upon demand and at a price reflecting a market rate of interest unrelated to the coupon rate or maturity of the purchased obligations. The Fund maintains custody of the underlying obligations prior to their repurchase, either through its regular custodian or through a special “triparty” custodian or sub-custodian that maintains separate accounts for both the Fund and its counterparty. The obligation of the counterparty to pay the repurchase price on the date agreed to or upon demand is, in effect, secured by such obligations.

 

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Repurchase agreements carry certain risks not associated with direct investments in securities, including a possible decline in the market value of the underlying obligations. If their value becomes less than the repurchase price, plus any agreed-upon additional amount, the counterparty must provide additional collateral so that at all times the collateral is at least equal to the repurchase price plus any agreed-upon additional amount. The difference between the total amount to be received upon repurchase of the obligations and the price that was paid by the Fund upon acquisition is accrued as interest and included in its net investment income. Repurchase agreements involving obligations other than U.S. Government securities (such as commercial paper and corporate bonds) may be subject to special risks and may not have the benefit of certain protections in the event of the counterparty’s insolvency. In the event of the bankruptcy or other default of a seller of a repurchase agreement, the Fund could experience both delays in liquidating the underlying securities and losses, including (1) possible decline in the value of the underlying security during the period in which the Fund seeks to enforce its rights thereto; (2) possible lack of access to income on the underlying security during this period; and (3) expenses of enforcing its rights.

Reverse repurchase agreements involve the sale of securities held by the Fund subject to the Fund’s agreement to repurchase the securities at an agreed-upon date or upon demand and at a price reflecting a market rate of interest. Reverse repurchase agreements are a form of leverage and may be subject to the Fund’s limitation on borrowings or restrictions on Derivatives and are generally entered into only with banks or securities dealers or their affiliates.

Reverse repurchase agreements involve the risk that the buyer of the securities sold by the Fund might be unable to deliver them when the Fund seeks to repurchase. In the event that the buyer of securities under a reverse repurchase agreement files for bankruptcy or becomes insolvent, the buyer, trustee or receiver may receive an extension of time to determine whether to enforce the Fund’s obligation to repurchase the securities, and the Fund’s use of the proceeds of the reverse repurchase agreement may effectively be restricted pending such decision.

U.S. Government Debt Securities Risk

U.S. Government debt securities generally do not involve the credit risks associated with investments in other types of debt securities, although, as a result, the yields available from U.S. Government debt securities are generally lower than the yields available from other securities. Like other debt securities, however, the values of U.S. Government securities change as interest rates fluctuate. Fluctuations in the value of portfolio securities will not affect interest income on existing portfolio securities but will be reflected in the Fund’s NAV. Because the magnitude of these fluctuations will generally be greater at times when the Fund’s average maturity is longer, under certain market conditions the Fund may, for temporary defensive purposes, accept lower current income from short-term investments rather than investing in higher yielding long-term securities.

High Portfolio Turnover Risk

The Fund may engage in active and frequent trading of its portfolio securities. High portfolio turnover (more than 100%) may result in increased transaction costs to the Fund, including brokerage commissions, dealer mark-ups and other transaction costs on the sale of securities and on reinvestment in other securities. The sale of Fund portfolio securities may result in the realization and/or distribution to shareholders of higher capital gains or losses as compared to a fund with less active trading policies. These effects of higher than normal portfolio turnover may adversely affect Fund performance.

Other Risks Relating to Fund Operations:

Key Personnel

The Adviser depends on the diligence, skill and network of business contacts of its senior management. For a description of the senior management team, see “The Portfolio Managers.” The Adviser will also depend, to a

 

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significant extent, on its access to the investment professionals and partners of its affiliates and the information and deal flow generated by the investment professionals of its affiliates in the course of their investment and portfolio management activities. The senior management of the Adviser will, among other things, evaluate, negotiate, structure and monitor Fund investments. The Fund’s future success will depend on the continued service of the senior management team of the Adviser. As with any managed fund, the Adviser may not be successful in selecting the best-performing securities or investment techniques for the Fund’s portfolio and the Fund’s performance may lag behind that of similar funds. The investment professionals associated with the Adviser are actively involved in other investment activities not concerning the Fund and will not be able to devote all of their time to the Fund’s business and affairs. The departure of any of the senior managers of the Adviser, or of a significant number of the investment professionals or partners of the Adviser’s affiliates, could have a material adverse effect on the Fund’s ability to achieve its investment objectives. Individuals not currently associated with the Adviser may become associated with the Fund and the performance of the Fund may also depend on the experience and expertise of such individuals. In addition, there is no assurance that the Adviser will remain the Fund’s investment adviser or that the Adviser will continue to have access to the investment professionals and partners of its affiliates and the information and deal flow generated by the investment professionals of its affiliates.

Risks Associated with Fund Distribution Policy

The Fund intends to make regular distributions. Currently, in order to maintain a relatively stable level of distributions, the Fund may pay out less than all of its net investment income, pay out undistributed income from prior months, return capital in addition to current period net investment income or borrow money to fund distributions. The distributions for any full or partial calendar year might not be made in equal amounts, and one distribution may be larger than the other. The Fund will make a distribution only if authorized by the Fund’s Board of Directors and declared by the Fund out of assets legally available for these distributions. Under certain circumstances, the Fund may pay a distribution that may result in a return of capital, which would reduce the Fund’s NAV and, over time, potentially increase the Fund’s expense ratio. If the Fund distributes a return of capital, it means that the Fund is returning to shareholders a portion of their investment rather than making a distribution that is funded from the Fund’s earned income or other profits. The Fund’s distribution policy may be changed at any time by the Board of Directors.

If the Fund elects to issue preferred stock and/or notes or other forms of indebtedness, its ability to make distributions to its common shareholders will be limited by the asset coverage requirements and other limitations imposed by the Investment Company Act and the Fund’s lenders.

Inadequate Return

No assurance can be given that the returns on the Fund’s investments will be commensurate with the risk of investment in the Fund nor can the Fund assure you that the Adviser will be able to find enough appropriate investments that meet the Fund’s investment criteria. Fund investments may be highly speculative and aggressive, therefore, an investment in Fund securities may not be suitable for someone with a low risk tolerance. Investors should not commit money to the Fund unless they have the resources to sustain the loss of their entire investment in the Fund.

Anti-Takeover Provisions

The Fund’s charter and Bylaws contain provisions that may delay, defer or prevent a transaction or a change in control that might otherwise be in the best interests of the shareholders. Such provisions may discourage outside parties from seeking control of the Fund or seeking to change the composition of its Board of Directors, which could result in shareholders not having the opportunity to realize a price greater than the current market price for their shares at some time in the future. The Fund, for example, has opted-in to the Maryland Control

 

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Share Acquisition Act (the “MCSAA”). The election to become subject to the MCSAA limits the ability of holders of “control shares” to vote those shares above various threshold levels that start at 10% unless the other shareholders of the Fund reinstate or approve those voting rights at a meeting of shareholders as provided in the MCSAA. The Bylaws for the Fund provide that the provisions of the MCSAA do not apply to the voting rights of the holders of any shares of preferred stock of the Fund (but only with respect to such preferred stock). The above description of the MCSAA is only a high-level summary and does not purport to be complete. Investors should refer to the actual provisions of the MCSAA and the Fund’s Bylaws for more information, including definitions of key terms, various exclusions and exemptions from the statute’s scope, and the procedures by which shareholders may approve the reinstatement of voting rights to holders of “control shares.”

The Fund’s charter classifies the Fund’s Board of Directors into three classes, serving staggered three-year terms, and authorizes the Board of Directors to cause the Fund to issue additional shares of common stock. The Board of Directors also may classify or reclassify any unissued shares of common stock into one or more classes or series of stock, including preferred stock, may set the terms of each class or series and may authorize the Fund to issue the newly-classified or reclassified shares. The Board of Directors may, without any action by the Fund’s shareholders, amend the Fund’s charter from time to time to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that the Fund has the authority to issue.

The Fund is also subject to Subtitle 8 of Title 3 of the Maryland General Corporation Law (“MGCL”). Subtitle 8 permits Maryland corporations with a class of equity securities registered under the Exchange Act and at least three independent directors to elect to be subject, by provision in its charter or Bylaws or a resolution of its board of directors and notwithstanding any contrary provision in the charter or Bylaws, to any or all of the following five provisions: a classified board; a two-thirds shareholder vote requirement for removing a director; a requirement that the number of directors be fixed only by vote of the directors; a requirement that a vacancy on the board be filled only by the remaining directors for the remainder of the full term of the class of directors in which the vacancy occurred; and a requirement that the request of the holders of at least a majority of all votes entitled to be cast shall be necessary to call a special meeting of shareholders. Through provisions in the Fund’s charter and Bylaws, some unrelated to Subtitle 8, the Fund includes provisions classifying the Board of Directors in three classes serving staggered three-year terms; requiring the affirmative vote of the holders of not less than two-thirds of all of the votes entitled to be cast on the matter for the removal of any Director from the Board, which removal is allowed only for cause; vesting in the Board the exclusive power to fix the number of directorships, subject to limitations set forth in the Fund’s charter and Bylaws, and filling vacancies; and requiring the written request of shareholders entitled to cast not less than a majority of all votes entitled to be cast at such meeting to call a shareholder–initiated special meeting.

*    *    *    *    *

The above discussion of the various risks associated with the Fund and its investments disclose the principal risks to which an investment in the Fund is expected to be subject based on its current investment program. The degree to which the Fund may be subject to these or other risks may change over time. In addition, as market, economic, political, tax and other factors change or evolve over time, an investment in the Fund may be subject to risk factors not foreseeable at this time or able to be described in this prospectus at this time. Prospective investors should read this entire prospectus and consult with their own advisors before deciding whether to invest in the Fund.

 

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LISTING OF SHARES

The Fund’s Common Shares are listed on the NYSE under the ticker symbol “AIF” and are required to meet the NYSE’s ongoing listing requirements.

INVESTMENT RESTRICTIONS

Fundamental Investment Restrictions

Please refer to the section of the Fund’s most recent annual report on Form N-CSR entitled “Fund Investment Objectives, Policies and Risks—AIF Fundamental Investment Restrictions”, which is incorporated by reference herein, for a discussion of the Fund’s fundamental investment restrictions.

Non-Fundamental Investment Restrictions

The Fund is also subject to the following non-fundamental restrictions and policies, which may be changed by the Board of Directors without the approval of the holders of a majority of the outstanding Common Shares or preferred shares, if any. The Fund may not:

 

  1.

change or alter the Fund’s investment objectives;

 

  2.

purchase securities of other investment companies, except to the extent that such purchases are permitted by applicable law, including any exemptive orders issued by the SEC; or

 

  3.

purchase any securities on margin except as may be necessary in connection with transactions described under “The Fund’s Investments” above and except that the Fund may obtain such short-term credit as may be necessary for the clearance of purchases and sales of portfolio investments (the deposit or payment by the Fund of initial or variation margin in connection with swaps, forward contracts, and futures contracts and options thereon is not considered the purchase of a security on margin).

Compliance with any policy or limitation of the Fund that is expressed as a percentage of assets is determined at the time of purchase of portfolio securities. The policy will not be violated if these limitations are exceeded because of changes in the market value or investment rating of the Fund’s assets or if a borrower distributes equity securities incident to the purchase or ownership of a Senior Loan or other credit instrument or in connection with a reorganization of a borrower. The Fund interprets its policies with respect to borrowing and lending to permit such activities as may be lawful for the Fund, to the full extent permitted by the Investment Company Act or by exemption from the provisions therefrom pursuant to an exemptive order of the SEC. The asset coverage requirements for debt securities or preferred stock required by Section 18(a) of the Investment Company Act will be applied as required by Section 18 of the Act, as interpreted from time to time by the SEC or other administrative or judicial bodies with jurisdiction over the Fund.

The Fund has adopted a non-fundamental investment policy to invest, under normal circumstances, at least 80% of the Fund’s Managed Assets in credit instruments and investments with similar economic characteristics. The Fund will provide shareholders with written notice at least 60 days prior to changing this non-fundamental policy of the Fund, unless such change was previously approved by shareholders. If, subsequent to an investment, the 80% requirement is no longer met, the Fund’s future investments will be made in a manner that will bring the Fund into compliance with this policy. The policies expressed in this prospectus as limitations on the amount of assets the Fund may invest in particular types of securities (such as the limitations on investments in foreign securities, Derivatives, illiquid securities or securities rated CCC or Caa or lower) are non-fundamental policies of the Fund and may be changed at any time by the Board of Directors without the approval by shareholders.

 

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MANAGEMENT OF THE FUND

Board of Directors

The Board of Directors of the Fund is responsible for the overall supervision of the Fund and performs the various duties imposed on the directors of investment companies by the Investment Company Act and applicable Maryland Law.

Biographical Information. Please refer to the section of the Fund’s definitive proxy statement dated April 20, 2022 on Schedule 14A for the annual meeting of the Fund’s Common Shareholders entitled “Proposal 1: Election of Directors – Information About Each Director’s and Nominee’s Experience, Qualifications, Attributes or Skills” which is incorporated by reference herein, for a discussion of the Fund’s Directors, their principal occupations and other affiliations during the past five years, the number of funds in the complex of funds advised by the Adviser (“Apollo Funds”) that they oversee, and other information about the Board.

Biographical Information of the Executive Officers of the Fund. Please refer to the section of the Fund’s definitive proxy statement dated April  20, 2022 on Schedule 14A for the annual meeting of the Fund’s Common Shareholders entitled “Proposal 1: Election of Directors – Executive Officers of the Funds” which is incorporated by reference herein, for a discussion of the Fund’s Executive Officers, their positions held and length of service with the Fund, and their principal occupations for the last five years.

Stock Ownership. Please refer to the section of the Fund’s definitive proxy statement dated April 20, 2022 on Schedule 14A for the annual meeting of the Fund’s Common Shareholders entitled: “Proposal 1: Election of Directors” for information relating to each Director’s share ownership in the Fund and in all Apollo Funds.

The Directors who are not currently “interested persons” (as the term is defined in the Investment Company Act) of the Fund (e.g., each Director except for Mr. Borden and Mr. Cohen) (“Independent Directors”) or their immediate family members had no interest in the Adviser or any person directly or indirectly controlling, controlled by, or under common control with the Adviser as of December 31, 2021.

Compensation of Directors and Executive Officers

The compensation paid by the Fund to the Independent Directors for the fiscal year ended December 31, 2021 is set forth below. No compensation was paid by the Fund to the Interested Director. No executive officers of the Fund received compensation from the Fund in excess of $60,000.

 

Independent Director    Aggregate
Compensation
from the Fund
     Pension or
Retirement
Benefits
Accrued
as
Part of
Fund
Expenses
     Total
Compensation
from the Fund
and Apollo
Fund
Complex Paid
to Each
Director
 

Robert L. Borden*

   $ 30,000      $ —        $ 59,000  

Glenn N. Marchak**

   $ 35,750      $ —        $ 70,500  

Carl J. Rickertsen

   $ 29,750      $ —        $ 59,500  

Todd J. Slotkin

   $ 30,750      $ —        $ 60,500  

Elliot Stein, Jr.

   $ 30,750      $ —        $ 60,500  

 

*

Mr. Borden is not a member of the Board’s Nominating and Corporate Governance Committee or Audit Committee. On March 8, 2021, Apollo Global Management, Inc. (“AGM”) announced that it had entered into a definitive agreement with Athene Holding Ltd. (“Athene”) to merge in an all-stock transaction (the “Merger”). Under the terms of the Merger, each outstanding Class A common share of Athene was exchanged for a fixed ratio of shares of AGM common stock. As a shareholder of Athene, Mr. Borden

 

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  received shares of AGM common stock as a result of the closing of the Merger on January 1, 2022. As of that date, he became an “interested person,” of the Fund as defined in the Investment Company Act. Mr. Borden will remain an interested person so long as he knowingly has any direct or indirect beneficial interest in AGM common stock. No compensation will be paid by the Fund to Mr. Borden while he remains an interested person of the Fund
**

Audit Committee Chair.

The Fund reimbursed the Independent Directors a total of $0 for out-of-pocket expenses incurred in attending the Board meetings and meetings of Committees thereof, for the year ended December 31, 2021.

Board Structure and Role of the Board of Directors in Risk Oversight. Please refer to the sections of the Fund’s definitive proxy statement dated April  20, 2022 on Schedule 14A for the annual meeting of the Fund’s Common Shareholders entitled “Proposal 1: Election of Directors – Board Composition and Leadership Structure,” “– Boards’ Oversight Role,” “– Audit Committee,” “ – Audit Committee Report,” and “– Nominating and Corporate Governance Committee” which are incorporated by reference herein, for a discussion of the Board composition and leadership structure and the Board’s committees, other than as noted below.

During the Fund’s fiscal year ended December 31, 2021, the Board’s Audit Committee and Nominating and Corporate Governance Committee met the following number of times:

 

Number of Audit Committee Meetings

     Number of Nominating and Corporate
Governance Committee Meetings
4      2

 

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AGREEMENTS WITH ADVISER

The Investment Adviser

Apollo Credit Management, LLC serves as the Fund’s investment adviser. The principal executive offices of the Adviser are located at 9 West 57th Street, New York, NY 10019. As of December 31, 2021, the Adviser had approximately $850.4 million of assets under management.

The Adviser provides certain investment advisory, management and administrative services to the Fund pursuant to an investment advisory and management agreement with the Fund (the “Investment Advisory Agreement”). The Fund and the Adviser have also entered into an Administrative Services and Reimbursement Agreement pursuant to which the Adviser will provide certain administrative services, personnel and facilities to the Fund and perform operational services necessary for the operation of the Fund not otherwise provided by other Fund service providers. Pursuant to this Agreement, the Fund will reimburse the Adviser at cost, at the Adviser’s request, for certain costs and expenses incurred by the Adviser that are necessary for the administration and operation of the Fund.

The table below sets forth information about the total fees paid by the Fund to the Adviser under the Administrative Services and Reimbursement Agreement, and the amounts waived by the Adviser, for the periods indicated:

 

Fiscal Year Ended December 31,

   Paid to the Adviser      Waived by the Adviser  
2021    $ 864,157      $ 213,399  
2020    $ 720,121      $ 0  
2019    $ 801,110      $ 0  

The Adviser may elect from time to time, in its sole discretion, to waive its right to reimbursement or its receipt of the advisory fee. If the Adviser elects to waive its compensation, such action may have a positive effect on the Fund’s performance or yield. The Adviser is under no obligation to waive its fees or rights to reimbursement, may elect not to do so, or may decide to waive its compensation periodically.

Investment Advisory Agreement and Advisory Fee

The Investment Advisory Agreement provides that, subject to the supervision of the Fund’s Board of Directors, the Adviser is responsible for management and oversight of the Fund’s portfolio. The Investment Advisory Agreement obligates the Adviser to provide investment advisory, management and certain other services to the Fund. Unless earlier terminated as described below, the Investment Advisory Agreement will remain in effect from year to year if approved annually (a) by the Board of Directors of the Fund or by a majority of the outstanding shares of the Fund and (b) by a majority of the Directors who are not parties to such contract or interested persons (as defined in the Investment Company Act) of any such party. The Investment Advisory Agreement is not assignable and may be terminated without penalty on 60 days’ prior written notice at the option of either party thereto or by the vote of the shareholders of the Fund. The Investment Advisory Agreement provides that in the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of its obligations thereunder, the Fund may indemnify the Adviser, under certain circumstances, against liabilities arising from the Adviser’s performance of its duties under the Investment Advisory Agreement.

For its services, the Fund pays the Adviser a monthly fee at the annual rate of 1.0% of the average daily value of the Fund’s Managed Assets. “Managed Assets” means the total assets of the Fund (including any assets attributable to any preferred shares that may be issued or to money borrowed (including the liquidation preference of preferred shares) or notes issued by the Fund) minus the sum of the Fund’s accrued liabilities, including accrued interest and accumulated dividends (other than liabilities for money borrowed or notes issued). Fees for any partial month are appropriately pro rated. During periods when the Fund is using leverage, if any, the fees paid to the Adviser will be higher than if the Fund did not use leverage because the fees paid are calculated on the basis of the Fund’s Managed Assets, which includes the assets purchased through leverage.

 

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The table below sets forth information about the total management fees paid by the Fund to the Adviser under the Investment Advisory Agreement, and the amounts waived by the Adviser, for the periods indicated:

 

Fiscal Year Ended December 31,

   Paid to the Adviser      Waived by the Adviser  
2021    $ 3,578,216      $ —    
2020    $ 3,331,651      $ —    
2019    $ 3,670,685      $ —    

A discussion regarding the basis of the Board of Directors’ approval of the Investment Advisory Agreement is available in the Fund’s semi-annual report to shareholders for the fiscal period ended June 30 of each year.

 

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THE PORTFOLIO MANAGERS

Unless otherwise indicated, the information below is provided as of the date of this prospectus.

The following individuals (the “Portfolio Managers”) are jointly and primarily responsible for the day-to-day implementation of the Fund’s investment strategy.

Joseph Moroney, CFA. Mr. Moroney is a Senior Partner in Credit and currently serves as Co-Head of the Global Corporate Credit platform of Apollo Capital Management, L.P. and serves as the President and Chief Investment Officer of the Fund. Mr. Moroney joined Apollo Global Management, Inc. (along with its subsidiaries “Apollo”) in 2008 as the Head of Apollo’s Global Performing Credit Group. Prior to joining Apollo, Mr. Moroney was employed by Aladdin Capital Management where he served as the Senior Managing Director of its Leveraged Loan Group. Mr. Moroney’s investment management career spans 27 years, with experience at various leading financial services firms including Merrill Lynch Investment Managers and MetLife Insurance. Mr. Moroney graduated from Rutgers University with a BS in Ceramic Engineering and serves on the Board of Overseers of the Rutgers Foundation. He is a Chartered Financial Analyst and a member of the NYSSA.

James Vanek. Mr. Vanek is a Partner and the Co-Head of Apollo’s Global Performing Credit business and serves as a Portfolio Manager of the Fund. Prior to joining Apollo in 2008, Mr. Vanek was an Associate Director, Loan Sales & Trading in the Leveraged Finance group at Bear Stearns. He is a board member of the Loan Syndications and Trading Association, a leading advocate for the U.S. syndicated loan market. Mr. Vanek graduated from Duke University with a BS in Economics and a BA in Computer Science, and received his MBA from Columbia Business School.

Other Accounts Managed. As of December 31, 2021, the Portfolio Managers were also primarily responsible for the day-to-day management of the following accounts:

 

Name of

Portfolio Manager

   Total
No. of
Accounts
Managed
     Total Assets(1)      No. of Accounts
where Advisory
Fee is Based on
Performance
     Total Assets in
Accounts where
Advisory Fee is
Based on
Performance(2)(3)
 

Joseph Moroney

           

Registered Investment Companies:

     1      $ 0.389 Billion        —          —    

Other Pooled Investment Vehicles:

     2      $ 6.770 Billion        1      $ 0.168 Billion  

Other Accounts:

     —          —          —          —    

James Vanek

           

Registered Investment Companies:

     1      $ 0.389 Billion        —          —    

Other Pooled Investment Vehicles:

     3      $ 15.206 Billion        2      $ 2.682 Billion  

Other Accounts:

     10      $ 4.712 Billion        1      $ 0.800 Billion  

 

(1)

Total assets represent assets under management as defined by Apollo Global Management, Inc., which includes unfunded commitments.

(2)

Represent the assets under management of the accounts managed that generate incremental fees in addition to advisory fees.

(3)

Joseph Moroney is the Co-Head of the Global Corporate Credit group which had AUM of approximately $350.1 billion as of December 31, 2021. The disclosures above only reflect those accounts where the Portfolio Managers have direct day-to-day responsibilities for oversight of the funds.

 

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Compensation. The Adviser’s financial arrangements with its portfolio managers, its competitive compensation and its career path emphasis at all levels reflect the value senior management places on key resources. Compensation may include a variety of components and may vary from year to year based on a number of factors. The principal components of compensation include base compensation and discretionary compensation.

Base Compensation. Generally, portfolio managers receive an annual salary that is consistent with the market rate of annual salaries paid to similarly situated investment professionals.

Discretionary Compensation. Portfolio managers also receive discretionary compensation generally consisting of two components: an annual bonus and carried interest.

Annual Bonus. Generally, a portfolio manager receives an annual bonus based on such person’s individual performance, operational performance for the Apollo-advised funds for which such person serves, and such portfolio manager’s impact on the overall operating performance and potential to contribute to long-term value and growth. A portion of each annual bonus may be deferred and, at the discretion of Apollo, may be in the form of cash or equity of an Apollo entity, such as restricted stock units of Apollo Global Management, Inc.

Carried Interest. Generally, a portfolio manager receives carried interests with respect to the Apollo-advised funds for which such person serves as a portfolio manager, subject to standard terms and conditions, including vesting.

Potential Conflicts of Interests.

Actual or apparent conflicts of interest may arise when a Portfolio Manager has day-to-day management responsibilities with respect to more than one fund or other account.

Certain inherent conflicts of interest arise from the fact that the Portfolio Managers, the Adviser and its affiliates provide investment management services both to the Fund and the other Apollo-advised funds, including other funds, client accounts, proprietary accounts and any other investment vehicles that the Adviser and its affiliates may establish from time to time, in which the Fund will not have an interest. The Portfolio Managers, the Adviser and its affiliates may give advice and recommend securities to the other Apollo-advised funds that may differ from advice given to, or securities recommended or bought for, the Fund, even though their investment objectives may be the same or similar to those of the Fund.

The Adviser will seek to manage potential conflicts of interest in good faith; nonetheless, the portfolio strategies employed by the Portfolio Managers, the Adviser and its affiliates in managing the other Apollo-advised funds could conflict with the transactions and strategies employed by the Portfolio Managers in managing the Fund and may affect the prices and availability of the securities and instruments in which the Fund invests. Conversely, participation in specific investment opportunities may be appropriate, at times, for both the Fund and the other Apollo-advised funds. It is the policy of the Adviser to generally share appropriate investment opportunities (and sale opportunities) with the other Apollo-advised funds to the extent consistent with applicable legal requirements. In general, this policy will result in such opportunities being allocated pro rata among the Fund and the other Apollo-advised funds. Nevertheless, investments and/or opportunities may be allocated other than on a pro rata basis, to the extent it is done in good faith and does not, or is not reasonably expected to, result in an improper disadvantage or advantage to one participating Apollo-advised fund as compared to another participating Apollo-advised fund.

In the event investment opportunities are allocated among the Fund and the other Apollo-advised funds, the Fund may not be able to structure its investment portfolio in the manner desired. Although the Adviser endeavors to allocate investment opportunities in a fair and equitable manner, it is possible that the Fund may not be given the opportunity to participate in certain investments made by the other Apollo-advised funds or portfolio managers affiliated with the Adviser. Furthermore, the Fund and the other Apollo-advised funds may make

 

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investments in securities where the prevailing trading activity may make impossible the receipt of the same price or execution on the entire volume of securities purchased or sold by the Fund and the other Apollo-advised funds. When this occurs, the various prices may be averaged, and the Fund will be charged or credited with the average price. Thus, the effect of the aggregation may operate on some occasions to the disadvantage of the Fund. In addition, under certain circumstances, the Fund may not be charged the same commission or commission equivalent rates in connection with a bunched or aggregated order.

It is possible that other Apollo-advised funds may make investments in the same or similar securities at different times and on different terms than the Fund. From time to time, the Fund and the other Apollo-advised funds may make investments at different levels of an issuer’s capital structure or otherwise in different classes of an issuer’s securities. Such investments may inherently give rise to conflicts of interest or perceived conflicts of interest between or among the various classes of securities that may be held by such entities. Conflicts may also arise because portfolio decisions regarding the Fund may benefit the other Apollo-advised funds. For example, the sale of a long position or establishment of a short position by the Fund may impair the price of the same security sold short by (and therefore benefit) one or more Apollo-advised funds, and the purchase of a security or covering of a short position in a security by the Fund may increase the price of the same security held by (and therefore benefit) one or more Apollo-advised funds.

While these conflicts cannot be eliminated, the Adviser, when consistent with fund objectives, guidelines and other fiduciary considerations and when practicable, the Fund and the other Apollo-advised funds may hold investments in the same levels of an issuer’s capital structure in the same proportion at each level.

Although the professional staff of the Adviser will devote as much time to the management of the Fund as the Adviser deems appropriate to perform its obligations, the professional staff of the Adviser may have conflicts in allocating its time and services among the Fund and the Adviser’s other investment vehicles and accounts. The Adviser and its affiliates are not restricted from forming additional investment funds, from entering into other investment advisory relationships or from engaging in other business activities, even though such activities may be in competition with the Fund and/or may involve substantial time and resources of the Adviser and its professional staff. These activities could be viewed as creating a conflict of interest in that the time and effort of the members of the Adviser and their officers and employees will not be devoted exclusively to the business of the Fund but will be allocated between the business of the Fund and the management of the monies of other clients of the Adviser.

A conflict of interest may arise where the financial or other benefits available to a Portfolio Manager differ among the accounts that he manages. If the structure of the Adviser’s (or its affiliates’) management fee or the Portfolio Manager’s compensation differs among accounts (such as where certain accounts pay higher management fees or performance based management fees), the Portfolio Managers may be motivated to favor accounts in which they have investment interests, or in which the Adviser or its affiliates have investment interests. Similarly, the desire to maintain assets under management or to enhance a Portfolio Manager’s performance record or to derive other rewards, financial or otherwise, could influence the Portfolio Manager in affording preferential treatment to those accounts that could most significantly benefit the Portfolio Manager. For example, as reflected above, if a Portfolio Manager manages accounts that have performance fee arrangements, certain portions of his compensation will depend on the achievement of performance milestones on those accounts. The Portfolio Manager could be incented to afford preferential treatment to those accounts and thereby be subject to a potential conflict of interest.

The Fund and the Adviser have adopted compliance policies and procedures that are reasonably designed to address the various conflicts of interest that may arise for the Adviser and its staff members. However, there is no guarantee that such policies and procedures will be able to detect and prevent every situation in which an actual or potential conflict may arise.

 

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Securities Ownership. The following indicates the dollar range of beneficial ownership of Common Shares by each Portfolio Manager as of December 31, 2021:

 

Name of Portfolio Manager

   Dollar ($) Range of Common
Stock Beneficially Owned
 

Joseph Moroney

   $ 100,001 - $500,000  

James Vanek

   $ 100,001 - $500,000  

 

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CONTROL PERSONS AND PRINCIPAL SHAREHOLDERS

Except as noted below in the table, to the Fund’s knowledge, no persons owned of record 5% or more of any class of Common Shares of the Fund. The following information is provided as of May 18, 2022. A shareholder who beneficially owns 25% or more of the Fund is presumed to control the Fund and such shareholders will be able to impact the outcome of matters presented for a vote of the Fund’s shareholders.

 

Name and Address of Record Owner

   Title of Class     Percent of
Class
 

Morgan Stanley(1)

1585 Broadway

New York, NY 10036

     Common Stock (2)      10.30

First Trust Portfolios L.P.(3)

First Trust Advisors L.P.

The Charger Corporation

120 East Liberty Drive

Suite 400

Wheaton, IL 60187

     Common Stock (4)      8.24

 

(1) 

Filing reflects the securities beneficially owned, or that may be deemed to be beneficially owned, by Parametric Portfolio Associates LLC, a wholly-owned subsidiary of Morgan Stanley (together, “Morgan Stanley”).

(2) 

Information obtained from a Schedule 13G/A filed by Morgan Stanley with the SEC reporting share ownership as of January 31, 2022. Based on that filing, Morgan Stanley does not have sole voting power, but does have shared power to vote or direct the vote of 157,164 shares as well as the shared power to dispose or direct the disposition of 1,490,089 shares.

(3) 

The Charger Corporation (“Charger”) is the General Partner of both First Trust Portfolios L.P. (“FTP”) and First Trust Advisors L.P. (“FTA”). FTP acts as sponsor of certain unit investment trusts which hold Shares of the Fund. FTA, an affiliate of FTP, acts as portfolio supervisor of the unit investment trusts sponsored by FTP.

(4) 

Information obtained from a Schedule 13G/A filed by FTP, FTA and Charger with the SEC reporting share ownership as of December 31, 2021. Based on that filing, FTP, FTA and Charger do not have sole voting power, but do have shared power to vote or direct the vote of 77,826 shares as well as shared power to dispose or direct the disposition of 1,191,785 shares.

As of May 18, 2022, the Directors and officers, as a group, owned less than 1% of the Common Shares of the Fund.

 

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NET ASSET VALUE

NAV per Common Share will be determined daily generally as of 4:00 p.m. on each day the NYSE is open for trading or at such other times as the Board of Directors may determine. The NAV of the Common Shares of the Fund means the total assets of the Fund (including all securities, cash and other assets) minus the sum of the Fund’s total liabilities (including accrued expenses, dividends payable, borrowings and the liquidation value of any preferred stock) divided by the total number of Common Shares of the Fund outstanding.

The following table sets out, for the quarters indicated, the highest and lowest daily closing prices on the NYSE per Common Share and the premium to or discount from NAV, on the date of each of the high and low market prices.

 

     NYSE Market Price
Per Common Share
     NAV per Common Share on
Date of Market Price
     Premium/(Discount) on Date
of Market Price
 

During Quarter Ended

   High      Low      High      Low      High     Low  

March 31, 2022

   $  15.91      $ 13.91      $ 16.61      $ 15.75        (4.21 )%      (11.68 )% 

December 31, 2021

   $ 16.00      $ 15.29      $ 16.66      $ 16.44        (3.96 )%      (7.00 )% 

September 30, 2021

   $ 15.97      $ 15.22      $ 16.75      $ 16.73        (4.66 )%      (9.03 )% 

June 30, 2021

   $ 15.65      $ 14.87      $ 16.82      $ 16.43        (6.96 )%      (9.49 )% 

March 31, 2021

   $ 14.95      $ 14.24      $ 16.49      $ 16.33        (9.43 )%      (12.80 )% 

December 31, 2020

   $ 14.48      $ 12.51      $ 16.27      $ 15.34        (11.00 )%      (18.45 )% 

September 30, 2020

   $ 13.01      $ 12.20      $ 15.36      $ 14.66        (15.30 )%      (16.78 )% 

June 30, 2020

   $ 12.79      $ 10.42      $ 14.76      $ 12.79        (13.35 )%      (18.53 )% 

March 31, 2020

   $ 15.85      $ 8.85      $ 16.91      $ 13.15        (6.27 )%      (32.70 )% 

As of May 18, 2022, the NAV per Common Share of the Fund was $14.91 and the market price per Common Share was $12.84, representing a discount to NAV of (13.88)%.

As of May 18, 2022, the Fund has outstanding 14,464,026 Common Shares.

The Fund values its investments primarily using the mean of the bid and ask prices provided by a nationally recognized security pricing service or broker. Senior Loans, corporate notes and bonds, common stock, structured products, preferred stock and warrants are priced based on valuations provided by an approved independent pricing service or broker, if available. If market or broker quotations are not available, or a price is not available from an independent pricing service or broker, or if the price provided by the independent pricing service or broker is believed to be unreliable, the security will be fair valued pursuant to procedures adopted by the Board. In general, the fair value of a security is the amount that the Fund might reasonably expect to receive upon the sale of an asset or pay to transfer a liability in an orderly transaction between willing market participants at the reporting date. Fair value procedures generally take into account any factors deemed relevant, which may include, among others, (i) the nature and pricing history of the security, (ii) the liquidity or illiquidity of the market for the particular security, (iii) recent purchases or sales transactions for the particular security or similar securities and (iv) press releases and other information published about the issuer. In these cases, the Fund’s NAV will reflect the affected portfolio securities’ fair value as determined in the judgment of the Board or its designee instead of being determined by the market. Using a fair value pricing methodology to value securities may result in a value that is different from a security’s most recent sale price and from the prices used by other investment companies to calculate their NAV. Determination of fair value is uncertain because it involves subjective judgments and estimates. There can be no assurance that a Fund’s valuation of a security will not differ from the amount that it realizes upon the sale of such security.

 

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DISTRIBUTIONS

The Fund intends to make regular monthly cash distributions of all or a portion of its net investment income to common shareholders. The Fund intends to pay holders of Common Shares at least annually all or substantially all of its net investment income after the payment of dividends and interest, if any, owed with respect to any outstanding preferred shares and/or notes or other forms of leverage utilized by the Fund. The Fund intends to pay any capital gains distributions at least annually. If the Fund makes a long-term capital gain distribution, it will be required to allocate such gain between the Common Shares and any preferred shares issued by the Fund in proportion to the total dividends paid to each class for the year in which the income is realized.

The U.S. federal income tax treatment and characterization of the Fund’s distributions may vary significantly from time to time because of the varied nature of the Fund’s investments. In light of the Fund’s investment policies, the Fund anticipates that the Investment Company Act will require it to accompany each monthly distribution with a statement setting forth the estimated source (as between net income, capital gains and return of capital) of the distribution made. The Fund will indicate the proportion of its capital gains distributions that constitute long-term and short-term gains annually. The ultimate U.S. federal income tax characterization of the Fund’s distributions made in a calendar or fiscal year cannot finally be determined until after the end of that taxable year. As a result, there is a possibility that the Fund may make total distributions during a calendar or taxable year in an amount that exceeds the Fund’s net investment company taxable income and net capital gains for the relevant taxable year. In such situations, if a distribution exceeds the Fund’s current and accumulated earnings and profits (as determined for U.S. federal income tax purposes), a portion of each distribution paid with respect to such taxable year would generally be treated as a tax-free return of capital reducing the amount of a shareholder’s tax basis in such shareholder’s shares. When you sell your shares in the Fund, the amount, if any, by which your sales price exceeds your basis in the Fund’s shares is gain subject to tax. Because a return of capital reduces your basis in the shares, it will increase the amount of your gain or decrease the amount of your loss when you sell the shares, all other things being equal. To the extent that the amount of any return of capital distribution exceeds the shareholder’s remaining basis in such shareholder’s shares, the excess will be treated as gain from a sale or exchange of the shares.

Various factors will affect the level of the Fund’s income, including the asset mix, the average maturity of the Fund’s portfolio and default rates, the amount of leverage utilized by the Fund, if any, and any use of hedging activities by the Fund. To permit the Fund to maintain a more stable monthly distribution, the Fund may from time to time distribute less than the entire amount of income earned in a particular period. The undistributed income would be available to supplement future distributions. As a result, the distributions paid by the Fund for any particular monthly period may be more or less than the amount of income actually earned by the Fund during that period. The Board of Directors may elect to change the Fund’s distribution policy at any time.

The distributions for any full or partial year might not be made in equal amounts, and one distribution may be larger than the other. The Fund will make a distribution only if authorized by the Fund’s Board of Directors and declared by the Fund out of assets legally available for these distributions. The Fund may pay a special distribution at the end of each calendar year, if necessary, to comply with U.S. federal income tax requirements. Under certain circumstances, the Fund may pay one or more distributions that may result in a return of capital to shareholders, which would reduce the Fund’s NAV and, over time, potentially increase the Fund’s expense ratio. If the Fund distributes a return of capital, it means that the Fund is returning to shareholders a portion of their investment rather than making a distribution that is funded from the Fund’s earned income or other profits.

Section 19(b) of the Investment Company Act and Rule 19b-1 thereunder generally limit the Fund to one long-term capital gain distribution per year, subject to certain exceptions.

 

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DIVIDEND REINVESTMENT PLAN

Please refer to the section of the Fund’s most recent annual report on Form N-CSR entitled “Dividend Reinvestment Plan” which is incorporated by reference herein, for a discussion of the Fund’s dividend reinvestment plan.

PORTFOLIO TRANSACTIONS

Subject to policies established by the Board of Directors, the Adviser is primarily responsible for the execution of the Fund’s portfolio transactions and the allocation of brokerage. The Fund has no obligation to deal with any dealer or group of dealers in the execution of transactions in portfolio securities of the Fund. When possible, the Fund deals directly with the dealers who make a market in the securities involved except in those circumstances where better prices and execution are available elsewhere. It is the policy of the Fund to obtain what are believed to be the best results in conducting portfolio transactions, taking into account such factors as price (including the applicable dealer spread or commission), the size, type and difficulty of the transaction involved, the firm’s general execution and operations facilities and the firm’s risk in positioning the securities involved. The cost of portfolio securities transactions of the Fund primarily consists of dealer or underwriter spreads and brokerage commissions. While reasonable competitive spreads or commissions are sought, the Fund will not necessarily be paying the lowest spread or commission available.

Subject to obtaining the best net results, dealers who provide supplemental investment research (such as quantitative and modeling information assessments and statistical data and other similar services) to the Adviser may receive orders for transactions by the Fund. Information so received will be in addition to and not in lieu of the services required to be performed by the Adviser and the expenses of the Adviser will not necessarily be reduced as a result of the receipt of such supplemental information. Supplemental investment research obtained from such dealers might be used by the Adviser in servicing all of its accounts and such research might not be used by the Adviser in connection with the Fund.

Section 11(a) of the Exchange Act generally prohibits members of the U.S. national securities exchanges from executing exchange transactions for their affiliates and institutional accounts that they manage unless the member (i) has obtained prior express authorization from the account to effect such transactions; (ii) at least annually furnishes the account with a statement setting out the aggregate compensation received by the member in effecting such transactions; and (iii) complies with any rules the SEC has prescribed with respect to the requirements of clauses (i) and (ii).

Securities may be held by, or be appropriate investments for, the Fund as well as other funds or investment advisory clients of the Adviser or its affiliates. Because of different investment objectives or other factors, a particular security may be bought for one or more clients of the Adviser or its affiliates when one or more clients of the Adviser or its affiliates are selling the same security. If purchases or sales of securities arise for consideration at or about the same time that would involve the Fund or other clients or funds for which the Adviser or its affiliates act as investment advisers, transactions in such securities will be made, insofar as feasible, for the respective funds and clients in a manner deemed equitable to all. To the extent that transactions on behalf of more than one client of the Adviser or its affiliates during the same period may increase the demand for securities being purchased or the supply of securities being sold, there may be an adverse effect on price.

Information about the brokerage commissions paid by the Fund, including commissions paid to affiliates, for the last three fiscal years, is set forth in the following table:

 

Fiscal Year Ended December 31,

   Aggregate Brokerage
Commissions Paid
     Commissions Paid to Affiliates  

2021

   $ 1,769      $  —    

2020

   $ —        $  —    

2019

   $ —        $  —    

 

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For the fiscal year ended December 31, 2021, the brokerage commissions paid to affiliates by the Fund represented 0% of the aggregate brokerage commissions paid and involved 0% of the dollar amount of transactions involving payment of commissions during the year.

The following table shows the dollar amount of brokerage commissions paid to brokers for providing third-party research services and the approximate dollar amount of the transactions involved for the fiscal year ended December 31, 2021. The provision of third-party research services was not necessarily a factor in the placement of all brokerage business with such brokers.

 

Amount of Commissions Paid to Brokers  for
Providing Research Services

   Amount of Brokerage Transactions Involved

$ —

   $—

As of December 31, 2021, the Fund did not hold securities of its “regular brokers or dealers” (as defined in Rule 10b-1 under the Investment Company Act).:

 

Regular Broker or Dealer

   Debt (D) /
Equity (E)
     Aggregate Holdings
(000’s)
 

N/A

     —          —    

Portfolio Turnover

Under normal circumstances, the Fund expects to incur portfolio turnover at a rate of more than 100% in any fiscal year. The Fund’s portfolio turnover rate is calculated by dividing the lesser of purchases or sales of portfolio securities for the particular fiscal year by the monthly average of the value of the portfolio securities owned by the Fund during the particular fiscal year. A high portfolio turnover rate generally results in greater transaction costs, which are borne directly by the Fund, and also has certain tax consequences for shareholders.

The Fund’s portfolio turnover rate for the fiscal years ended December 31, 2021 and December 31, 2020 was 137.5% and 96.4%, respectively.

 

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CONFLICTS OF INTEREST

The Apollo organization, including the Adviser and its affiliated investment advisory firms (collectively, the “Apollo”), will be subject to certain conflicts of interest with respect to the services the Adviser provides to the Fund. These conflicts will arise primarily from activities of Apollo that may conflict with the Fund’s activities. You should be aware that individual conflicts will not necessarily be resolved in favor of the Fund. This discussion of conflicts does not purport to be a complete enumeration or explanation of the actual and potential conflicts involved in an investment in the Fund or that may arise in the future.

Apollo sponsors, manages or advises and will continue to sponsor, manage or advise other investment funds, partnerships, limited liability companies, corporations or similar investment vehicles, clients or the assets or investments for the account of any client, or separate account for which, in each case, the Adviser or one or more of its affiliates acts as general partner, manager, managing member, investment adviser, sponsor or in a similar capacity (collectively, including the Fund, “Apollo Clients”). Apollo will continue to sponsor, manage or advise new Apollo Clients, whether alone or partnering with others, and will continue to maintain, develop, expand or monetize its investment and advisory and related businesses. Certain current Apollo Clients have, and certain future Apollo Clients are expected to have, investment mandates that overlap, either substantially or in part, with that of the Fund, and Apollo expects that the universe of potential investments and other activities of Apollo’s business could overlap with the investments and activities of the Fund, each of which, as a result, is expected to create conflicts of interest. For clarification, Apollo Clients will not include (a) any alternative investment vehicle, special purpose vehicle, subsidiary of the Fund, vehicles established to structure a co-investment, master, joint or commingled account or investment vehicle, joint venture or other person through which the Fund can make an investment or group of investments or (b) any investment and any portfolio investment or investment of any other Apollo Client or Apollo and its subsidiaries, in each case subject to the Investment Company Act, and unless the Adviser determines in its sole discretion that such person should be treated as an Apollo Client under the circumstances.

The following discussion sets forth certain potential conflicts of interest that should be carefully evaluated before making an investment in the Fund.

Allocation of Investment Opportunities. Certain inherent conflicts of interest arise from the fact that (i) Apollo provides investment advisory and/or management services to more than one Apollo Client, (ii) Apollo Clients have one or more overlapping investment strategies and (iii) all or a portion of an investment opportunity may be allocated to Apollo in accordance with Apollo’s allocation policies and procedures. Also, the investment strategies employed by Apollo for current and future Apollo Clients could conflict with each other and adversely affect the prices and availability of other securities or instruments held by, or potentially considered for, one or more other Apollo Clients. If participation in specific investment opportunities is appropriate for more than one Apollo Client, participation in such opportunities will be allocated pursuant to Apollo’s allocation policies and procedures and the applicable governing documents of the relevant Apollo Clients. There can be no assurance, however, that the application of such allocation policies and procedures will result in the allocation of a specific investment opportunity to the Fund or that the Fund will participate in all investment opportunities falling within its investment objectives or be allocated its investment interest. In addition, the Adviser may in certain situations choose to consult with or obtain the consent of the Board of Directors with respect to any specific conflict of interest.

Apollo is committed to allocating investment opportunities in a manner that, over time, is on a fair and equitable basis, and Apollo has established policies and procedures to guide the determination of such allocations. Subject to applicable law, including the Investment Company Act, and the Board of Directors’ oversight, the Adviser will have the power to resolve, or consent to the resolution of, conflicts of interest on behalf of the Fund.

 

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Apollo’s allocation policies and procedures have established: (i) the allocations committee of Apollo Global Management, Inc. (“AGM” and such committee, the “AGM Allocations Committee”) to, among other things, review: (a) questions regarding an Apollo Client’s mandate; (b) potential distressed control investments; (c) any opportunities involving potential third-party co-investors; and (d) the actions taken by subcommittees to the AGM Allocations Committee (the “Allocations Sub-Committees”) and conflicts of interest that cannot be resolved by the Allocations Sub-Committees; and (ii) allocation guidelines on which such committees generally base their allocation decisions.

Generally, an investment opportunity will be allocated to an Apollo Client if the opportunity reasonably falls within such Apollo Client’s mandate or is otherwise deemed suitable as determined by the relevant portfolio manager, investment committee, the AGM Allocations Committee or an Allocations Sub-Committee. If an investment opportunity falls within the mandate of, or is otherwise deemed suitable for, two or more Apollo Clients and it is not possible to fully satisfy the investment interest of all such Apollo Clients, the investment opportunity generally will be allocated pro rata based on the size of each Apollo Client’s original investment interest. The size of each Apollo Client’s investment interest will be determined generally based on each Apollo Client’s available capital or NAV (or, in certain circumstances, the available capital or NAV ascribed to the applicable strategy). However, a number of additional other factors can influence other allocation decisions, including:

 

  (a)

the relative actual or potential exposure of any particular Apollo Client to the type of investment opportunity in terms of its existing investment portfolio;

 

  (b)

the investment objective of such Apollo Client;

 

  (c)

cash availability, suitability, instructions from an Apollo Client, permitted leverage and available financing for the investment opportunity (including taking into account the levels/rates that would be required to obtain an appropriate return);

 

  (d)

the likelihood of current income;

 

  (e)

the size, liquidity and duration of the investment opportunity;

 

  (f)

the seniority of loan and other capital structure criteria;

 

  (g)

with respect to an investment opportunity originated by a third party, the relationships of a particular Apollo Client (or the portfolio manager) to such third party;

 

  (h)

tax considerations;

 

  (i)

regulatory considerations;

 

  (j)

supply or demand for an investment opportunity at a given price level;

 

  (k)

an Apollo Client’s risk or investment concentration parameters (including parameters such as geography, industry, issuer, volatility, leverage, liability duration or weighted average life, asset class type or other risk metrics);

 

  (l)

whether the investment opportunity is a follow-on investment;

 

  (m)

whether the vehicle is in the process of fundraising, is open to redemptions (in which case notions of NAV and available capital can be subjectively adjusted to account for anticipated inflows or redemptions) or is close to the end of its investment period (for closed-ended funds);

 

  (n)

whether an Apollo Client’s economic exposure has been swapped to, or otherwise assumed by, one or more other parties;

 

  (o)

the governing documents of an Apollo Client (which could include provisions pursuant to which an Apollo Client is entitled to receive an allocation of a certain type of an investment opportunity on a priority basis, which could result in the Fund not participating in any such investment or participating to a lesser extent); and

 

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  (p)

such other criteria as are reasonably related to a reasonable allocation of a particular investment opportunity to one or more Apollo Clients (e.g., in the case of an Apollo Client ramp-up period or when incubating a particular investment strategy or product or the investment period or term of an Apollo Client).

In determining whether an investment opportunity falls within an Apollo Client’s mandate, the relevant portfolio manager, investment committee, the AGM Allocation Committee or an Allocations Sub-Committee, as appropriate, will take into consideration that:

 

  (i)

multiple Apollo Clients have investment objectives that overlap to greater or lesser degrees;

 

  (ii)

the applicable legal documents of each Apollo Client contemplate, to greater or lesser degrees, the obligation to offer such Apollo Client investment opportunities that fall within its investment objective or mandate;

 

  (iii)

Apollo endeavors to not systematically disadvantage any Apollo Client;

 

  (iv)

the investment objective of a particular Apollo Client could change over time;

 

  (v)

the ultimate character of an investment opportunity (i.e., its risk/reward profile) will generally not become clear before a great deal of diligence and analysis has been completed by the portfolio manager pursuing such investment opportunity;

 

  (vi)

investment opportunities that are outcomes of heavily negotiated transactions are capable of being structured in a variety of ways, each of which presents its own particular risk/reward profile, tax, regulatory, legal and other considerations; and

 

  (vii)

an Apollo Client could have more than one mandate.

To the extent that the Fund’s participation in an investment opportunity that is otherwise suitable for the Fund and other Apollo Clients would cause the investment to become subject to requirements and restrictions of any law, rule or regulation that could have an adverse impact on any or all participating Apollo Clients (or underlying investors) in such investment opportunity, Apollo is authorized to exclude the Fund as a whole.

The Fund is party to an exemptive order from the SEC permitting the Adviser to negotiate the terms of co-investment transactions with certain of affiliates, including investment funds, including the Fund, subject to the conditions included therein (the “Order”). Under the terms of the Order, a “required majority” (as defined in Section 57(o) of the Investment Company Act) of the Fund’s Independent Directors must be able to reach certain conclusions in connection with a co-investment transaction, including that (1) the terms of the proposed transaction are reasonable and fair to the Fund and its shareholders and do not involve overreaching of the Fund or its shareholders on the part of any person concerned and (2) the transaction is consistent with the interests of the shareholders and is consistent with the Board of Directors’ approved criteria. In certain situations where co-investment with one or more funds managed by the Adviser or its affiliates is not covered by the Order, the personnel of the Adviser or its affiliates will need to decide which fund will proceed with the investment. Such personnel will make these determinations based on allocation policies and procedures, as discussed above, which are designed to reasonably ensure that investment opportunities are allocated fairly and equitably among affiliated funds over time and in a manner that is consistent with applicable laws, rules and regulations. The Order is subject to certain terms and conditions so there can be no assurance that the Fund will be permitted to co-invest with certain of its affiliates other than in the circumstances currently permitted by regulatory guidance and the Order.

Apollo’s investment allocation policies and procedures can be revised by Apollo at any time without notice to, or consent from, the shareholders.

Investments with Respect to Which Other Apollo Clients May Benefit. The Fund can invest in joint ventures and can invest in Platform Investments (defined below), which investment activities may give rise to

 

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future investment opportunities (e.g., a forward commitment or other option acquired by the Fund or a relationship developed in connection with the making of an investment by the Fund) from which one or more other Apollo Clients may benefit. The Adviser has an incentive to take such future opportunities and/or benefits into consideration when making investment decisions for the Fund.

In addition, the Investment Company Act may limit the Fund’s ability to undertake certain transactions with its affiliates that are registered under the Investment Company Act or regulated as business development companies under the Investment Company Act. As a result of these restrictions, the Fund may be prohibited from executing “joint” transactions with such affiliates, which could include investments in the same portfolio company (whether at the same or different times). These limitations may limit the scope of investment opportunities that would otherwise be available to the Fund.

Platform Investments. In addition, as Apollo continues to seek additional sourcing channels for investment opportunities for the Fund and other Apollo Clients, it is also anticipated that there will be opportunities for investments in various companies or businesses, including, among others, financial services companies and investment advisory/management businesses, that would be allocated to Apollo (and not Apollo Clients, including those participating in Apollo’s origination platform) as part of developing investment sourcing opportunities for the platform, including as part of such underlying investment, a commitment to fund or otherwise contemporaneously participate in such sourcing opportunities by Apollo Clients, including those participating in Apollo’s origination platform (such investments, “Platform Investments”). To the extent applicable, any Platform Investments will be made in compliance with the Order.

From time to time, Apollo recruits an existing or newly formed management team to pursue a new “platform” opportunity that is expected to lead to investment opportunities for Apollo Clients, including the Fund. In other cases, a new Platform Investment may be formed and used to recruit an existing or newly formed management team to build such Platform Investment through acquisitions and organic growth. Finally, in order to augment the Fund team’s capabilities and diligence techniques and, in some instances, to operate or service the Fund’s investments, Apollo may partner with, including through joint ventures, Platform Investments or by making investments in, high-quality operators with significant expertise and the requisite skills to operate or service the Fund’s assets. The structure of each Platform Investment and the engagement of each operating partner will vary, including in respect of whether a management or operating team’s services are exclusive to the platform and whether members of the management team are employed directly by such platform or indirectly through a separate management company established to manage such platform, and such structures are subject to change throughout an investment’s hold period, for example, in connection with potential restructurings, refinancings and/or dispositions. Members of the management or operating team for a Platform Investment could include former Apollo personnel, industry advisors, senior advisors and Apollo advisors. The management or operating team of a Platform Investment (or one or more members thereof) may also provide the same or similar services with respect to other Platform Investments of the Fund and/or one or more other Apollo Clients (including predecessor funds and successor funds thereto and co-investment vehicles) or provide the same or similar services for assets owned by third parties. The Fund may realize a Platform Investment (in whole or in part) through sale of the platform or a disposition of assets held through the platform. The services provided by the platform’s management and operating team could be similar to, and overlap with, services provided by Apollo to the Fund or to other Apollo Clients, and the services may be provided exclusively to the Platform Investments.

As with the Fund’s other portfolio investments, in respect of all Platform Investments, the Fund will bear the expenses of the management team and/or portfolio entity, as the case may be, including, for example, any overhead expenses, management fees or other fees, employee compensation, diligence expenses or other expenses in connection with backing the management team and/or the build out of the platform entity. Such expenses may be borne directly by the Fund pursuant to the Advisory Agreement or Administrative Reimbursement Agreement, as applicable, or indirectly through operational expenses of the Platform Investment. In each case subject to the Investment Company Act, the compensation of management of a platform portfolio

 

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entity may include management fees (or other fees, including, for example, origination fees) or interests in the profits of the portfolio entity (or other entity in the holdings structure of the Platform Investment), including profits realized in connection with the disposition of an asset and other performance-based compensation. None of the compensation or expenses described above will be offset against any management fees in respect of the Fund and will be borne by the applicable Platform Investment or by the Fund as Fund expenses pursuant to the Advisory Agreement and Administrative Reimbursement Agreement.

Co-Investments Generally and Co-Investors. The Adviser may, consistent with the Order, offer the opportunity to co-invest alongside the Fund to one or more Co-Investors (as described below). The Adviser can, in its sole discretion, offer the opportunity to co-invest alongside the Fund to (i) other Apollo Clients, (ii) any limited partner of an Apollo Client (or any of its beneficial owners or any other client or account of its advisor or consultant), (iii) management or employees of the relevant portfolio company or issuer to which the Fund invests (a “Portfolio Company”), consultants and advisors with respect to such Portfolio Company or pre-existing investors or other persons associated with such Portfolio Company, (iv) any joint venture partner or operating partner, (v) any alternative investment fund or business sponsored, managed or advised by persons other than Apollo or (vi) any other persons or entities, including persons or entities whom the Adviser believes will be of benefit to the Fund or one or more Portfolio Companies or who may provide a strategic, sourcing or similar benefit to Apollo, any Apollo Client, the Fund, a Portfolio Company or one or more of their respective affiliates due to industry expertise, regulatory expertise, end-user expertise or otherwise (including credit or other investment funds sponsored by persons other than Apollo in so-called “club deals” through joint ventures or other entities). “Co-Investors” and any similar terminology are intended to refer to investment opportunities that are allocated to the Fund based on its investment strategy and objectives and with respect to which the Adviser has, in each case, in its sole discretion, determined that it is appropriate to offer the opportunity to co-invest alongside the Fund to one or more such Co-Investors. Some of the Co-Investors with whom the Fund may co-invest have pre-existing investments with Apollo, and the terms of such pre-existing investments may differ from the terms upon which such persons may invest with the Fund in such investment.

As an investment company registered under the Investment Company Act, the Fund is subject to certain limitations relating to co-investments and joint transactions with affiliates, which likely will in certain circumstances limit the Fund’s ability to make investments or enter into other transactions alongside Apollo Clients. There can be no assurance that such regulatory restrictions will not adversely affect the Fund’s ability to capitalize on attractive investment opportunities. However, subject to the Investment Company Act and any applicable co-investment order issued by the SEC, the Fund may co-invest with Apollo Clients (including co-investment or other vehicles in which the Firm or its personnel invest and that co-invest with such Apollo Clients) in investments that are suitable for the Fund and one or more of such Apollo Clients. Even if the Fund and any such Apollo Clients and/or co-investment or other vehicles invest in the same securities, conflicts of interest may still arise.

Co-investment Allocations. The Adviser can allocate co-investment opportunities among Co-Investors in any manner it deems appropriate in its sole discretion taking into account those factors that it deems relevant under the circumstances, including:

 

  (i)

the character or nature of the co-investment opportunity (e.g., its size, structure, geographic location, relevant industry, tax characteristics, timing and any contemplated minimum commitment threshold);

 

  (ii)

the level of demand for participation in such co-investment opportunity;

 

  (iii)

the ability of a prospective Co-Investor to analyze or consummate a potential co-investment opportunity, including on an expedited basis;

 

  (iv)

certainty of funding and whether a prospective Co-Investor has the financial resources to provide the requisite capital;

 

  (v)

the investing objectives and existing portfolio of the prospective Co-Investor;

 

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  (vi)

as noted above, whether a prospective Co-Investor is a private fund or similar person or business sponsored, managed or advised by persons other than Apollo;

 

  (vii)

the reporting, public relations, competitive, confidentiality or other issues that may also arise as a result of the co-investment;

 

  (viii)

the legal or regulatory constraints to which the proposed investment is expected to give rise or that are applicable to a prospective Co-Investor;

 

  (ix)

the ability of the prospective Co-Investor to make commitments to invest in other Apollo Clients (including contemporaneously with the applicable co-investment);

 

  (x)

Apollo’s own interests;

 

  (xi)

the prospective Co-Investor can provide a strategic, sourcing or similar benefit to Apollo, the Fund, a Portfolio Company or one or more of their respective affiliates due to industry expertise, regulatory expertise, end-user expertise or otherwise;

 

  (xii)

the prospective Co-Investor’s existing or prospective relationship with Apollo; and

 

  (xiii)

with respect to the Fund, the restrictions set forth in the Order.

With respect to allocations influenced by Apollo’s own interests, there may be a variety of circumstances where Apollo will be incentivized to afford co-investment opportunities to one Co-Investor over another. For example, depending on the fee structure of the co-investment opportunity, if any, Apollo may be economically incentivized to offer such co-investment opportunity to certain Co-Investors over others based on its economic arrangement with such Co-Investors in connection with the applicable co-investment opportunity or otherwise. Additionally, Apollo may be contractually incentivized or obligated to offer certain Co-Investors a minimum amount of co-investment opportunities or otherwise bear adverse economic consequences for failure to do so, which consequences may include, a loss of future economic rights, including carried interest or other incentive arrangements.

Apollo may allocate co-investment opportunities to prospective Co-Investors that ultimately decline to participate in the offered co-investment. In such instance, if another Co-Investor is not identified, the certain Apollo Clients may be unable to consummate an investment, or may end up holding a larger portion of an investment than Apollo had initially anticipated. To the extent that this happens, the Apollo Client may have insufficient capital to pursue other opportunities or may not achieve its intended portfolio diversification.

The Fund may co-invest together with other Apollo Clients in some or all of the Fund’s investment opportunities, consistent with the Order. Apollo may also offer co-investment opportunities to Apollo co-investment vehicles (which may include participation by Apollo professionals and employees and other Apollo Clients or entities and other key advisors/relationships of Apollo). In determining the allocation of such co-investment opportunities, Apollo considers a multitude of factors, including its own interest in investing in the opportunity. With respect to the Fund, any co-investment expenses shall be paid consistent with the Order. With respect to other Co-Investors that committed to participate in a particular unconsummated co-investment, such Co-Investors shall bear their proportionate share of any fees, costs or expenses related to such unconsummated co-investment, such as reverse break-up fees or broken deal expenses.

Co-Investment Expenses. The Adviser may, but will not be obligated to, endeavor to cause unaffiliated Co-Investors that committed to participate in a particular unconsummated co-investment to bear their proportionate share of any fees, costs or expenses related to such unconsummated co-investment, such as reverse break-up fees or broken deal expenses, subject to the Order and the Investment Company Act.

Fees and Carried Interest Payable with Respect to Co-Investments. Apollo can in its discretion: (i) receive performance-based compensation (such as carried interest or performance allocations), management fees or other

 

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similar fees from Co-Investors, and Apollo may make an investment, or otherwise participate, in any vehicle formed to structure a co-investment to facilitate, among other things, receipt of such performance-based compensation, management fees or other similar fees; and (ii) collect customary fees in connection with actual or contemplated investments that are the subject of such co-investment arrangements, and any such fees will be retained by, and be for the benefit of, the Adviser or any of its respective affiliates with respect to certain Co-Investors. Any such carried interest, incentive allocation, management fees or other similar fees received from Co- Investors with respect to any co-investment may (or may not) differ from those charged to the Fund. Additionally, in those circumstances where the applicable Co-Investors include one or more members of a Portfolio Company’s management group, the Co-Investors who are members of such management group may receive compensation relating to the investment in such Portfolio Company, including incentive compensation arrangements.

Allocation of Expenses. Apollo will from time to time incur fees, costs and expenses on behalf of the Fund, one or more other Apollo Clients and itself. To the extent such fees, costs and expenses are incurred for the account or for the benefit of the Fund, one or more other Apollo Clients and itself, the Fund, such other Apollo Clients and Apollo will typically bear an allocable portion of any such fees, costs and expenses (subject to the terms of the Advisory Agreement and Administrative Reimbursement Agreement) in such manner as the Adviser in good faith determines. In most cases, Apollo’s Expense Allocation Steering Committee, which typically meets on a quarterly basis, is responsible for the overall expense allocations and the related methodologies for Apollo and Apollo Clients. Although Apollo endeavors to allocate such fees, costs and expenses in good faith over time, there can be no assurance that such fees, costs and expenses will in all cases be allocated appropriately. Notwithstanding the foregoing, Apollo may in the future develop policies and procedures to address the allocation of expenses that differ from its current practice.

Overhead Allocation. Apollo has in-house accounting, legal, compliance, tax, administrative, operational, finance, risk, reporting, technology, investor servicing and other types of personnel or employees that provide support to Apollo Clients (including the Fund) and their respective subsidiaries and potential and existing portfolio investments on an ongoing basis. These employees assist with, among other things, the legal, compliance, tax, administrative, operational, finance, risk, reporting, technology, investor servicing and other functions of the Adviser, its affiliates and Apollo Clients (including the formation of, and capital raising for, Apollo Clients) and their respective acquisition, due diligence, holding, maintenance, financing, restructuring and disposition of investments, including, without limitation, mergers and acquisitions, financing and accounting, legal, tax and operational support and risk, litigation and regulatory management and compliance. The performance of such functions by Apollo employees could be in addition to or as an alternative to the outsourcing of any such services to third party service providers at market rates, including entities and persons regularly used by Apollo and its affiliates, Apollo Clients and their respective potential and existing portfolio investments. All fees, costs and expenses incurred by Apollo (including allocable compensation of such personnel or employees and related overhead otherwise payable by Apollo in connection with their employment, such as rent and benefits) in connection with services performed by personnel or employees of the Adviser or its affiliates that constitute services for or in respect of the Fund, its subsidiaries and its existing and potential portfolio investments, may be allocable to and borne by the Fund pursuant to the Advisory Agreement or Administrative Reimbursement Agreement, as applicable. Such allocations to the Fund will be based on any of the following methodologies (or any combination thereof), among others: (i) requiring personnel to periodically allocate their historical time spent with respect to the Fund or the Adviser, approximating the proportion of certain personnel’s time spent with respect to the Fund (which will be tracked on a weekly or biweekly basis), and, in each case, allocating their compensation and allocable overhead based on such approximations of time spent, or charging such approximations of time spent at market rates, (ii) the assessment of an overall dollar amount (based on a fixed fee or percentage of assets under management) that the Adviser determines in good faith represents a fair recoupment of expenses and for such services, or (iii) any other methodology determined by the Adviser in good faith to be appropriate and practicable under the circumstances. Further, the methodology utilized for one personnel group could be different from the methodology utilized by another personnel group, and different methodologies may be utilized, including within a single personnel group, at different times or in

 

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determining different types of allocations (such as allocations among Apollo Clients, on the one hand, and allocations as between Apollo Clients and Apollo affiliates, on the other hand). Determining such charges based on approximate allocations, rather than time recorded on an hourly or similar basis (which will not be undertaken), could result in the Fund being charged a different amount (including relative to another Apollo Client), which could be higher or lower, than would be the case under a different methodology. In addition, any methodology (including the choice thereof), as well as the application of any approximations it entails, involves inherent conflicts between the interests of the Fund, on the one hand, and any other Apollo Client or Apollo affiliate to which all or a portion of the relevant personnel’s time would otherwise be charged, on the other hand, and could result in incurrence of greater expenses by the Fund than would be the case if such services were provided by third parties at market rates. Further, some Apollo Clients’ governing documents could restrict or preclude the allocation of any of the foregoing amounts to such Apollo Clients, in which case such Apollo Clients could bear a lesser amount of such expenses relative to the Fund or any other Apollo Client, or not bear any such expenses at all.

Restrictions on Transactions Due to Other Apollo Businesses. From time to time, various potential and actual conflicts of interest will arise from the overall advisory, investment and other activities of Apollo and its personnel. Apollo will endeavor to resolve conflicts of interest with respect to investment opportunities in a manner that it deems equitable to the extent possible under the prevailing facts and circumstances. Apollo can invest, on its own behalf, in securities and other instruments that would be appropriate for, held by or fall within the investment guidelines of an Apollo Client. Apollo can give advice or take action for its own account that can differ from, conflict with or be adverse to advice given or action taken for Apollo Clients. These activities will, in certain circumstances, adversely affect the prices and availability of other business opportunities, transactions, securities or instruments held by, available to or potentially considered for one or more Apollo Clients. Potential conflicts of interest also arise due to the fact that Apollo has investments in some Apollo Clients but not in others, or has different levels of investment in the various Apollo Clients, and that the Apollo Clients bear different levels of fees and incentive compensation in favor of Apollo.

Apollo, together with Apollo Clients, engages in a broad range of business activities and invests in businesses and assets whose operations can be substantially similar to, and/or competitive with, the business and assets in which Apollo Clients have invested. The performance and operation of such competing businesses and assets could conflict with and adversely affect the performance and operation of an Apollo Client’s portfolio companies or other operating entities, and could adversely affect the prices and availability of business opportunities, transactions, securities or instruments held by, available to or potentially considered for such portfolio investments. Apollo will seek to resolve conflicts in a manner that Apollo deems to be fair and equitable.

In addition, Apollo can give advice, or take action with respect to, the investments of one or more Apollo Clients that may not be given or taken with respect to other Apollo Clients with similar investment programs, objectives or strategies. Accordingly, Apollo Clients with similar strategies may not hold the same securities or instruments or achieve the same performance. Apollo also advises Apollo Clients with conflicting investment objectives or strategies. These activities also could adversely affect the prices and availability of other securities or instruments held by, available to or potentially considered for one or more Apollo Clients. Apollo has and expects to maintain ongoing relationships with issuers whose securities have been acquired by, or are being considered for investment by, Apollo Clients.

Apollo may also have ongoing relationships with issuers whose securities have been acquired by, or are being considered for investment by, Apollo Clients. From time to time, Apollo may acquire securities or other financial instruments of an issuer for one Apollo Client which are senior or junior to securities or other financial instruments of the same issuer that are held by or acquired for another Apollo Client (e.g., one Apollo Client could acquire senior debt while another Apollo Client acquires subordinated debt). Apollo also advises Apollo Clients with conflicting investment objectives or strategies. For example, in the event such issuer enters bankruptcy, the Apollo Client holding securities that are senior in bankruptcy preference is expected to have the

 

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right to pursue the issuer’s assets to fully satisfy the issuer’s indebtedness to such Apollo Client, and Apollo might have an obligation to pursue such remedy on behalf of such Apollo Client. As a result, another Apollo Client holding assets of the same issuer that are more junior in the capital structure might not have access to sufficient assets of the issuer to completely satisfy its bankruptcy claim against the issuer and suffer a loss. These activities also could adversely affect the prices and availability of other securities or instruments held by, available to or potentially considered for one or more Apollo Clients.

Apollo Clients will, from time to time, subject to their governing documents, as applicable, acquire and dispose of securities or other financial instruments in portfolio investments at different times and upon different terms. The interests of Apollo Clients (including the Fund) in such investments will not be aligned in all or any circumstances, and there will be actual or potential conflicts of interests or the appearance thereof. In this regard, actions could, from time to time, be taken by Apollo that are adverse to the Fund. Apollo will also have ongoing relationships with issuers whose securities have been acquired by or are being considered for investment by Apollo Clients. Situations could arise where another Apollo Client acquires or otherwise engages in transactions with respect to securities of an entity in which the Fund has a financial interest (whether in the same or a different class of securities) or otherwise engages in selling, divesting or making further acquisitions or otherwise engages in transactions with respect to securities of such entity, including in connection with and following a co-investment.

As described herein, Apollo, together with Apollo Clients, engages in a broad range of business activities and invests in a broad range of businesses and assets. The Adviser may take into account Apollo’s, it affiliates’ and/or other Apollo Clients’ respective interests (including reputational interests) when determining whether to pursue a potential investment for the Fund. As a result, it is possible that the Adviser may choose not to pursue or consummate an investment opportunity for the Fund notwithstanding that such investment may be profitable for the Fund or that the Adviser may choose not to pursue an investment opportunity because of the reputational, financial and/or other interests of Apollo and its Affiliates.

Capital Structure Conflicts. The Fund is permitted to invest in a company in which one or more other Apollo Clients hold an investment in a different class of such company’s debt or equity, or vice versa, subject to the limitations of the Investment Company Act. For example, to the extent permitted by the Investment Company Act with respect to the Fund:

 

  (i)

Apollo can acquire securities or other financial instruments of an issuer for one Apollo Client or itself that are senior or junior to securities or other financial instruments of the same issuer that are held by, or acquired for, another Apollo Client (e.g., one Apollo Client could acquire senior debt while another Apollo Client acquires subordinated debt),

 

  (ii)

Apollo could make a holistic capital solutions proposal to an issuer that involves multiple Apollo Clients (including the Fund) providing financing, in the form of debt or equity, or a combination thereof investing across two or more tranches or series of such issuer’s capital structure,

 

  (iii)

Apollo can permit other Apollo Clients to provide debt or equity financing to a Portfolio Company in which the Fund holds an investment,

 

  (iv)

Apollo can permit the Fund (including together with other Apollo Clients) to provide financing to a portfolio company/portfolio investment of other Apollo Clients or

 

  (v)

Apollo can cause an Apollo Client (including the Fund) to provide financing and/or leverage to another Apollo Client (including the Fund) with respect to investments.

Conflicts of interest are expected to arise under such circumstances. For example, in the event Apollo negotiates a holistic capital solution with an issuer, as described in clause (ii) of the previous sentence, the specific terms and conditions of each tranche or series could be impacted by Apollo’s desire to provide an overall financing package, which could result in the terms and conditions of the tranche or series in which the Fund

 

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participates being less favorable to the Fund than could have been the case absent such an overall arrangement. This could be exacerbated if there is no or limited overlap of participating Apollo Clients (including the Fund) in the different tranches or series. Apollo, in its sole discretion, and in response to the desires of an issuer in some cases, could negotiate for enhanced terms or protections for one tranche or series at the expense of another tranche or series, and the issuer’s ultimate approval of the holistic capital solution should not be viewed as dispositive that the terms and conditions of each tranche or series, taken individually, reflect an arms’-length arrangement.

In addition, in the event that any issuer in which Apollo and/or Apollo Clients are invested in different levels of the capital structure enters bankruptcy, Apollo or the Apollo Client(s) holding securities that are senior in bankruptcy preference are expected to have the right to aggressively pursue the issuer’s assets to fully satisfy the issuer’s indebtedness to Apollo or such Apollo Client(s), and Apollo might have an obligation to pursue such remedy on behalf of itself or such Apollo Client(s). As a result, another Apollo Client holding assets of the same issuer that are more junior in the capital structure might not have access to sufficient assets of the issuer to completely satisfy its bankruptcy claim against the issuer and suffer a loss.

Apollo has instituted policies and procedures that are reasonably designed to identify and address such potential conflicts of interest (whether including at the inception of an investment and during the holding or ownership of an investment) and that seek to ensure that Apollo Clients are treated fairly and equitably. The application by Apollo of its policies and procedures will vary based on the particular facts and circumstances surrounding each investment made by Apollo and Apollo Clients (including the Fund), or made by two or more Apollo Clients (including the Fund), in different classes, series or tranches of an issuer’s capital structure (as well as across multiple issuers or borrowers within the same overall capital structure), and, as such, investors should expect some degree of variation, and potentially inconsistency, in the manner in which potential, or actual, conflicts of interest are addressed by Apollo. While Apollo’s policies and procedures for addressing the conflicts between Apollo and Apollo Clients and among multiple Apollo Clients in these situations are intended to resolve the conflicts in an impartial manner, there can be no assurance that Apollo’s own interests will not influence its conduct.

In addressing certain of the potential conflicts of interest described herein, Apollo and/or the Adviser may, but will not be obligated to, take one or more actions on behalf of the Fund or any other Apollo Client, including any one or more of the following:

 

  (i)

causing an Apollo Client (including the Fund) to remain passive in a situation in which it is otherwise entitled to vote, which may mean that the Fund or any other Apollo Client defers to the decision or judgment of an independent, third-party investor in the same class of equity or debt securities or other financial instruments held by the Fund or such other Apollo Client;

 

  (ii)

referring the matter to one or more persons not affiliated with Apollo to review or approve of an intended course of action with respect to such matter;

 

  (iii)

establishing ethical screens or information barriers to separate Apollo investment professionals or assigning different teams of Apollo investment professionals, in each case, who are supported by separate legal counsel and other advisers, to act independently of each other in representing different Apollo Clients or Apollo Clients that hold different classes, series or tranches of an issuer’s capital structure;

 

  (iv)

as between two Apollo Clients, ensuring (or seeking to ensure) that the underlying investors therein own interests in the same securities or financial instruments and in the same proportions so as to preserve an alignment of interest; or

 

  (v)

causing the Fund or another Apollo Client to divest itself of a security, financial instrument or particular class, series or tranche of an issuer’s capital structure it might otherwise have held on to.

 

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Any such step would be subject to the Investment Company Act and could have the effect of benefiting other Apollo Clients or Apollo at the expense of the Fund, and there can be no assurance that any of these measures will be feasible or effective in any particular situation, and it is possible that the outcome for the Fund will be less favorable than might otherwise have been the case if Apollo had not had duties to other Apollo Clients.

Certain Transactions. Situations may arise where certain assets held by the Fund may be transferred to Apollo Clients and vice versa. Such transactions will be conducted in accordance with, and subject to, the Adviser’s contractual obligations to the Fund and applicable law, including the Investment Company Act.

Representing Creditors and Debtors. The Adviser and its affiliates can serve as the controlling persons of Apollo Clients that hold positions in creditors or debtors either in proceedings under relevant bankruptcy or insolvency codes or prior to such filings. From time to time, the Adviser and its affiliates serve as advisers to creditor or equity committees on behalf of such Apollo Clients. This involvement, for which the Adviser and its affiliates could be compensated, could, among other things, limit or preclude the flexibility that the Fund otherwise has to participate in restructurings of investments, or that the Fund requires to liquidate any existing positions of the applicable issuer.

Brokerage Commissions. The Fund’s securities transactions generate brokerage commissions and other compensation, including clearing fees and charges, all of which the Fund, not the Adviser or any of their affiliates, will be obligated to pay. The Adviser has sole discretion in deciding what brokers and dealers the Fund uses, subject to Board approval, and in negotiating the rates of brokerage commissions and other compensation the Fund pays. In selecting brokers and negotiating commission rates, the Adviser will take into account such information it deems appropriate. The Fund buys and sells securities directly from or to brokers each acting as “principals” at prices that include markups or markdowns, and buys securities from underwriters or dealers in public offerings at prices that include compensation to the underwriters and dealers. Any use of commissions or “soft dollars” generated by the Fund to pay for brokerage and research products or services will fall within the safe harbor created by Section 28(e) of the Exchange Act, although the Fund does not intend to use “soft dollars.”

Information Barriers. Apollo currently operates without ethical screens or information barriers that some other investment management firms implement to separate persons who make investment decisions from others who might possess material nonpublic information that could influence such decisions. In an effort to manage possible risks arising from Apollo’s decision not to implement such screens, Apollo maintains a code of ethics and provides training to relevant personnel with respect to conflicts of interest and how such conflicts are identified and resolved under Apollo’s policies and procedures. In addition, Apollo’s compliance department maintains a list of restricted securities with respect to which Apollo could have access to material nonpublic information and in which Apollo Clients are not permitted to trade. In the event that any employee of Apollo obtains such material nonpublic information, Apollo will be restricted in acquiring or disposing of the relevant investments on behalf of Apollo Clients, which could impact the returns generated for such Apollo Clients.

Notwithstanding the maintenance of restricted securities lists and other internal controls, it is possible that the internal controls relating to the management of material nonpublic information could fail and result in Apollo, or one of its investment professionals or other employees, buying or selling a security while, at least constructively, in possession of material nonpublic information. Inadvertent trading on material nonpublic information could have adverse effects on Apollo’s reputation, result in the imposition of regulatory or financial sanctions and, as a consequence, negatively impact Apollo’s ability to provide its investment management services to Apollo Clients. In addition, Apollo’s investment professionals or other employees will acquire, in their capacities as investment professionals or otherwise of one or more Apollo Clients (including the Fund), nonpublic information regarding investment opportunities, business methodologies, strategies and other proprietary information that is shared with and ultimately used for the benefit of other Apollo Clients, including Apollo Clients (other than the Fund) within Apollo’s credit business segment or in Apollo’s private equity or real

 

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assets business segments. Although Apollo will endeavor to ensure that such information sharing and use does not prejudice the Fund or one or more other Apollo Clients, there can be no assurance that such endeavors will be sufficient or successful.

While Apollo currently operates without information barriers on an integrated basis, Apollo could be required by certain regulations, or decide that it is advisable, to establish information barriers. In such event, Apollo’s ability to operate as an integrated platform would be impaired, which would limit the Adviser’s access to certain Apollo personnel and could adversely impact its ability to manage the Fund’s investments. The establishment of such information barriers could also lead to operational disruptions and result in restructuring costs, including costs related to hiring additional personnel as existing investment professionals are allocated to either side of such barriers, which could adversely affect Apollo’s business and the Fund.

Management Team. Management intends to devote sufficient time to the Fund. Apollo and its personnel will have conflicts of interest in allocating their time and services among Apollo Clients and personal investment activities. The Adviser’s personnel will work on other projects, including other Apollo Clients and Apollo’s other existing and potential business activities. In addition, Apollo’s personnel will participate in the management of the investment activities of other Apollo Clients concurrently with their obligations to the Fund. In certain circumstances, it is possible that the investments held by such Apollo Clients will be in competition with those of the Fund. None of the shareholders will have an interest in investments made by such other Apollo Clients solely by reason of their investment in the Fund.

Employees of Apollo may, from time to time, serve as directors or as board observers with respect to operating entities, the securities of which are purchased on behalf of Apollo Clients. In the event that Apollo (i) obtains material nonpublic information in such capacity with respect to the issuer of any such securities or (ii) is subject to trading restrictions pursuant to the internal policies of such issuer, Apollo will be restricted from engaging in transactions with respect to the securities or instruments of such issuer. Such a restriction could have an adverse effect on the Fund and other Apollo Clients.

Conflicts of interest are expected to arise because Apollo employees (including personnel dedicated to the Fund) will serve as directors, board observers or management committee members or in a similar capacity, of certain of the operating entities in which the Fund invests. In addition to any fiduciary duties Apollo employees owe to the Fund as directors or management committee members of operating entities, such employees may owe fiduciary duties to the other owners of such entities, which in many cases are other Apollo Clients, and to persons other than the Fund. In general, such director or similar positions are often important to the Fund’s investment strategy and often have the effect of enhancing the ability of Apollo to manage investments. However, such positions could also have the effect of impairing the ability of Apollo to sell the related securities when, and upon the terms, it otherwise desires. In addition, such positions can place Apollo employees in a position where they must make a decision that is either not in the best interests of the Fund or not in the best interests of the other owners of the operating entity where the Fund is not the sole owner of the applicable operating entity. Should an Apollo employee make a decision that is not in the best interest of such owners, such decision could subject Apollo and the Fund to claims that they would not otherwise be subject to as an investor, including claims of breach of the duty of loyalty, securities claims and other director-related claims. In addition, because of the potential conflicting fiduciary duties, Apollo could be restricted in choosing investments for the Fund, which could negatively impact returns received by the Fund.

Apollo’s three founders (the “Founders”) have established family offices (each a “Family Office” and collectively the “Family Offices”) to provide investment advisory, accounting, administrative and other services to their respective family accounts (including certain charitable accounts) in connection with their personal investment activities unrelated to their investments in Apollo entities. The investment activities of the Family Offices and the involvement of the Founders in these activities give rise to potential conflicts between the personal financial interests of the Founders and the interests of the Fund or other Apollo Clients (for example, if the Family Offices were to hold debt obligations or securities in a company in which the Fund or another Apollo

 

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Client owned equity or subordinated debt and that was experiencing financial distress). Apollo has adopted certain procedures designed to mitigate some of these potential conflicts (for example, by requiring investment professionals employed by the Family Offices to refrain from making direct investments in portfolio investments that are controlled by the Fund or other Apollo Clients or that are the subject of announced transactions involving the Fund or other Apollo Clients).

Each of the Family Offices employs its own professional staff at its own expense, and each of them conducts its day-to-day operations independently of Apollo. Set out below is a summary of certain procedures that are currently in place for certain categories of investments in which the Family Offices can participate:

 

   

Liquid Credit Investments. The Founders generally do not participate in decisions to invest in, nor do they have investment discretion with respect to, liquid credit investments by their respective Family Offices. To the extent a Founder does not provide guidance or participate in investment decisions with respect to liquid credit investments, its respective Family Office may participate in such investments provided that the Family Office certifies to Apollo Compliance, on a quarterly basis, that it was not directed by its respective Founder to buy, sell or vote on any such liquid credit investments. To the extent a Founder were to provide guidance or participate in investment decisions with respect to liquid credit investments on behalf of its respective Family Office, such investment opportunities would first be reviewed by Apollo for potential conflicts of interest, including for possible allocation to the Fund or other Apollo Clients.

 

   

Illiquid, Private Investments (Equity and Debt) and Public Equities. The Founders may provide guidance or participate in investment decisions on behalf of their respective Family Offices in connection with illiquid, private investments and public equities. These investment opportunities are reviewed by Apollo for potential conflicts of interest, including for possible allocation to the Fund or other Apollo Clients.

These procedures are designed to seek to mitigate conflicts of interest; however, there will be situations where a Family Office, with respect to certain asset classes, reviews and invests in investment opportunities that overlap with the mandates of the Fund or other Apollo Clients. These procedures can be revised by Apollo at any time without notice to, or consent from, the shareholders.

AGS and AGF. Apollo Global Securities, LLC (“AGS”), an affiliate of Apollo, which is a broker-dealer registered with the SEC and a member of FINRA, is authorized to perform, among other things, the following services: (i) conduct private placements; (ii) provide services in respect of the underwriting of securities; (iii) provide transaction advisory services, including capital markets advisory and structuring services; (iv) conduct merger and acquisition transactions; and (v) purchase and sell corporate debt securities. Apollo Global Funding, LLC (“AGF”) is a subsidiary of Apollo and an affiliate of AGS, and provides a variety of services with respect to financial instruments, including loans, that are not subject to broker-dealer regulations such as arranging, structuring and syndicating loans and providing debt advisory and other similar services. AGS and AGF are expected to, from time to time, expand the services that they perform and the activities in which they engage. AGF or AGS, as applicable, may be engaged, either by the corporate borrower (or its sponsor) or by the participating Apollo Clients (including the Fund) to provide services, and arrangements are generally made for AGF or AGS, as applicable, to receive its fees directly from the corporate borrower for services rendered (however, if the corporate borrower will not pay or reimburse such fees, the participating Apollo Clients will pay such fees).

Apollo Consulting and Other Consultants. Subject to the limitations of the Investment Company Act, SEC guidance, the Investment Advisory Agreement and the Administrative Reimbursement Agreement, the Fund may bear the payments, fees, costs or expenses of certain services provided by, and allocable overhead of, Apollo Consulting as well as industry executives, advisors, consultants and operating executives contracted or engaged, directly or indirectly, by the Fund, the Adviser, or any affiliated service provider. Certain non-employee industry executives, advisors, consultants and operating executives may be exclusive to Apollo. “Apollo Consulting”

 

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consists of one of more entities, including Apollo Investment Consulting LLC, established or utilized by affiliates of Apollo, Apollo Clients or their respective portfolio investments, that facilitate strategic arrangements with, or engagements (including on an independent contractor or employment basis) of, any persons that the Adviser determines in good faith to be industry executives, advisors, consultants (including operating consultants and sourcing consultants), operating executives, subject matter experts or other persons acting in a similar capacity, to provide consulting, sourcing or other services (any such person, a “Consultant”) to or in respect of the Fund and other Apollo Clients and their investments. To the extent that for legal, tax, accounting, regulatory or similar reasons it is necessary or desirable that the foregoing activities be conducted by, through or with one or more affiliates of the Adviser or other persons other than Apollo Consulting, such activities will be treated for purposes of this definition as if they were conducted by Apollo Consulting.

Apollo Clients (including the Fund) for or in respect of which a Consultant provides services will typically pay, or otherwise bear, such Consultant’s fees, costs and expenses incurred in connection with its engagement of such Consultants, as well as any other operating expenses associated with such engagement (including overhead and organizational expenses attributable to Apollo Consulting).

In addition, Consultants may receive other forms of compensation from multiple sources for services provided for or in respect of the Fund (for example, fees, reimbursement of expenses or compensation received for serving as its director or in a similar capacity or providing analysis of a potential acquisition or sale). Any fees, compensation or reimbursements received by Apollo Consulting or any Consultant (including from the Fund) will be retained by, and be for the benefit of, Apollo Consulting, the applicable Consultant or any of their respective affiliates or employees.

While the expertise or responsibilities of a Consultant could be or are similar in certain or substantially all respects to those of a full-time Apollo investment professional employed by Apollo or certain functions that might customarily be performed by an investment professional employed by the manager of a private fund, the fees, costs, expenses or other compensation described above will nonetheless be borne by Apollo Clients or their investments, including the Fund, due to, among other things, factors that distinguish these engagements from those of Apollo investment professionals. Any determinations relating to Apollo Consulting or any Consultant to be engaged by the Fund, will, in each case, be made by Apollo in good faith, which includes Apollo being authorized in its sole discretion to determine that certain functions carried out by Consultants will instead be carried out by Apollo employees, or a mix of Consultants and employees, if, for example, it believes that the ability to offer an employment relationship would provide Apollo with greater flexibility in attracting the personnel it desires.

Operating Partners Generally. With respect to an operating partner, Apollo generally retains, or otherwise enters into a joint venture arrangement with, such operating partner on an ongoing basis through a consulting or joint venture arrangement involving the payment of annual retainer fees or other forms of compensation. Such operating partner may receive success fees, performance-based compensation and other compensation for assistance provided by such operators in sourcing and diligencing investments for the Fund (subject to the requirements of the Investment Company Act) and other Apollo Clients. Such annual retainer fees, success fees, performance-based compensation and the other costs of retaining such operating partners may be borne directly by the Fund as fund expenses. None of the compensation or expenses described above will be offset against any management fees or incentive compensation payable to the Adviser in respect of the Fund. Such operating partners (including operating partners in which the Fund may own an interest) may operate assets on behalf of the Fund, as well as other Apollo Clients and may also operate assets for third parties.

Selection of Service Providers. As described above, the Adviser will generally select the Fund’s service providers (including affiliated service providers) and will determine the compensation of such providers without review by or the consent of any shareholders but with Board approval. The Fund, regardless of the relationship to Apollo of the person performing the services, will bear the fees, costs and expenses related to such services. This will create an incentive for the Adviser to select an affiliated service provider, or to otherwise select service providers based on the potential benefit to Apollo or its affiliates rather than to the Fund (subject to the

 

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requirements of the Investment Company Act and applicable guidance). For example, the Adviser can select service providers that use their or their respective affiliates’ premises, for which the Adviser does not currently, but may in the future, receive overhead, rent or other fees, costs and expenses in connection with such on-site arrangement. Furthermore, the Adviser can engage the same service provider to provide services to the Fund that also provides services to Apollo or any such affiliate, which creates a potential conflict of interest to the extent the interests of such parties are not aligned. For example, a law firm can at the same time act as legal counsel to the Fund, the Adviser or any of their respective affiliates. The Adviser and their respective affiliates address these conflicts of interest by using reasonable diligence to ascertain whether each service provider (including law firms) provides its service on a “best execution” basis, taking into account factors such as expertise, operational and regulatory controls, availability and quality of service and the competitiveness of compensation rates in comparison with other service providers satisfying Apollo’s or its affiliates’ service provider selection criteria. In addition, in the event such service providers are affiliates of Apollo (as opposed to third parties), the engagement of such providers must typically comply with any conditions applicable to affiliate transactions described herein. Apollo from time to time enters into arrangements with service providers that provide for fee discounts for services rendered to Apollo and its affiliates. For example, certain law firms retained by Apollo discount their legal fees for certain legal services, such as legal advice in connection with firm operational, compliance and related matters. To the extent such law firms also provide legal services to Apollo Clients with respect to such matters, such Apollo Clients also enjoy the benefit of such fee discount arrangements. Legal services rendered for investment transactions, however, are typically charged to Apollo and Apollo Clients without a discount or at a premium. Legal fees for transactions that are not consummated are also typically charged at a discount.

Apollo Compensation-Related Conflicts. The percentage of profits Apollo is entitled to receive and the terms applicable to such performance-based compensation vary among Apollo Clients. Because the opportunity to receive performance-based compensation is based on the success of investments, to the extent the rates or other terms applicable to such compensation differ among Apollo Clients and subject to the Investment Company Act, Apollo will be incentivized to dedicate increased resources and allocate more profitable or more attractive investment opportunities to Apollo Clients bearing higher performance compensation rates or to Apollo Clients whose governing documents contain less restrictive terms regarding such compensation. In addition, Apollo will be incentivized to allocate investment opportunities away from Apollo Clients that have suffered losses and have not yet achieved a priority return threshold and, instead, allocate them to Apollo Clients that are more likely to actively generate performance-based compensation. In addition, the portion of any fees payable in connection with any investment that are allocable to investments by Co-Investors will not reduce management fees paid by any Apollo Client and will be retained by and be for the benefit of the Adviser or any of their respective affiliates or employees. Therefore, the Adviser will be perceived to be incentivized to allocate a greater portion of such investment to Co-Investors than it would have otherwise allocated to Co-Investors in the absence of such arrangements. Apollo has adopted written allocation policies and procedures to help address conflicts arising in the allocation of resources and investment opportunities among Apollo Clients.

Similarly, management fees or higher management fees will be perceived to incentivize Apollo to dedicate increased resources and allocate more profitable or more attractive investment opportunities to Apollo Clients who are charged such management fees or higher management fees.

Finally, the right to receive performance-based compensation also creates a potential conflict of interest in the valuation of investments. Apollo has prepared accounting guidelines regarding the recognition of asset impairment and has also adopted written valuation policies and procedures intended to address conflicts of interests that arise in respect of the valuation of the Fund’s assets.

Valuation of Fund Assets. There can be situations in which Apollo is potentially incentivized to influence or adjust the valuation of the Fund’s assets. For example, the Adviser could be incentivized to employ valuation methodologies that improve the Fund’s track record and increase the adjusted cost of investments used to determine the amount of management fees due. Apollo has adopted valuation policies to address these potential conflicts.

 

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Fees Paid to Apollo. Certain fees received by the Adviser will not be applied to reduce management fees and a portion of such fees will be retained by and be for the benefit of the Adviser or any of its affiliates or employees, in each case, in accordance with the fee arrangements set forth in the Advisory Agreement and Administrative Reimbursement Agreement, as applicable).

Strategic Relationship with Athene and Athora. Athene Holding Ltd. (together with its subsidiaries, “Athene”) is a retirement services company that issues, reinsures and acquires retirement savings products designed for individuals and institutions seeking to fund retirement needs. The products and services offered by Athene include fixed-income and fixed-indexed annuity products, reinsurance services offered to third-party annuity providers and institutional products, such as funding agreements. Athora Holding Ltd. is a strategic platform that acquires or reinsures blocks of insurance business in the German and broader European life insurance market (together with its subsidiaries, “Athora”). In exchange for an advisory fee, Apollo provides asset management and advisory services to Athene and Athora, including asset allocation services, direct asset management services, asset and liability matching management, mergers and acquisitions, asset diligence hedging and other asset management services. Apollo also provides sub-allocation services with respect to a portion of Athene’s and Athora’s assets and allocates such assets across Apollo Clients in a manner that often characterizes Athene and Athora as captive permanent capital vehicles in relation to Apollo’s business. Additionally, Apollo and Athene (as well as Apollo and Athora) also have considerable overlap in ownership and, as a result, from time to time Apollo is or may be perceived to be able to exercise significant influence over matters requiring shareholder approval relating to Athene’s and Athora’s businesses, including approval of significant corporate transactions, appointment of members of Athene’s and Athora’s management, election of directors, approval of the termination of Athene’s and Athora’s investment management agreements and determination of Athene’s and Athora’s corporate policies. As a result of the relationship between (x) Apollo and Athene and (y) Apollo and Athora, Athene’s and/or Athora’s participation (as well as the respective accounts or assets that they manage) in an Apollo Client (other than the Fund) is typically accompanied by strategic partnership treatment and in connection with investing Athene’s and Athora’s assets across Apollo Clients (other than the Fund), Apollo grants Athene and Athora certain preferential terms, including reduced management fee and carried interest rates that are lower than those applicable to the other fund investors, access to co-investment opportunities and other preferential terms, that in each case, are not subject to “most favored nations” treatment by other fund investors. Furthermore, as stated above, as Apollo provides asset management and advisory services to Athene and Athora, there will be instances where certain transactions (such as, for example, cross-trades among Apollo Clients (other than the Fund), the provision of financing or other transactions between Apollo Clients or potential or existing portfolio companies of Apollo Clients, on the one hand, and Athene and/or Athora, on the other hand, in each case, subject to the limitations of the Investment Company Act) present conflicts of interest from the perspective of the involved parties, which would include Apollo itself or through its ownership of or significant influence over Athene and Athora.

Further, as Athene, Athora and/or their affiliates or portfolio companies invest in a number of Apollo Clients (other than the Fund) and may seek to restructure or otherwise modify their respective balance sheet holdings from time to time, they may request to transfer their interests in Apollo Clients to each other, to portfolio companies of Apollo or Apollo Clients or to third parties. Apollo is incentivized to consent to such transfers (notwithstanding that the applicable general partner can grant or withhold its consent in its sole discretion), due to the fact that such transfers may, among other things, relieve the respective balance sheets of Athene, Athora and/or their affiliates or portfolio companies in a manner that allows them to fund other Apollo Clients or Apollo initiatives. Additionally, Athene holds interests in entities within the Apollo corporate structure that are recipients of all or a portion of the fees earned by the Adviser. Apollo, any affiliate thereof or one or more Apollo Clients could acquire interests in, Apollo or an affiliate thereof could enter into advisory arrangements with, or any of the foregoing could otherwise transact or enter into relationships with other businesses (such as, by way of example only and not of limitation, other insurance businesses) in a manner similar to the relationships with Athene, Athora and/or their affiliates or portfolio companies, in which case the conflicts and other issues described in this paragraph could apply, potentially more acutely depending on the nature and degree of the relationship, with respect to each such other business.

 

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Creation of Other Entities; Restructuring. Except as expressly prohibited under a contractual restriction to which Apollo is subject, Apollo will be permitted to market, organize, sponsor, act as general partner or manager or as the primary source for transactions for other pooled investment vehicles or managed accounts, which can be offered on a public or private placement basis, and to restructure and monetize interests in Apollo, or to engage in other investment and business activities. Such activities raise conflicts of interest for which the resolution may not be currently determinable.

Relationship among the Fund, the Adviser and the Investment Team. The Adviser will have a conflict of interest between its responsibility to act in the best interests of the Fund, on the one hand, and any benefit, monetary or otherwise, that could result to it or its affiliates from the operation of the Fund, on the other hand.

The functions performed by the Adviser are not exclusive. The officers and employees of the Adviser and its affiliates will devote such time as the Adviser deems necessary to carry out the operations of the Fund effectively. The Adviser has rendered in the past and will continue to render in the future various services to others (including investment vehicles and accounts that have the ability to participate in similar types of investments as those of the Fund) and perform a variety of other functions that are unrelated to the management of the Fund and the selection and acquisition of the Fund’s investments.

Potential Duties to Other Stakeholders. The Adviser is an affiliate of AGM. The shares of Class A common stock of AGM are publicly traded on the New York Stock Exchange. As a result, the Adviser has duties or incentives relating to the interests of AGM’s stockholders that could differ from and that could conflict with the interests of the Fund and its shareholders, such as conflicts arising from the allocation of expenses, special fee offsets and investment opportunities (in particular, opportunities in the financial services industry). Apollo will endeavor to resolve such conflicts in a manner that Apollo determines in good faith to be fair and equitable to the extent possible under the prevailing facts and circumstances. Apollo will seek to allocate investment opportunities in the financial services industry between Apollo and Apollo Clients in accordance with their respective governing documents and will evaluate such opportunities in accordance with its allocation policies and procedures. In the past, the application of such policies has resulted in the allocation by Apollo of certain investment opportunities relating to the alternative investment management business to Apollo rather than to the Apollo Clients, and Apollo expects to allocate such opportunities in a similar manner in the future.

The foregoing discussion of conflicts does not purport to be a complete enumeration or explanation of the actual and potential conflicts involved in an investment in the Fund. Prospective investors should read this prospectus and consult with their own advisors before deciding whether to invest in the Fund. In addition, as the Fund’s investment program develops and changes over time, an investment in the Fund may be subject to additional and different actual and potential conflicts. Although the various conflicts discussed herein are generally described separately, prospective investors should consider the potential effects of the interplay of multiple conflicts.

 

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CODE OF ETHICS

The Fund’s Board of Directors has adopted a code of ethics pursuant to Rule 17j-1 under the Investment Company Act and have also approved the Adviser’s code of ethics that was adopted by it in accordance with Rule 17j-1 and Rule 204A-1 under the Investment Advisers Act of 1940. These codes of ethics establish procedures for personal investments and restrict certain personal securities transactions. Personnel subject to a code may invest in securities for their personal investment accounts, including securities that may be purchased or held by the Fund, so long as such investments are made in accordance with the code’s requirements.

The code of ethics is available on the EDGAR Database on the SEC’s website at http://www.sec.gov, and copies may be obtained, after paying a duplicating fee, by electronic request at publicinfo@sec.gov. This reference to the website does not incorporate the contents of the website into this prospectus.

PROXY VOTING POLICIES

The Board of Directors of the Fund has delegated the voting of proxies for Fund securities to the Adviser pursuant to the Adviser’s proxy voting guidelines. Under these guidelines, the Adviser will vote proxies related to Fund securities in the best interests of the Fund and its shareholders. A copy of the Adviser’s proxy voting policy is attached as Appendix B.

Information on how the Fund voted proxies (if any) relating to portfolio securities during the most recent 12 month period ended June 30 will be available without charge by calling (888) 301-3838, or on the SEC’s website at http://www.sec.gov. This reference to the website does not incorporate the contents of the website into this prospectus.

DESCRIPTION OF SHARES

The following description of the terms of the Fund’s Common Shares is only a summary. For a complete description, please refer to the MGCL, and the Fund’s charter and Bylaws. The charter and Bylaws are exhibits to the Registration Statement, of which this prospectus forms a part.

Outstanding Securities. The following table sets forth information with respect to the outstanding securities of the Fund as of December 31, 2021.

 

Title of Class

   Amount of
Shares
Authorized
     Amount of
Shares Held
by the Fund
for its
Account
     Amount of Shares
Outstanding
 

Common Shares

     1,000,000,000        —          14,464,026  

The Fund’s Board of Directors may, without any action by the Fund’s shareholders, approve amendments to the Fund’s charter from time to time to increase or decrease the aggregate number of shares of stock or the number of shares of any class or series of stock that the Fund is authorized to issue. Additionally, the Fund’s charter authorizes the Board of Directors to classify and reclassify any unissued shares of common stock into one or more classes or series of stock, including preferred stock, from time to time, by setting or changing the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption for each class or series. Although the Fund has no present intention of doing so, it could issue a class or series of stock that could delay, defer or prevent a transaction or change in control of the Fund that might otherwise be in the common shareholders’ best interest.

Common Shares

General. All Common Shares offered pursuant to this prospectus will be, upon issuance, duly authorized, fully paid and nonassessable. All Common Shares offered pursuant to this prospectus will be of the same class

 

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and will have identical rights, as described below. Holders of Common Shares are entitled to receive distributions when, as and if authorized by the Board of Directors and declared by the Fund out of assets legally available for the payment of distributions. Common Shareholders have no preference, conversion, exchange, sinking fund, redemption or appraisal rights and have no preemptive rights to subscribe for any of the Fund’s securities. Common Shares are freely transferable, except where their transfer is restricted by federal and state securities laws or by contract. All Common Shares have equal earnings, assets, distribution, liquidation and other rights.

Distributions. Distributions may be paid to the Common Shareholders if, as and when authorized by the Fund’s Board of Directors and declared by the Fund out of assets legally available therefor.

If any shares of preferred stock are outstanding, Common Shareholders generally will not be entitled to receive any distributions from the Fund unless (1) the Fund has paid all accumulated dividends on the preferred stock, (2) the Fund has redeemed the full number of shares of preferred stock required to be redeemed by any provision for mandatory redemption of such preferred stock, (3) immediately after such a distribution, the Fund has an asset coverage of at least 200%, (4) the assets in the Fund’s portfolio meet any asset coverage requirements set forth by the Fund’s lenders or any applicable rating agency, in each case, after giving effect to such a distribution, and (5) there is no event of default existing under the terms of any of the Fund’s borrowings, in each case, after giving effect to such distributions. See “Leverage.”

So long as senior securities representing indebtedness of the Fund are outstanding, Common Shareholders generally will not be entitled to receive any distributions from the Fund unless (1) there is no event of default existing under the terms of such indebtedness, (2) immediately after such a distribution, the Fund has an asset coverage of at least 300% and (3) the assets in the Fund’s portfolio meet any asset coverage requirements set forth by the Fund’s lenders or any applicable rating agency, in each case, after giving effect to such a distribution. See “Leverage.”

Liquidation Rights. Common Shareholders are entitled to share ratably in the assets legally available for distribution to the Fund’s Common Shareholders in the event of the liquidation, dissolution or winding up of the Fund, after payment of or adequate provision for all of the Fund’s known debts and liabilities, including any outstanding debt securities or other borrowings and any interest thereon. These rights are subject to the preferential rights of outstanding shares of any other class or series of the Fund’s stock, including any preferred stock.

Voting Rights. Each outstanding share of common stock generally entitles the holder to cast one vote on all matters submitted to a vote of the Fund’s shareholders, including the election of Directors. The presence of Common Shareholders entitled to cast a majority of the votes entitled to be cast at a meeting of the Fund’s shareholders constitutes a quorum at the meeting, except with respect to any matter that, under applicable law or the Fund’s charter requires a separate vote of one or more classes of the Fund’s stock, in which case the presence in person or by proxy of the holders of shares entitled to cast a majority of the votes entitled to be cast by each such class on such a matter will constitute a quorum.

The Fund’s charter provides that, except as may otherwise be provided in the Fund’s Bylaws, Directors will be elected by the affirmative vote of the holders of a majority of the shares of stock outstanding and entitled to vote thereon. There is no cumulative voting in the election of Directors. Consequently, at each annual meeting of the Fund’s shareholders, the holders of a majority of the outstanding shares of stock entitled to vote in the election of such Directors will be able to elect all of the successors of the class of Directors whose terms expire at that meeting. If any shares of preferred stock are outstanding, holders of any outstanding preferred stock will have the exclusive right to elect two of the Fund’s Directors at all times. Pursuant to the Fund’s charter and Bylaws, the Board of Directors may amend the Bylaws from time to time to alter the vote required to elect a Director.

Under the rules of the NYSE applicable to listed companies, the Fund is required to hold an annual meeting of shareholders in each fiscal year. If for any reason the common stock is not listed on the NYSE (or any other

 

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national securities exchange, the rules of which require annual meetings of the Fund’s shareholders) or such rule otherwise ceases to apply to the Fund, subject to its ability to do so under Maryland law, the Fund may amend its Bylaws so that the Fund is not otherwise required to hold annual meetings of shareholders.

Issuance of Additional Shares. The provisions of the Investment Company Act generally require that the public offering price of common stock of a closed-end investment company (less underwriting commissions and discounts) must equal or exceed the NAV of the company’s common stock (calculated within 48 hours of pricing), unless the sale is made with the consent of a majority of the Fund’s common shareholders. Any sale of common stock by the Fund will be subject to the requirements of the Investment Company Act.

Preferred Stock

The Fund’s charter authorizes the Board of Directors to classify and reclassify any unissued shares of common stock into shares of other classes or series of stock, including preferred stock, without the approval of the holders of Common Shares. Holders of Common Shares have no preemptive right to purchase any shares of preferred stock that the Fund may issue. The Fund may elect to issue preferred stock as part of a leveraging strategy.

Prior to issuance of shares of each class or series, the Board of Directors is required by Maryland law and by the Fund’s charter to set the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption for each class or series. Thus, the Board of Directors could authorize the Fund to issue shares of preferred stock with terms that could have the effect of delaying, deferring or preventing a transaction or a change in control that might involve a premium price for common shareholders or otherwise be in their best interest. Any issuance of preferred stock, however, must comply with the requirements of the Investment Company Act.

The Investment Company Act, among other things, requires that the holders of outstanding shares of preferred stock, voting separately as a class, have the right to elect at least two Directors at all times. The remaining Directors will be elected by common and preferred shareholders, voting together as a single class. In addition, subject to the prior rights, if any, of the holders of any other class of senior securities outstanding, preferred shareholders will have the right to elect a majority of the Directors at any time that two years’ dividends on any outstanding shares of preferred stock are unpaid.

Certain Provisions of the MGCL and the Fund’s Charter and Bylaws

The MGCL and the Fund’s charter and Bylaws contain provisions that could make it more difficult for a potential acquiror to acquire the Fund by means of a tender offer, proxy contest or otherwise. These provisions are designed to discourage certain coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of the Fund to negotiate first with the Board of Directors. The Fund believes that the benefits of these provisions outweigh the potential disadvantages of discouraging any such acquisition proposals because, among other things, the negotiation of such proposals may improve their terms.

Classified Board of Directors. The Fund’s Board of Directors is divided into three classes of Directors serving staggered three-year terms. Upon expiration of their current terms, Directors of each class will be elected to serve for three-year terms and until their successors are duly elected and qualify, and each year one class of Directors will be elected by the shareholders. A classified board may render a change in control of the Fund or the removal of the Fund’s incumbent management more difficult. The Fund believes, 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 the Fund’s management and policies.

Election of Directors. The Fund’s charter and Bylaws provide that the affirmative vote of the holders of a majority of the outstanding shares of stock entitled to vote in the election of Directors will be required to elect a Director. As noted above, pursuant to the Fund’s charter, the Board of Directors may amend the Bylaws from time to time to alter the vote required to elect a Director.

 

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Number of Directors; Vacancies; Removal. The Fund’s charter provides that the number of Directors will be set only by the Board of Directors in accordance with the Fund’s Bylaws. The Fund’s Bylaws provide that a majority of the entire Board of Directors may at any time increase or decrease the number of Directors. However, unless the Fund’s Bylaws are amended, the number of Directors cannot be less than the minimum number required by the MGCL or more than 12.

The Fund’s charter provides that, at such time as the Fund has at least three independent directors and its common stock is registered under the Exchange Act, the Fund elects to be subject to the provision of Subtitle 8 of Title 3 of the MGCL regarding the filling of vacancies on the Board of Directors. For that reason, 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 Directors remaining in office, even if the remaining Directors do not constitute a quorum, and any Director elected to fill a vacancy will serve for the remainder of the full term of the directorship in which the vacancy occurred and until a successor is elected and qualifies, subject to any applicable requirements of the Investment Company Act.

The Fund’s charter provides that a Director may be removed only for cause, as defined in the charter, and then only by the affirmative vote of at least two-thirds of the votes entitled to be cast in the election of Directors.

Action by Shareholders. Under the MGCL, shareholder action can be taken only at an annual or special meeting of shareholders or, unless the charter provides for shareholder action by less than unanimous written consent (which is not the case for the Fund’s charter), by unanimous written consent in lieu of a meeting. These provisions, combined with the requirements of the Fund’s Bylaws regarding the calling of a shareholder-requested special meeting of shareholders discussed below, may have the effect of delaying consideration of a shareholder proposal until the next annual meeting of shareholders.

Advance Notice Provisions for Shareholder Nominations and Shareholder Proposals. The Fund’s Bylaws provide that, with respect to an annual meeting of shareholders, the nomination of individuals for election as Directors and the proposal of other business to be considered by the Fund’s shareholders may be made only (1) pursuant to the Fund’s notice of the meeting, (2) by or at the direction of the Board of Directors or (3) by a shareholder of the Fund who was a shareholder of record both at the time the shareholder provides the notice required by the Fund’s Bylaws and at the time of the annual meeting, who is entitled to vote at the meeting in the election each individual so nominated or on such other business and who has complied with the advance notice requirements of, and provided the information required by, the Fund’s Bylaws. With respect to special meetings of the Fund’s shareholders, only the business specified in the notice of the meeting may be brought before the meeting. Nominations of individuals for election as Directors at a special meeting of shareholders may be made only (i) by or at the direction of the Board of Directors or (ii) if the special meeting has been called in accordance with the Fund’s Bylaws for the purpose of electing directors, by any shareholder of the Fund who is a shareholder of record both at the time the shareholder provides the notice required by the Fund’s Bylaws and at the time of the special meeting, who is entitled to vote at the meeting in the election of each individual so nominated and who has complied with the advance notice requirements of, and provided the information required by, the Fund’s Bylaws.

Calling of Special Meetings of Shareholders. The Fund’s Bylaws provide that special meetings of the Fund’s shareholders may be called by the Board of Directors and certain of the Fund’s officers. The Fund’s Bylaws also provide that, subject to the satisfaction of certain procedural and informational requirements by the shareholders requesting the meeting, a special meeting of shareholders must be called by the secretary of the Fund upon the written request of shareholders entitled to cast not less than a majority of all the votes entitled to be cast at such meeting. The Fund’s secretary will inform the requesting shareholders of the reasonably estimated cost of preparing and mailing the notice of meeting (including the Fund’s proxy materials), and the requesting shareholders must pay the estimated cost before the secretary may prepare and mail notice of the special meeting.

Control Share Acquisitions. Subtitle 7 of Title 3 of the MGCL, commonly known as the Maryland Control Share Acquisition Act (the “MCSAA”), provides that, once a corporation has at least 100 beneficial owners of its

 

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capital stock and a registered closed-end fund elects to opt-in to the MCSAA, control shares of a Maryland corporation acquired in a control share acquisition have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter. Shares owned by the acquirer, by officers or by directors who are employees of the corporation are excluded from shares entitled to vote on the matter. Control shares are voting shares of stock which, if aggregated with all other shares of stock owned by the acquirer or in respect of which the acquirer is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquirer to exercise voting power in electing directors within one of the following ranges of voting power:

 

   

one-tenth or more but less than one-third;

 

   

one-third or more but less than a majority; or

 

   

a majority or more of all voting power.

The requisite shareholder approval must be obtained each time an acquirer crosses one of the thresholds of voting power set forth above. Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained shareholder approval. A control share acquisition means the acquisition of control shares, subject to certain exceptions.

A person who has made or proposes to make a control share acquisition may compel the Board of the corporation to call a special meeting of shareholders to be held within 10 days of demand to consider the voting rights of the shares. The right to compel the calling of a special meeting is subject to the satisfaction of certain conditions, including an undertaking to pay the expenses of the meeting. Such meeting must be held within 50 days after the day on which the corporation has received the request and the undertaking. If no request for a meeting is made, the corporation may itself present the question at any shareholders meeting.

If voting rights are not approved at the meeting or if the acquiring person does not deliver an acquiring person statement as required by the statute, then the corporation may redeem for fair value any or all of the control shares, except those for which voting rights have previously been approved. The right of the corporation to redeem control shares is subject to certain conditions and limitations, including, as provided in the Fund’s Bylaws compliance with the Investment Company Act. Fair value is determined, without regard to the absence of voting rights for the control shares, as of the date of the last control share acquisition by the acquirer or of any meeting of shareholders at which the voting rights of the shares are considered and not approved, and without regard to the absence of voting rights of the control shares. If voting rights for control shares are approved at a shareholders meeting and the acquirer becomes entitled to vote a majority of the shares entitled to vote, all other shareholders may exercise appraisal rights. The fair value of the shares as determined for purposes of appraisal rights may not be less than the highest price per share paid by the acquirer in the control share acquisition.

The MCSAA does not apply (a) to shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction or (b) to acquisitions approved or exempted by the articles of incorporation or Bylaws of the corporation.

The Fund has opted-in to the MCSAA. The Bylaws for the Fund provide that the provisions of the MCSAA do not apply to the voting rights of the holders of any preferred shares of the Fund (but only with respect to such preferred shares).

Business Combinations. Under Subtitle 6 of Title 3 of the MGCL (the “Business Combination Act”), once a corporation has at least 100 beneficial owners of its capital stock and subject to certain limited exceptions not applicable to the Company, “business combinations” between a Maryland corporation and an interested shareholder or an affiliate of an interested shareholder are prohibited for five years after the most recent date on which the interested shareholder becomes an interested shareholder. These business combinations include a

 

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merger, consolidation, share exchange or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities. An interested shareholder is defined as:

 

   

any person who beneficially owns 10% or more of the voting power of the corporation’s outstanding voting stock; or

 

   

an affiliate or associate of the corporation who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then-outstanding voting stock of the corporation.

A person is not an interested shareholder under this statute if the Board approved in advance the transaction by which the shareholder otherwise would have become an interested shareholder. However, in approving a transaction, the Board may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the Board.

After the five-year prohibition, any business combination between the Maryland corporation and an interested shareholder generally must be recommended by the board of directors of the corporation and approved by the affirmative vote of at least:

 

   

80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation; and

 

   

two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested shareholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested shareholder.

These super-majority vote requirements do not apply if the corporation’s common shareholders receive a minimum price, as defined under Maryland law, for their shares in the form of cash or other consideration in the same form as previously paid by the interested shareholder for its shares.

The statute permits various exemptions from its provisions, including business combinations that are exempted by the Board before the time that the interested shareholder becomes an interested shareholder, which may discourage others from trying to acquire control of the Fund and increase the difficulty of consummating any offer.

Subtitle 8 of Title 3 of the MGCL. The Fund is subject to Subtitle 8 of Title 3 of the MGCL. Subtitle 8 permits Maryland corporations with a class of equity securities registered under the Exchange Act and at least three independent directors to elect to be subject, by provision in its charter or Bylaws or a resolution of its board of directors and notwithstanding any contrary provision in the charter or Bylaws, to any or all of the following five provisions: a classified board; a two-thirds shareholder vote requirement for removing a director; a requirement that the number of directors be fixed only by vote of the directors; a requirement that a vacancy on the board be filled only by the remaining directors and for the remainder of the full term of the class of directors in which the vacancy occurred; and a requirement that the request of the holders of at least a majority of all votes entitled to be cast shall be necessary to call a special meeting of shareholders. Through provisions in the Fund’s charter and Bylaws, some unrelated to Subtitle 8, the Fund includes provisions classifying the Fund’s Board of Directors in three classes serving staggered three-year terms; require the affirmative vote of the holders of not less than two-thirds of all of the votes entitled to be cast on the matter for the removal of any director from the board, which removal is allowed only for cause; vest in the board the exclusive power to fix the number of directorships, subject to limitations set forth in the Fund’s charter and Bylaws, and fill vacancies; and require the written request of shareholders entitled to cast not less than a majority of all votes entitled to be cast at such meeting to call a shareholder –initiated special meeting.

Approval of Extraordinary Corporate Action; Amendment of the Fund’s Charter and Bylaws. Under Maryland law, a Maryland corporation generally cannot dissolve, amend its charter, merge, consolidate, sell all

 

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or substantially all of its assets or engage in a statutory share exchange, unless approved by the affirmative vote of shareholders entitled to cast at least two-thirds of the votes entitled to be cast on the matter. A Maryland corporation may provide in its charter for approval of these matters by a lesser percentage, but not less than a majority of all of the votes entitled to be cast on the matter.

The Fund’s charter generally provides for approval of charter amendments and extraordinary transactions by the shareholders entitled to cast at least a majority of the votes entitled to be cast on the matter, except that the Fund’s charter provides that the following matters require the approval of shareholders entitled to cast at least 80 percent of the votes entitled to be cast on such matter:

 

   

amendments to the provisions of the Fund’s charter relating to the classification of the Board of Directors, the power of the Board of Directors to fix the number of directors and to fill vacancies on the Board and the vote required to elect or remove a Director;

 

   

charter amendments that would convert the Fund from a closed-end company to an open-end company or make the Fund’s common stock a redeemable security (within the meaning of the Investment Company Act);

 

   

the liquidation or dissolution of the Fund or charter amendments to effect the liquidation or dissolution of the Fund;

 

   

amendments to the provisions of the Fund’s charter relating to the vote required to approve the dissolution of the Fund, charter amendments and extraordinary transactions

 

   

any merger, consolidation, statutory share exchange or sale or exchange of all or substantially all of the Fund’s assets that the MGCL requires be approved by the Fund’s shareholders; or

 

   

any transaction between the Fund, on the one hand, and any person or group of persons acting together that is entitled to exercise or direct the exercise, or acquire the right to exercise or direct the exercise, directly or indirectly (other than solely by virtue of a revocable proxy), of one-tenth or more of the voting power in the election of Directors generally, or any affiliate of such a person, group or member of such a group (collectively “Transacting Persons”), on the other hand.

However, if such amendment, proposal or transaction is approved by at least two-thirds of the Fund’s continuing directors (in addition to approval by the Board of Directors), the amendment, proposal or transaction may instead be approved by a majority of the votes entitled to be cast on such amendment, proposal or transaction, except that any transaction including Transacting Persons that would not otherwise require shareholder approval under the MGCL would not require further shareholder approval unless another provision of the Fund’s charter requires such approval. The “continuing directors” are defined in the Fund’s charter as its current Directors and Directors whose nomination for election by the Fund’s shareholders or whose election by the Directors to fill a vacancy on the Board is approved by a majority of the continuing directors then serving on the Board of Directors.

The Fund’s charter and Bylaws provide that the Board of Directors will have the exclusive power to adopt, alter or repeal any provision of the Fund’s Bylaws and to make new Bylaws.

 

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CLOSED-END FUND STRUCTURE

The Fund is a diversified, closed-end management investment company (commonly referred to as a closed-end fund). Unlike open-end funds (e.g., mutual funds) closed-end funds generally list their shares for trading on a stock exchange and do not redeem their shares at the request of the shareholder. As a result, if shareholders wish to sell common shares of a closed-end fund they must trade them on the market as they would with respect to any other stock at the prevailing market price at that time. If the shareholder wishes to sell shares of a mutual fund, the mutual fund will redeem or buy back the shares at “net asset value.”

Shares of closed-end funds frequently trade at a discount to their NAV. Because of this possibility and the recognition that any such discount may not be in the interest of shareholders, the Fund’s Board of Directors might consider from time to time engaging in transactions such as open-market repurchases, tender offers for shares or other programs intended to reduce the discount. The Fund cannot guarantee or assure, however, that the Fund’s Board of Directors will decide to engage in any of these actions. Nor is there any guarantee or assurance that such actions, if undertaken, would result in the shares trading at a price equal or close to NAV per common share.

 

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REPURCHASE OF COMMON SHARES

Because the Fund is a closed-end management investment company, its shareholders will not have the right to cause the Fund to redeem their Common Shares. Instead, the Fund’s Common Shares will trade in the open market at a price that will be a function of several factors, including dividend levels (which are in turn affected by expenses), NAV, dividend stability, relative demand for and supply of such shares in the market, general market and economic conditions and other factors. Notice is hereby given in accordance with Section 23(c) of the Investment Company Act that the Fund may purchase at market prices from time to time its Common Shares in the open market but is under no obligation to do so.

Notwithstanding the foregoing, at any time if the Fund has preferred shares outstanding, the Fund may not purchase, redeem or otherwise acquire any of its Common Shares unless (i) all accrued preferred shares dividends have been paid and (ii) at the time of such purchase, redemption or acquisition, the Fund has an asset coverage of at least 200% after deducting the amount of such purchase, redemption or acquisition, as applicable. Similarly, if the Fund has outstanding indebtedness, the Fund generally may not purchase, redeem or acquire its capital stock unless the Fund has an asset coverage of at least 300% after deducting the amount of such purchase, redemption or acquisition, as applicable. See “Leverage.” Any service fees incurred in connection with any tender offer made by the Fund will be borne by the Fund and will not reduce the stated consideration to be paid to tendering shareholders.

Subject to its investment restrictions, the Fund may borrow to finance the repurchase of Common Shares or to make a tender offer for those shares. Interest on any borrowings to finance share repurchase transactions or the accumulation of cash by the Fund in anticipation of share repurchases or tenders will reduce the Fund’s net income. Any share repurchase, tender offer or borrowing approved by the Fund’s Board of Directors would have to comply with the NYSE listing requirements and the Exchange Act, the Investment Company Act, and the rules and regulations thereunder.

There is no assurance that, if action is undertaken to repurchase or tender for Common Shares, such action will result in the Common Shares trading at a price that approximates their NAV. Although share repurchases and tenders could have a favorable effect on the market price of the Fund’s Common Shares, shareholders should be aware that the acquisition of Common Shares by the Fund will decrease the total assets of the Fund and, therefore, may have the effect of increasing the Fund’s expense ratio and decreasing the asset coverage with respect to any preferred shares outstanding and any amounts borrowed.

 

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TAX MATTERS

The discussion below provides general tax information related to an investment in Common Shares of the Fund. Because tax laws are complex and often change, shareholders should consult their tax advisors about the tax consequences of an investment in the Fund. Unless otherwise noted, the following tax discussion applies only to U.S. shareholders that hold the Common Shares as a capital asset (generally, property held for investment). A U.S. shareholder is, for U.S. federal income tax purposes, an individual who is a citizen or resident of the United States, a U.S. corporation, or any estate or trust the income of which is subject to U.S. federal income tax regardless of its source.

The Fund has elected to be treated and intends to qualify each taxable year as a regulated investment company under Subchapter M of the Code. To qualify under Subchapter M for the favorable tax treatment accorded to regulated investment companies, the Fund must, among other things: (1) distribute to its shareholders in each taxable year at least 90% of the sum of its investment company taxable income (i.e., income other than its net realized long-term capital gain over its net realized short-term capital loss, but without regard to the deduction for dividends paid) and its net tax-exempt income; (2) derive in each taxable year at least 90% of its gross income from (a) dividends, interest, payments with respect to certain securities loans, and gains from the sale or other disposition of stock, securities or foreign currencies, or other income (including but not limited to gain from options, futures and forward contracts) derived with respect to its business of investing in such stock, securities or foreign currencies; and (b) net income derived from interests in “Qualified Publicly Traded Partnerships” (i.e., partnerships that are traded on an established securities market or tradable on a secondary market) that derive less than 90% of their gross income from the items described in (a) above); and (3) diversify its holdings so that, at the end of each quarter of each taxable year of the Fund (a) at least 50% of the value of the Fund’s total assets is represented by cash, cash items, U.S. government securities and securities of other regulated investment companies, and other securities, with these other securities limited, with respect to any one issuer, to an amount not greater in value than 5% of the value of the Fund’s total assets, and to not more than 10% of the outstanding voting securities of such issuer, and (b) not more than 25% of the value of the Fund’s total assets is represented by the securities (other than U.S. government securities or securities of other regulated investment companies) of (I) any one issuer, (II) any two or more issuers that the Fund controls and that are determined to be engaged in the same or similar trades or businesses or related trades or businesses or (III) any one or more Qualified Publicly Traded Partnerships. As a regulated investment company, the Fund generally will not be subject to U.S. federal income tax on its investment company taxable income and net capital gain (the excess of net long-term capital gain over net short-term capital loss), if any, that it distributes in each taxable year to its shareholders. The Fund intends to distribute to its shareholders, at least annually, substantially all of its investment company taxable income and net capital gain.

A regulated investment company that fails to distribute, by the close of each calendar year, an amount at least equal to the sum of 98% of its ordinary taxable income for such calendar year and 98.2% of its capital gain net income for the one-year period ended on October 31 of such calendar year, plus any shortfalls from any prior year’s required distribution, is liable for a 4% excise tax on the portion of the undistributed amounts of such income that are less than the required distributions. For these purposes, the Fund will be deemed to have distributed any income on which it paid federal income tax. To avoid the imposition of this excise tax, the Fund intends to make the required distributions of its ordinary taxable income and its capital gain net income, to the extent possible, by the close of each calendar year. However, for cash management purposes, the Fund may elect to retain distributable amounts and pay excise tax as described above.

Distributions to shareholders by the Fund of ordinary income (including “market discount” realized by the Fund on the sale of debt securities), and of net short-term capital gains, if any, realized by the Fund will be taxable to shareholders as ordinary income to the extent such distributions are paid out of the Fund’s current or accumulated earnings and profits. Distributions, if any, of net capital gains generally will qualify for the maximum 20% U.S. federal income tax rate on long-term capital gains, regardless of the length of time the shareholder has owned Common Shares of the Fund. It is anticipated that distributions paid by the Fund will

 

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generally not be attributable to dividends and, therefore, generally will not qualify for the 20% maximum tax rate applicable to “qualified dividend income” of non-corporate shareholders. A distribution of an amount in excess of the Fund’s current and accumulated earnings and profits (as determined for U.S. federal income tax purposes) will be treated by a shareholder as a return of capital that is applied against and reduces the shareholder’s basis in his or her Common Shares of the Fund. To the extent that the amount of any such distribution exceeds the shareholder’s basis in his or her shares, the excess will be treated by the shareholder as gain from a sale or exchange of the Common Shares. A non-corporate shareholder should also be aware that the benefits of the favorable tax rate applicable to long-term capital gains and qualified dividend income may be affected by the application of the alternative minimum tax to individual shareholders.

Distributions will be treated in the manner described above regardless of whether such distributions are paid in cash or invested in additional Common Shares of the Fund. Shareholders receiving distributions in the form of additional Common Shares of the Fund will be treated as receiving a distribution in the amount of cash that they would have received if they had elected to receive the distribution in cash, unless the Fund issues additional Common Shares with a fair market value equal to or greater than NAV, in which case, shareholders will be treated as receiving a distribution in the amount of the fair market value of the distributed Common Shares.

Although dividends generally will be treated as distributed when paid, dividends declared in October, November or December, payable to shareholders of record on a specified date in one of those months, and paid during the following January, will be treated as having been distributed by the Fund (and received by shareholders) on December 31 of the year in which declared. In addition, certain other distributions made after the close of a taxable year of the Fund may be “spilled back” and treated for certain purposes as paid by the Fund during such taxable year. In such case, shareholders generally will be treated as having received such dividends in the taxable year in which the distributions were actually made. For purposes of calculating the amount of a regulated investment company’s undistributed income and gain subject to the 4% excise tax described above, such “spilled back” dividends are treated as paid by the regulated investment company when they are actually paid.

For U.S. federal income tax purposes, the Fund is permitted to carry forward a net capital loss for any year to offset future capital gains. To the extent subsequent capital gains are offset by such losses, they would not result in U.S. federal income tax liability to the Fund and may not be distributed as such to shareholders. The Fund may not carry forward any losses other than net capital losses.

In general, the sale or other disposition of Common Shares will result in capital gain or loss to shareholders. A holder’s gain or loss generally will be a long-term gain or loss if the Common Shares have been held for more than one year. Present law taxes both long- and short-term capital gains of corporations at the rates applicable to ordinary income. For non-corporate taxpayers, however, net capital gains are taxed at a maximum rate of 20%, while short-term capital gains and other ordinary income are taxed at a maximum rate of 37%. Losses realized by a holder on the sale or exchange of Common Shares held for six months or less are treated as long-term capital losses to the extent of any distribution of long-term capital gain received (or amounts designated as undistributed capital gains) with respect to such Common Shares. In addition, no loss will be allowed on the sale or other disposition of Common Shares if the owner acquires (including pursuant to the dividend reinvestment plan) or enters into a contract or option to acquire securities that are substantially identical to such Common Shares within 30 days before or after the disposition. In such case, the basis of the securities acquired will be adjusted to reflect the disallowed loss.

A 3.8% Medicare contribution tax is imposed on net investment income, including interest, dividends, and capital gain, of U.S. individuals with income exceeding $200,000 (or $250,000 if married filing jointly), and of estates and trusts.

The Fund’s transactions in foreign currencies, forward contracts, options and futures contracts (including options and futures contracts on foreign currencies), to the extent permitted, will be subject to special provisions

 

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of the Code (including provisions relating to “hedging transactions” and “straddles”) that, among other things, may affect the character of gains and losses realized by the Fund (i.e., may affect whether gains or losses are ordinary or capital), accelerate recognition of income to the Fund and defer Fund losses. These rules could therefore affect the character, amount and timing of distributions to shareholders. These provisions also (a) will require the Fund to mark-to-market certain types of the positions in its portfolio (i.e., treat them as if they were closed out at the end of each year) and (b) may cause the Fund to recognize income without receiving cash with which to pay dividends or make distributions in amounts necessary to satisfy the distribution requirements for avoiding income and excise taxes. The Fund will endeavor to monitor its transactions and will endeavor to make the appropriate tax elections and the appropriate entries in its books and records when it acquires any foreign currency, forward contract, option, futures contract or hedged investment in order to mitigate the effect of these rules and prevent disqualification of the Fund as a regulated investment company.

The Fund’s investment in so-called “section 1256 contracts,” such as regulated futures contracts, most foreign currency forward contracts traded in the interbank market and options on most stock indices, are subject to special tax rules. All section 1256 contracts held by the Fund at the end of its taxable year are required to be marked to their market value, and any unrealized gain or loss on those positions will be included in the Fund’s income as if each position had been sold for its fair market value at the end of the taxable year. The resulting gain or loss will be combined with any gain or loss realized by the Fund from positions in section 1256 contracts closed during the taxable year. Provided such positions were held as capital assets and were not part of a “hedging transaction” nor part of a “straddle,” 60% of the resulting net gain or loss will be treated as long-term capital gain or loss, and 40% of such net gain or loss will be treated as short-term capital gain or loss, regardless of the period of time the positions were actually held by the Fund.

As a result of entering into swap contracts, the Fund may make or receive periodic net payments. The Fund may also make or receive a payment when a swap is terminated prior to maturity through an assignment of the swap or other closing transaction. Periodic net payments will generally constitute ordinary income or deductions, while termination of a swap will generally result in capital gain or loss (which will be a long-term capital gain or loss if the Fund has been a party to the swap for more than one year). With respect to certain types of swaps, the Fund may be required to currently recognize income or loss with respect to future payments on such swaps or may elect under certain circumstances to mark such swaps to market annually for tax purposes as ordinary income or loss. The tax treatment of many types of credit default swaps is uncertain.

Under section 988 of the Code, gains or losses attributable to fluctuations in exchange rates between the time the Fund accrues income or receivables or expenses or other liabilities denominated in a foreign currency and the time the Fund actually collects such income or pays such liabilities are generally treated as ordinary income or ordinary loss. Similarly, gains or losses on foreign currency, foreign currency forward contracts and certain foreign currency options or futures contracts, to the extent attributable to fluctuations in exchange rates between the acquisition and disposition dates, are also treated as ordinary income or loss unless the Fund were to elect otherwise.

In certain situations, the Fund may, for a taxable year, defer all or a portion of its capital losses and currency losses realized after October and ordinary losses incurred after December until the next taxable year in computing its investment company taxable income and net capital gain, which will defer the recognition of such realized losses. Such deferrals and other rules regarding gains and losses realized after October (or December) may affect the tax character of shareholder distributions.

Properly reported dividends are generally exempt from U.S. federal withholding tax when they (i) are paid in respect of the Fund’s “qualified net interest income” (generally, the Fund’s U.S. source interest income, other than certain contingent interest and interest from obligations of a corporation or partnership in which the Fund is at least a 10% shareholder, reduced by expenses that are allocable to such income) or (ii) are paid in respect of the Fund’s “qualified short-term capital gains” (generally, the excess of the Fund’s net short-term capital gain over the Fund’s long-term capital loss for such taxable year). However, depending on its circumstances, the Fund

 

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could report all, some or none of its potentially eligible dividends as such qualified net interest income or as qualified short-term capital gains and/or treat such dividends, in whole or in part, as ineligible for this exemption from withholding. In order to qualify for this exemption from withholding, a non-U.S. shareholder would need to comply with applicable certification requirements relating to its non-U.S. status (including, in general, furnishing an IRS Form W-8BEN or substitute Form). In the case of shares held through an intermediary, the intermediary could withhold even if the Fund designated the payment as qualified net interest income or qualified short-term capital gain. Non-U.S. shareholders should contact their intermediaries with respect to the application of these rules to their accounts.

Distributions that the Fund reported as “short-term capital gain dividends” or “long-term capital gain dividends” will not be treated as such to a recipient foreign shareholder if the distribution is attributable to gain received from the sale or exchange of U.S. real property or an interest in a U.S. real property holding corporation and the Fund’s direct or indirect interests in U.S. real property exceed certain levels. Instead, if the foreign shareholder does not own more than 5% of the outstanding shares of the Fund at any time during the one year period ending on the date of distribution, such distributions will be subject to 30% withholding by the Fund and will be treated as ordinary dividends to the foreign shareholder; if the foreign shareholder owns more than 5% of the outstanding shares of the Fund at any time during the one year period ending on the date of the distribution, such distribution will be treated as real property gain subject to 21% withholding tax and could subject the foreign shareholder to U.S. filing requirements. Additionally, if the Fund’s direct or indirect interests in U.S. real property were to exceed certain levels, a foreign shareholder realizing gains upon redemption from the Fund could be subject to the 21% withholding tax and U.S. filing requirements unless more than 50% of the Fund’s shares were owned by U.S. persons at such time or unless the foreign person had not held more than 5% of the Fund’s outstanding shares throughout either such person’s holding period for the redeemed shares or, if shorter, the previous five years.

Separately, a withholding tax of 30% will apply to Fund dividends paid to shareholders that are non-U.S. entities unless such shareholders comply with certain reporting requirements to the tax authorities of their home jurisdictions or the IRS (for non-U.S. investment funds and financial institutions) or the Fund (other non-U.S. entities) as to identifying information (including name, address and taxpayer identification number) of their direct and indirect U.S. owners.

The foregoing tax discussion is for general information only. The provisions of the Code and regulations thereunder presently in effect as they directly govern the taxation of the Fund and its shareholders are subject to change by legislative or administrative action, and any such change may be retroactive with respect to the Fund’s transactions. The foregoing does not represent a detailed description of the federal income tax considerations relevant to special classes of taxpayers including, without limitation, financial institutions, insurance companies, investors in pass-through entities, U.S. shareholders whose “functional currency” is not the U.S. dollar, tax-exempt organizations, dealers in securities or currencies, traders in securities or commodities that elect mark to market treatment, persons that will hold Common Shares as a position in a “straddle,” “hedge” or as part of a “constructive sale” for federal income tax purposes, or persons subject to the special accounting rules under section 451(b) of the Code. Shareholders are advised to consult with their own tax advisors for more detailed information concerning federal income tax matters.

 

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PLAN OF DISTRIBUTION

The Fund may offer, from time to time, Common Shares on an immediate, continuous or delayed basis, in one or more underwritten public offerings, “at the market” offerings (through one or more underwriters or dealers acting as principal or agent for the Fund) or a combination of both offerings under this prospectus and any related prospectus supplement. The Fund may offer to sell securities either at a fixed price or at prices that may vary, at market prices prevailing at the time of sale, at prices related to prevailing market prices, or at negotiated prices. Any underwriter or agent involved in the offer and sale of the securities will be named in the applicable prospectus supplement. A prospectus supplement or supplements will disclose any sales loads, discounts, commissions, fees or other compensation paid to any underwriter, dealer or agent, the offering price, net proceeds and use of proceeds and the terms of any offering of the securities.

Underwriters or agents may receive compensation from the Fund in the form of discounts, concessions or commissions. Underwriters may sell Common Shares to or through dealers, and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers for whom they may act as agents. Underwriters, dealers and agents that participate in the distribution of the Common Shares may be deemed to be underwriters under the Securities Act, and any discounts and commissions they receive from the Fund and any profit realized by them on the resale of the Common Shares may be deemed to be underwriting discounts and commissions under the Securities Act. Any such compensation received from the Fund will be described in the applicable prospectus supplement. The maximum amount of compensation to be received by any Financial Industry Regulatory Authority (FINRA) member or independent broker-dealer will not exceed 8.0% for the sale of any securities being registered pursuant to Rule 415 under the Securities Act. The Fund will not pay any compensation to any underwriter or agent in the form of warrants, options, consulting or structuring fees or similar arrangements.

If a prospectus supplement so indicates, the Fund may grant the underwriters an option, exercisable for 45 days from the date of the prospectus supplement, to purchase an additional amount of Common Shares to cover over-allotments, if any, at the public offering price, less the underwriting discounts and commissions.

The Fund anticipates that from time to time certain underwriters or agents may act as brokers or dealers in connection with the execution of the Fund’s portfolio transactions after they have ceased to be underwriters or agents and, subject to certain restrictions, may act as brokers while they are underwriters or agents. Certain underwriters and agents may perform investment banking and advisory services for the Adviser and its related parties from time to time, for which they would receive customary fees and expenses. Certain underwriters and agents may, from time to time, engage in transactions with or perform services for the Adviser and its affiliates in the ordinary course of business.

A prospectus and accompanying prospectus supplement in electronic form may be made available on the websites maintained by underwriters and agents. The underwriters and agents may agree to allocate a number of securities for sale to their online brokerage account holders. Such allocations of securities for Internet distributions will be made on the same basis as other allocations. In addition, securities may be sold by the underwriters and agents to securities dealers who resell securities to online brokerage account holders.

 

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ADMINISTRATIVE, CUSTODIAN AND TRANSFER AGENT SERVICES

U.S. Bancorp Fund Services, LLC, located 615 East Michigan Street, Milwaukee, WI 53202, serves as administrator (“Administrator”) to the Fund pursuant to a Fund Administration Servicing Agreement. U.S. Bank, National Association (together, “U.S. Bank”), located at 1 Federal Street, Boston, MA 02110, serves as the Fund’s custodian pursuant to a Custody Agreement.

Under the terms of the agreements, U.S. Bank is responsible for providing services necessary in the daily operations of the Fund, such as maintaining the Fund’s books and records, calculating the Fund’s NAV, settling all portfolio trades, preparing regulatory filings and acting as corporate secretary.

Under the Fund Administration Servicing Agreement, the Fund pays the Administrator an annual asset-based fee, which is payable monthly. The fee is calculated at the following rate: 0.06% on the first $200 million; 0.04% on the next $300 million; and 0.03% on the balance above $500 million. In addition, the Administrator is entitled to certain out of pocket expenses and the fees are subject to a minimum annual fee.

AST, located at 6201 15th Avenue, Brooklyn, NY 11219, serves as the Fund’s transfer agent and dividend paying agent with respect to the Common Shares.

 

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LEGAL OPINIONS

Certain legal matters in connection with the Common Shares will be passed upon for the Fund by Willkie Farr & Gallagher LLP, New York, New York. Willkie Farr & Gallagher LLP may rely as to certain matters of Maryland law on the opinion of Miles & Stockbridge, P.C., Baltimore, Maryland.

FISCAL YEAR

For accounting purposes, the Fund’s fiscal year is the 12-month period ending on December 31. For tax purposes, the Fund has adopted the 12-month period ending December 31 of each year as its taxable year.

FINANCIAL STATEMENTS

The audited financial statements and financial highlights included in the annual report to the Fund’s shareholders for the fiscal year ended December 31, 2021 (the “2021 Annual Report”), together with the report of Deloitte  & Touche LLP on the financial statements and financial highlights included in the 2021 Annual Report, are incorporated herein by reference and are not part of the registration statement, this prospectus or any prospectus supplement.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Deloitte & Touche LLP, 30 Rockefeller Plaza, New York, NY is the Fund’s independent registered public accounting firm.

INCORPORATION BY REFERENCE

This prospectus is part of a registration statement that we have filed with the SEC. We are allowed to “incorporate by reference” the information that we file with the SEC, which means that we can disclose important information to you by referring you to those documents. We incorporate by reference into this prospectus the documents listed below and any future filings we make with the SEC pursuant to Section 30(b)(2) of the Investment Company Act and Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, including any filings on or after the date of this prospectus from the date of filing (excluding any information furnished, rather than filed), until we have sold all of the offered securities to which this prospectus and any accompanying prospectus supplement relates or the offering is otherwise terminated. The information incorporated by reference is an important part of this prospectus. Any statement in a document incorporated by reference into this prospectus will be deemed to be automatically modified or superseded to the extent a statement contained in (1) this prospectus or (2) any other subsequently filed document that is incorporated by reference into this prospectus modifies or supersedes such statement. The documents incorporated by reference herein include:

 

   

the Fund’s annual report on Form N-CSR for the fiscal year ended December 31, 2021, filed with the SEC on February 25, 2022;

 

   

the Fund’s definitive proxy statement on Schedule 14A filed with the SEC on April 20, 2022; and

 

   

the description of the Fund’s Common Shares contained in the Registration Statement on Form 8-A (File No. 001-35820) filed with the SEC on February 20, 2013, including any amendment or report filed for the purpose of updating such description prior to the termination of this offering.

The Fund will provide without charge to each person, including any beneficial owner, to whom this prospectus is delivered, upon written or oral request, a copy of any and all of the documents that have been or may be

 

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incorporated by reference in this prospectus or the accompanying prospectus supplement. You should direct requests for documents by calling (800) 882-0052:

The Fund makes available this prospectus and the Fund’s annual and semi-annual reports, free of charge, at www.apollofunds.com. You may also obtain this prospectus and the other documents incorporated by reference and other information the Fund files electronically, including reports and proxy statements, on the SEC website (http://www.sec.gov) or with the payment of a duplication fee, by electronic request at publicinfo@sec.gov. Information contained in, or that can be accessed through, the Fund’s website is not incorporated by reference into this prospectus and should not be considered to be part of this prospectus or the accompanying prospectus supplement.

 

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APPENDIX A

DESCRIPTION OF S&P, MOODY’S AND FITCH RATINGS*

The following is a description of certain ratings assigned by S&P, Moody’s & Fitch.

MOODY’S INVESTORS SERVICE, INC. (MOODY’S)

Long Term Ratings

Aaa: Obligations rated Aaa are judged to be of the highest quality, subject to the lowest level of credit risk.

Aa: Obligations rated Aa are judged to be of high quality and are subject to very low credit risk.

A: Obligations rated A are judged to be upper-medium grade and are subject to low credit risk.

Baa: Obligations rated Baa are judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics.

Ba: Obligations rated Ba are judged to be speculative and are subject to substantial credit risk.

B: Obligations rated B are considered speculative and are subject to high credit risk.

Caa: Obligations rated Caa are judged to be speculative of poor standing and are subject to very high credit risk.

Ca: Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest.

C: Obligations rated C are the lowest rated and are typically in default, with little prospect for recovery of principal or interest.

Moody’s appends numerical modifiers 1, 2, and 3 to each generic rating classification from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category. Additionally, a “(hyb)” indicator is appended to all ratings of hybrid securities issued by banks, insurers, finance companies, and securities firms.

Short-Term Ratings

P-1: Issuers (or supporting institutions) rated Prime-1 have a superior ability to repay short-term debt obligations.

P-2: Issuers (or supporting institutions) rated Prime-2 have a strong ability to repay short-term debt obligations.

P-3: Issuers (or supporting institutions) rated Prime-3 have an acceptable ability to repay short-term obligations.

NP: Issuers (or supporting institutions) rated Not Prime do not fall within any of the Prime rating categories.

 

* 

The ratings indicated herein are believed to be the most recent ratings available at the date of this prospectus for the securities listed. Ratings are generally given to securities at the time of issuance. While the rating agencies may from time to time revise such ratings, they undertake no obligation to do so, and the ratings indicated do not necessarily represent ratings which would be given to these securities on the date of the Fund’s fiscal year end

 

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Short-Term Municipal Ratings

MIG 1: This designation denotes superior credit quality. Excellent protection is afforded by established cash flows, highly reliable liquidity support, or demonstrated broad-based access to the market for refinancing.

MIG 2: This designation denotes strong credit quality. Margins of protection are ample, although not as large as in the preceding group.

MIG 3: This designation denotes acceptable credit quality. Liquidity and cash-flow protection may be narrow, and market access for refinancing is likely to be less well-established.

SG: This designation denotes speculative-grade credit quality. Debt instruments in this category may lack sufficient margins of protection.

S&P Global Ratings (S&P)

Long-Term Issue Credit Ratings

AAA: An obligation rated AAA has the highest rating assigned by S&P. The obligor’s capacity to meet its financial commitment on the obligation is extremely strong.

AA: An obligation rated AA differs from the highest rated obligations only to a small degree. The obligor’s capacity to meet its financial commitment on the obligation is very strong.

A: An obligation rated A is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories. However, the obligor’s capacity to meet its financial commitment on the obligation is still strong.

BBB: An obligation rated BBB exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to weaken the obligor’s capacity to meet its financial commitment on the obligation.

Obligations rated BB, B, CCC, CC, and C are regarded as having significant speculative characteristics. BB indicates the least degree of speculation and C the highest. While such obligations will likely have some quality and protective characteristics, they may be outweighed by large uncertainties or major exposure to adverse conditions.

BB: An obligation rated BB is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to the obligor’s inadequate capacity to meet its financial commitment on the obligation.

B: An obligation rated B is more vulnerable to nonpayment than obligations rated BB, but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial, or economic conditions will likely impair the obligor’s capacity or willingness to meet its financial commitment on the obligation.

CCC: An obligation rated CCC is currently vulnerable to nonpayment, and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation.

CC: An obligation rated CC is currently highly vulnerable to nonpayment. The CC rating is used when a default has not yet occurred but S&P expects default to be a virtual certainty, regardless of the anticipated time to default.

 

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C: The C rating may be used to cover a situation where a bankruptcy petition has been filed or similar action has been taken, but payments on this obligation are being continued.

D: An obligation rated ‘D’ is in default or in breach of an imputed promise. For non-hybrid capital instruments, the ‘D’ rating category is used when payments on an obligation are not made on the date due, unless S&P Global Ratings believes that such payments will be made within five business days in the absence of a stated grace period or within the earlier of the stated grace period or 30 calendar days. The ‘D’ rating also will be used upon the filing of a bankruptcy petition or the taking of similar action and where default on an obligation is a virtual certainty, for example due to automatic stay provisions. A rating on an obligation is lowered to ‘D’ if it is subject to a distressed exchange offer.

Plus (+) or Minus (–): Ratings from AA to CCC may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the rating categories.

Short-Term Issue Credit Ratings

A-1: A short-term obligation rated ‘A-1’ is rated in the highest category by S&P Global Ratings. The obligor’s capacity to meet its financial commitments on the obligation is strong. Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligor’s capacity to meet its financial commitments on these obligations is extremely strong.

A-2: A short-term obligation rated ‘A-2’ is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rating categories. However, the obligor’s capacity to meet its financial commitments on the obligation is satisfactory.

A-3: A short-term obligation rated ‘A-3’ exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to weaken an obligor’s capacity to meet its financial commitments on the obligation.

B: A short-term obligation rated ‘B’ is regarded as vulnerable and has significant speculative characteristics. The obligor currently has the capacity to meet its financial commitments; however, it faces major ongoing uncertainties that could lead to the obligor’s inadequate capacity to meet its financial commitments.

C: A short-term obligation rated ‘C’ is currently vulnerable to nonpayment and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitments on the obligation.

D: A short-term obligation rated ‘D’ is in default or in breach of an imputed promise. For non-hybrid capital instruments, the ‘D’ rating category is used when payments on an obligation are not made on the date due, unless S&P Global Ratings believes that such payments will be made within any stated grace period. However, any stated grace period longer than five business days will be treated as five business days. The ‘D’ rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action and where default on an obligation is a virtual certainty, for example due to automatic stay provisions. A rating on an obligation is lowered to ‘D’ if it is subject to a distressed exchange offer.

Notes Ratings

An S&P Notes rating reflects the liquidity factors and market access risks unique to notes. Notes due in three years or less will likely receive a notes rating. Notes maturing beyond three years will most likely receive a long-term debt rating. The following criteria will be used in making that assessment.

 

   

Amortization schedule-the longer the final maturity relative to other maturities the more likely it will be treated as a note.

 

   

Source of payment-the more dependent the issue is on the market for its refinancing, the more likely it will be treated as a note.

 

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Note rating symbols are as follows:

SP-1: Strong capacity to pay principal and interest. An issue determined to possess a very strong capacity to pay debt service is given a plus (+) designation.

SP-2: Satisfactory capacity to pay principal and interest, with some vulnerability to adverse financial and economic changes over the term of the notes.

SP-3: Speculative capacity to pay principal and interest.

D: D is assigned upon failure to pay the note when due, completion of a distressed exchange offer, or the filing of a bankruptcy petition or the taking of similar action and where default on an obligation is a virtual certainty, for example due to automatic stay provisions.

FITCH RATINGS LTD.

International Long-Term Credit Ratings

AAA: Highest Credit Quality. AAA ratings denote the lowest expectation of credit risk. They are assigned only in cases of exceptionally strong capacity for payment of financial commitments. This capacity is highly unlikely to be adversely affected by foreseeable events.

AA: Very High Credit Quality. AA ratings denote a very low expectation of credit risk. They indicate very strong capacity for payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events.

A: High Credit Quality. A ratings denote expectations of low credit risk. The capacity for payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to adverse business or economic conditions than is the case for higher ratings.

BBB: Good Credit Quality. BBB ratings indicate that expectations of credit risk are currently low. The capacity for payment of financial commitments is considered adequate, but adverse business or economic conditions are more likely to impair this capacity.

BB: Speculative. BB ratings indicate an elevated vulnerability to credit risk, particularly in the event of adverse changes in business or economic conditions over time; however, business or financial alternatives may be available to allow financial commitments to be met.

B: Highly Speculative. B ratings indicate that material credit risk is present.

CCC: Substantial Credit Risk. CCC ratings indicate that substantial credit risk is present.

CC: Very High Levels of Credit Risk. CC ratings indicate very high levels of credit risk.

C: Exceptionally High Levels of Credit Risk. C indicates exceptionally high levels of credit risk.

International Short-Term Credit Ratings

F1: Highest Short-Term Credit Quality. Indicates the strongest intrinsic capacity for timely payment of financial commitments; may have an added “+” to denote any exceptionally strong credit feature.

F2: Good Short-Term Credit Quality. Good intrinsic capacity for timely payment of financial commitments.

 

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F3: Fair Short-Term Credit Quality. The intrinsic capacity for timely payment of financial commitments is adequate.

B: Speculative Short-Term Credit Quality . Minimal capacity for timely payment of financial commitments, plus heightened vulnerability to near term adverse changes in financial and economic conditions.

C: High Short-Term Default Risk. Default is a real possibility.

D: Default. Indicates the default of a short-term obligation.

Plus (+) or Minus (–): The modifiers “+” or “-” may be appended to a rating to denote relative status within major rating categories. Such suffixes are not added to AAA ratings and ratings below CCC. For the short-term rating category of F1, a “+” may be appended.

 

 

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LOGO

APPENDIX B

Proxy Voting Policies and Procedures

of

Apollo Credit Management, LLC

SEC registered advisers that have the authority to vote client proxies (which authority may be implied from a general grant of investment discretion) are required to adopt policies and procedures (i) reasonably designed to ensure that the adviser votes proxies in the best interests of its clients and (ii) that include how the adviser addresses material conflicts that may arise between the adviser’s interests and those of its clients. It is expected that, in most cases, Apollo Credit Management, LLC (the “adviser”) will invest the assets of its clients in securities that do not generally carry voting rights. When a client account does have voting rights in a security, it follows the proxy voting policies and procedures summarized below:

In determining how to vote, officers of the adviser will consult with each other and other investment professionals affiliated with the adviser, taking into account the interests of the adviser’s clients and investors as well as any potential conflicts of interest. The adviser will consult with legal counsel to identify potential conflicts of interest. Where a potential conflict of interest exists, the adviser may, if it so elects, resolve it by following the recommendation of a disinterested third party, including by seeking the direction of the independent directors of the client or, in extreme cases, by abstaining from voting. While the adviser may retain an outside service to provide voting recommendations and to assist in analyzing votes, the adviser does not expect to delegate its voting authority to any third party.

An officer of the adviser will keep a written record of how all such proxies are voted. The adviser will retain records of (1) proxy voting policies and procedures, (2) all proxy statements received (or it may rely on proxy statements filed on the SEC’s EDGAR system in lieu thereof), (3) all votes cast, (4) investor requests for voting information, and (5) any specific documents prepared or received in connection with a decision on a proxy vote. If it uses an outside service, the adviser may rely on such service to maintain copies of proxy statements and records, so long as such service will provide a copy of such documents promptly upon request.

The adviser’s proxy voting policies are not exhaustive and are designed to be responsive to the wide range of issues that may be subject to a proxy vote. In general, the adviser will vote proxies in accordance with these guidelines unless: (1) it has determined otherwise due to the specific and unusual facts and circumstances with respect to a particular vote, (2) the subject matter of the vote is not covered by these guidelines, (3) a material conflict of interest is present, or (4) it is necessary to vote contrary to the general guidelines to maximize shareholder value or the best interests of the adviser’s clients. In reviewing proxy issues, the adviser generally uses the following guidelines:

Elections of Directors: In general, the adviser will vote in favor of the management-proposed slate of directors. If there is a proxy fight for seats on a portfolio company’s board of directors, or the adviser determines that there are other compelling reasons for withholding a vote, it will determine the appropriate vote on the matter. The adviser may withhold votes for directors that fail to act on key issues, such as failure to: (1) implement proposals to declassify a board, (2) implement a majority vote requirement, (3) submit a rights plan to a shareholder vote or (4) act on tender offers where a majority of shareholders have tendered their shares. Finally, the adviser may withhold votes for directors of non-U.S. issuers where there is insufficient information about the nominees disclosed in the proxy statement or where, in the adviser’s discretion, the cost of voting will outweigh the perceived benefit.

Appointment of Auditors: The adviser believes that the board of an issuer remains in the best position to choose its independent auditors and the adviser will generally support management’s recommendation in this regard.

 

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LOGO

Changes in Capital Structure: Changes in an issuer’s charter or by-laws may be required by state or federal regulation. In general, the adviser will cast client votes in accordance with management on such proposals. However, the adviser will consider carefully any proposal regarding a change in corporate structure that is not required by state or federal regulation.

Corporate Restructurings, Mergers and Acquisitions: The adviser believes proxy votes dealing with corporate reorganizations are an extension of the investment decision. Accordingly, the adviser will analyze such proposals on a case-by-case basis and vote in accordance with its perception of client interests.

Proposals Affecting Shareholder Rights: The adviser generally will vote in favor of proposals that give shareholders a greater voice in the affairs of an issuer and oppose any measure that seeks to limit such rights. However, when analyzing such proposals, the adviser will balance the financial impact of the proposal against any impairment of shareholder rights as well as of a client’s investment in the issuer.

Corporate Governance: The adviser recognizes the importance of good corporate governance. Accordingly, the adviser generally will favor proposals that promote transparency and accountability within an issuer.

Anti-Takeover Measures: The adviser will evaluate, on a case-by-case basis, any proposals regarding anti-takeover measures to determine the measure’s likely effect on shareholder value dilution.

Stock Splits: The adviser generally will vote with management on stock split matters.

Limited Liability of Directors: The adviser generally will vote with management on matters that could adversely affect the limited liability of directors.

Social and Corporate Responsibility: The adviser will review proposals related to social, political and environmental issues to determine whether they may adversely affect shareholder value. The adviser may abstain from voting on such proposals where they do not have a readily determinable financial impact on shareholder value.

 

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Apollo Credit Management, LLC

Privacy Policy

Dear Client or Investor:

Apollo Global Management, Inc. (“Apollo”) and its subsidiaries1 (together “us”, “we”, or “Apollo”) take precautions to maintain the privacy of personal information concerning Apollo’s current and prospective investors who are individuals/natural persons. These precautions include the adoption of certain procedures designed to maintain and secure such investors’ nonpublic personal information from inappropriate disclosure to third parties. U.S. federal regulations require Apollo to inform investors of its privacy policy regarding what kinds of information it collects and the circumstances in which that information may be disclosed to third parties. Please see the Appendix to this Policy for additional information about our privacy practices regarding the European Union, United Kingdom, Cayman Islands, and other jurisdictions that may grant natural persons certain privacy rights.

We collect nonpublic personal information about investors from the following sources:

 

   

information Apollo receives from an investor in its subscription documentation, other forms or agreements, and correspondence (written, telephonic, or electronic), including identifiers, such as an investor’s name, address, social security number, and commercial information such as assets, income, and amounts or types of such investor’s investments;

 

   

commercial information about an investor’s transactions with Apollo, its affiliates, and nonaffiliated third parties, such as an investor’s capital account balance, other account data, and participation in other investments; and

 

   

commercial information Apollo may receive from a consumer reporting agency, such as an investor’s credit history.

We do not disclose any nonpublic personal information about prospective, current, or former investors to anyone, except as requested or authorized by an investor or to certain affiliates and service providers as permitted or as otherwise required by law or regulation. We do not sell your nonpublic personal information.

Except as described below or as otherwise required by law or regulation, we do not disclose to affiliates or to nonaffiliates any nonpublic personal information about you. We do disclose information to affiliates and nonaffiliated third parties for our everyday business purposes, such as to process your transactions, maintain your investments in funds managed by Apollo, and to respond to court orders and legal investigations, or as permitted by law. We also provide such information to our affiliates, attorneys, banks, auditors, securities brokers, and service providers as may be necessary to facilitate the acceptance and management of your investments in funds managed by Apollo and to enable them to perform services on our behalf. We may also provide your name, address, telephone number, social security number, or financial condition information to affiliates or nonaffiliated third parties, such as broker-dealers, engaged in marketing activities on our behalf, such as the solicitation of your investment in future funds managed by Apollo. We will require such third party service providers and financial institutions to protect the confidentiality of the investors’ nonpublic personal information and to use the information only for purposes for which it is disclosed to them. We maintain physical, electronic, and procedural safeguards that comply with U.S. federal standards to safeguard the investors’ nonpublic personal information.

We will adhere to the policies and practices described in this privacy policy regardless of whether the investor is a prospective, current or former investor.

If you have any questions concerning this privacy policy, please contact privacy@apollo.com.

 

1 

Subsidiaries of Apollo also include entities that conduct their business under names that do not include the “Apollo” name.


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Appendix: European Union, United Kingdom, Cayman Islands, and Other Jurisdictional Privacy Notice

This notice, along with the Apollo Privacy Policy above, describes how Apollo,2 as a data controller, collects and processes personal information about natural persons residing in the European Union, the United Kingdom, and other jurisdictions that may grant natural persons certain privacy rights,3 as well as in relation to an Apollo entity that is established in the European Union or United Kingdom or an entity that is established in the Cayman Islands (“Personal Information”). This notice also provides such persons with information about the rights they may have in relation to Personal Information. If we materially change our privacy practices regarding Personal Information, we will notify relevant individuals. For purposes of this Appendix, “investors” includes directors, officers, employees, and owners of investors that are not natural persons.

Investors provide us with Personal Information in connection with their investments in Apollo funds, which may include address, social security number, wire transfer instructions, and the amount of assets or income. This information is required before investors can be accepted into an Apollo fund, and not providing it may mean that we are not able to accept an investment. Investors provide us with information in subscription documentation, and may continue to provide information through ongoing communications with us by mail, e-mail, or telephone.

We also collect Personal Information from third-party consultants, fund administrators, identity verification services, and credit reference agencies.

As permitted by applicable laws, we use Personal Information primarily to communicate with investors.

We use Personal Information to:

 

   

comply with our obligations to investors under contract, and if not strictly necessary for this, to meet our legitimate business interests in providing our services most efficiently. This processing benefits investors by supporting our provision of services, and we do not use Personal Information in ways other than those set out in this notice;

 

   

support our business development and marketing initiatives. We do this to meet our business interests in expanding our business. We only send direct electronic marketing messages where recipients have agreed to this or as otherwise permitted by applicable law. Individuals can opt out of receiving such messages at any time by using the opt-out mechanisms that may be available in those messages or by contacting us via the channels provided below;

 

   

protect our rights and support our legitimate interests in managing our business effectively;

 

   

maintain security and prevent or detect crime and fraud. In many cases we are required to do this by applicable laws, but will otherwise do so to meet our interests in maintaining security and preventing crime, which is also in the interest of our investors;

 

   

compliance with applicable laws to meet our legitimate interests or those of a third party; and

 

   

audit compliance with Apollo’s corporate policies and contractual obligations. This is necessary to meet our legal and regulatory obligations, for example to financial services regulators, and if not strictly necessary to meet these obligations, to allow us to meet our interests in running our business to our high corporate standards, which is beneficial to investors as these help protect investments and information.

 

2 

As defined in the Apollo Privacy Policy, “Apollo” refers to Apollo Global Management, Inc. and its subsidiaries. Subsidiaries of Apollo also include entities that conduct their business under names that do not include the “Apollo” name.

3 

Individuals in Andorra, Argentina, Australia, California, Canada, Europe, Faroe Islands, Guernsey, Hong Kong, Israel, Isle of Man, Japan, Jersey, Mexico, New Zealand, Singapore, South Korea, Switzerland, the United Kingdom, Uruguay, and certain other jurisdictions may have certain data subject rights. These rights vary, but they may include the right to: (i) request access to and rectification or erasure of their personal data; (ii) restrict or object to the processing of their personal data; and (iii) obtain a copy of their personal data in a portable format. Individuals may also have the right to lodge a complaint about the processing of personal data with a data protection authority.


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We disclose information for the purposes disclosed in the Apollo Privacy Policy and on the grounds described above in this notice.

We take our responsibility to protect the privacy and confidentiality of Personal Information very seriously.

We maintain physical, electronic, and procedural safeguards to store and secure Personal Information from unauthorized access, alteration, and destruction. Our control policies, for example, authorize access to investor information only by individuals who need such access to do their work.

We may transfer the information we collect, as permitted by applicable laws, to the United States and other countries where we or our service providers have facilities. When we transfer Personal Information to a country that is not regarded as ensuring an adequate level of protection for Personal Information under European Union, United Kingdom, the Cayman Islands, or other applicable laws, we put in place appropriate safeguards (such as standard contractual clauses approved by the European Commission or other relevant authority, where the transfer is necessary for the performance of a contract between you and us or between us and a third party in your interest, where the transfer is necessary to establish, exercise or defend legal claims, or where the transfer is made for important reasons of public interest) in accordance with applicable legal requirements. For more information on the safeguards in place, please contact us at the details below.

We retain Personal Information for as long as we have a relationship with the individuals to whom the information relates, and for a period after our relationship has ended. When deciding how long to keep Personal Information after our relationship has ended, we take into account how long we need to retain the information to fulfill the purposes described above and to comply with our legal regulatory obligations, including obligations of our regulators. We may also retain Personal Information to investigate or defend against potential legal claims in accordance with the limitation periods of countries where legal action may be brought.

Subject to local law, individuals may have certain additional rights regarding their Personal Information. In particular, individuals may have the right to object to our uses of their Personal Information. Individuals who would like to discuss or exercise such rights can contact us at the details below. These additional rights may include the rights to: (i) access Personal Information;

(ii) rectify the Personal Information we hold; (iii) erase Personal Information; (iv) restrict our use of Personal Information; (v) receive Personal Information in a usable electronic format and transmit it to a third party (also known as the right of data portability); and (vi) lodge a complaint with a data protection authority in the United Kingdom or the EEA Member State in which you live, work or where the infringement occurred or in respect of an entity organized under the laws of the Cayman Islands, the Ombudsman in the Cayman Islands.

Please contact privacy@apollo.com with any questions about this notice or our data privacy and data protection practices. The Apollo point of contact for Apollo entities established outside the European Union and United Kingdom is: Apollo Management International LLP, 25 St. George Street, London W1S 1FS, United Kingdom, privacy@apollo.com.


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APOLLO TACTICAL INCOME FUND INC.

Up to $50,000,000 of Common Stock

 

 

PROSPECTUS

 

 

[], 2022

 

 

 


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Filed Pursuant to Rule 424(b)([    ])

Registration Statement No. 333-262875

 

The information in this prospectus supplement is not complete and may be changed. Apollo Tactical Income Fund Inc. may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus supplement is not an offer to sell these securities and is not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

SUBJECT TO COMPLETION, DATED MAY 24, 2022

PROSPECTUS SUPPLEMENT

(To Prospectus dated [●], 2022)

 

LOGO

APOLLO TACTICAL INCOME FUND INC.

Up to $50,000,000 of Common Stock

 

 

The Fund. Apollo Tactical Income Fund Inc. (the “Fund”) is a corporation organized under the laws of the State of Maryland and registered with the U.S. Securities and Exchange Commission (the “SEC”) under the Investment Company Act of 1940 (the “Investment Company Act”) as a diversified, closed-end management investment company. The Fund commenced operations on February 25, 2013 following the initial public offering of the Fund’s shares of common stock.

The Offering. The Fund has entered into an at the market sales agreement (the “Sales Agreement”) with [●] relating to its shares of common stock (“Common Shares”) offered by this prospectus supplement and the accompanying prospectus. In accordance with the terms of the Sales Agreement, the Fund may offer and sell up to $50,000,000 of its Common Shares from time to time through [●] as its agent or principal for the offer and sales of the Common Shares. Under the Investment Company Act, the Fund generally may not sell any Common Shares at a price below the current net asset value (“NAV”) of such Common Shares, exclusive of any distributing commission or discount. Accordingly, the offering of Common Shares may be suspended from time to time, particularly when Common Shares are trading at a discount to their NAV. There is no guarantee that there will be any sales of Common Shares pursuant to this prospectus supplement and the accompanying prospectus.

The Fund’s Common Shares are listed on the New York Stock Exchange (“NYSE”) under the symbol “AIF.” The last reported sale price of the Fund’s Common Shares, as reported by the NYSE on [●] was $[●] per Common Share. The NAV of the Fund’s Common Shares at the close of business on [●] was $[●] per Common Share.

Sales of Common Shares, if any, under this prospectus supplement and the accompanying prospectus may be made in transactions that are deemed to be “at the market offerings” as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”).

[●] is entitled to compensation at a commission rate of up to [●]% of the gross sales price per share sold under the Sales Agreement. In connection with the sale of the Common Shares, [●] may be deemed to be an “underwriter” within the meaning of the Securities Act and the compensation of [●] may be deemed to be underwriting commissions or discounts. [●] is not required to sell any specific number or dollar amount of Common Shares, but will use commercially reasonable efforts to sell the Common Shares offered by this prospectus supplement and the accompanying prospectus. There is no arrangement for Common Shares to be received in escrow, trust or similar arrangement.

 

 

Before buying any of the Fund’s Common Shares, you should read the discussion of the risks of investing in the Fund in “Risk Factors” beginning on page 26 of the accompanying prospectus, including the information incorporated by reference therein.

Neither the U.S. Securities and Exchange Commission (the “SEC”) nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

 

The date of this prospectus supplement is []

Please retain this prospectus supplement and the accompanying prospectus for future reference. Together it sets forth concisely the information about the Fund you should know before investing. You should read the prospectus and this prospectus supplement carefully before deciding whether to invest. This prospectus supplement, and the accompanying prospectus are part of a “shelf” registration statement filed with the SEC. This prospectus supplement describes the specific details regarding this offering, including the method of distribution. If information in this prospectus supplement is inconsistent with the accompanying prospectus, you should rely on this prospectus supplement. You may call (800) 882-0052 to request the Fund’s annual and semi-annual reports or other information about the Fund, and to make shareholder inquires. The Fund makes available the Fund’s annual and semi-annual reports, free of charge, at www.apollofunds.com. Information contained in, or that can be accessed through, the Fund’s website is not part of this prospectus supplement. You may also obtain other information regarding the Fund on the SEC’s website (http://www.sec.gov) or with the payment of a duplication fee, by electronic request at publicinfo@sec.gov.

You should not construe the contents of this prospectus supplement and the accompanying prospectus as legal, tax or financial advice. You should consult with your own professional advisors as to the legal, tax, financial or other matters relevant to the suitability of an investment in the Fund.

The Common Shares are not a deposit or obligation of, and are not guaranteed or endorsed by, any bank or other insured depository institution and are not federally insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency.

You should rely only on the information contained or incorporated by reference in this prospectus supplement and the accompanying prospectus. Neither the Fund nor [] have authorized anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. The Fund is not making an offer to sell its Common Shares in any jurisdiction where the offer or sale is not permitted. You should assume that the information in this prospectus supplement and the accompanying prospectus is accurate only as of the date of this prospectus supplement and the date of the accompanying prospectus, respectively. The Fund’s business, financial condition, prospects and risks may have changed since those dates.


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TABLE OF CONTENTS

PROSPECTUS SUPPLEMENT

 

CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

     S-1  

PROSPECTUS SUPPLEMENT SUMMARY

     S-2  

SUMMARY OF FUND EXPENSES

     S-4  

CAPITALIZATION

     S-7  

PLAN OF DISTRIBUTION

     S-8  

LEGAL MATTERS

     S-9  

INCORPORATION BY REFERENCE

     S-9  

PROSPECTUS

 

PROSPECTUS SUMMARY

     1  

SUMMARY OF FUND EXPENSES

     6  

FINANCIAL HIGHLIGHTS

     8  

THE FUND

     10  

THE OFFERING

     10  

WHO MAY WISH TO INVEST

     10  

USE OF PROCEEDS

     11  

THE FUND’S INVESTMENTS

     12  

LEVERAGE

     22  

RISK FACTORS

     26  

LISTING OF SHARES

     37  

INVESTMENT RESTRICTIONS

     38  

MANAGEMENT OF THE FUND

     39  

AGREEMENTS WITH ADVISER

     41  

THE PORTFOLIO MANAGERS

     43  

CONTROL PERSONS AND PRINCIPAL SHAREHOLDERS

     47  

NET ASSET VALUE

     48  

DISTRIBUTIONS

     49  

DIVIDEND REINVESTMENT PLAN

     50  

PORTFOLIO TRANSACTIONS

     50  

CONFLICTS OF INTEREST

     52  

CODE OF ETHICS

     69  

PROXY VOTING POLICIES

     69  

DESCRIPTION OF SHARES

     69  

CLOSED-END FUND STRUCTURE

     75  

REPURCHASE OF COMMON SHARES

     77  

TAX MATTERS

     78  

PLAN OF DISTRIBUTION

     82  

ADMINISTRATIVE, CUSTODIAN AND TRANSFER AGENT SERVICES

     83  

LEGAL OPINIONS

     84  

FISCAL YEAR

     84  

FINANCIAL STATEMENTS

     84  

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

     84  

INCORPORATION BY REFERENCE

     84  

APPENDIX A

     A-1  

APPENDIX B

     B-1  

 

 

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CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus supplement and the accompanying prospectus contain “forward-looking statements.” Forward-looking statements can be identified by the words “may,” “will,” “intend,” “expect,” “estimate,” “continue,” “plan,” “anticipate,” and similar terms and the negative of such terms. Such forward-looking statements may be contained in this prospectus supplement as well as in the accompanying prospectus. By their nature, all forward-looking statements involve risks and uncertainties, and actual results could differ materially from those contemplated by the forward-looking statements. Several factors that could materially affect the Fund’s actual results are the performance of the portfolio of securities the Fund holds, the price at which the Fund’s shares will trade in the public markets and other factors discussed in our periodic filings with the SEC.

Although the Fund believes that the expectations expressed in these forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in these forward-looking statements. The Fund’s future financial condition and results of operations, as well as any forward-looking statements, are subject to change and are subject to inherent risks and uncertainties, such as those disclosed in the “Risk Factors” section of the accompanying prospectus. All forward-looking statements contained or incorporated by reference in this prospectus supplement or the accompanying prospectus are made as of the date of this prospectus supplement or the accompanying prospectus, as the case may be. Except for the Fund’s ongoing obligations under the federal securities laws, the Fund does not intend, and undertakes no obligation, to update any forward-looking statement. The forward-looking statements contained in this prospectus supplement and the accompanying prospectus are excluded from the safe harbor protection provided by Section 27A of the Securities Act.

Currently known risk factors that could cause actual results to differ materially from the Fund’s expectations include, but are not limited to, the factors described in the “Risk Factors” section of the accompanying prospectus. Please review carefully that section for a more detailed discussion of the risks of an investment in the Fund’s Common Shares.

 

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PROSPECTUS SUPPLEMENT SUMMARY

The following summary is qualified in its entirety by reference to the more detailed information included elsewhere in this prospectus supplement and in the accompanying prospectus.

The Fund. The Fund is a diversified, closed-end management investment company. The Fund’s primary investment objective is to seek current income with a secondary objective of preservation of capital. The Fund seeks to achieve its investment objectives primarily by allocating its assets among different types of credit instruments based on absolute and relative value considerations and its analysis of the credit markets. This ability to dynamically allocate the Fund’s assets may result in the Fund’s portfolio becoming concentrated in a particular type of credit instrument (such as senior secured loans made to companies whose debt is rated below investment grade (“Senior Loans”) or high yield corporate bonds) and substantially less invested in other types of credit instruments. Under normal market conditions, at least 80% of the Fund’s managed assets will be invested in credit instruments and investments with similar economic characteristics. For purposes of this policy, “credit instruments” will include Senior Loans, subordinated loans, high yield corporate bonds, notes, bills, debentures, distressed securities, mezzanine securities, structured products (including, without limitation, collateralized debt obligations (“CDOs”), collateralized loan obligations (“CLOs”) and asset-backed securities), bank loans, corporate loans, convertible and preferred securities, government and municipal obligations, mortgage-backed securities, repurchase agreements, and other fixed-income instruments of a similar nature that may be represented by derivatives such as options, forwards, futures contracts or swap agreements. This policy and the Fund’s investment objectives are not fundamental and may be changed by the board of directors of the Fund with at least 60 days’ prior written notice provided to shareholders. The Fund will seek to preserve capital to the extent consistent with its primary investment objective. The Fund’s ability to achieve capital preservation may be limited by its investment in credit instruments that have speculative characteristics. There can be no assurance that the Fund will achieve its investment objectives.

Leverage. The Fund utilizes leverage and may utilize leverage to the maximum extent permitted by law for investment and other general corporate purposes. The Fund has entered into an amended and restated credit facility (the “Amended Credit Facility”) with Sumitomo Mitsui Banking Corporation as lender. The use of leverage is a speculative technique that involves special risks associated with the leveraging of common stock. There can be no assurance that any leveraging strategy the Fund employs will be successful during any period in which it is employed. See “Leverage” in the accompanying prospectus.

Investment Adviser. Apollo Credit Management, LLC (the “Adviser”), located at 9 West 57th Street, New York, NY 10019, serves as the Fund’s investment adviser. The Adviser is responsible for the day-to-day management of the Fund.

The Offering. The Fund has entered into the Sales Agreement with [●]relating to the Common Shares offered by this prospectus supplement and the accompanying prospectus. In accordance with the terms of the Sales Agreement, the Fund may offer and sell up to $50,000,000 of its Common Shares from time to time through [●] as its agent or principal for the offer and sales of the Common Shares. Under the Investment Company Act, the Fund generally may not sell any Common Shares at a price below the current NAV of such Common Shares, exclusive of any distributing commission or discount. Accordingly, the offering of Common Shares may be suspended from time to time, particularly when Common Shares are trading at a discount to their NAV. There is no guarantee that there will be any sales of the Common Shares pursuant to this prospectus supplement and the accompanying prospectus.

The Fund’s Common Shares are listed on the NYSE under the symbol “AIF.” The last reported sale price of the Fund’s Common Shares, as reported by the NYSE on [●] was $[●] per Common Share. The NAV of the Fund’s Common Shares at the close of business on [●] was $[●] per Common Share.

 

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Sales of Common Shares, if any, under this prospectus supplement and the accompanying prospectus may be made in transactions that are deemed to be “at the market offerings” as defined in Rule 415 under the Securities Act.

[●] is entitled to compensation at a commission rate of up to [●]% of the gross sales price per share sold under the Sales Agreement. In connection with the sale of the Common Shares, [●] may be deemed to be an “underwriter” within the meaning of the Securities Act and the compensation of [●] may be deemed to be underwriting commissions or discounts. [●] is not required to sell any specific number or dollar amount of Common Shares, but will use commercially reasonable efforts to sell the Common Shares offered by this prospectus supplement and the accompanying prospectus. There is no arrangement for Common Shares to be received in escrow, trust or similar arrangement.

Use of Proceeds. The net proceeds from the issuance of Common Shares hereunder will be invested in accordance with the Fund’s investment objectives and policies as described in the section of the accompanying prospectus titled “Investment Objectives and Policies”. The net proceeds will be invested in accordance with our investment objectives and policies as promptly as possible but no later than six months from the date on which the proceeds from an offering are received by the Fund. Pending such investments, those proceeds may be invested in cash, cash equivalents, government securities and short-term fixed income securities.

Depending on market conditions and operations, a portion of the cash held by the Fund, including any proceeds raised from the offering, may be used to pay distributions in accordance with the Fund’s distribution policy and may be a return of capital.

 

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SUMMARY OF FUND EXPENSES

The purpose of the following table and example below is to help you understand the fees and expenses that you, as a holder of Common Shares, would bear directly or indirectly, as a result of an offering. The table reflects the use of leverage in the form of borrowings in an amount equal to 33% of the Fund’s Managed Assets (after the leverage is incurred), and shows Fund expenses as a percentage of net assets attributable to Common Shares. The Fund’s actual expenses may vary from the estimated expenses shown in the table. The extent of the Fund’s assets attributable to leverage following an offering, and the Fund’s associated expenses, are likely to vary (perhaps significantly) from these assumptions.

 

Shareholder Transaction Expenses    Percentage of
Offering Price

Sales load paid by you (as a percentage of offering price)

   1.0%(1)

Offering Expenses borne by Common Shareholders (as a percentage of offering price) (1)

   0.64%

Dividend reinvestment plan fees

   None(2)

 

Annual Expenses    Percentage of Net Assets (6)
Attributable to Common Shares
(Includes Leverage)

Investment management fee (3)

   1.50%

Interest payments on borrowed funds (4)

   0.63%

Other expenses (5)

   0.76%

Total annual Fund operating expenses

   2.89%

 

(1)

Holders of Common Shares will pay all offering expenses involved with an offering. “Offering Expenses” assumes the full $50,000,000 of Common Shares being offered by this prospectus supplement and the accompanying prospectus are sold. Offering expenses generally include, but are not limited to, the preparation, review and filing with the Securities and Exchange Commission of the Fund’s registration statement, associated filing fees, NYSE listing fees, FINRA filing fees and legal and auditing fees associated with the offering.

(2)

There is no charge to participants for reinvesting dividends or capital gains distributions. The Fund’s plan agent service fee for handling the reinvestment of such dividends and capital gains distributions will be paid by the Fund. Shareholders will bear a proportionate share of brokerage commissions on all open market purchases. See “Dividend Reinvestment Plan” in the accompanying prospectus.

(3)

The Adviser receives a monthly management fee for its advisory services equal to an effective annual rate of 1.0% of the average daily value of the Fund’s Managed Assets assuming that the amount of leverage of 33% of the Fund’s Managed Assets is used.

(4)

Interest expense assumes that leverage represents 33% of the Fund’s Managed Assets and is charged at an interest rate pursuant to the Amended Credit Facility. As of April 30, 2022, the annualized interest rate on the drawn balance is 1.13%. Because borrowings under the Amended Credit Facility are charged a variable interest rate of SOFR plus 0.875%, future interest payments will vary and may increase significantly if interest rates rise. Prior to April 4, 2022, borrowings under the Credit Facility were charged at an interest rate of LIBOR plus 0.875%.

(5)

“Other expenses” are based upon estimated amounts for the current fiscal year. Other expenses include amortized offering expenses.

(6)

For purposes of the Fee Table, the Fund’s net assets have been calculated as Managed Assets less the principal amount of borrowings under the Amended Credit Facility. As of the date of this prospectus supplement, the Fund does not have any preferred shares outstanding.

 

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Example

The following example illustrates the hypothetical expenses (including the sales load of $10.00, estimated offering expenses of this offering of $6.41 and the estimated costs of borrowings with the Fund utilizing leverage representing 33% of the Fund’s Managed Assets) that you would pay on a $1,000 investment in Common Shares, assuming (1) total net annual expenses of 2.89% of net assets attributable to Common Shares and (2) a 5% annual return:

 

1 Year

 

3 Years

 

5 Years

 

10 Years

$39   $99   $161   $328

____________________

*

The example above should not be considered a representation of future expenses. Actual expenses may be higher or lower. The example assumes that the estimated “Other expenses” set forth in the Fee Table is accurate and that all dividends and distributions are reinvested at NAV. Actual expenses may be greater or less than those assumed. Moreover, the Fund’s actual rate of return may be greater or less than the hypothetical 5% return shown in the example.

 

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USE OF PROCEEDS

The net proceeds from the issuance of Common Shares hereunder will be invested in accordance with the Fund’s investment objectives and policies as described in section of the accompanying prospectus titled “Investment Objectives and Policies”. The net proceeds will be invested in accordance with the Fund’s investment objectives and policies as promptly as possible but no later than six months from the date on which the proceeds from the offering are received by the Fund. Pending such investments, those proceeds may be invested in cash, cash equivalents, government securities and short-term fixed income securities.

Depending on market conditions and operations, a portion of the cash held by the Fund, including any proceeds raised from the offering, may be used to pay distributions in accordance with the Fund’s distribution policy and may be a return of capital. A return of capital is a return to investors of a portion of their original investment in the Fund. In general terms, a return of capital would involve a situation in which a Fund distribution (or a portion thereof) represents a return of a portion of a shareholder’s investment in the Fund, rather than making a distribution that is funded from the Fund’s earned income or other profits. Although return of capital distributions may not be currently taxable, such distributions would decrease the basis of a shareholder’s Common Shares, and therefore, may increase a shareholder’s tax liability for capital gains upon a sale of Common Shares, even if sold at a loss to the shareholder’s original investments.

PRICE RANGE OF COMMON SHARES

The following table sets forth, for the quarters indicated, the highest and lowest daily closing prices on the NYSE per Common Share, and the NAV per Common Share and the premium to or discount from NAV, on the date of each of the high and low market prices.

 

     NYSE Market Price
Per Common Share
     NAV per Common Share
on Date of Market Price
     Premium/(Discount) on
Date of Market Price
 

During Quarter Ended

   High      Low      High      Low      High     Low  

March 31, 2022

   $ 15.91      $ 13.91      $ 16.61      $ 15.75        (4.21 )%      (11.68 )% 

December 31, 2021

   $ 16.00      $ 15.29      $ 16.66      $ 16.44        (3.96 )%      (7.00 )% 

September 30, 2021

   $ 15.97      $ 15.22      $ 16.75      $ 16.73        (4.66 )%      (9.03 )% 

June 30, 2021

   $ 15.65      $ 14.87      $ 16.82      $ 16.43        (6.96 )%      (9.49 )% 

March 31, 2021

   $ 14.95      $ 14.24      $ 16.49      $ 16.33        (9.43 )%      (12.80 )% 

December 31, 2020

   $ 14.48      $ 12.51      $ 16.27      $ 15.34        (11.00 )%      (18.45 )% 

September 30, 2020

   $ 13.01      $ 12.20      $ 15.36      $ 14.66        (15.30 )%      (16.78 )% 

June 30, 2020

   $ 12.79      $ 10.42      $ 14.76      $ 12.79        (13.35 )%      (18.53 )% 

March 31, 2020

   $ 15.85      $ 8.85      $ 16.91      $ 13.15        (6.27 )%      (32.70 )% 

As of [●], the NAV per Common Share of the Fund was $[●] and the market price per Common Share was $[●], representing a discount to NAV of [●]%.

As of [●], the Fund has outstanding [●] Common Shares.    

 

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CAPITALIZATION

Pursuant to the Sales Agreement, the Fund may offer and sell Common Shares having an aggregate offering price of up to $50,000,000, from time to time through [●] as its agent or principal for the offer and sale of the Common Shares under this prospectus supplement and the accompanying prospectus. There is no guarantee that there will be any sales of the Common Shares pursuant to this prospectus supplement and the accompanying prospectus. The table below assumes that the Fund will sell [●] Common Shares at an assumed price of $[●] per share (the last reported sale price per share of the Common Shares on the NYSE on [●]). Actual sales, if any, of the Common Shares, and the actual application of the proceeds thereof, under this prospectus supplement and the accompanying prospectus may be different than as set forth in the table below. In addition, the price per share of any such sale may be greater or less than $[●], depending on the market price of the Common Shares at the time of any such sale. To the extent that the market price per share of the Common Shares on any given day is less than the NAV per share on such day, the Fund will instruct [●] not to make any sales on such day.

The following table sets out the Fund’s capitalization:

 

  (1)

on a historical basis as of December 31, 2021; and

 

  (2)

on a pro forma basis as adjusted to reflect (i) the assumed sale of [●]Common Shares at an assumed price of $[●]per share (the last reported sale price per share of the Common Shares on the NYSE on [●]) in an offering under this prospectus supplement and the accompanying prospectus and (ii) after deducting the assumed commission of $[●] (representing an estimated commission paid to [●] of [●]% of the gross sales price per share sold under the Sales Agreement).

 

     As of December 31, 2021  
     Actual
(audited)
     As Adjusted
(unaudited)
 

NET ASSETS AVAILABLE TO COMMON SHARES consist of:

     

Total accumulated loss

   $                    $                

Par value of Common Shares

   $        $    

Paid-in capital in excess of par value of Common Shares

   $        $    

Total Net Assets Available to Common Stock

   $        $    

NET ASSET VALUE PER COMMON SHARE:

     

Common Shares Outstanding Common Share NAV

   $        $    

 

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PLAN OF DISTRIBUTION

[The Fund entered into the Sales Agreement with [●], under which the Fund may issue and sell from time to time up to $50,000,000 of Common Shares through or to [●], as sales agent or principal. Sales of the Fund’s Common Shares, if any, under this prospectus supplement and the accompanying prospectus may be made in transactions that are deemed to be “at the market offerings” as defined in Rule 415 under the Securities Act.

Each time the Fund wants to issue and sell Common Shares under the Sales Agreement, the Fund will notify [●] of the number of Common Shares to be issued, the dates on which such sales are anticipated to be made and any minimum price below which sales may not be made. Once the Fund has so instructed [●], unless [●] declines to accept the terms of this notice, [●] has agreed to use commercially reasonable efforts consistent with its normal trading and sales practices to sell such shares up to the amount specified on such terms. The obligations of [●] under the Sales Agreement to sell Common Shares are subject to a number of conditions.

The settlement between the Fund and [●] is generally anticipated to occur on the second trading day following the date on which the sale was made. Sales of Common Shares as contemplated in this prospectus supplement will be settled through the facilities of The Depository Trust Company or by such other means as the Fund and [●] may agree upon. There is no arrangement for Common Shares to be received in an escrow, trust or similar arrangement.

The Fund will pay [●] commissions for its services in acting as agent or principal in the sale of Common Shares. [●] is entitled to compensation at a commission rate of up to [●]% of the gross sales price per share sold under the Sales Agreement. Because there is no minimum offering amount required as a condition to close this offering, the actual total public offering amount, commissions and proceeds to the Fund, if any, are not determinable at this time. [The Fund has also agreed to reimburse [●] for certain specified expenses, including the reasonable and documented fees and disbursements of its legal counsel in an amount not to exceed $[●].] In connection with the sale of the Common Shares, [●] may be deemed to be an “underwriter” within the meaning of the Securities Act and the compensation of [●] may be deemed to be underwriting commissions or discounts. The Fund has agreed to provide indemnification and contribution to [●] with respect to certain civil liabilities, including liabilities under the Securities Act. The Fund estimates that the total expenses for the offering, excluding compensation payable to [●] under the terms of the Sales Agreement, will be approximately $[●].

The offering of Common Shares pursuant to this prospectus supplement will terminate upon the earlier of (i) the sale of all Common Shares provided for in this prospectus supplement, or (ii) termination of the Sales Agreement as permitted therein.

This summary of certain provisions of the Sales Agreement does not purport to be a complete statement of its terms and conditions. A copy of the Sales Agreement is filed with the SEC and are incorporated by reference into the registration statement of which this prospectus supplement is a part.

[●] and its affiliates may in the future provide various investment banking, commercial banking and other financial services for the Fund and its affiliates, for which services they may in the future receive customary fees.]

 

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LEGAL MATTERS

Certain legal matters in connection with the Common Shares will be passed upon for the Fund by Willkie Farr & Gallagher LLP, counsel to the Fund and Miles & Stockbridge P.C., Maryland counsel to the Fund. [Certain legal matters will be passed on by [●] as special counsel to [●] in connection with the offering.]

INCORPORATION BY REFERENCE

This prospectus supplement is part of a registration statement that we have filed with the SEC. We are allowed to “incorporate by reference” the information that we file with the SEC, which means that we can disclose important information to you by referring you to those documents. We incorporate by reference into this prospectus supplement the documents listed below and any future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, including any filings on or after the date of this prospectus supplement from the date of filing (excluding any information furnished, rather than filed), until we have sold all of the offered securities to which this prospectus supplement relates or the offering is otherwise terminated. The information incorporated by reference is an important part of this prospectus supplement. Any statement in a document incorporated by reference into this prospectus supplement will be deemed to be automatically modified or superseded to the extent a statement contained in (1) this prospectus supplement or (2) any other subsequently filed document that is incorporated by reference into this prospectus supplement modifies or supersedes such statement. The documents incorporated by reference herein include:

 

   

The Fund’s Prospectus, dated [●];

 

   

the Fund’s annual report on Form N-CSR for the fiscal year ended December 31, 2021, filed with the SEC on February 25, 2022;

 

   

the Fund’s definitive proxy statement on Schedule 14A, filed with the SEC on April 20, 2022; and

 

   

the description of the Fund’s Common Shares contained in the Registration Statement on Form 8-A (File No. 001-35820) filed with the SEC on February 20, 2013, including any amendment or report filed for the purpose of updating such description prior to the termination of this offering.

The Fund will provide without charge to each person, including any beneficial owner, to whom this prospectus supplement is delivered, upon written or oral request, a copy of any and all of the documents that have been or may be incorporated by reference in this prospectus supplement or the accompanying prospectus. You should direct requests for documents by calling (800) 882-0052.

The Fund makes available the prospectus and the Fund’s annual and semi-annual reports, free of charge, at www.apollofunds.com. You may also obtain this prospectus supplement, the prospectus and other documents incorporated by reference and other information the Fund files electronically, including reports and proxy statements, on the SEC website (http://www.sec.gov) or with the payment of a duplication fee, by electronic request at publicinfo@sec.gov. Information contained in, or that can be accessed through, the Fund’s website is not incorporated by reference into this prospectus supplement and should not be considered to be part of this prospectus supplement or the accompanying prospectus.

 

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APOLLO TACTICAL INCOME FUND INC.

Up to $50,000,000 of Common Stock

 

 

PROSPECTUS SUPPLEMENT

 

 

[●], 202[        ]

 

 

 


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PART C

OTHER INFORMATION

Item 25Financial Statements and Exhibits

1. Financial Statements

Included in Part A: Financial highlights for the fiscal years ended December 31, 2021, 2020, 2019, 2018, 2017, 2016, 2015, 2014 and 2013.

Incorporated into Parts A and B by reference:

The audited financial statements included in the Fund’s annual report for the fiscal year ended December 31, 2021, together with the report of Deloitte & Touche LLP, on Form N-CSR, filed February 25, 2022 (File No. 811-22591).

The financial highlights included in the Fund’s  annual report for the fiscal year ended December 31, 2016 on Form N-CSR, filed March 6, 2017 (File No. 811-22591).

2. Exhibits

 

(a)   Articles of Amendment and Restatement is incorporated herein by reference to Exhibit (a)(3) to Pre-Effective Amendment No. 2 to the Fund’s Registration Statement on Form N-2 (File No. 333-175832), filed on January 17, 2013.
(b)   Amended and Restated Bylaws is incorporated herein by reference to Exhibit 5.03 to the Fund’s Form 8-K, filed on November 24, 2020.
(c)   Not applicable
(d)   The rights of security holders are defined in the Registrant’s Articles of Amendment and Restatement (Article IV) and the Registrant’s Amended and Restated Bylaws (Article II).
(e)   Dividend Reinvestment Plan*
(f)   Not applicable
(g)   Form of Investment Advisory and Management Agreement is incorporated herein by reference to Exhibit (g) to Pre-Effective Amendment No. 4 to the Fund’s Registration Statement on Form N-2 (File No.  333-175832), filed on February 25, 2013.
(h)   ATM Sales Agreement**
(i)   Not applicable
(j)   Custody Agreement by and between the Fund and U.S. Bank National Association is incorporated herein by reference to Exhibit (9)(a) to the Fund’s Form N-14 (File No. 333-254419), filed on May 14, 2021.
(k)(1)   Transfer Agency and Registrar Services Agreement by and between the Fund and American Stock Transfer  & Trust Company, LLC is incorporated herein by reference to Exhibit (13)(a) to the Fund’s Form N-14 (File No. 333-254419), filed on May  14, 2021.
(k)(2)   Fund Administration Servicing Agreement by and between the Fund and U.S. Bancorp Fund Services, LLC is incorporated herein by reference to Exhibit (13)(b) to the Fund’s Form N-14 (File No. 333-254419), filed on May 14, 2021.
(k)(3)   Form of Administrative Services and Reimbursement Agreement by and between the Fund and the Adviser is incorporated herein by reference to Exhibit (k)(3) to Pre-Effective Amendment No. 4 to the Fund’s Registration Statement on Form N-2 (File No. 333-175832), filed on February 25, 2013.


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(k)(4)   Form of License Agreement is incorporated herein by reference to Exhibit (k)(4) to Pre-Effective Amendment No. 4 to the Fund’s Registration Statement on Form N-2 (File No. 333-175832), filed on February 25, 2013.
(k)(5)   Second Amended and Restated Loan and Security Agreement by and between the Fund and Sumitomo Mitsui Banking Corporation*
(k)(6)   First Amendment to Second Amended and Restated Loan and Security Agreement by and between the Fund and Sumitomo Mitsui Banking Corporation*
(l)   Opinion and Consent of Miles & Stockbridge P.C.*
(m)   Not applicable
(n)   Consent of Independent Registered Public Accounting Firm*
(o)   Not applicable
(p)   Certificate of Initial Stockholder is incorporated herein by reference to Exhibit (p)  to Pre-Effective Amendment No. 4 to the Fund’s Registration Statement on Form N-2 (File No.  333-175832), filed on February 25, 2013.
(q)   Not applicable
(r)(1)   Code of Ethics of the Fund*
(r)(2)   Code of Ethics of the Adviser*
(s)   Calculation of Filing Fee Tables*
(t)   Power of Attorney is incorporated herein by reference to Exhibit (t) to the Fund’s Registration Statement on Form N-2 (File No. 333-262875) filed on February 18, 2022.

 

*

Filed herewith.

**

To be filed by amendment.

Item 26Marketing Arrangements

The information contained under the heading “Plan of Distribution” on page 78 of the prospectus is incorporated by reference, and any information concerning any underwriters will be contained in the accompanying prospectus supplement, if any.

Item 27Other Expenses of Issuance and Distribution

The following table sets forth the expenses to be incurred in connection with the offer described in this Registration Statement:

 

Registration and Filing Fees

   $ 4,635  

FINRA Fees

     8,000  

New York Stock Exchange Fees

     13,747  

Costs of Printing and Engraving

     21,000  

Accounting Fees and Expenses

     20,000  

Legal Fees and Expenses

     253,000  
  

 

 

 

Total

   $ 320,382  
  

 

 

 

 

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Item 28Persons Controlled by or under Common Control with Registrant

None.

Item 29Number of Holders of Securities

Set forth below is the number of record holders as of March 18, 2022, of each class of securities of the Registrant:

 

Title of Class

   Number of
Record
Holders
 

Shares of Common Stock, par value $0.001 per share

     13,054  

Item 30Indemnification

Maryland law permits a Maryland corporation to include a provision in its charter eliminating the liability of its directors and officers to the corporation and its stockholders for money damages, except for liability resulting from (a) actual receipt of an improper benefit or profit in money, property or services or (b) active and deliberate dishonesty that is established by a final judgment and is material to the cause of action. The Fund’s charter contains a provision that eliminates its directors’ and officers’ liability to the maximum extent permitted by Maryland law and the Investment Company Act of 1940 (the “1940 Act” or “Investment Company Act”).

Maryland law requires a Maryland corporation (unless its charter provides otherwise, which the Fund’s charter does not) to indemnify a director or officer who has been successful in the defense of any proceeding to which he or she is made or threatened to be made a party by reason of his or her service in that capacity. Maryland law permits a Maryland corporation to indemnify its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made or threatened to be made a party by reason of their service in those or other capacities unless it is established that (a) the act or omission of the director or officer was material to the matter giving rise to the proceeding and (i) was committed in bad faith or (ii) was the result of active and deliberate dishonesty, (b) the director or officer actually received an improper personal benefit in money, property or services or (c) in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful. A Maryland corporation may not indemnify a director or officer who has been adjudged liable in a suit by or on behalf of the corporation or in which the director or officer was adjudged liable on the basis that a personal benefit was improperly received. A court may order indemnification if it determines that the director or officer is fairly and reasonably entitled to indemnification, even though the director or officer did not meet the prescribed standard of conduct or was adjudged liable on the basis that personal benefit was improperly received; however, indemnification for an adverse judgment in a suit by or on behalf of the corporation, or for a judgment of liability on the basis that personal benefit was improperly received, is limited to expenses.

In addition, Maryland law permits a Maryland corporation to advance reasonable expenses to a director or officer upon the corporation’s receipt of (a) a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification by the corporation and (b) a written undertaking by him or her or on his or her behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined that the standard of conduct was not met.

The Fund’s charter authorizes it to obligate itself, and its Bylaws require it, to the maximum extent permitted by Maryland law and subject to the requirements of the 1940 Act, to indemnify any present or former director or officer or any individual who, while a director or officer of the Fund and at the request of the Fund, serves or has served another corporation, real estate investment trust, partnership, joint venture, limited liability company, trust, employee benefit plan or other enterprise as a director, officer, partner, manager, managing member or trustee, from and against any claim or liability to which that individual may become subject or which that

 

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individual may incur by reason of his or her service in any of the foregoing capacities and to pay or reimburse his or her reasonable expenses in advance of final disposition of a proceeding, without requiring a preliminary determination of the ultimate entitlement to indemnification. The Fund’s charter and Bylaws also permit it to indemnify and advance expenses to any individual who served any predecessor of the Fund in any of the capacities described above and any employee or agent of the Fund or any predecessor of the Fund.

In accordance with the Investment Company Act, the Fund will not indemnify any person for any liability to which such person would be subject by reason of such person’s willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office.

Advisory Agreement Indemnification. Please refer to Section  13 of the Investment Management and Advisory Agreement (“Advisory Agreement”) between the Fund and the Adviser. In Section 13 of the Advisory Agreement, the Fund agrees to indemnify the Adviser (and its officers, managers, partners, agents, employees, controlling persons, members and any person or entity affiliated with the Adviser), against certain liabilities arising in connection with Adviser’s performance as an investment adviser to the Fund.

Administrative Services and Reimbursement Agreement. Please refer to Section 3 of the Administrative Services and Reimbursement Agreement (the “Services Agreement”) between the Fund and the Adviser. In Section 3 of the Services Agreement, the Fund agrees to indemnify the Adviser, as administrator, (and its officers, managers, partners, agents, employees, controlling persons, members and any person or entity affiliated with the Adviser), against certain liabilities arising in connection with Adviser’s provision of services under the Services Agreement.

Indemnification Agreement Indemnification. Reference is made to an Indemnification Agreement between the Fund and each Director and Officer of the Fund. Under the Indemnification Agreement, the Fund agrees to indemnify each Director and Officer for certain liabilities arising in connection with their duties as Directors or Officers, as applicable, of the Fund.

Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the “Securities Act”) may be permitted to directors, officers and controlling persons of the Fund, pursuant to the foregoing provisions or otherwise, the Fund has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Fund of expenses incurred or paid by a director, officer or controlling person of the Fund in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Fund will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

Item 31Business and other Connections of Investment Adviser

The description of the Adviser under the caption “Management of the Fund” in the prospectus, which forms part of this registration statement, is incorporated by reference herein. Information as to the directors and officers of the Adviser together with information as to any other business, profession, vocation or employment of a substantial nature engaged in by the directors and officers of the Adviser in the last two years, is included in its application for registration as an investment adviser on Form ADV (File No. 801-72098) filed under the Investment Advisers Act of 1940, as amended, and is incorporated herein by reference. The Adviser’s principal business address is 9 West 57th Street, 43rd Floor, New York, NY 10019.

Item 32Location of Accounts and Records

Omitted pursuant to Instruction to Item 32 of Form N-2.

 

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Item 33Management Services

Not applicable.

Item 34Undertakings

(1) Not applicable.     

(2) Not applicable.

(3) Registrant undertakes:

 

  (a)

to file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement:

 

  (1)

to include any prospectus required by Section 10(a)(3) of the Securities Act;

 

  (2)

to reflect in the prospectus any facts or events after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

 

  (3)

to include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement.

 

  (4)

if (i) it determines to conduct one or more offerings of the Fund’s common shares (including rights to purchase its common shares) at a price below its net asset value per common share at the date the offering is commenced, and (ii) such offering or offerings will result in greater than a 15% dilution to the Fund’s net asset value per common share.

 

  (b)

that for the purpose of determining any liability under the Securities Act, each post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof;

 

  (c)

to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering;

 

  (d)

that, for the purpose of determining liability under the Securities Act to any purchaser:

 

  (1)

if the Registrant is relying on Rule 430B:

 

  (A)

Each prospectus filed by the Registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and

 

  (B)

Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (x), or (xi) for the purpose of providing the information required by Section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in

 

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  the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or

 

  (2)

if the Registrant is relying on Rule 430C: each prospectus filed pursuant to Rule 424(b) under the Securities Act as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

 

  (e)

that for the purpose of determining liability of the Registrant under the Securities Act to any purchaser in the initial distribution of securities:

The undersigned Registrant undertakes that in a primary offering of securities of the undersigned Registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller to the purchaser and will be considered to offer or sell such securities to the purchaser:

 

  (1)

any preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule 424 under the Securities Act;

 

  (2)

free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by the undersigned Registrant;

 

  (3)

the portion of any other free writing prospectus or advertisement pursuant to Rule 482 under the Securities Act relating to the offering containing material information about the undersigned Registrant or its securities provided by or on behalf of the undersigned Registrant; and

 

  (4)

any other communication that is an offer in the offering made by the undersigned Registrant to the purchaser.

(4) Registrant undertakes:

 

  (a)

that, for the purpose of determining any liability under the Securities Act the information omitted from the form of prospectus filed as part of the Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant under Rule 424(b)(1) under the Securities Act will be deemed to be a part of the Registration Statement as of the time it was declared effective.

 

  (b)

that, for the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus will be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of the securities at that time will be deemed to be the initial bona fide offering thereof.

 

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(5) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference into the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(6) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

(7) Registrant undertakes to send by first-class mail or other means designed to ensure equally prompt delivery, within two business days of receipt of a written or oral request, any prospectus or Statement of Additional Information.

 

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended, Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York and the State of New York on the 24th day of May, 2022.

 

APOLLO TACTICAL INCOME FUND INC.
BY:  

        /S/ JOSEPH MORONEY

Name:           Joseph Moroney
Title:           President

Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities and on May 24, 2022.

 

Signature

  

Title

/s/ JOSEPH MORONEY

JOSEPH MORONEY

  

President (Principal Executive Officer)

/s/ KENNETH SEIFERT

KENNETH SEIFERT

  

Chief Financial Officer

(Principal Financial and Accounting Officer)

BARRY COHEN*

BARRY COHEN

  

Director

ROBERT L. BORDEN*

ROBERT L. BORDEN

  

Director

GLENN N. MARCHAK*

GLENN N. MARCHAK

  

Director

CARL J. RICKERTSEN*

CARL J. RICKERTSEN

  

Director

TODD J. SLOTKIN*

TODD J. SLOTKIN

  

Director

ELLIOT STEIN, JR.*

ELLIOT STEIN, JR

  

Director

 

*By:  

                /s/ JOSEPH D. GLATT

      (Joseph D. Glatt, Attorney-In-Fact)

 

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SCHEDULE OF EXHIBITS

 

Exhibit
No.

  

Description

(e)    Dividend Reinvestment Plan
(k)(5)    Second Amended and Restated Loan and Security Agreement
(k)(6)    First Amendment to Second Amended and Restated Loan and Security Agreement
(l)    Opinion and Consent of Miles & Stockbridge P.C.
(n)    Consent of Independent Registered Public Accounting Firm
(r)(1)    Code of Ethics of the Fund
(r)(2)    Code of Ethics of the Adviser
(s)    Calculation of Filing Fee Tables

 

- 9 -

Exhibit (e)

Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Dividend Reinvestment Plan

Unless a shareholder specifically elects to receive common stock of the Funds as set forth below, all net investment income dividends and all capital gains distributions declared by the Board will be payable in cash.

A shareholder may elect to have net investment income dividends and capital gains distributions reinvested in common stock of the Funds. To exercise this option, such shareholder must notify AST, the plan administrator and the Funds’ transfer agent and registrar, in writing so that such notice is received by the plan administrator not less than 10 days prior to the record date fixed by the Board for the net investment income dividend and/or capital gains distribution involved.

The plan administrator will set up an account for shares acquired pursuant to the plan for each shareholder that elects to receive dividends and distributions in additional shares of common stock of the Funds (each a “Participant”). The plan administrator may hold each Participant’s shares, together with the shares of other Participants, in non-certificated form in the plan administrator’s name or that of its nominee.

The shares are acquired by the plan administrator for a participant’s account, depending upon the circumstances described below, either (i) through receipt of additional unissued but authorized shares of common stock from the Funds (“Newly Issued Shares”) or (ii) by purchase of outstanding shares of common stock on the open market (“Open-Market Purchases”) on the NYSE or elsewhere. If, on the dividend payment date, the NAV per share of the common stock is equal to or less than the market price per share of the common stock plus estimated brokerage commissions (such condition being referred to as “market premium”), the plan administrator will invest the dividend amount in Newly Issued Shares on behalf of the Participant. The number of Newly Issued Shares of common stock to be credited to the Participant’s account will be determined by dividing the dollar amount of the dividend by the NAV per share on the date the shares are issued, unless the NAV is less than 95% of the then current market price per share, in which case the dollar amount of the dividend will be divided by 95% of the then current market price per share. If, on the dividend payment date, the NAV per share is greater than the market value (such condition being referred to as “market discount”), the plan administrator will invest the dividend amount in shares acquired on behalf of the Participant in Open-Market Purchases.

The plan administrator’s service fee, if any, and expenses for administering the plan will be paid for by the Funds. If a Participant elects by written notice to the plan administrator to have the plan administrator sell part or all of the shares held by the plan administrator in the Participant’s account and remit the proceeds to the Participant, the plan administrator is authorized to deduct a $15 transaction fee plus a 12¢ per share brokerage commission from the proceeds.

Shareholders who receive dividends in the form of stock are subject to the same federal, state and local tax consequences as are shareholders who elect to receive their dividends in cash. A shareholder’s basis for determining gain or loss upon the sale of stock received in a dividend from the Funds will be equal to the total dollar amount of the dividend payable to the shareholders. Any stock received in a dividend will have a new holding period for tax purposes commencing on the day following the day on which the shares are credited to the U.S. shareholder’s account.

Participants may terminate their accounts under the plan by notifying the plan administrator via its website at www.astfinancial.com, by filling out the transaction request form located at the bottom of the Participant’s statement and sending it to the plan administrator at American Stock Transfer and Trust Company, LLC, P.O. Box 922 Wall Street Station, New York, NY 10269-0560 or by calling the plan administrator at 1-877-864-4834.


The plan may be terminated by the Funds upon notice in writing mailed to each Participant at least 30 days prior to any record date for the payment of any dividend or distribution by the Funds. All correspondence, including requests for additional information, concerning the plan should be directed to the plan administrator by mail at American Stock Transfer and Trust Company, LLC, 6201 15th Avenue, Brooklyn NY 11219.

Execution Version

Exhibit (k)(5)

 

 

SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

Dated as of April 22, 2021

among

APOLLO TACTICAL INCOME FUND INC.,

as Borrower

and

SUMITOMO MITSUI BANKING CORPORATION,

as Lender

 

 


TABLE OF CONTENTS

 

          Page  

SECTION 1. DEFINITIONS

     1  

        1.1

   Defined Terms      1  

        1.2

   Other Definitional Provisions      15  

SECTION 2. AMOUNT AND TERMS OF THE LOAN

     16  

        2.1

   The Loan      16  

        2.2

   Reserved      17  

        2.3

   Fees      17  

        2.4

   Reserved      17  

        2.5

   Repayment of the Loan; Evidence of Debt      17  

        2.6

   Optional and Mandatory Prepayments      18  

        2.7

   Interest Rates and Payment Dates      18  

        2.8

   Computation of Interest and Fees      19  

        2.9

   Payments      20  

        2.10

   Requirements of Law      20  

        2.11

   Taxes      21  

        2.12

   Change of Lending Office      23  

        2.13

   Reserved      23  

        2.14

   Indemnity      23  

        2.15

   Certain Increased Costs and Eurodollar Events      24  

SECTION 3. REPRESENTATIONS AND WARRANTIES

     25  

        3.1

   Financial Condition      25  

        3.2

   No Change      25  

        3.3

   Existence; Compliance with Law      25  

        3.4

   Power; Authorization; Enforceable Obligations      25  

        3.5

   No Legal Bar      26  

        3.6

   No Material Litigation      26  

        3.7

   No Default      26  

        3.8

   Ownership of Property; Leases; Liens      26  

        3.9

   No Burdensome Agreements      26  

        3.10

   Taxes      26  

        3.11

   Federal Margin Regulations      27  

        3.12

   ERISA      27  

        3.13

   Certain Restrictions      27  

        3.14

   Subsidiaries      27  


          Page  

        3.15

   Registration of Borrower      27  

        3.16

   Offering in Compliance with Securities Laws      27  

        3.17

   Investment Policies      27  

        3.18

   Accuracy of Information; Electronic Information      27  

        3.19

   Affiliated Persons      28  

        3.20

   [Reserved]      28  

        3.21

   Foreign Assets Control Regulations, Etc      28  

SECTION 4. CONDITIONS PRECEDENT

     28  

        4.1

   Conditions Precedent      28  

        4.2

   Additional Conditions      29  

SECTION 5. AFFIRMATIVE COVENANTS

     30  

        5.1

   Financial Statements      30  

        5.2

   Certificates; Other Information      30  

        5.3

   Payment of Obligations      30  

        5.4

   Conduct of Business; Maintenance of Existence and Investment Company Status; Compliance with Law and Contractual Obligations; Maintenance of Custodian      31  

        5.5

   Maintenance of Property; Insurance      31  

        5.6

   Inspection of Property; Books and Records; Discussions      31  

        5.7

   Notices      31  

        5.8

   Purpose of the Loan      32  

        5.9

   Payments Following Event of Default            

        5.10

   Collateral Requirement      32  

SECTION 6. NEGATIVE COVENANTS

     32  

        6.1

   Limitation on Indebtedness      32  

        6.2

   Limitation on Liens      33  

        6.3

   Limitation on Guarantee Obligations      33  

        6.4

   Limitation on Fundamental Changes      33  

        6.5

   Limitation on Distributions      33  

        6.6

   Limitation on Investments, Loans and Advances; Subsidiaries      33  

        6.7

   Limitation on Transactions with Affiliates      33  

        6.8

   Limitation on Negative Pledge Clauses      34  

        6.9

   Limitation on Changes to Investment Policies      34  

        6.10

   Permitted Activities      34  

        6.11

   ERISA      34  

        6.12

   Custodian      34  

        6.13

   Terrorism Sanctions Regulations      34  

        6.14

   Anti-Corruption Laws      34  


          Page  

SECTION 7. EVENTS OF DEFAULT

     34  

SECTION 8. SECURITY INTEREST

     37  
        8.1    Collateral      37  
        8.2    Preservation of Collateral and Perfection of Security Interests Therein      38  
        8.3    Setoff      38  
        8.4    Safekeeping      38  
        8.5    Other Actions      39  

SECTION 9. MISCELLANEOUS

     39  
        9.1    Amendments and Waivers      39  
        9.2    Notices      39  
        9.3    No Waiver; Cumulative Remedies      40  
        9.4    Survival of Representations and Warranties      40  
        9.5    Payment of Expenses and Taxes; Indemnification      40  
        9.6    Successors and Assigns; Participations and Assignments      41  
        9.7    Reserved      42  
        9.8    Counterparts      42  
        9.9    Severability      42  
        9.10    Integration      42  
        9.11    GOVERNING LAW      43  
        9.12    Submission To Jurisdiction; Waivers      43  
        9.13    Acknowledgments      43  
        9.14    WAIVERS OF JURY TRIAL      43  
        9.15    Waiver of Conflicts; Confidentiality      44  
        9.16    Non-Recourse      44  
        9.17    PATRIOT Act      44  

EXHIBITS:

 

Exhibit A-1            Form of Term Note
Exhibit A-2    Form of Revolving Note
Exhibit B    Form of Borrowing Request


THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT, dated as of April 22, 2021 (as amended, restated, supplemented or otherwise modified from time to time, this “Agreement”), between APOLLO TACTICAL INCOME FUND INC., a diversified, closed-end management investment company registered under the Investment Company Act of 1940 (“Borrower”) and SUMITOMO MITSUI BANKING CORPORATION (“Lender”).

Reference is made herein to that certain Loan and Security Agreement, dated as of April 2, 2020, by and between Borrower and Lender, as amended prior to the date hereof (the “Existing Agreement”).

This Agreement is an amendment and restatement, in its entirety, of the Existing Agreement and any Obligations (as defined in the Existing Agreement) outstanding thereunder shall be deemed to be outstanding under this Agreement. Nothing in this Agreement shall be deemed to be a repayment or novation of any such Obligations, or a release of any lien, mortgage, or security interest securing any such Obligations.

WHEREAS, Borrower has requested that Lender make available to it a credit facility for the purposes of and on the terms and conditions set forth herein; and

NOW, THEREFORE, in consideration of the promises and mutual covenants herein contained, the parties hereto hereby agree as follows:

SECTION 1. DEFINITIONS

1.1 Defined Terms. As used in this Agreement, the following terms shall have the following meanings:

1933 Act” means the Securities Act of 1933, as amended from time to time, together with all rules and regulations promulgated from time to time thereunder.

1940 Act” means the Investment Company Act of 1940, as amended from time to time, together with all rules and regulations promulgated from time to time thereunder.

ABR Loans” means Loans made at a rate of interest based upon the Base Rate.

Advisers Act” means the Investment Advisers Act of 1940, as amended from time to time, together with all rules and regulations promulgated from time to time thereunder.

Affiliate” means, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” of a Person means the power, directly or indirectly, either to (a) vote 10% or more of the securities having ordinary voting power for the election of directors of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.

AFT” means Apollo Senior Floating Rate Fund, Inc., a diversified, closed-end management investment company registered under the Investment Company Act of 1940.

AFT Loan Documents” means that certain Amended and Restated Loan and Security Agreement dated as of March 1, 2019, by and between AFT and Lender (as amended by that certain First Amendment to Amended and Restated Loan and Security Agreement, dated as of March 1, 2021, and as further amended, restated, or otherwise modified from time to time).

 

Page 1


Agreement” has the meaning given such term in the preamble hereto.

Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to Borrower from time to time concerning or relating to bribery or corruption.

Anti-Terrorism Order” means Executive Order No. 13224 of September 24, 2001, Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit or Support Terrorism, 66 U.S. Fed. Reg. 49, 079 (2001), as amended from time to time.

Applicable Margin” means 0.875% per annum; provided, however, that the Applicable Margin shall be increased to 1.075% on the date of the delivery of any asset coverage certificate delivered pursuant to Section 5.2(c) evidencing an Asset Coverage Ratio of less than 260% and shall remain at such rate until the first Business Day following delivery to Lender of the next regularly scheduled asset coverage certificate to be delivered pursuant to Section 5.2(c) which reflects an Asset Coverage Ratio of 260% or greater at which time the Applicable Margin shall decrease to 0.875%.

Asset Coverage Ratio” means, with respect to Borrower, the ratio, expressed as a percentage, of (a) the value of the Total Assets of Borrower less all liabilities and indebtedness of Borrower not represented by Senior Securities, to (b) the aggregate amount of all Senior Securities representing Indebtedness of Borrower.

Available Commitment” means, at any time, an amount equal to the excess, if any, of (a) the amount of the Maximum Revolving Amount less (b) the aggregate principal amount of all Revolving Loans then outstanding.

Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, any tenor for such Benchmark or payment period for interest calculated with reference to such Benchmark, as applicable, that is or may be used for determining the length of an Interest Period pursuant to this Agreement as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to Section 2.8(c).

Bank Parties” has the meaning given such term in Section 9.15.

Banking Day” means any day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.

Bankruptcy Event” means, with respect to any Person, such Person becomes the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of Lender, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment, provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person by a Governmental Authority or instrumentality thereof, provided, further, that such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.

Base Rate” means, for any day, the highest of (a) Lender’s prime rate as announced by Lender in New York City, and (b) the sum of (x) the Federal Funds Rate plus (y) 100 bps; provided that, if any such rate of interest shall be less than zero, such rate shall be deemed to be zero.

 

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Base Rate Loan” means a Loan that bears interest based on the Base Rate.

Benchmark” means, initially, USD LIBOR; provided that if a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred with respect to USD LIBOR or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 2.8(c).

Benchmark Replacement” means, for any Available Tenor, the first alternative set forth in the order below that can be determined by the Lender for the applicable Benchmark Replacement Date:

(1) the sum of: (a) Term SOFR and (b) the related Benchmark Replacement Adjustment;

(2) the sum of: (a) Daily Simple SOFR and (b) the related Benchmark Replacement Adjustment;

(3) the sum of: (a) the alternate benchmark rate that has been selected by the Lender and the Borrower as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for U.S. dollar-denominated syndicated credit facilities at such time and (b) the related Benchmark Replacement Adjustment;

provided that, in the case of clause (1), such Unadjusted Benchmark Replacement is displayed on a screen or other information service that publishes such rate from time to time as selected by the Lender in its reasonable discretion. If the Benchmark Replacement as determined pursuant to clause (1), (2) or (3) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents.

Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement for any applicable Interest Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement:

(1) for purposes of clauses (1) and (2) of the definition of “Benchmark Replacement,” the first alternative set forth in the order below that can be determined by the Lender:

(a) the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that has been selected or recommended by the Relevant Governmental Body for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for the applicable Corresponding Tenor;

(b) the spread adjustment (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that would apply to the fallback rate for a derivative transaction referencing the ISDA Definitions to be effective upon an index cessation event with respect to such Benchmark for the applicable Corresponding Tenor; and

(2) for purposes of clause (3) of the definition of “Benchmark Replacement,” the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Lender and the Borrower for the applicable Corresponding Tenor giving due

 

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consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement Date or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for U.S. dollar-denominated syndicated credit facilities; provided that, in the case of clause (1) above, such adjustment is displayed on a screen or other information service that publishes such Benchmark Replacement Adjustment from time to time as selected by the Lender in its reasonable discretion.

Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Base Rate,” the definition of “Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Lender decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Lender in a manner substantially consistent with market practice (or, if the Lender decides that adoption of any portion of such market practice is not administratively feasible or if the Lender determines that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as the Lender decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).

Benchmark Replacement Date” means the earliest to occur of the following events with respect to the then-current Benchmark:

(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof);

(2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the date of the public statement or publication of information referenced therein; or

(3) in the case of an Early Opt-in Election, the sixth (6th) Business Day after the date notice of such Early Opt-in Election is provided to the Lender or Borrower, as applicable.

For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).

 

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Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark:

(1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);

(2) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or

(3) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer representative.

For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).

Benchmark Unavailability Period” means the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to clauses (1) or (2) of that definition has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with this Section 2.8(c) and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.8(c).

Borrower” has the meaning given such term in the preamble hereto.

Borrowing” means, as the context may require, a borrowing consisting of Loans of the same class and type, made, converted or continued on the same date, and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect.

Borrowing Date” means any Business Day specified in a Borrowing Request pursuant to Section 2.2 as a date on which Borrower requests Lender to make a Revolving Loan hereunder.

Borrowing Request” means a notice of borrowing of a Revolving Loan pursuant to Section 2.2 substantially in the form of Exhibit B or such other form as may be reasonably approved by Lender, appropriately completed and signed by a Responsible Officer of Borrower.

 

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Business Day” means a day other than (a) a Saturday, Sunday or any other day on which commercial banks in New York City are authorized or required by law to close; and (b) if such day relates to a borrowing of, a payment or prepayment or principal or interest on, a conversion of or into, or an Interest Period for, a Eurodollar Loan, or a notice with respect to any of the foregoing, any such day that is also a day on which dealings in Dollar deposits are not conducted by and between banks in the London interbank market.

Closing Date” means the first date all the conditions precedent in Section 4.1 are satisfied or waived.

Code” means the Internal Revenue Code of 1986, as amended from time to time, together with all rules and regulations promulgated from time to time thereunder.

Collateral” has the meaning specified in Section 8.1.

Collateral Documents” means, collectively, this Agreement, the Control Agreement, the Custody Agreement and all documents, instruments and agreements entered into with, or executed or delivered to Lender in connection with any of the foregoing.

Commitment” means the obligation of Lender to make Loans to Borrower hereunder.

Commitment Fee” has the meaning given such term in Section 2.3(a).

Commitment Period” means, with respect to the Loans, the period from and including the Closing Date to, but not including, the Maturity Date.

Confidential Information” has the meaning given such term in Section 9.15.

Contractual Obligation” means as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

Control Agreement” means that certain Control Agreement dated as of March 1, 2019, by and among Borrower, Lender and Custodian.

Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.

Custodian” means U.S. Bank, National Association, or its designee or nominee, acting in its capacity as custodian, or such other Person satisfying the requirements set forth in Sections 5.4 and 6.12.

Custody Account” means each of Borrower’s custodial accounts established and maintained by Custodian pursuant to the Custody Agreement, including any substitute, successor or replacement account; provided such term shall not include any such account maintained for the purpose of holding Excluded Property.

Custody Agreement” means that certain Custody Agreement, dated as of March 1, 2019, by and among Borrower, Custodian and the other parties thereto, if any.

 

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Daily Simple SOFR” means, for any day, SOFR, with the conventions for this rate (which will include a lookback) being established by the Lender in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for syndicated business loans; provided, that if the Lender decides that any such convention is not administratively feasible for the Lender, then the Lender may establish another convention in its reasonable discretion.

Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

Default” means any of the events specified in Section 7, whether or not any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied.

Dollars” and “$” means dollars in lawful currency of the United States of America.

Early Opt-in Election” means, if the then-current Benchmark is USD LIBOR, the occurrence of:

(1) a notification by the Lender to (or the request by the Borrower to the Lender to notify) each of the other parties hereto that at least five currently outstanding U.S. dollar-denominated syndicated credit facilities at such time contain (as a result of amendment or as originally executed) a SOFR-based rate (including SOFR, a term SOFR or any other rate based upon SOFR) as a benchmark rate (and such syndicated credit facilities are identified in such notice and are publicly available for review), and

(2) the joint election by the Lender and the Borrower to trigger a fallback from USD LIBOR.

ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, together with all rules and regulations promulgated from time to time thereunder.

ERISA Affiliate” means any trade or business (whether or not incorporated) that is treated as a single employer together with Borrower under Section 414 of the Code.

Eurocurrency Reserve Requirements” means for any day as applied to any Loan, the aggregate (without duplication) of the rates (expressed as a decimal fraction) of reserve requirements in effect on such day, including, without limitation, basic, supplemental, marginal and emergency reserves under any regulations of the Board of Governors of the Federal Reserve System or other Governmental Authority having jurisdiction with respect thereto, dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of such Board) maintained by a member bank of the Federal Reserve System or bank subject to such Governmental Authority.

Eurodollar Base Rate” means with respect to each day during each Interest Period pertaining to any Loan, the rate appearing on Reuters Screen LIBOR01 Page (or on any successor or substitute page on such screen) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of the applicable Interest Period, as the rate for dollar deposits in the London interbank market with a maturity comparable to such Interest Period; provided that, if any such rate of interest shall be less than zero, such rate shall be deemed to be zero. In the event that such rate does not appear on such

 

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page (or on any such successor or substitute page), such rate shall be determined by reference to such other comparable publicly available service for displaying interest rates for dollar deposits in the London interbank market as may be agreed by Lender and Borrower together in a commercially reasonable manner or, in the absence of such availability, by reference to the rate at which dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of Lender in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such applicable Interest Period; provided that, if any such rate of interest shall be less than zero, such rate shall be deemed to be zero.

Eurodollar Loans” means Loans the rate of interest applicable to which is based upon the Eurodollar Rate.

Eurodollar Rate” means, with respect to each day during each Interest Period pertaining to any Loan, a rate per annum determined for such day in accordance with the following formula (rounded upward to the nearest 1/100th of 1%):

 

                                                                          Eurodollar Base Rate
  1.00 - Eurocurrency Reserve Requirements

Event of Default” means any of the events specified in Section 7.

Excluded Property” means any assets of Borrower which have been segregated pursuant to the requirements of Release 10666.

Existing Principal Amount” has the meaning given such term in Section 2.1.

FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such Sections of the Code.

Federal Funds Rate” means, for any day, the weighted average of the “offered rates”, as determined by Lender, of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day for such transactions received by Lender from three federal funds brokers of recognized standing selected by it.

Financing Lease” means any lease of property, real or personal, the obligations of the lessee in respect of which are required in accordance with GAAP to be capitalized on a balance sheet of the lessee.

Fixed Rate” means a fixed rate of interest agreed to by Borrower and Lender at the time of the making of a Fixed Rate Loan.

Fixed Rate Loans” means Loans (other than Eurodollar Loans or ABR Loans) bearing interest at a fixed rate of interest agreed to by Borrower and Lender, in writing, at the time of the making of such Loan or conversion of such Loan to bear interest at the Fixed Rate.

 

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Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to USD LIBOR.

GAAP” means generally accepted accounting principles in the United States of America in effect from time to time.

Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

Guarantee Obligation” means, as to any Person (the “guaranteeing person”), any obligation of (a) the guaranteeing person or (b) another Person (including, without limitation, any bank under any letter of credit) to induce the creation of which the guaranteeing person has issued a reimbursement, counterindemnity or similar obligation, in either case guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or other obligations (the “primary obligations”) of any other third Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (A) for the purchase or payment of any such primary obligation or (B) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall be such guaranteeing person’s maximum reasonably anticipated liability in respect thereof as determined by such guaranteeing person in good faith.

Indebtedness” means, of any Person at any date, (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services (other than current trade liabilities incurred in the ordinary course of business and payable in accordance with customary practices), (b) any other indebtedness of such Person which is evidenced by a note, bond, debenture or similar debt instrument, (c) all obligations of such Person under Financing Leases or Interest Rate Agreements or Swap Obligations as calculated daily on a marked-to-market basis in accordance with GAAP, (d) all obligations of such Person in respect of acceptances (as defined in Section 3-410 of the UCC) issued or created for the account of such Person, (e) all reimbursement obligations of such Person arising out of any letters of credit, and (f) all liabilities secured by any Lien on any property owned by such Person even though such Person has not assumed or otherwise become liable for the payment thereof.

Indemnified Parties” has the meaning given such term in Section 9.5.

Initial Term Loan” has the meaning given such term in Section 2.1(a).

 

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Interest Payment Date” means (a) as to each ABR Loan and Fixed Rate Loan, the last day of each calendar month and the Maturity Date; (b) as to each Eurodollar Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date; provided, however, that if any Interest Period for a Eurodollar Loan exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates; and (c) with respect to each Loan, in connection with any prepayment, with respect to interest on the amount of principal prepaid, the date of such prepayment.

Interest Period” means (a) with respect to the Initial Term Loan, initially, the period commencing on the Closing Date and ending one (1) month, two (2) months, or three (3) months thereafter, as selected by Borrower in its notice of borrowing as provided in Section 2.2, as the case may be, (b) with respect to the Up-Size Term Loan, initially, the period commencing on the Up-Size Date and ending one (1) month, two (2) months, or three (3) months thereafter, as selected by Borrower in its notice of borrowing as provided in Section 2.2, as the case may be, and (c) with respect to the Revolving Loans, (i) initially, the period commencing on the borrowing or continuation date, as the case may be, with respect to Revolving Loans and ending one (1) month, two (2) months, three (3) months or, if available (as determined by Lender in its sole discretion), six (6) months thereafter, as selected by Borrower in its notice of borrowing as provided in Section 2.2, as the case may be; and (ii) thereafter, each period commencing on the last day of the immediately preceding Interest Period applicable to Revolving Loans and ending (x) one (1) month, two (2) months, three (3) months, or, if available (as determined by Lender in its sole discretion), six (6) months thereafter, as selected by Borrower by irrevocable notice to Lender not less than three Banking Days prior to the last day of the then current Interest Period with respect to such Revolving Loans or (y) if no such notice is given, a period of time thereafter equal to the Interest Period then ending; provided that, all of the foregoing provisions relating to Interest Periods are subject to the following: (1) if any Interest Period pertaining to any Loan would otherwise end on a day which is not a Banking Day, such Interest Period shall be extended to the next succeeding Banking Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Banking Day; (2) any Interest Period that would otherwise end after the Maturity Date shall end on the Maturity Date; (3) Borrower shall select Interest Periods so as not to require a payment or prepayment of any Loan during an Interest Period for such Loan.

Interest Rate Agreement” means any interest rate protection agreement, interest rate future, interest rate option, interest rate swap, interest rate cap of other interest rate hedge or arrangement under which Borrower is a party or a beneficiary.

Investment Advisor” means initially, Apollo Credit Management, Inc., and subsequently, any Affiliate of Apollo Global Management, Inc. reasonably acceptable to Lender, in each case acting as investment advisor for Borrower.

Investment Advisory Agreement” means that certain Investment Advisory and Management Agreement dated as of January 16, 2013, by and between Borrower and Investment Advisor.

Investment Policies” means the policies and objectives for, and limits and restrictions on, investing by Borrower as set forth in Borrower’s registration statement or Prospectus (including potential changes thereto reflected in the registration statement for shares to be issued in connection with the Merger) and as from time to time adopted or amended by the board of directors or stockholders of Borrower in accordance with the terms hereof.

ISDA Definitions” means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time by the International Swaps and Derivatives Association, Inc. or such successor thereto.

 

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Lender” has the meaning given such term in the preamble hereto.

Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement and any Financing Lease having substantially the same economic effect as any of the foregoing).

Loan Documents” means this Agreement, the Collateral Documents and each Note, if any, and all documents, instruments and agreements entered into with, or executed or delivered to, Lender in connection with any of the foregoing.

Loans” means, collectively, the Term Loans and the Revolving Loans, and any of such Loans, individually being, a “Loan”.

Margin Stock” has the meaning given such term by Regulation U.

Material Adverse Effect” means (a) a material impairment of the ability of Borrower to perform any of its obligations under any of the Loan Documents, (b) a material adverse effect upon the legality, validity, binding effect or enforceability of any Loan Document or any material provision thereof, (c) a material adverse change in, or a material adverse effect upon, the business, properties, or financial condition of Borrower or (d) a material adverse change in, a material adverse effect upon, or a material impairment of, (i) the priority of Lender’s security interest in the Collateral or (ii) the rights, remedies and benefits available to, or conferred upon, Lender under any Loan Document or Lender’s ability to foreclose on the Collateral at the times and in the manner contemplated herein.

Maturity Date” means the earliest to occur of (a) the date on which Lender demands repayment pursuant to Section 7, (b) the date on which the Loans are repaid in full (together with all accrued interest and all other amounts due and owing in connection with the Loans) and the Commitments have been terminated, and (c) April 4, 2022.

Maximum Revolving Amount” means (i) prior to the satisfaction of the Up-Size Conditions, $14,000,000 and (ii) upon the satisfaction of the Up-Size Conditions, $26,000,000.

Minimum Required Rating” means, at any time of determination for a debt security or instrument, a rating of no lower than B3 (as rated by Moody’s) or B- (as rated by S&P); provided that Lender may, in its sole discretion, select the lower of the Moody’s or the S&P rating for such debt security or instrument to determine whether such security or instrument has met the “Minimum Required Rating”.

Moody’s” means Moody’s Investors Service, Inc., or any successor acceptable to Lender performing substantially the same function.

Non-Excluded Taxes” has the meaning given such term in Section 2.11.

Non-Recourse Person” has the meaning given such term in Section 9.16.

Note” means a Term Note or Revolving Note, as applicable.

 

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Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of Borrower arising under any Loan Document or otherwise with respect to the Loans, in each case whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against Borrower of any proceeding under any Debtor Relief Laws naming Borrower as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.

Participant” has the meaning given such term in Section 9.6(b).

Patriot Act” means United State Public Law 107-56, Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as amended from time to time, together with all rules and regulations promulgated from time to time thereunder.

Permitted Liens” has the meaning given such term in Section 6.2.

Person” means an individual, partnership, corporation, business trust, joint stock company, limited liability company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.

Plan” means, at a particular time, any employee benefit plan covered by ERISA which Borrower maintains.

Prospectus” means, as to Borrower at a particular time, the currently effective prospectus and statement of additional information of Borrower; provided that, the Investment Policies stated therein shall be deemed to be replaced by any such Investment Policies that are later modified, supplemented, amended or rescinded by the board of directors of Borrower or authorized action of the holders of its common stock, in each case, in accordance with the terms hereof.

Reference Time” with respect to any setting of the then-current Benchmark means (1) if such Benchmark is USD LIBOR, 11:00 a.m. (London time) on the day that is two London banking days preceding the date of such setting, and (2) if such Benchmark is not USD LIBOR, the time determined by the Lender in its reasonable discretion.

Registration Statement” means, as to Borrower at a particular time, the currently effective registration statement of Borrower.

Regulation D” means Regulation D of the Board of Governors of the Federal Reserve System, as the same may be in effect from time to time, and any successor regulations.

Regulation T” means Regulation T of the Board of Governors of the Federal Reserve System as in effect from time to time.

Regulation U” means Regulation U of the Board of Governors of the Federal Reserve System as in effect from time to time.

Regulation X” means Regulation X of the Board of Governors of the Federal Reserve System as in effect from time to time.

 

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Release 10666” means Investment Company Act Release No. 10666 and any interpretive opinions of the staff of the U.S. Securities and Exchange Commission issued prior to the date of this Agreement relating to the maintenance of segregated accounts.

Relevant Governmental Body” means the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or any successor thereto.

Requirement of Law” means, as to any Person, the certificate of incorporation, by-laws, partnership agreement, or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

Responsible Officer” means any duly appointed officer of Borrower (or other Person duly authorized by Borrower to execute and deliver Loan Documents on behalf of Borrower) whose title appears on a list of “Responsible Officers” (which title may include “Authorized Signatory” in the case of such other Person) provided from time to time by Borrower to Lender, and accepted by Lender in its reasonable discretion.

Revolving Loan” has the meaning given such term in Section 2.1(b).

Revolving Note” means a promissory note made by Borrower in favor of Lender evidencing Revolving Loans made by Lender, substantially in the form of Exhibit A-2.

S&P” means Standard & Poor’s Financial Services, LLC, a subsidiary of The McGraw-Hill Companies, or any successor acceptable to Lender performing substantially the same function.

Sanctioned Country” means, at any time, a country or territory which is the subject or target of any Sanctions.

Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, or the U.S. Department of State, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person controlled by any such Person.

Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State.

Senior Securities Representing Indebtedness” and “Senior Securities representing Indebtedness” mean any Senior Security other than stock, preferred stock or other equity security.

Senior Security” means any security classified as a “Senior Security” under the 1940 Act, including, without limitation, any bond, debenture, note or similar obligation or instrument constituting a security and evidencing indebtedness (including, without, limitation the Loans under this Agreement), and any share of beneficial interest of Borrower of a class having priority over any other class of shares of Borrower as to distribution of assets or payment of dividends, including without limitation preferred stock; provided however, that Senior Security shall not include (i) marked to market obligations under Swap

 

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Obligations or Interest Rate Agreements to the extent not constituting a Senior Security consistent with the regulatory guidance provided by the staff of the Securities Exchange Commission, (ii) any Excluded Property or (iii) any security that is exempted from the definition of “Senior Security” or otherwise not considered for purposes of computing asset coverage under Section 18 of the 1940 Act pursuant to proposed 1940 Act Rule 18f-4.

SOFR” means, with respect to any Business Day, a rate per annum equal to the secured overnight financing rate for such Business Day published by the SOFR Administrator on the SOFR Administrator’s Website on the immediately succeeding Business Day.

SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).

SOFR Administrator’s Website” means the website of the Federal Reserve Bank of New York, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.

Subsidiary” means as to any Person, a corporation, partnership or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person, except if such shares of stock or other ownership interests are held, or where such management is controlled by such Person acting, solely in a fiduciary capacity entered into in the ordinary course of business.

Swap Obligation” means as to any Person, any net obligation of such Person arising out of (i) any “swap agreement” (as defined in Section 101(53B) of the Bankruptcy Code), (ii) any equity derivative transactions such as swap, floor, collar, or cap transactions, (iii) any option to enter into any of the foregoing or (iv) any combination of the foregoing.

Term Loan” has the meaning given such term in Section 2.1(a).

Term Note” means a promissory note made by Borrower in favor of Lender evidencing the Term Loan made by Lender, substantially in the form of Exhibit A-1.

Term SOFR” means, for the applicable Corresponding Tenor as of the applicable Reference Time, the forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body.

Total Assets” means at any time, all assets of Borrower which in accordance with GAAP would be classified as assets on a balance sheet of Borrower prepared as of such time; provided that, (a) to the extent the market value of assets attributable to any single issuer exceeds 5% of the market value of all assets of Borrower, such excess shall not be included in the determination of Total Assets, (b) to the extent the market value of rated debt securities or other rated instruments or assets that do not meet the Minimum Required Rating exceed 20% of the market value of all assets of Borrower, such excess shall not be included in the determination of Total Assets; provided, however, that any such excess resulting from a downgrade of securities or other investments previously rated at or higher than the Minimum Required Rating to a rating lower than the Minimum Required Rating shall not be excluded in the determination of Total Assets until the third (3rd) Business Day following the day on which such downgrade occurred, (c) to the extent the market value of assets attributable to issuers in any single industry exceeds 25% of the market value of

 

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all assets of Borrower, the excess over such 25% limitation shall not be included in the determination of Total Assets, (d) any assets of Borrower which have been segregated pursuant to the requirements of Release 10666 shall not be included in the determination of Total Assets and (e) with respect to any assets of Borrower subject to a Lien permitted by Section 6.2(c), the value of such asset up to the amount of liability of Borrower, determined at such time, under the contract which such Lien secures shall not be included in the determination of Total Assets.

Transferee” has the meaning given such term in Section 9.6(c).

Type” means, as to any Loan, its nature as an ABR Loan, a Eurodollar Loan or a Fixed Rate Loan.

UCC” means Uniform Commercial Code in effect from time to time in the State of New York and any other applicable jurisdiction.

Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.

Up-front Fee” has the meaning given such term in Section 2.3(b).

Up-Size Conditions” mean, collectively, the following conditions: (i) Lender has received reasonably satisfactory evidence that (a) all obligations of AFT pursuant to the AFT Loan Documents have been repaid, satisfied or discharged or will be repaid, satisfied or discharged with the proceeds of the Up-Size Term Loan as provided in Section 2.1(a) upon completion of the Merger (as hereinafter defined), (b) the AFT Loan Documents and the loans made thereunder have been terminated and (c) the merger transaction between Borrower and AFT (the “Merger”) has been consummated; (ii) Borrower has paid to Lender an up-front up-size fee in an amount equal to $66,500, which fee shall be non-refundable and fully earned when paid; (iii) no Default or Event of Default hereunder is continuing; (iv) each of the representations and warranties made by Borrower in or pursuant to the Loan Documents shall be true and correct in all material respects on and as of the Up-size Date as if made on and as of such date, except to the extent the same expressly relate to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date; and (v) Borrower has delivered to Lender a certificate signed by an officer of Borrower certifying that the conditions set forth in each of the foregoing clauses (i) through (iv) have been satisfied or will be satisfied following the consummation of the Merger and the advance of the Up-Size Term Loan has been or will concurrently be provided as set forth in Section 2.1(a).

Up-Size Date” means the date on which the Up-Size Conditions have been satisfied.

Up-Size Term Loan” has the meaning given such term in Section 2.1(a).

USD LIBOR” means the London interbank offered rate for U.S. dollars.

1.2 Other Definitional Provisions.

(a) Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in any Notes or any certificate or other document made or delivered pursuant hereto.

(b) As used herein and in any other Loan Document, and any certificate or other document made or delivered pursuant hereto, accounting terms relating to Borrower not defined in Section 1.1 and accounting terms partly defined in Section 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP (as consistently applied).

 

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(c) The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, subsection, Schedule and Exhibit references are to this Agreement unless otherwise specified.

(d) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

(e) Unless otherwise specified, all references herein to times of day shall be references to Eastern Time (daylight or standard, as applicable).

(f) When used herein the terms Accessions, Account, Certificated Securities, Chattel Paper, Commercial Tort Claim, Commodity Account, Commodity Contract, Deposit Account, Document, Electronic Chattel Paper, Equipment, Goods, Instrument, Inventory, Investment Property, Letter-of-Credit Rights, Payment Intangible, Proceeds, Promissory Notes, Securities Account, Security Entitlement, Supporting Obligations and Uncertificated Securities have the meaning provided in Article 8 or Article 9, as applicable, of the UCC. Letter of Credit has the meaning provided in Section 5-102 of the UCC.

(g) Unless the context requires otherwise, any definition of or reference to any agreement, instrument or other document (including any organizational document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document).

SECTION 2. AMOUNT AND TERMS OF THE LOAN

2.1 The Loans. (a) Pursuant to the Existing Agreement, Lender has previously made a term loan advance to Borrower, the aggregate outstanding principal amount thereof as of the date hereof being $110,000,000 (the “Existing Principal Amount”). Effective as of the date hereof, and without the making of any further advances hereunder, the Existing Principal Amount shall be deemed to be a term loan advance made pursuant to this Agreement (the “Initial Term Loan”) and shall be subject in all respects to the terms hereof. In addition to the Initial Term Loan, Lender hereby agrees to make an additional term loan advance to Borrower on the Up-Size Date in an amount equal to $121,000,000, subject to the satisfaction of the Up-Size Conditions (the “Up-Size Term Loan” and, collectively with the Initial Term Loan, the “Term Loans” and each, individually, a “Term Loan”). Any amounts repaid or prepaid on the Term Loan may not be reborrowed. The Term Loans shall be Eurodollar Loans. The parties hereto acknowledge and agree that on the Up-Size Date, without the initiation of any new wire transfers from Lender to Borrower, the Up-Size Term Loan shall be deemed to be made hereunder and applied to pay, satisfy or discharge all obligations of AFT pursuant to the AFT Loan Documents in full. Borrower hereby instructs Lender to reflect on its book and records the making of such deemed loan and the application of the proceeds thereof to pay, satisfy or discharge all obligations of AFT pursuant to the AFT Loan Documents in full.

(b) Subject to the terms and conditions hereof, Lender agrees to make advances to Borrower, from time to time during the Commitment Period, in an aggregate principal amount at any one time outstanding not to exceed the Maximum Revolving Amount (each such advance, a “Revolving Loan”). During the Commitment Period, Borrower may use the Commitments by borrowing, prepaying Loans in whole or in part, and reborrowing, in each case in accordance with the terms and conditions hereof. The Revolving Loans may, subject to the terms and conditions hereof, from time to time be (i) Eurodollar Loans,

 

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(ii) ABR Loans, (iii) Fixed Rate Loans, or (iv) a combination thereof, as determined by Borrower and notified to the Lender in accordance with Sections 2.2 and 2.7, provided that no Revolving Loan shall be made as a Eurodollar Loan after the day that is one month prior to April 4, 2022. The Revolving Loans may from time to time have Interest Periods of 1-month, 2-months, 3-months or, if available (as determined by Lender in its sole discretion), 6-months, or a combination thereof, as determined by Borrower and notified to Lender in accordance with Sections 2.2 and 2.7.

2.2 Procedure for Borrowing. Subject to Section 4, Borrower may borrow Revolving Loans during the Commitment Period on any Banking Day, with respect to Eurodollar Loans, or any Business Day, with respect to ABR Loans and Fixed Rate Loans, provided that Borrower shall give Lender irrevocable written notice pursuant to a Borrowing Request (which notice must be received by Lender by 11:00 a.m., (a) in the case of Eurodollar Loans, at least three Banking Days prior to the requested Borrowing Date, (b) in the case of Fixed Rate Loans, at least five Business Days prior to the requested Borrowing Date, and (c) in the case of ABR Loans, on the requested Borrowing Date), specifying (i) the aggregate amount to be borrowed and the aggregate amount outstanding after giving effect to such borrowing, (ii) the Type of each Loan requested, (iii) the requested Borrowing Date, (iv) with respect any Fixed Rate Loan, the Fixed Rate and any additional terms agreed to between Borrower and Lender with respect thereto, and (v) with respect to any Eurodollar Loan, the lengths of the initial Interest Periods therefor. The aggregate amount of each borrowing of Revolving Loans by Borrower shall be in an amount equal to $1,000,000 or a whole multiple of $500,000 in excess thereof (or, if the then Available Commitment is less than $1,000,000, such lesser amount).

2.3 Fees.

(a) Borrower agrees to pay to Lender a commitment fee (the “Commitment Fee”) during the period which shall begin on the first day of the Commitment Period and shall extend to the Maturity Date, at the rate of 0.125% per annum on the average daily amount of the Available Commitment during each calendar quarter. The Commitment Fee shall be payable quarterly in arrears on the last Business Day of each March, June, September and December and on the Maturity Date, commencing on the first of such dates to occur after the Closing Date.

(b) Borrower agrees to pay to Lender on the Closing Date an up-front fee (the “Up-front Fee”) in an amount equal to $14,000. The Up-front Fee shall be non-refundable and fully-earned when paid.

2.4 Termination and Reduction of Commitments. Borrower shall have the right, upon not less than three (3) Business Days’ notice to Lender, to reduce the Maximum Revolving Amount in minimum increments of $1,000,000. Any such reduction shall be accompanied by prepayment in full of the Revolving Loans then outstanding that are in excess of the Maximum Revolving Amount as so reduced.

2.5 Repayment of the Loans; Evidence of Debt.

(a) Borrower hereby unconditionally promises to pay to Lender the then unpaid principal amount of the Loans on the Maturity Date. Borrower hereby further agrees to pay to Lender interest on the unpaid principal amount of the Loans from time to time outstanding from the date hereof until payment in full thereof at the rates per annum, and on the dates, set forth in Section 2.7.

(b) The Lender shall maintain in accordance with its usual practice one or more accounts or records evidencing indebtedness of Borrower to Lender resulting from the Loans, including the amounts of principal and interest payable and paid to Lender from time to time under this Agreement. The

 

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accounts or records maintained by Lender, shall, to the extent permitted by applicable law, be prima facie evidence, absent manifest error, of the amount of the Loans made by Lender to Borrower and the interest and payments thereon.

(c) Upon the written request of Lender, Borrower shall execute and deliver to Lender one or more Notes, which shall evidence the Loans in addition to such accounts or records. The Lender may attach schedules to its Note and endorse thereon the date, amount and maturity of the Loans and payments with respect thereto. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of Borrower hereunder to pay any amount owing with respect to the Obligations.

2.6 Optional and Mandatory Prepayments.

(a) Borrower may, at any time and from time to time, prepay the Loans, in whole or in part, without premium or penalty, except as set forth in Section 2.6(c), upon notice (it being understood that any such notice, in the case of termination, may be conditioned upon the consummation of a refinancing of the Loans, in which case such notice may be postponed or revoked by the Borrower if such refinancing does not occur) to Lender received (i) in the case of Eurodollar Loans, at least three Banking Days prior to such prepayment, (ii) in the case of Fixed Rate Loans or ABR Loans, prior to 11:00 a.m. on the Business Day of such proposed pre-payment, in each case to the Lender, specifying the date and amount of prepayment, and whether the prepayment is of the Term Loan or the Revolving Loans or a combination thereof, and, if a combination thereof, the amount allocable to each. If any such notice is given, the amount specified in such notice shall be due and payable by the Borrower on the date specified therein, together with accrued interest to such date on the amount prepaid. Partial prepayments shall be in an aggregate principal amount of $1,000,000 or a whole multiple of $500,000 in excess thereof.

(b) If, at any time, either (i) the Asset Coverage Ratio of Borrower shall be less than 250%, or (ii) the Indebtedness of the Borrower is greater than any leverage limits provided in Borrower’s Prospectus, then Borrower shall, within ten (10) Business Days of the occurrence thereof, repay the Loans to the extent necessary to ensure that Borrower’s Asset Coverage Ratio after such payment is at least 300% or less than any such leverage limits provided in Borrower’s Prospectus, as applicable.

(c) In the event that any prepayment of a Eurodollar Loan is made on a date other than the last day of the then current Interest Period with respect thereto, Borrower shall indemnify Lender therefor in accordance with Section 2.14 hereof.

2.7 Interest Rates and Payment Dates.

(a) Each Eurodollar Loan shall bear interest for each day during each applicable Interest Period with respect thereto at a rate per annum equal to the Eurodollar Rate plus the Applicable Margin; provided, however, that during the continuance of an event described in Section 2.15(b), then each Loan shall bear interest for each day at a rate per annum equal to the Base Rate.

(b) Each ABR Loan shall bear interest at a rate per annum equal to the Base Rate.

(c) Each Fixed Rate Loan shall bear interest at a rate per annum equal to the Fixed Rate.

(d) Upon (i) the occurrence and continuance of any Event of Default specified in Section 7(e) or (ii) notice given by Lender to Borrower following the occurrence and during the continuance of such Event of Default, all Loans outstanding to Borrower shall bear interest at a rate per annum which

 

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is the rate that would otherwise be applicable thereto pursuant to the provisions of Section 2.7(a), (b) or (c), as applicable, plus 2.00% per annum. If all or a portion of (i) the principal amount of any Loan, (ii) any interest payable thereon or (iii) any Commitment Fee or other amount payable hereunder or under any other Loan Document shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum which is the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this Section plus 2.00% per annum, in each case from the date of such non-payment until such amount is paid in full (as well after as before judgment); provided that the maximum rate of interest payable on the principal amount of any Loan shall not exceed the sum of the rate per annum described in Section 2.7 plus 2.00% per annum.

Interest on Loans shall be payable in arrears on each Interest Payment Date, provided that (i) interest accruing pursuant to paragraph (d) of this Section 2.7 shall be payable from time to time on demand and (ii) interest accruing at the Base Rate pursuant to Section 2.15(b) shall be payable on the last Business Day of each month.

2.8 Computation of Interest and Fees.

(a) Interest shall be calculated on the basis of a 360-day year for the actual days elapsed. Any change in the interest rate on the Loans resulting from a change in the Base Rate or the Eurocurrency Reserve Requirements shall become effective as of the opening of business on the day on which such change becomes effective. The Lender shall as soon as practicable notify Borrower of the effective date and the amount of each such change in interest rate.

(b) Each determination of an interest rate by Lender pursuant to any provision of this Agreement shall be conclusive and binding on Borrower in the absence of manifest error. The Lender shall, at the request of Borrower, deliver to Borrower a statement showing the quotations used by Lender in determining any interest rate pursuant to Section 2.7(a).

(c) USD LIBOR Replacement.

(i) Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Loan Document, if a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then if a Benchmark Replacement is determined in accordance the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document.

(ii) Benchmark Replacement Conforming Changes. In connection with the implementation of a Benchmark Replacement, the Lender will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document.

(iii) Notices; Standards for Decisions and Determinations. The Lender will promptly notify the Borrower of (A) any occurrence of a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date, (B) the implementation of any Benchmark Replacement, (C) the effectiveness of any Benchmark Replacement Conforming Changes, (D) the removal or

 

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reinstatement of any tenor of a Benchmark pursuant to clause (iv) below and (E) the commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Lender pursuant to this Section 2.8(c) including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Loan Document, except, in each case, as expressly required pursuant to this Section 2.8(c).

(iv) Unavailability of Tenor of Benchmark. Notwithstanding anything to the contrary herein or in any other Loan Document, at any time (including in connection with the implementation of a Benchmark Replacement), (A) if the then-current Benchmark is a term rate (including Term SOFR or USD LIBOR) and either (1) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Lender in its reasonable discretion or (2) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is or will be no longer representative, then the Lender may modify the definition of “Interest Period” for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (B) if a tenor that was removed pursuant to clause (A) above either (1) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (2) is not, or is no longer, subject to an announcement that it is or will no longer be representative for a Benchmark (including a Benchmark Replacement), then the Lender may modify the definition of “Interest Period” for all Benchmark settings at or after such time to reinstate such previously removed tenor.

(v) Benchmark Unavailability Period. Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any request for a Eurodollar Borrowing of, conversion to or continuation of Eurodollar Loans to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any such request into a request for a Borrowing of or conversion to ABR Loans. During any Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of Base Rate based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of Base Rate.

2.9 Payments. All payments (including prepayments) to be made by Borrower hereunder, whether on account of principal, interest, fees or otherwise, shall be made without set off or counterclaim and shall be made no later than 3:00 p.m., on the due date therefor to Lender, at Lender’s office specified in Section 9.2 hereof, in Dollars and in immediately available funds. If any payment hereunder becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day, and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension.

2.10 Requirements of Law.

(a) If Lender shall have determined that the adoption of or any change in any Requirement of Law of or by any Governmental Authority regarding or effecting capital adequacy or in the interpretation or application thereof or compliance by Lender or any corporation controlling Lender with any request or directive regarding or effecting capital adequacy from any Governmental Authority made subsequent to the date hereof shall have the effect of reducing the rate of return on Lender’s or such corporation’s capital as a consequence of its obligations hereunder to a level below that which Lender or such corporation could have achieved but for such adoption, change or compliance (taking into consideration Lender’s or such corporation’s policies with respect to capital adequacy) by an amount reasonably determined by Lender to be material, then from time to time, Borrower shall promptly, and in

 

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any event within ten Business Days of receipt of detailed notice thereof from Lender documenting the relevant changes, pay to Lender such additional amount or amounts as will compensate Lender for such reduction.

(b) If Lender becomes entitled to claim any additional amounts pursuant to this Section, it shall promptly notify Borrower of the event by reason of which it has become so entitled by providing a certificate setting forth in reasonable detail the basis for the claim for additional amounts, the amounts required to be paid by Borrower to Lender, and the computations made by Lender to determine the amounts; provided that Lender shall not be required to disclose any confidential information. Such certificate as to any additional amounts payable pursuant to this Section submitted by Lender to Borrower shall be conclusive in the absence of manifest error. The agreements in this Section shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

(c) Failure or delay on the part of Lender to demand compensation pursuant to this Section shall not constitute a waiver of Lender’s right to demand such compensation; provided that Borrower shall not be required to compensate Lender pursuant to this Section for any increased costs incurred or reductions suffered more than 90 days prior to the date that Lender notifies Borrower of the event giving rise to such increased costs or reductions, and of Lender’s intention to claim compensation therefor (except that, if the event giving rise to such increased costs or reductions is retroactive, then the 90 day period referred to above shall be extended to include the period of retroactive effect thereof).

2.11 Taxes.

(a) All payments made by Borrower under this Agreement and any Notes shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, assessments, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding (i) all present and future income taxes (including, without limitation, branch profits tax), minimum taxes, and franchise taxes (imposed in lieu of net income taxes) imposed on Lender as a result of a present or former connection between Lender (or its applicable lending office) and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from Lender having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or any Note), (ii) any U.S. federal withholding taxes imposed under FATCA. If any such non-excluded taxes, levies, imposts, duties, charges, fees, assessments, deductions or withholdings (“Non-Excluded Taxes”) are required to be withheld from any amounts payable to Lender hereunder or under any Note, the amounts so payable to Lender shall be increased to the extent necessary to yield to Lender (after payment of all required Non-Excluded Taxes, including such deductions and withholdings applicable to additional sums payable under this Section 2.11), Lender will have received an amount equal to the sum it would have received had no such withholding or deduction been made, provided, however, that (i) Borrower shall not be required to increase any such amounts payable to Lender if Lender fails to comply with the requirements of paragraph (c) of this Section, and (ii) Borrower shall not be required to increase any such amounts payable to Lender for any Non-Excluded Taxes that are U.S. federal withholding taxes imposed on amounts payable to Lender pursuant to laws in effect at the time Lender becomes a party to this Agreement. Whenever any Non-Excluded Taxes are payable by Borrower, as promptly as possible thereafter, and in no event more than forty-five (45) days thereafter, Borrower shall send to Lender a certified copy of an original official receipt received by Borrower showing payment thereof or such other evidence of payment as is reasonably acceptable to Lender. If Borrower fails to pay any Non-Excluded Taxes when due to the appropriate taxing authority or fails to remit to Lender the required receipts or other required documentary evidence, Borrower shall indemnify Lender for any incremental taxes, interest or penalties that may become payable by Lender as a result of any such failure. The agreements in this Section shall survive the termination of this Agreement and the repayment, satisfaction or discharge of the Loans and all other Obligations hereunder.

 

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(b) If Lender determines, in its sole discretion exercised in good faith, that it has received a refund of any taxes, levies, imposts, duties, charges, fees, assessments, deductions, withholdings or any other amount as to which it has been indemnified pursuant to this Section (including by the payment of additional amounts pursuant to this Section), it shall pay to Borrower an amount equal to such refund or credit (but only to the extent of indemnity payments made under this Section with respect to the amounts giving rise to such refund or credit), net of all out-of-pocket expenses (including taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund or credit). Borrower, upon the request of such Lender, shall repay to Lender the amount paid over pursuant to this paragraph (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that Lender is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this Section, in no event will Lender be required to pay any amount to Borrower pursuant to this Section the payment of which would place Lender in a less favorable net after-tax position than Lender would have been in if the amount subject to indemnification had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts giving rise to such refund had never been paid. This subsection shall not be construed to require Lender to make available its tax returns (or any other information relating to its taxes that it deems confidential) to Borrower or any other Person.

(c) If Lender is entitled to an exemption from or reduction of withholding tax with respect to payments made under any Loan Document, Lender shall deliver to Borrower at the time or times reasonably requested by Borrower such properly completed and executed documentation reasonably requested by Borrower as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, Lender, if reasonably requested by Borrower, shall deliver such other documentation prescribed by applicable law or reasonably requested by Borrower as will enable Borrower to determine whether or not Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 2.11(d) below) shall not be required if in Lender’s reasonable judgment such completion, execution or submission would subject Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of Lender. Each Person that shall become a Lender or a Participant pursuant to Section 9.6 shall, upon the effectiveness of the related transfer, be required to provide all of the forms and statements required pursuant to this Section; provided that, in the case of a Participant such Participant shall furnish all such required forms and statements to the Lender from which the related participation shall have been purchased.

(d) Without limiting the generality of the foregoing, Lender shall (i) deliver to Borrower prior to any payments being made under this Agreement or the Loans (A) if Lender is organized under the laws of a jurisdiction outside the United States of America, one duly completed copy of United States Internal Revenue Service Form W-8BEN, Form W-8BEN-E, Form W-8IMY or Form W-8ECI, or successor applicable forms, appropriate for Lender, or (B) if Lender is organized under the laws of a jurisdiction within the United States of America, one duly completed copy of United States Internal Revenue Service Form W-9, or successor form.

(e) If a payment made to Lender under this Agreement or the Loans would be subject to U.S. federal withholding tax imposed by FATCA if Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), Lender shall deliver to Borrower at the time or times prescribed by law and at such time or times reasonably requested by Borrower such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably

 

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requested by Borrower as may be necessary for Borrower to comply with their obligations under FATCA, to determine whether Lender has or has not complied with Lender’s obligations under FATCA or to determine the amount, if any, to deduct and withhold from such payment. Solely for purposes of this Section 2.11(e), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify Borrower in writing of its legal inability to do so.

2.12 Change of Lending Office. If Lender requests compensation under Section 2.10, or if Borrower is required to pay any additional amount to Lender or any Governmental Authority for the account of Lender pursuant to Section 2.11, then Lender shall use reasonable efforts to designate a different lending office if the making of such a designation would reduce or obviate the need for the Borrower to make payments under Section 2.10 or payment of additional amounts under Section 2.11. Borrower hereby agrees to pay all reasonable out-of-pocket costs and expenses incurred by Lender in connection with any such designation or assignment.

2.13 Continuation Options; Tranches.

(a) Each Eurodollar Loan may be converted to an ABR Loan by giving Lender notice of such election not later than the third Banking Day prior to the last day of such Interest Period, unless there shall have occurred and be continuing a Default or Event of Default, provided that such conversion of Eurodollar Loans may only be made on the last day of an Interest Period with respect thereto. Each ABR Loan may be converted to a Eurodollar Loan by giving Lender notice of such election not later than the third Banking Day prior to the date of such conversion, unless there shall have occurred and be continuing a Default or Event of Default. No conversion may be made pursuant to this Section 2.13(a) if, after giving effect thereto, Section 2.13(c) shall be contravened.

(b) All Eurodollar Loans shall be continued as such upon the expiration of the then current Interest Period with respect thereto in accordance with the applicable provisions of the term “Interest Period” set forth in Section 1.1, provided that no Eurodollar Loan may be continued as such (i) if, after giving effect thereto, Section 2.13(c) would be contravened or (ii) after the date that is one month prior to April 20, 2022.

(c) All borrowings, conversions and continuations of Revolving Loans hereunder and all selections of Interest Periods hereunder shall be in such amounts and be made pursuant to such elections so that, after giving effect thereto, the aggregate principal amount of the Loans comprising each Revolving Loan shall be equal to $1,000,000 or a whole multiple of $500,000 in excess thereof. There shall be no more than ten (10) Interest Periods outstanding at any one time.

2.14 Indemnity.

(a) Borrower agrees to indemnify Lender and to hold Lender harmless from any loss or expense which Lender may sustain or incur as a consequence of (i) default by Borrower in payment when due of the principal amount of or interest on the Loans, (ii) default by Borrower in making any prepayment after Borrower has given a notice thereof in accordance with the provisions of this Agreement, or (iii) the making by Borrower of a prepayment (whether such prepayment is voluntary, optional, mandatory or upon acceleration of the Loans) of the Loans on a day which is not the last day of an Interest Period with respect thereto, in each case above including, without limitation, any such loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain the Loans or from fees payable to terminate the deposits from which such funds were obtained. This covenant shall survive the termination of this Agreement and the payment of the Obligations and all other amounts payable hereunder.

 

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(b) When demanding payment pursuant to this Section, Lender shall provide to Borrower a certificate, signed by an officer of Lender, setting forth in reasonable detail the amount required to be paid by Borrower to Lender. Such certificate shall be conclusive in the absence of manifest error.

2.15 Certain Increased Costs and Eurodollar Events.

(a) If any future Requirement of Law, or any change after the date hereof in the interpretation or administration of any Requirement of Law by any Governmental Authority charged with the interpretation or administration thereof, or compliance by Lender (or its applicable lending office) with any request or directive (whether or not having the force of law) of any such Governmental Authority in connection therewith issued, promulgated or enacted after the date hereof shall:

(i) subject Lender (or its applicable lending office) to any tax, duty or other charge with respect to the Loans or its Commitment, in each case except for any Non- Excluded Taxes and any taxes described in Sections 2.11(a)(i) or (ii); or

(ii) impose, modify or deem applicable any reserve (including, without limitation, any such requirement imposed by the Board of Governors of the Federal Reserve System), special deposit, insurance assessment or similar requirement against assets of, deposits with or for the account of, or credit extended by, Lender (or its applicable lending office) or shall impose on Lender (or its applicable lending office) any other condition affecting the Loans or its Commitment; or

(iii) impose on Lender any other conditions or requirements with respect to this Agreement, or the Loans made by Lender or participation therein or Lender’s Commitment and the result of any of the foregoing is to increase the cost to Lender of making, funding, issuing, renewing, extending or maintaining the Loans or Lender’s Commitment, or to reduce the amount of any sum received or receivable by Lender under this Agreement with respect thereto, by an amount deemed by Lender to be material, then, promptly upon demand by Lender and delivery to Borrower of the certificate required by clause (c) hereof, Borrower shall pay to Lender the additional amount or amounts as will compensate Lender for such increased cost or reduction.

(b) If prior to the commencement of any Interest Period for a Eurodollar Loan:

(i) Lender determines (which determination shall be conclusive and binding absent manifest error) that adequate and reasonable means do not exist for ascertaining the Eurodollar Base Rate or the Eurodollar Rate, as applicable, for a Loan for the applicable Interest Period; or

(ii) Lender determines (which determination shall be conclusive and binding absent manifest error) that the Eurodollar Base Rate or the Eurodollar Rate, as applicable, for the applicable Interest Period will not adequately and fairly reflect the cost to Lender of making or maintaining its Loans included in such borrowing for such Interest Period,

then Lender shall give notice thereof to Borrower by telephone or telecopy as promptly as practicable thereafter and, until Lender notifies Borrower that the circumstances giving rise to such notice no longer exist, any request by Borrower for conversion of any Eurodollar Loan to, or continuation of any Eurodollar Loan for the applicable Interest Period, as the case may be, shall be ineffective and such Borrowing shall be made as an ABR Loan.

 

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(c) If Lender becomes entitled to claim any additional amounts pursuant to this Section, it shall promptly notify Borrower of the event by reason of which it has become so entitled by providing a certificate setting forth in reasonable detail the basis for the claim for additional amounts, the amounts required to be paid by Borrower to Lender, and the computations made by Lender to determine the amounts; provided that Lender shall not be required to disclose any confidential information; provided further that Borrower shall not be required to compensate Lender pursuant to this Section for any increased costs incurred or reductions suffered more than 90 days prior to the date that Lender notifies Borrower of the event giving rise to such increased costs or reductions, and of Lender’s intention to claim compensation therefor (except that, if the event giving rise to such increased costs or reductions is retroactive, then the 90 day period referred to above shall be extended to include the period of retroactive effect thereof). Such certificate as to any additional amounts payable pursuant to this Section submitted by Lender to Borrower shall be conclusive in the absence of manifest error. The agreements in this Section shall survive the termination of this Agreement and the payment of the Obligations and all other amounts payable hereunder.

SECTION 3. REPRESENTATIONS AND WARRANTIES

Borrower hereby represents and warrants to Lender that:

3.1 Financial Condition. Borrower’s annual shareholder report on Form N-CSR (or any successor form adopted by the U.S. Securities and Exchange Commission) for Borrower’s most recently ended fiscal year for which annual reports have been prepared, if any, certified by the independent public accountants for Borrower (i) has heretofore been filed with the Securities and Exchanges Commission through its public Electronic Data Gathering, Analysis, and Retrieval system (“EDGAR”), (ii) contains a statement of assets and liabilities as of Borrower in respect of such year and related statements of operations and of changes in net assets for the fiscal year ended on such date, and (iii) fairly presents, in all material respects, the financial position of Borrower as of such date and the results of its operations for such period, in conformity with GAAP (as consistently applied).

3.2 No Change. Since the date of the shareholder report for the most recently ended fiscal year for which annual reports have been prepared for Borrower, there has been no development or event which has had or could reasonably be expected to have a Material Adverse Effect.

3.3 Existence; Compliance with Law. Borrower is (a) duly formed, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) has the power and authority and the legal right to own its property and to conduct the business in which it is currently engaged, (c) is duly qualified as a foreign entity and is in good standing under the laws of each jurisdiction where its ownership of property or the conduct of its business requires such qualification except where the failure to so qualify could not reasonably be expected to have a Material Adverse Effect and (d) is in material compliance with all Requirements of Law (including, without limitation, prior to and after giving effect to this Agreement, the 1940 Act and the 1933 Act). Borrower will be in compliance with Section 18(c) of the 1940 Act. The shares of Borrower have been validly authorized.

3.4 Power; Authorization; Enforceable Obligations. Borrower has the power and authority and the legal right, to execute, deliver and perform the Loan Documents to which it is a party and to borrow hereunder and has taken all necessary action to authorize the borrowings on the terms and conditions of this Agreement and any Notes and to authorize the execution, delivery and performance of the Loan Documents to which it is a party including, without limitation, receiving the approval of the majority of the independent members of the board of directors of Borrower as to entering into the transactions contemplated hereby.

 

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Except for any filings to perfect Lender’s security interest in the Collateral, no consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person is required in connection with (a) the borrowings hereunder, (b) the granting of the security interest in the Collateral to Lender, or (c) with the execution, delivery, performance, validity or enforceability of the Loan Documents to which Borrower is a party other than those that have been obtained. This Agreement has been, and each other Loan Document to which it is a party will be, duly executed and delivered by Borrower. This Agreement constitutes, and each other Loan Document to which it is a party when executed and delivered will constitute, a legal, valid and binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).

3.5 No Legal Bar. The execution, delivery and performance of the Loan Documents to which Borrower is a party, the borrowings hereunder and the use of the proceeds thereof will not violate any material Requirement of Law applicable to Borrower (including, without limitation, the 1940 Act and the 1933 Act) or material Contractual Obligation of Borrower and will not result in, or require, the creation or imposition of any material Lien on any of their respective properties or revenues pursuant to any such Requirement of Law or Contractual Obligation other than the Liens granted in favor of Lender pursuant to the Loan Documents.

3.6 No Material Litigation. No material litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of Borrower, threatened by or against Borrower or against any of its properties or revenues which could reasonably be expected to have a Material Adverse Effect.

3.7 No Default. Borrower is not in default under or with respect to any Contractual Obligations in any respect which could reasonably be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing.

3.8 Ownership of Property; Leases; Liens. Borrower has good title to all its property, free and clear of Liens other than Permitted Liens. All material leases of Borrower are valid and subsisting and are in full force and effect in all material respects.

3.9 No Burdensome Agreements. No Contractual Obligation of Borrower could reasonably be expected to have a Material Adverse Effect.

3.10 Taxes.

(a) Borrower has filed all tax returns which are required to be filed and has paid all taxes shown to be due and payable on said returns or on any assessments made against it or any of its property and all other material taxes, fees or other charges imposed on it or any of its property by any Governmental Authority (other than any amounts the validity of which are currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of Borrower); and no tax Lien (other than Permitted Liens) has been filed, and, to the knowledge of Borrower, no claim is being asserted, with respect to any such tax, fee or other charge.

(b) Borrower qualifies as a “regulated investment company” as defined in subchapter M of the Code.

(c) Borrower is in compliance with all requirements of the Code applicable to regulated investment companies under subchapter M.

 

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3.11 Federal Margin Regulations. Other than the delivery to Lender and execution of Form FR U-1 by Borrower, no filing or other action is required under the provisions of Regulations U or X in connection with the execution and delivery of this Agreement and the making of the Loans hereunder, and such execution and delivery of this Agreement and making of the Loans is in compliance therewith.

3.12 ERISA. Neither Borrower nor any ERISA Affiliate is currently or has at any time maintained or established a Plan. Neither Borrower nor any ERISA Affiliate is currently or has at any time been a “party in interest” (as defined in Section 3(14) of ERISA) or a “disqualified person” (as defined in Section 4975 of the Code) with respect to a Plan.

3.13 Certain Restrictions. Borrower is not subject to regulation under any Federal or State statute or regulation (other than Regulation X of the Board of Governors of the Federal Reserve System and the 1940 Act) which limits its ability to incur Indebtedness. Borrower is not party to, or otherwise subject to any provision contained in, any instrument evidencing Indebtedness of Borrower, any agreement relating thereto or any other agreement (including, without limitation, its charter or other organizational document), which limits its ability to incur Indebtedness.

3.14 Subsidiaries. Borrower has no direct Subsidiaries.

3.15 Registration of Borrower. Borrower is registered as a diversified, closed-end, management investment company under the 1940 Act. The Investment Advisor is registered as an investment adviser under the Advisers Act, and is Borrower’s Investment Advisor.

3.16 Offering in Compliance with Securities Laws. Borrower has issued all of its securities pursuant to an effective registration statement on Form N-2 or otherwise in accordance with all Federal and State securities laws applicable thereto in all material respects.

3.17 Investment Policies. Borrower is in compliance in all material respects with all of its Investment Policies (including, without limitation, immediately prior to and immediately after giving effect to this Agreement and the borrowings contemplated hereunder).

3.18 Accuracy of Information; Electronic Information.

(a) All factual information furnished on or prior to the date hereof by or on behalf of Borrower in writing to Lender for purposes of or in connection with this Agreement or any transaction contemplated hereby (in each case, as amended, superseded, supplemented or otherwise modified with the knowledge of Lender) is, and all other such factual information hereafter furnished by or on behalf of Borrower to Lender (in each case, as amended, superseded, supplemented or otherwise modified with the knowledge of Lender) will be, true and accurate in every material respect on the date as of which such information is dated or certified, and to the extent such information was furnished to Lender on or prior to the date hereof, as of the date of execution and delivery of this Agreement by Lender, and such information is not, or shall not be, as the case may be, incomplete by omitting to state any material fact necessary to make such information not misleading; provided, however, that, with respect to projected financial information, Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.

(b) Borrower agrees that Lender shall not be liable to Borrower for any damages arising from its use of information or other materials obtained through electronic transmission systems which is incorrect or incomplete because of an electronic transmission error.

 

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3.19 Affiliated Persons. To the best knowledge of Borrower, Borrower, together with its respective Affiliates, is not an “Affiliated Person” (as defined in the 1940 Act) of Lender.

3.20 [Reserved].

3.21 Foreign Assets Control Regulations, Etc.

(a) None of the execution, delivery or performance of any Loan Document, the issuance of any Notes, or the use of proceeds of the Loans will violate the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto.

(b) Borrower (i) is not a Person described or designated in the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control or in Section 1 of the Anti-Terrorism Order and (ii) does not engage in any dealings or transactions with any such Person. Borrower is in compliance, in all material respects, with the Patriot Act.

(c) No part of the proceeds from the Loans hereunder will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended, assuming in all cases that such act applies to Borrower.

(d) Borrower has implemented and maintains in effect policies and procedures designed to ensure compliance by Borrower and its directors, officers and employees with Anti-Corruption Laws and applicable Sanctions, and Borrower, and to the knowledge of Borrower, its officers, employees, directors and agents (such agents acting pursuant to the direction of Borrower), in each case, to the extent acting on behalf of Borrower, are in material compliance with Anti-Corruption Laws and applicable Sanctions in all material respects. None of (a) Borrower, or (b) to the knowledge of any Responsible Officer, any of the directors, officers or employees while in such office of Borrower or any agent of Borrower that acts at the direction of Borrower in connection with the credit facility established hereby, is a Sanctioned Person. Neither the Loans nor use of proceeds contemplated by this Agreement will violate Anti-Corruption Laws or applicable Sanctions.

SECTION 4. CONDITIONS PRECEDENT

4.1 Conditions Precedent. The effectiveness of this Agreement is subject to the satisfaction, prior to or on the Closing Date, of the following conditions precedent:

(a) Executed Agreement. The Lender shall have received this Agreement fully executed and delivered by all other parties thereto, including, without limitation, by a duly authorized officer of Borrower.

(b) Control Agreement. The Lender shall have received the Control Agreement fully executed and delivered by all other parties thereto.

(c) Notes. The Lender shall have received Notes requested pursuant to Section 2.5(c), if any, executed and delivered by a duly authorized officer of Borrower.

(d) Related Agreements. The Lender shall have received true, correct and complete copies, certified as to authenticity by Borrower, of (i) Borrower’s most recent Prospectus, the Investment

 

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Advisory Agreement, the Custody Agreement, and (ii) such other documents or instruments as may be reasonably requested by Lender, including, without limitation, a copy of any material debt instrument, security agreement or other material contract to which Borrower may be a party.

(e) Proceedings of Borrower. The Lender shall have received a copy of the resolutions, in form and substance satisfactory to Lender, of the board of directors of Borrower authorizing (i) the execution, delivery and performance of the Loan Documents and (ii) the borrowings contemplated hereunder, certified by the Secretary or any Assistant Secretary of Borrower as of the Closing Date, which certificate shall be in form and substance satisfactory to Lender and shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded and are in full force and effect.

(f) Incumbency Certificate. The Lender shall have received a certificate of Borrower, dated the Closing Date, as to the incumbency and signature of the officers of Borrower executing any Loan Document, executed by the Secretary or any Assistant Secretary of Borrower, satisfactory in form and substance to Lender.

(g) Organizational Documents. The Lender shall have received true, correct and complete copies of the charter and by-laws of Borrower, certified as of the Closing Date as true, correct and complete copies thereof by the Secretary or any Assistant Secretary of Borrower.

(h) Good Standing. The Lender shall have received a certificate evidencing the good standing of Borrower in its jurisdiction of formation.

(i) Legal Opinions. The Lender shall have received the executed legal opinion of counsel to Borrower (which shall not be an “Accord” opinion). Such legal opinion shall cover such matters incident to the transactions contemplated by this Agreement as Lender may reasonably require.

(j) Financial Information. The Lender shall have received the most recent publicly available financial information (which includes a list of portfolio securities) for Borrower.

(k) Additional Matters. All corporate and other proceedings, and all documents, instruments and other legal matters in connection with the transactions contemplated by this Agreement and the other Loan Documents shall be satisfactory in form and substance to Lender, and Lender shall have received such other documents and legal opinions in respect of any aspect or consequence of the transactions contemplated hereby or thereby as it shall reasonably request.

4.2 Conditions to Each Loan. The agreement of Lender to make any Revolving Loan requested by Borrower to be made by it on any date is subject to the satisfaction of the following conditions precedent:

(a) Representations and Warranties. Each of the representations and warranties made by Borrower in or pursuant to the Loan Documents shall be (i) on the Closing Date, true and correct and (ii) on and as of such date (other than the Closing Date), true and correct as if made on and as of such date (A) as stated if such representation and warranty contains an express materiality qualification or (B) in all material respects if such representation and warranty does not contain such a qualification, except to the extent, in any case, the same expressly relate to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date.

(b) No Default. No Default or Event of Default shall have occurred and be continuing on the Closing Date.

 

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(c) Maximum Borrowing Limitation. Borrower is in compliance with and shall not have violated any Requirements of Law or exceeded the borrowing limits set forth in its Prospectus or Registration Statement.

(d) Regulation U. The Lender shall be satisfied that the Loans and the use of proceeds thereof comply in all respects with Regulation U.

SECTION 5. AFFIRMATIVE COVENANTS

So long as the Loans or other Obligation hereunder shall remain unpaid or unsatisfied or Lender shall have any outstanding Commitment, Borrower shall:

5.1 Financial Statements. Furnish to Lender or caused to be furnished to Lender, as soon as possible and in any event within two (2) Business Days after (i) the deadline for filing thereof with the Securities and Exchange Commission or any successor or analogous Governmental Authority, copies of all annual and semi-annual reports to shareholders and (ii) the filing thereof with the Securities and Exchange Commission or any successor or analogous Governmental Authority, copies of all amendments and supplements to the Registration Statement, the Prospectus, non-routine proxy statements, financial statements and other materials of a financial or otherwise material nature; provided that publication of such information on Borrower’s website, agmfunds.com, or public availability as posted on EDGAR shall constitute delivery for purposes of this Section 5.1.

5.2 Certificates; Other Information. Furnish to Lender:

(a) within two (2) Banking Days after the delivery of each annual and semi-annual financial statement referred to in Section 5.1, a certificate of Borrower stating that (i) Borrower during such period has observed or performed all of its covenants and other agreements, and satisfied every condition, contained in this Agreement and the other Loan Documents to be observed, performed or satisfied by it, (ii) the representations and warranties made by Borrower in or pursuant to the Loan Documents shall be true and correct on and as of such date of such financial statement (A) as stated if such representation and warranty contains an express materiality qualification or (B) in all material respects if such representation and warranty does not contain such a qualification, except to the extent the same expressly relate to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date, and (iii) no Default or Event of Default has occurred and is continuing;

(b) as soon as available, but in any event not later than 10 days after the end of each month, the net asset value sheet of the Borrower as at the end of such month, in the form and detail similar to those customarily prepared by the Borrower’s management for internal use and reasonably satisfactory to Lender, certified by a Responsible Officer as being fairly stated in all material respects;

(c) within two (2) Banking Days following the 15th and the last day of each month (or, if any such date is not a Banking Day, on the next succeeding Banking Day), a certificate of a Responsible Officer showing in reasonable detail the calculation of Borrower’s Asset Coverage Ratio as of the 15th or the last day of each such month, as applicable; and

(d) promptly, copies of all changes to the Prospectus and Registration Statement, and any additional financial and other information as Lender may from time to time reasonably request.

5.3 Payment of Obligations. Pay, discharge or otherwise satisfy, at or before maturity or before they become delinquent, as the case may be, all its obligations of whatever nature (including taxes), except where (i) the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto have been provided on the books of Borrower, or (ii) the failure to pay, discharge or otherwise satisfy would not result in an Event of Default.

 

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5.4 Conduct of Business; Maintenance of Existence and Investment Company Status; Compliance with Law and Contractual Obligations; Maintenance of Custodian. Continue to engage in its investment business in accordance with its Investment Policies, Prospectus and Registration Statement, as such may be supplemented or amended from time to time in accordance with this Agreement, and preserve, renew and keep in full force and effect its existence and take all reasonable action to maintain all of its licenses, certificates, permits, rights, privileges and franchises necessary or desirable in the normal conduct of its business where the failure to do so could reasonably be expected to have a Material Adverse Effect; comply with all material Contractual Obligations and Requirements of Law (including, without limitation, Regulations U (including, compliance with all withdrawal and substitution rules therein) and X and other applicable regulations of the Board of Governors of the Federal Reserve System); maintain at all times its registration as a diversified, closed-end investment company under the 1940 Act; maintain at all times a custodian which is a bank or trust company organized under the laws of the United States or a political subdivision thereof having assets of at least $10,000,000,000 and a long-term debt or deposit rating of at least A- from S&P or A3 from Moody’s; and maintain in effect and enforce policies and procedures designed to ensure compliance by Borrower and its directors, officers and employees with Anti-Corruption Laws and applicable Sanctions.

5.5 Maintenance of Property; Insurance. Keep all property necessary in its business, if any, in good working order and condition, normal wear and tear excepted; maintain with financially sound and reputable insurance companies insurance on all its property in at least such amounts and against at least such risks as are customarily insured against in the same general area by entities engaged in the same or similar business or as may otherwise be required by the Securities and Exchange Commission or any successor or analogous Governmental Authority (including, without limitation, (i) fidelity bond coverage as shall be required by Rule 17g-1 promulgated under the 1940 Act or any successor provision and (ii) errors and omissions insurance); and furnish to Lender, upon written request, full information as to the insurance carried. Borrower shall defend the Collateral against all claims and demands of all persons at any time claiming any interest therein adverse to Lender.

5.6 Inspection of Property; Books and Records; Discussions. Keep proper books of records and account in which full, true and correct entries in conformity with GAAP and all material Requirements of Law shall be made of all dealings and transactions in relation to its business and activities; and permit representatives of Lender to visit and inspect any of Borrower’s properties and examine and make abstracts from any of its books and records during normal business hours and to discuss the business, operations, properties and financial and other condition of Borrower with officers and employees of Borrower and with its independent certified public accountants; provided that, unless a Default or an Event of Default shall have occurred and be continuing, Lender shall provide Borrower with three (3) Business Days’ prior notice of such visit. The right of inspection described in this Section 5.6 shall not apply to any information regarding shareholders of Borrower to the extent Borrower is prohibited from providing such information by Regulation S-P, 17 CFR Part 248.

5.7 Notices. Promptly give notice to Lender of:

(a) the occurrence of any Default or Event of Default;

(b) any (i) default or event of default under any Contractual Obligation of Borrower which, if not cured, could reasonably be expected to have a Material Adverse Effect, or (ii) material litigation, investigation (other than an industry-wide investigation) or proceeding which may exist at any time between Borrower and any Governmental Authority;

 

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(c) any litigation or proceeding affecting Borrower in which the amount reasonably determined to be at risk is more than 5% of Borrower’s net assets and not covered by insurance or in which injunctive or similar relief is sought;

(d) any change in Borrower’s Prospectus or Registration Statement involving Investment Policies, on the same day as such notice is given to any stockholder of the Borrower;

(e) any development or event which could reasonably be expected to have a Material Adverse Effect on Borrower; and

(f) any change in Borrower’s custodian, such notice to be received prior to the effective date of such change.

Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action Borrower proposes to take with respect thereto.

5.8 Purpose of the Loans. Use the proceeds of the Loans for new portfolio investments and general corporate purposes of Borrower as an investment company registered under the 1940 Act. Without limiting the foregoing, Borrower will not, directly or indirectly, use any part of such proceeds for any purpose which would violate any provision of its Prospectus or any applicable statute, regulation, order or restriction. Payments Following Event of Default. During the existence of and continuation of an Event of Default, Borrower will not (a) make any voluntary or optional payment or prepayment on or redemption or acquisition for value of (including, but not limited to, by way of depositing with the trustee with respect thereto money or securities before due for the purpose of paying when due) any Indebtedness (other than the Obligations) or (b) amend or modify, or permit the amendment or modification of, any provision of any Indebtedness (other than the Obligations) with the effect of such Indebtedness having an earlier maturity date than that prior to such amendment or modification.

5.10 Collateral Requirement. At all times remain the owner of the Collateral and place and maintain the Collateral that may be held therein in the Custody Account, subject to the provisions of the Loan Documents, and Borrower will not remove the Collateral from such location except for sales and dispositions in the ordinary course of business (including, but not limited to, purchases and sales of portfolio securities, sales and redemptions of fund shares, and regular and customary periodic dividends and distributions), without providing at least 30 days prior written notice to Lender.

SECTION 6. NEGATIVE COVENANTS

So long as the Loans or other Obligation hereunder shall remain unpaid or unsatisfied or Lender shall have any outstanding Commitment, Borrower shall not directly or indirectly:

6.1 Limitation on Indebtedness. Create, incur, assume or suffer to exist any Indebtedness of Borrower, except Indebtedness of Borrower incurred (a) under the Loan Documents, (b) under the Custody Agreement in favor of the Custodian to the extent (i) incurred in the ordinary course of business, (ii) incurred solely for temporary purposes with repayment in full within thirty days and without any renewal or extension thereof, and (iii) not in excess of 5% of the value of the Total Assets of Borrower at the time at which any such Indebtedness is incurred or (c) in the form of reverse repurchase transactions, Swap Obligations, Interest Rate Agreements, derivatives, dollar rolls or other transactions entered into solely for investment purposes which have the effect of borrowing (in each case, in compliance with Release 10666 and/or 1940 Act Rule 18f-4); and, in each case, which is not otherwise prohibited by law, is in the ordinary course of business, and is not in contravention of Borrower’s Prospectus or Registration Statement and, in the case of Section 6.1(a), is reflected properly as Senior Securities representing Indebtedness of Borrower in the calculation of the Asset Coverage Ratio.

 

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6.2 Limitation on Liens. Create, incur, assume or suffer to exist any Lien upon any of the property, assets or revenues of Borrower, whether now owned or hereafter acquired, except for (a) Liens for taxes not yet due or which are being contested in good faith by appropriate proceedings, provided that adequate reserves with respect thereto are maintained on the books of Borrower in conformity with GAAP, (b) Liens arising in favor of the Custodian to secure claims for customary fees and expenses owed to the Custodian under the Custody Agreement, (c) Liens arising from Swap Obligations, Interest Rate Agreements or reverse repurchase transactions, to the extent the aggregate amount of the assets of Borrower subject to such Liens does not exceed, at any time, more than 5% of the value of the Total Assets of Borrower, and (d) Liens created under any of the Loan Documents (collectively, the “Permitted Liens”).

6.3 Limitation on Guarantee Obligations. Create, incur, assume or suffer to exist any Guarantee Obligation of Borrower, except as may occur in the ordinary course of Borrower’s business and which is not otherwise prohibited by this Agreement or any Requirements of Law.

6.4 Limitation on Fundamental Changes. (a) Enter into any merger, consolidation or amalgamation, unless (i) no Default or Event of Default shall have occurred and be continuing or be caused by such merger, consolidation or amalgamation, (ii) Borrower is the surviving entity of such merger, consolidation or amalgamation and (iii) the Investment Advisor remains the investment advisor of Borrower; (b) liquidate, wind up or dissolve (or suffer any liquidation or dissolution); convey, sell, lease, assign, transfer or otherwise dispose of all or substantially all of the property, business or assets of Borrower in a single transaction or in related transactions; or (c) make any material change in its present method of conducting business. For the avoidance of doubt, the Merger shall not be prohibited by the foregoing.    

6.5 Limitation on Distributions. Make any distribution or dividend (other than a dividend or distribution paid in shares of, or options, warrants, or rights to subscribe for, or purchase, common shares or other shares of capital stock of Borrower) to the shareholders of Borrower, whether now or hereafter existing, either directly or indirectly, whether in cash or property or in obligations of Borrower if such distribution or dividend would result in a Default or an Event of Default. Notwithstanding the foregoing sentence, during the occurrence and continuation of an Event of Default, including without limitation arising due to any failure to make a mandatory prepayment due pursuant to the provisions of Section 2.6(b), Borrower shall not make any distribution or dividend to the shareholders of Borrower, whether now or hereafter existing, either directly or indirectly, whether in cash or property or in obligations of Borrower. Notwithstanding the foregoing, nothing herein shall prevent Borrower from making (i) distributions that are required to enable Borrower to qualify as a “regulated investment company” under Sections 851-855 of the Code or otherwise to minimize or eliminate Federal, State or local income or excise taxes payable by Borrower or (ii) distributions that are required by any other Requirement of Law.

6.6 Limitation on Investments, Loans and Advances; Subsidiaries. Make any advance, loan, extension of credit or capital contribution to, or purchase any stock, bonds, notes, debentures or other securities of or any assets constituting a business unit of or make any other investment (each such advance, loan, extension, contribution, purchase or investment, an “Investment”) in, any Person, except those not inconsistent with Borrower’s Investment Policies; provided that Borrower shall have no direct Subsidiaries.

6.7 Limitation on Transactions with Affiliates. Enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of property or the rendering of any service, with any Affiliate unless such transaction is not otherwise prohibited under this Agreement and not in violation of the 1940 Act.

 

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6.8 Limitation on Negative Pledge Clauses. Enter into with any Person any agreement which prohibits or limits the ability of Borrower to create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, other than (a) the Loan Documents, (b) the provisions of certain series of mandatory redeemable preferred shares issued by Borrower, and (c) except as may occur in the ordinary course of Borrower’s business and which is not otherwise prohibited by any Requirements of Law.

6.9 Limitation on Changes to Investment Policies. Except as may be required by law, make any amendment to the Prospectus or Registration Statement of Borrower relating to changes in Borrower’s Investment Policies without the consent of Lender, which consent shall not be unreasonably withheld, conditioned or delayed; provided that Borrower shall not enter into any amendment that would restrict Borrower’s ability to perform its obligations under the Loan Documents in any respect.

6.10 Permitted Activities. Engage in any business or activity other than consistent with Borrower’s Investment Policies.

6.11 ERISA. Establish, maintain or be obligated, or permit any ERISA Affiliate to establish, maintain or be obligated, in respect of a Plan.

6.12 Custodian. Transfer any assets to, or have on deposit any assets with, any custodian or bank unless Lender shall have a perfected, first-priority security interest in all securities accounts and deposit accounts maintained by Borrower with such Person and shall have received such documentation as it may reasonably require in connection with perfecting and maintaining such security interest, including, without limitation, (a) a control agreement, in form and substance reasonably satisfactory to Lender, duly executed and delivered by such new custodian and Borrower, (b) a certificate of the Secretary, Assistant Secretary, Treasurer or Assistant Treasurer of Borrower dated the date of such new control agreement and certifying that attached thereto is a true and correct copy of the custody agreement to be entered into by such new custodian and Borrower, and (c) a favorable written opinion of counsel for Borrower referring to such new control agreement, (i) dated the date of such new control agreement, (ii) addressed to Lender and (iii) covering such matters as Lender or its counsel shall reasonably request, including, without limitation, the perfected security interest achieved by such new control agreement and the Loan Documents.

6.13 Terrorism Sanctions Regulations. Become a Person described or designated in the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control or in Section 1 of the Anti-Terrorism Order, or engage, in any dealings or transactions with any such Person.

6.14 Anti-Corruption Laws. Borrower shall not use, and shall prohibit its directors, officers and employees, and agents to the extent acting on behalf of and at the direction of Borrower from using, the proceeds of the Loans: (A) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (B) for the specific purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or (C) in any manner that violates any Sanctions applicable to Borrower.

SECTION 7. EVENTS OF DEFAULT

If any of the following events shall occur and be continuing (each an “Event of Default”):

(a) Borrower shall fail to pay any principal of the Loans when due in accordance with the terms thereof or hereof, including, without limitation, any failure to make a mandatory prepayment due pursuant to the provisions of Section 2.6(b); or Borrower shall fail to pay any interest on the Loans, or any other amount payable hereunder and such failure shall continue for five (5) days; or

 

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(b) Any representation or warranty made or deemed made by Borrower or Investment Advisor herein or in any other Loan Document or which is contained in any certificate, document or financial or other statement furnished by it at any time under or in connection with this Agreement or any such other Loan Document shall prove to have been incorrect in any material respect on or as of the date made or deemed made; or

(c) Borrower shall fail to perform or observe any term, covenant or agreement contained in Section 5.1, Section 5.2(a), (b), (c) or (d), or any of Section 6; or

(d) Borrower shall fail to perform or observe any term, covenant or agreement contained in this Agreement or any other Loan Document (other than as provided in paragraphs (a), (b) or (c) of this Section), and such default shall continue unremedied for a period of fifteen (15) days; or

(e) Borrower shall (i) default in any payment of principal of or interest on any Indebtedness (other than the Loans) or Guarantee Obligation, in each case with a face amount in excess of $5,000,000, or any Swap Obligation in an amount in excess of $5,000,000, beyond the grace period (not to exceed 30 days), if any, provided in the instrument or agreement under which such Indebtedness, Swap Obligation or Guarantee Obligation was created; or (ii) after the satisfaction or expiration of any notice requirement and grace period pertaining thereto, default in the observance or performance of any other agreement or condition relating to any such Indebtedness, Swap Obligation or Guarantee Obligation or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness or beneficiary or beneficiaries of such Guarantee Obligation or Swap Obligation to cause such Indebtedness or Swap Obligation to become due prior to its stated maturity or such Guarantee Obligation to become payable; or

(f) (i) Borrower shall commence any case, proceeding or other action with respect to itself (A) under any then applicable law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it as bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or Borrower shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against Borrower any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains unvacated, undischarged, unstayed or unbonded pending appeal within 60 days from the entry thereof; or (iii) there shall be commenced against Borrower any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) Borrower shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) Borrower shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or

(g) Borrower incurs any liability to any Plan which would reasonably be expected to have a Material Adverse Effect on Borrower; or

 

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(h) One or more final judgments or decrees shall be entered against Borrower involving in the aggregate a liability (not fully covered by insurance) equal to or exceeding $5,000,000, which judgment(s) remain unsatisfied for at least 30 days; or

(i) Any material provision of any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or Borrower, Investment Advisor or Custodian contests in writing the validity or enforceability of any material provision of any Loan Document; or Borrower denies in writing that it has any or further liability or obligation under any Loan Document; or

(j) Lender shall cease to have a first priority perfected Lien in the Collateral (except for any Permitted Lien); or

(k) Borrower fails to make any material filing (including, without limitation, Forms N-CSR and N-CSRS (or any successor forms adopted by the U.S. Securities and Exchange Commission)) with the Securities Exchange Commission or any other Governmental Authority, as required by applicable law, in each case, within the time period prescribed by applicable law but after giving effect to any extension provided by filing a notification pursuant to Rule 12b-25 under the Exchange Act and any required approval by the applicable Governmental Authority, and such default shall continue unremedied for a period of two (2) Banking Days; or

(l) Either the Investment Advisor or an Affiliate thereof shall no longer act as investment advisor for Borrower; or

(m) Borrower shall cease to be registered under the 1940 Act (or proceedings for such purpose shall have been instituted); or

(n) Borrower shall fail to materially comply with its fundamental Investment Policies in a manner which Lender, in its sole discretion, determines could reasonably be expected to have a Material Adverse Effect; or

(o) Borrower shall fail to materially comply with the 1940 Act; or

(p) (i) the Custody Agreement shall have been terminated without the prior written consent of Lender, or (ii) Custodian (A) transfers or otherwise permits the withdrawal of Collateral in contravention of the terms of the Control Agreement, (B) fails to comply with a notice of exclusive control (or any transfer instructions thereafter) from Lender in accordance with the terms of the Control Agreement, or (C) fails to comply with any other material provision of the Control Agreement; or

(q) Borrower shall fail to pay to Custodian, when due, any fees, expenses or charges in an aggregate amount greater than $500,000 (at any time outstanding) under the Custody Agreement and such failure continues for thirty (30) days;

then, and in any such event, (A) if such event is an Event of Default specified in paragraph (f) of this Section with respect to Borrower, automatically the Commitments shall immediately terminate and the Loans hereunder made to Borrower (with accrued interest thereon) and all other amounts owing under this Agreement by Borrower shall immediately become due and payable, and (B) if such event is any other Event of Default with respect to Borrower, any or all of the following actions may be taken by Lender: (i) declare the Commitments to be terminated forthwith, whereupon such Commitments shall immediately terminate; and (ii) declare the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement by Borrower to be due and payable forthwith, whereupon the same shall immediately become due and payable. Except as expressly provided above in this Section, presentment, demand, protest and all other notices of any kind are hereby expressly waived.

 

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On and after the occurrence and during the continuance of an Event of Default, Lender may exercise any or all of the following rights and remedies: (A) those rights and remedies available to a secured party under the UCC (whether or not the UCC applies to the affected Collateral) or under any other applicable law (including any law governing the exercise of a bank’s right of setoff or bankers’ lien) when a debtor is in default under a security agreement, (B) without notice, sell, lease, assign, grant an option or options to purchase or otherwise dispose of the Collateral or any part thereof in one or more parcels at public or private sale, for cash, on credit or for future delivery, and upon such other terms as Lender may deem commercially reasonable; provided, neither Lender’s compliance with any applicable state or federal law in the conduct of such sale, nor its disclaimer of any warranties relating to the Collateral, shall be considered to affect the commercial reasonableness of such sale and Borrower hereby waives (to the extent permitted by applicable law) all rights of redemption, stay and/or appraisal which it now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted; (C) all payments and distributions made to Borrower upon or with respect to the Collateral shall be paid or delivered to Lender, and Borrower agrees to take all such action as Lender may deem necessary or appropriate to cause all such payments and distributions to be made to Lender and all money and other property paid over to or received by Lender shall be retained by Lender as additional collateral hereunder.

In addition to the foregoing, upon the occurrence and during the continuance of an Event of Default, Lender may, at its option, instruct the Custodian to transfer the whole or any part of the Collateral into the name of Lender or the name of its nominee, notify the obligors on any Collateral to make payment to Lender or its nominee of any amounts due thereon, take control or grant its nominee the right to take control of any proceeds of the Collateral, liquidate any or all of the Collateral, withdraw and/or sell any or all of the Collateral and apply any such Collateral as well as the proceeds of any such Collateral to all unpaid Obligations in such order as Lender determines in its sole discretion, and exercise any other rights and remedies under any Loan Document, at law or in equity. Borrower will be responsible for any decrease in the value of the Collateral occurring prior to liquidation.

SECTION 8. SECURITY INTEREST

8.1 Collateral. To secure the payment and performance of all of the Obligations, Borrower hereby pledges, assigns and grants to Lender, a security interest in and lien on, and a right of set-off against, all rights of Borrower in all of the following, whether real property, personal property or fixtures, whether now or hereafter existing, owned or acquired by Borrower (collectively, the “Collateral”): (a) all Accounts, the Custody Account, contract rights, General Intangibles, Payment Intangibles, health care insurance receivables, tax refunds, Letters of Credit, Letter of Credit Rights (whether or not the letter of credit is evidenced by a writing), Supporting Obligations, instruments (including promissory notes), Chattel Paper (whether tangible or electronic), documents, notes and documents of title; (b) all Commercial Tort Claims; (c) all Inventory; (d) all Equipment, fixtures and other goods; (e) all Deposit Accounts (general or special); (f) all financial assets, securities, Investment Property and money; (g) all insurance proceeds of or relating to any of the foregoing; (h) all insurance proceeds relating to any life insurance policy covering the life of any director, manager (within the meaning of any applicable limited liability company law), officer, employee or former director, officer or employee of Borrower; (i) insurance proceeds relating to business interruption insurance; (j) all other real property, personal property and fixtures of Borrower; (k) all books and records, including all books and records relating to any of the foregoing; and (l) all accessions and additions to, substitutions for, and replacements, products and proceeds of any of the foregoing. Notwithstanding the foregoing provisions of this Section 8.1, the foregoing security interest, pledge and collateral assignment shall not extend to, and the term “Collateral” shall not include Borrower’s right, title and interest in any Excluded Property.

 

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8.2 Preservation of Collateral and Perfection of Security Interests Therein. Borrower irrevocably authorizes Lender at any time, and from time to time, to file in any jurisdiction any initial financing statements and amendments thereto that (a) indicate the Collateral as all assets of Borrower (other than Excluded Property) or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the UCC of the jurisdiction wherein such financing statement or amendment is filed, and (b) contain any other information required by Section 5 of Article 9 of the UCC of the jurisdiction wherein such financing statement or amendment is filed regarding the sufficiency or filing office acceptance of any financing statement or amendment, including (i) whether Borrower is an organization, the type of organization and any organization identification number issued to Borrower, and (ii) in the case of a financing statement filed as a fixture filing or indicating Collateral as as-extracted collateral or timber to be cut, a sufficient description of real property to which the Collateral relates. Borrower agrees to furnish any such information to Lender promptly upon its request. Without limiting the generality of the foregoing, to perfect and keep, as a first priority perfected security interest (subject only to Permitted Liens), the security interest and Liens in the Collateral granted by Borrower to Lender to secure the payment and performance of all of the Obligations, and to otherwise protect and preserve the Collateral and Lender’s security interest and Liens therein or to enforce Lender’s security interests and Liens in the Collateral, Borrower (x) shall execute and deliver to Lender, concurrently with the execution of this Agreement, and at any time or times hereafter, at the request of Lender, all instruments or other documents (and pay the cost of filing or recording the same in all public offices deemed necessary by Lender) and do such acts as Lender may reasonably request, in form and substance reasonably satisfactory to Lender, and (y) irrevocably authorizes Lender at any time, and from time to time, to file (and if necessary to execute) in any jurisdiction any financing statements and any amendment to any financing statement. Borrower further ratifies and affirms its authorization for any financing statements and/or amendments thereto filed by Lender in any jurisdiction on or prior to the date of this Agreement.

8.3 Setoff. Borrower agrees that Lender has all rights of setoff and banker’s lien provided by applicable law with respect to Borrower and the Collateral and, in addition thereto, Borrower agrees that (in addition to Lender’s rights with respect to proceeds of Collateral) at any time after the occurrence and during the continuance of an Event of Default any amount owing by it under this Agreement or any other Loan Document is then due, Lender may apply to the payment of the Obligations any and all balances, credits, deposits, accounts or monies of Borrower then or thereafter with Lender. Without limitation of the foregoing and in addition to Lender’s rights with respect to the proceeds of the Collateral, Borrower agrees that upon and after the occurrence and during the continuance of an Event of Default, Lender and each of its branches and offices is hereby authorized, at any time and from time to time, without notice, (i) to setoff against, and to appropriate and apply to the payment of, the Obligations (whether matured or unmatured, fixed or contingent or liquidated or unliquidated) any and all amounts owing by Lender or any such office or branch to Borrower (whether matured or unmatured, and, in the case of deposits, whether general or special, time or demand and however evidenced) and (ii) pending any such action, to the extent necessary, to hold such amounts as collateral to secure such Obligations and to return as unpaid for insufficient funds any and all checks and other items drawn against any deposits so held as Lender may elect in its sole discretion.

8.4 Safekeeping. Lender shall not be responsible for: (a) the safekeeping of the Collateral, (b) any diminution in the value of the Collateral, or (c) any act or default of Custodian or any carrier, warehouseman, bailee, forwarding agency, repairman, bailee or any other Person with respect to the Collateral. All risk of loss, damage, destruction or diminution in value of the Collateral shall be borne by Borrower. Notwithstanding the foregoing, Lender’s sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the UCC, shall be to deal with such Collateral in the same manner as Lender deals with similar property for its own account.

 

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8.5 Other Actions. To further the attachment, perfection and first priority (subject only to Permitted Liens) of, and the ability of Lender to enforce, its Liens in or on the Collateral, and without limitation Borrower’s other obligations in this Agreement, Borrower agrees, at the expense of Borrower, to take the following actions with respect to the following Collateral:

(a) For each deposit account that Borrower at any time opens or maintains (other than a deposit account established with Lender or which has been established for the purpose of holding Excluded Property), Borrower shall, at Lender’s request and option, pursuant to an agreement in form and substance reasonably satisfactory to Lender, either: (i) cause the depositary bank to comply at any time with instructions from Lender to such depositary bank directing the disposition of funds from time to time credited to such deposit account, without further consent of Borrower, or (ii) arrange for Lender to become the customer of the depositary bank with respect to the deposit account, with Borrower being permitted, only with the consent of Lender, to exercise rights to withdraw funds from such deposit account.

(b) All securities, whether certificated or uncertificated, or other investment property now or hereafter acquired, except with respect to Excluded Property, by Borrower shall be held by Borrower through Custodian and subject to the Control Agreement.

(c) Borrower further agrees, at the request and option of Lender, to take any and all other actions Lender may reasonably require to the extent necessary for the attachment, perfection and first priority of (subject only to Permitted Liens), and the ability of Lender to enforce, its Liens on and in any and all of the Collateral.

SECTION 9. MISCELLANEOUS

9.1 Amendments and Waivers. Except as otherwise provided in this Agreement, including, without limitation, as provided in Section 2.8 with respect to the implementation of a Benchmark Replacement Rate or any Benchmark Replacement Conforming Changes (as set forth therein), no amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by Borrower therefrom, shall be effective unless in writing signed by Lender and Borrower, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

9.2 Notices. All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (which writing may be in the form of a facsimile transmission), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered, or five days after being deposited in the mail, postage prepaid, or, in the case of facsimile notice, when transmitted, with written confirmation of transmission obtained, addressed as follows in the case of Borrower and Lender, or to such other address as may be hereafter notified by the respective parties hereto:

 

            

 

If to Lender:        

  

Sumitomo Mitsui Banking Corporation

    

277 Park Avenue

    

New York, NY 10172

    

Attention: Shane Klein

    

Email: shane_klein@smbcgroup.com

    

Facsimile No.: 212-224-4384

    

With a copy to:

    

Moore & Van Allen

    

100 North Tryon Street, Suite 4700

 

Page 39


    

Charlotte, NC 28202

    

Attention: Todd Ransom

    

Email: toddransom@mvalaw.com

    

Facsimile No.: 704-378-2034

            

 

If to Borrower:        

  

Apollo Tactical Income Fund Inc.

    

c/o Apollo Global Management, Inc.

    

9 West 57th Street

    

New York, NY 10019

    

Attn: Joseph Glatt

    

Facsimile: 212-822-0456

    

E-mail: jglatt@apollolp.com

    

With copies to:

    

Apollo Tactical Income Fund Inc.

    

c/o Apollo Global Management, Inc.

    

9 West 57th Street

    

New York, NY 10019

    

Attn: Frank Marra

    

Facsimile: 914-467-6526

    

E-mail: fmarra@apollolp.com

    

and

    

Apollo Global Management, Inc.

    

9 West 57th Street

    

New York, NY 10019

    

Attn: Joseph Moroney

    

Facsimile: 646-383-6562

    

E-Mail: jmoroney@apollolp.com

provided that any notice, request or demand to or upon Lender pursuant to Section 2.2, 2.4, 2.6, or 2.13(a) shall not be effective until received.

9.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of any party hereto, any right, remedy, power or privilege hereunder or under the other Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

9.4 Survival of Representations and Warranties. All representations and warranties made hereunder, in the other Loan Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans hereunder.

9.5 Payment of Expenses and Taxes; Indemnification. Borrower agrees (i) to reimburse Lender for its reasonable and documented out-of-pocket costs and expenses incurred in connection with the development, preparation and execution of, and any amendment, waiver. supplement or modification to, this Agreement and the other Loan Documents and any other documents prepared in connection herewith

 

Page 40


or therewith, and the consummation and administration of the transactions contemplated hereby and thereby, including, without limitation, the reasonable fees and disbursements of counsel to Lender, (ii) to reimburse Lender for all its costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement with respect to Borrower, the other Loan Documents and any such other documents, including, without limitation, the reasonable and documented fees and disbursements of counsel to Lender, (iii) to indemnify and hold Lender harmless, from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other taxes, if any, which may be payable or determined to be payable in connection with the execution and delivery of, or consummation or administration of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, the other Loan Documents and any such other documents with respect to Borrower, except any such taxes referred to in Section 2.11(a)(i) imposed with respect to an assignment, and (iv) to indemnify and hold Lender (and its affiliates, directors, officers, agents and employees (collectively with Lender, the “Indemnified Parties”)) harmless from and against any and all other liabilities, obligations, losses, claims, damages, penalties, actions, judgments, suits, reasonable and documented costs, reasonable and documented out-of-pocket expenses or disbursements of any kind or nature whatsoever (including but not limited to reasonable and documented attorney’s fees and settlement costs) arising directly or indirectly from or in connection with the execution, delivery, enforcement, performance and administration of this Agreement, the other Loan Documents and any such other documents, from Borrower’s use of proceeds, from failure of Borrower to comply with rules, regulations and laws regarding the business of mutual funds, from false or incorrect representations or warranties or other information provided in connection with this Agreement, or from failure of Borrower to comply with covenants in a timely manner (all the foregoing in this clause (iv), collectively, the “indemnified liabilities”), provided, that Borrower shall have no obligation hereunder to any Indemnified Party with respect to indemnified liabilities arising from with respect to any Indemnified Party that are determined by a court of competent jurisdiction by a final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnified Party. The agreements in this Section 9.5 shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

9.6 Successors and Assigns; Participations and Assignments.

(a) This Agreement shall be binding upon and inure to the benefit of Borrower and Lender and their respective successors and assigns, except that Borrower may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of Lender. Lender may, with the prior written consent of Borrower (not to be unreasonably withheld), assign to any person all or a portion of its rights and obligations under this Agreement; provided that no such consent of Borrower shall be required if an Event of Default shall have occurred and be continuing or if the assignee is an Affiliate of the Lender. Any assignment or transfer not in compliance with this Section 9.6 shall be null and void.

(b) The Lender may, in the ordinary course of its commercial banking business and in accordance with applicable laws, at any time sell to one or more Persons as permitted by law (“Participants”) participating interests in the Loans, or any other interest of Lender hereunder and under the other Loan Documents. In the event of any such sale by a Lender of a participating interest to a Participant, Lender’s obligations under this Agreement to the other parties to this Agreement shall remain unchanged, Lender shall remain solely responsible for the performance thereof, Lender shall remain the holder of the Loans for all purposes under this Agreement and the other Loan Documents, and Borrower shall continue to deal solely and directly with Lender in connection with Lender’s rights and obligations under this Agreement and the other Loan Documents. Any agreement pursuant to which Lender may grant such a participating interest shall provide that Lender shall retain the sole right and responsibility to enforce the obligations of Borrower hereunder including the right to approve any amendment, modification or waiver of any provision of this Agreement; provided that such participation agreement may provide that the

 

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Participant may obtain voting rights limited to changes in respect of the principal amount, interest rates, fees and term of the Loans. Borrower agrees that if amounts outstanding under this Agreement are due or unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall, to the maximum extent permitted by applicable laws, be deemed to have the right of setoff in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement, provided that, in purchasing such participating interest, such Participant shall be deemed to have agreed to share with Lender the proceeds thereof on a pro rata basis in accordance with the percentage of the outstanding Obligations held by such Participant as fully as if it were a Lender hereunder. Borrower also agrees that each Participant shall be entitled to the benefits of Sections 2.10, 2.11 and 2.15 with respect to its participation in the Loans outstanding from time to time as if it was a Lender; provided that, in the case of Section 2.11 and 2.15, such Participant shall have complied with the requirements of said Section and provided, further, that no Participant shall be entitled to receive any greater amount pursuant to any such Section than Lender would have been entitled to receive in respect of the amount of the participation transferred by such transferor Lender to such Participant had no such transfer occurred unless the entitlement to a greater payment results from a change a Requirement of Law that occurs after the Participant acquired the participation.

(c) Borrower authorizes Lender to disclose to any Participant or assignee (each, a “Transferee”) and any prospective Transferee any and all financial information in Lender’s possession concerning Borrower and its Affiliates which has been delivered to Lender by or on behalf of Borrower pursuant to this Agreement or which has been delivered to Lender by or on behalf of Borrower in connection with Lender’s credit evaluation of Borrower and its Affiliates prior to becoming a party to this Agreement.

(d) Lender, acting solely for this purpose as a non-fiduciary agent of Borrower (and such agency being solely for tax purposes), shall maintain a register for the recordation of the names and addresses of the Transferees and principal amounts (and stated interest) owing to, each Transferee pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error.

(e) For avoidance of doubt, the parties to this Agreement acknowledge that the provisions of this Section concerning assignments of Loans and Notes relate only to absolute assignments and that such provisions do not prohibit assignments creating security interests, including, without limitation, any pledge or assignment by a Lender of the Loans or Note to any Federal Reserve Bank in accordance with applicable law.

9.7 Reserved.

9.8 Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by facsimile or pdf transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Agreement signed by all the parties shall be lodged with Investment Advisor and Lender.

9.9 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

9.10 Integration. This Agreement and the other Loan Documents represent the agreement of Borrower and Lender with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by Lender relative to subject matter hereof not expressly set forth or referred to herein or in the other Loan Documents.

 

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9.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK.

9.12 Submission To Jurisdiction; Waivers. Borrower and Lender each hereby irrevocably and unconditionally:

(a) submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the sole exclusive general jurisdiction of the Courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof;

(b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;

(c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to Borrower at its address set forth in Section 9.2 or at such other address of which Lender shall have been notified pursuant thereto;

(d) agrees that nothing herein shall affect the right of any party hereto to effect service of process in any other manner permitted by law or shall limit the right of any party hereto to sue in any other jurisdiction; and

(e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section any special, exemplary, punitive or consequential damages.

9.13 Acknowledgments. Borrower hereby acknowledges that:

(a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents;

(b) Lender has no fiduciary relationship with or duty to Borrower arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between Lender and Borrower in connection herewith or therewith is solely that of debtor and creditor; and

(c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby between Borrower and Lender.

9.14 WAIVERS OF JURY TRIAL. THE BORROWER AND THE LENDER EACH HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

Page 43


9.15 Waiver of Conflicts; Confidentiality.

(a) Borrower acknowledges that Lender and its affiliates (collectively, the “Bank Parties”) may be providing debt financing, equity capital or other services (including financial advisory services) to other companies in respect of which Borrower may have conflicting interests regarding the transactions described herein and otherwise. The Bank Parties will not use Confidential Information obtained from Borrower by virtue of the transactions contemplated by this Agreement or their other relationships with Borrower in connection with the performance by each of the Bank Parties of services for other companies, and each of the Bank Parties will not furnish any such Confidential Information to other companies. Borrower also acknowledges that no Bank Party has any obligation to use in connection with the transactions contemplated by this Agreement, or to furnish to Borrower, confidential information obtained from other companies.

(b) For purposes of this Section, “Confidential Information” shall mean all information received from Borrower or Investment Advisor relating to any of them or their business, other than any such information, that is available to Lender on a nonconfidential basis other than as a result of a breach of this Agreement. The Lender agrees to maintain the confidentiality of, and not to use the Confidential Information including for purposes of buying or selling securities, including shares issued by Borrower, except that Confidential Information may be disclosed (i) to its and its Affiliates’ directors, officers, employees and agents, including, without limitation, accountants, legal counsel and other advisors for purposes relating to the transactions contemplated by this Agreement or for conducting legitimate audits (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Confidential Information and will have agreed to keep such Confidential Information confidential), (ii) to the extent requested by any legal or regulatory authority having or claiming jurisdiction over such Person, (iii) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (iv) to any other party to this Agreement for purposes relating to the transactions contemplated hereby, (v) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder, (vi) subject to an agreement containing provisions substantially the same as those of this subsection, to any Assignee of or Participant in, or any prospective Assignee of or Participant in, any of its rights under this Agreement or (vii) with the written consent of Borrower. Any person required to maintain the confidentiality of Confidential Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Confidential Information as such Person would accord to its own confidential information.

9.16 Non-Recourse. The Lender hereby agrees for the benefit of the Investment Advisor and each and every shareholder, trustee, director and officer of Investment Advisor, Borrower and any successor, assignee, heir, estate, executor, administrator or personal representative of any such shareholder, trustee, director and officer (a “Non-Recourse Person”) that: (a) no Non-Recourse Person shall have any personal liability for any obligation of Borrower under this Agreement or any Loan Document or any other instrument or document delivered pursuant hereto or thereto (provided, however, that this provision shall not imply the absence of loss to stockholders as a result of the decline in value of Borrower); (b) no claim against any Non-Recourse Person may be made for any obligation of the Borrower under this Agreement or any Loan Document or other instrument or document delivered pursuant hereto or thereto, whether for payment of principal of, or interest on, the Loans or for any fees, expense, or other amounts payable by the Borrower hereunder or thereunder, or otherwise; and (c) the obligations of Borrower under this Agreement or any Loan Document or other instrument or document delivered pursuant hereto or thereto are enforceable solely against the Borrower and its properties and assets.

9.17 PATRIOT Act. The Lender hereby notifies Borrower that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies Borrower, which

 

Page 44


information includes the name and address of Borrower and other information that will allow Lender to identify Borrower in accordance with the Patriot Act. Borrower will provide such information promptly upon the request of Lender.

[Remainder of page intentionally blank; signature pages follow.]

 

Page 45


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first written above.

 

APOLLO TACTICAL INCOME FUND INC.,

as Borrower

By:

           LOGO

Name:

  Joseph D. Glatt

Title:

  Secretary and Chief Legal Officer

SUMITOMO MITSUI BANKING CORPORATION,

as Lender

By:

   

Name:

 

Title:

 

Signature Page to Second Amended and Restated Loan and Security Agreement


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first written above.

 

APOLLO TACTICAL INCOME FUND INC.,
as Borrower
By:  

 

Name:  
Title:  
SUMITOMO MITSUI BANKING CORPORATION,
as Lender
By:        LOGO
Name:   Shane Klein
Title:   Managing Director

Signature Page to Second Amended and Restated Loan and Security Agreement


EXHIBIT A-1

FORM OF TERM NOTE

April 22, 2021

FOR VALUE RECEIVED, APOLLO TACTICAL INCOME FUND INC. ( “Borrower”), hereby promises to pay to Sumitomo Mitsui Banking Corporation or its registered assigns (“Lender”), in accordance with the provisions of the Agreement (as hereinafter defined), the principal sum of $[            ] or such lesser amount as shall equal the aggregate unpaid principal amount of the Term Loans made by Lender to Borrower from time to time under that certain Second Amended Loan and Security Agreement, dated as of April 22, 2021 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), between Borrower and Sumitomo Mitsui Banking Corporation, as Lender.

Borrower promises to pay interest on the unpaid principal amount of the Term Loans made by Lender from the date of such Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Agreement. All payments of principal and interest shall be made to Lender in Dollars in immediately available funds at Lender’s office specified in Section 9.2 of the Agreement. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Agreement.

This Term Note is one of the Term Notes referred to in the Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject to the terms and conditions provided therein. This Term Note is also secured by the Collateral. Upon the occurrence and continuation of one or more of the Events of Default specified in the Agreement, all amounts then remaining unpaid on this Term Note shall become, or may be declared to be, immediately due and payable all as provided in the Agreement. The Term Loans made by Lender shall be evidenced by one or more loan accounts or records maintained by Lender in the ordinary course of business in accordance with the terms of the Agreement; provided that the failure of Lender to make any such recordation shall not affect the obligations of Borrower to make a payment when due of any amount owing under the Agreement or hereunder in respect of the Term Loans made by Lender. Lender may also attach schedules to this Term Note and endorse thereon the date, amount and maturity of its Loans and payments with respect thereto.

Borrower, for itself, its successors and assigns hereafter liable with respect to this Term Note, hereby waives presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Term Note.

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

APOLLO TACTICAL INCOME FUND INC.
By:  

 

Name:  
Title:  

Exhibit A-1 to Second Amended and Restated Loan and Security Agreement


LOANS AND PAYMENTS WITH RESPECT THERETO

 

Date

   Type of
Loan Made
     Amount of
Loan Made
     Amount of
Principal or
Interest Paid
This Date
     Outstanding
Principal
Balance This
Date
     Notation
Made By
 
              
              
              
              
              
              
              
              
              
              
              
              
              
              

Exhibit A-1 to Second Amended and Restated Loan and Security Agreement


EXHIBIT A-2

FORM OF REVOLVING NOTE

April 22, 2021

FOR VALUE RECEIVED, APOLLO TACTICAL INCOME FUND INC. (“Borrower”), hereby promises to pay to Sumitomo Mitsui Banking Corporation or its registered assigns (“Lender”), in accordance with the provisions of the Agreement (as hereinafter defined), the principal sum of $[            ] or such lesser amount as shall equal the aggregate unpaid principal amount of the Revolving Loans made by Lender to Borrower from time to time under that certain Second Amended and Restated Loan and Security Agreement, dated as of April 22, 2021 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), between Borrower and Sumitomo Mitsui Banking Corporation, as Lender.

Borrower promises to pay interest on the unpaid principal amount of each Revolving Loan from the date of such Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Agreement. All payments of principal and interest shall be made to Lender in Dollars in immediately available funds at Lender’s office specified in Section 9.2 of the Agreement. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Agreement.

This Revolving Note is one of the Revolving Notes referred to in the Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject to the terms and conditions provided therein. This Revolving Note is also secured by the Collateral. Upon the occurrence and continuation of one or more of the Events of Default specified in the Agreement, all amounts then remaining unpaid on this Revolving Note shall become, or may be declared to be, immediately due and payable all as provided in the Agreement. Revolving Loans made by Lender shall be evidenced by one or more loan accounts or records maintained by Lender in the ordinary course of business in accordance with the terms of the Agreement; provided that the failure of Lender to make any such recordation shall not affect the obligations of Borrower to make a payment when due of any amount owing under the Agreement or hereunder in respect of the Revolving Loans made by Lender. Lender may also attach schedules to this Revolving Note and endorse thereon the date, amount and maturity of its Revolving Loans and payments with respect thereto.

Borrower, for itself, its successors and assigns hereafter liable with respect to this Revolving Note, hereby waives presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Revolving Note.

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

APOLLO TACTICAL INCOME FUND INC.
By:      

 

  Name:
  Title:

Exhibit A-2 to Second Amended and Restated Loan and Security Agreement


LOANS AND PAYMENTS WITH RESPECT THERETO

 

Date

   Type of
Loan Made
     Amount of
Loan Made
     Amount of
Principal or
Interest Paid
This Date
     Outstanding
Principal
Balance This
Date
     Notation
Made By
 
              
              
              
              
              
              
              
              
              
              
              
              
              
              

Exhibit A-2 to Second Amended and Restated Loan and Security Agreement


EXHIBIT B

FORM OF BORROWING REQUEST

Date:                     ,            

To:     Sumitomo Mitsui Banking Corporation, as Lender

Ladies and Gentlemen:

Reference is made to that certain Second Amended and Restated Loan and Security Agreement, dated as of April 22, 2021 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), between Apollo Tactical Income Fund Inc., a non-diversified, closed-end management investment company registered under the Investment Company Act of 1940 (the “Borrower”), and Sumitomo Mitsui Banking Corporation, as Lender

The undersigned hereby requests a borrowing of a Revolving Loan:

1. On                                                              (a Banking Day);

2. In the amount of $                             (the “Loan Amount”). The aggregate amount outstanding after giving effect to such borrowing shall be                     .

[3. With respect to any Eurodollar Loan, the initial Interest Period shall be: 1 Month / 2 Months / 3 Months / 6 Months.1]

[4. $         of the Loan Amount shall be a Eurodollar Loan, $             of the Loan Amount shall be an ABR Loan and $             of the Loan Amount shall be a Fixed Rate Loan.]

[5. If any portion of the Loan Amount is a Fixed Rate Loan, the Fixed Rate for such portion shall be             .]2

The Loan requested herein complies with the proviso to the first sentence of Section 2.1(b) of the Agreement.

The Borrower hereby represents and warrants that the conditions specified in Section 4.2 of the Agreement are and shall be satisfied on and as of the Business Day set forth in Clause (1) above.

 

APOLLO TACTICAL INCOME FUND INC.
By:  

     

Name:  
Title:  

 

1 

6 Month Interest Period subject to availability (as determined by Lender in its sole discretion).

2 

If any portion of the Loan Amount is a Fixed Rate Loan, include any additional agreed upon terms for such Fixed Rate Loan

Exhibit B to Second Amended and Restated Loan and Security Agreement

Execution Version

Exhibit (k)(6)

AMENDMENT

TO

SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

 

This AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”), dated as of April 4, 2022, is made by and between APOLLO TACTICAL INCOME FUND INC., a diversified, closed-end management investment company registered under the Investment Company Act of 1940 (“Borrower”), and SUMITOMO MITSUI BANKING CORPORATION (“Lender”).

WHEREAS, Borrower and Lender are parties to that certain Second Amended and Restated Loan and Security Agreement dated as of April 22, 2021 (as amended, restated, or otherwise modified from time to time, the “Loan Agreement”; capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Loan Agreement);

WHEREAS, Borrower has requested that certain amendments be made to the Loan Agreement; and

WHEREAS, Lender has agreed to such amendments on the terms and conditions set forth herein.

NOW THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree to amend the Loan Agreement as follows:

1. Amendments to the Loan Agreement.

(a) Section 1.1 of the Loan Agreement is hereby amended by deleting the definitions of “Banking Day”, “Early Opt-in Election”, “Eurocurrency Reserve Requirements”, “Eurodollar Base Rate”, “Eurodollar Lending Office”, “Eurodollar Loans”, “Eurodollar Rate”, “Reference Time” and “USD LIBOR” in their entirety and by deleting the reference to a 2-month Interest Period.

(b) Section 1.1 of the Loan Agreement is hereby amended by deleting the definition of “Benchmark” in its entirety and replacing it with the following:

Benchmark” means, initially, Term SOFR Reference Rate; provided that if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred with respect to the Term SOFR Reference Rate or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 2.8(c).

(c) Section 1.1 of the Loan Agreement is hereby amended by deleting clauses (1) and (2) of the definition of “Benchmark Replacement” in their entirety and replacing them with the following:

(1) [reserved];

(2) the sum of (x) Daily Simple SOFR and (y) ten basis points (0.10%);

(d) The definitions of “Borrowing”, “Fixed Rate Loans”, “Interest Payment Date”, “Interest Period” and “Type” in Section 1.1 of the Loan Agreement are hereby amended by deleting the reference therein to “Eurodollar Loans” and replacing it with “SOFR Loans”.

 

Page 1


(e) Section 1.1 of the Loan Agreement is hereby amended by deleting the definition of “Benchmark Replacement Adjustment” in its entirety and replacing it with the following:

Benchmark Replacement Adjustment” means, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Lender and the Borrower giving due consideration to (a) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or (b) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for Dollar-denominated syndicated credit facilities at such time.

(f) Section 1.1 of the Loan Agreement is hereby amended by deleting clause (3) and the last paragraph of the definition of “Benchmark Replacement Date” in its entirety and replacing it with the following:

(3) [reserved].

For the avoidance of doubt, the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).

(g) Section 1.1 of the Loan Agreement is hereby amended by deleting the definition of “Business Day” in its entirety and replacing it with the following:

Business Day” means a day other than a Saturday, Sunday or any other day on which commercial banks in New York City are authorized or required by law to close.

(h) Section 1.1 of the Loan Agreement is hereby amended by deleting the definition of “Daily Simple SOFR” in its entirety and replacing it with the following:

Daily Simple SOFR” means, for any day, SOFR, with the conventions for this rate (which will include a lookback) being established by the Lender in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple SOFR”.

(i) Section 1.1 of the Loan Agreement is hereby amended by deleting the definition of “Floor” in its entirety and replacing it with the following:

Floor” means zero percent (0.00%).

(j) Section 1.1 of the Loan Agreement is hereby amended by deleting the definition of “Maturity Date” in its entirety and replacing it with the following:

Maturity Date” means the earliest to occur of (a) the date on which Lender demands repayment pursuant to Section 7, (b) the date on which the Loans are repaid in full (together with all accrued interest and all other amounts due and owing in connection with the Loans) and the Commitments have been terminated, and (c) April 4, 2024.

 

Page 2


(k) Section 1.1 of the Loan Agreement is hereby amended by deleting the definition of “Maximum Revolving Amount” in its entirety and replacing it with the following:

Maximum Revolving Amount” means (i) prior to the satisfaction of the Up-Size Conditions, $33,000,000 and (ii) upon the satisfaction of the Up-Size Conditions, $45,000,000.

(l) Section 1.1 of the Loan Agreement is hereby amended by deleting the definition of “Term SOFR” in its entirety and replacing it with the following:

Term SOFR” means the Term SOFR Reference Rate for a tenor comparable to the applicable Interest Period on the day (such day, the “Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to the first day of such Interest Period, as such rate is published by the Term SOFR Administrator; provided, however, that if as of 5:00 p.m. (New York City time) on any Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term SOFR Administrator, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such rate for such tenor was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such Term SOFR Determination Day.

(m) Section 1.1 of the Loan Agreement is hereby amended by deleting subsection (ii) of definition of “Up-Size Conditions” in its entirety and replacing it with the following:

(ii) Borrower has paid to Lender a fee in an amount equal to (A) the Up-Front Increase Amount multiplied by (B) the product of 0.20% multiplied by the quotient (expressed as a percentage) of (x) the number of days from (and including) the date of the Merger through (but not including) April 4, 2024 and (y) the number of days from (and including) April 4, 2022 through (but not including) April 4, 2024.

(n) Section 1.1 of the Loan Agreement is hereby amended by adding the following defined terms in their correct alphabetical order:

Adjusted Term SOFR Rate” means (a) for an Interest Period of one (1) month, Term SOFR plus 10 basis points (0.10%), (b) for an Interest Period of three (3) months, Term SOFR plus 15 basis points (0.15%) and (c) for an Interest Period of six (6) months, Term SOFR plus 25 basis points (0.25%); provided that if the Adjusted Term SOFR Rate as so determined would be less than zero, such rate shall be deemed to be equal to zero.

Conforming Changes” means, with respect to the use, administration of or any conventions associated with SOFR or any proposed Successor Rate or Term SOFR, as applicable, any conforming changes to the definitions of “Base Rate”, “SOFR”, “Term SOFR” and “Interest Period”, timing and frequency of determining rates and making payments of interest and other technical, administrative or operational matters (including, for the avoidance of doubt, the definitions of “Business Day” and “U.S. Government Securities Business Day”, timing of borrowing requests or prepayment, conversion or continuation notices and length of lookback periods) as may be appropriate, in the reasonable discretion of the Lender, to reflect the adoption and implementation of such applicable rate(s) and to permit the administration thereof by the Lender in a manner substantially consistent with market practice (or, if the Lender determines in its reasonable discretion that adoption of any portion of such market practice is not administratively feasible or if the Lender determines in its reasonable discretion (and in consultation with the

 

Page 3


Borrower) that no market practice for the administration of such rate exists, in such other manner of administration as the Lender determines is reasonably necessary in connection with the administration of this Agreement and any other Loan Document).

SOFR Loans” means Loans the rate of interest applicable to which is based upon SOFR.

Term SOFR Administrator” means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Lender in its reasonable discretion).

Term SOFR Reference Rate” means the forward-looking term rate based on SOFR.

Up-Front Increase Amount” means an amount equal to (i) the Up-Size Term Loan amount minus the Existing Principal Amount plus (ii) the Maximum Revolving Amount upon the satisfaction of the Up-Size Conditions minus the Maximum Revolving Amount prior to the satisfaction of the Up-Size Conditions.

(o) Section 2.1(a) of the Loan Agreement is hereby amended by deleting the reference therein to “Eurodollar Loans” and replacing it with “SOFR Loans”.

(p) Section 2.1(b) of the Loan Agreement is hereby amended by deleting each reference therein to “Eurodollar Loans” and replacing it with “SOFR Loans”, by deleting the reference therein to “2022” and replacing it with “2024” and by deleting the reference to a 2-month Interest Period.

(q) Section 2.2 of the Loan Agreement is hereby amended by deleting each reference therein to “Eurodollar Loans” and replacing it with “SOFR Loans”.

(r) Section 2.6 of the Loan Agreement is hereby amended by deleting each reference therein to “Eurodollar Loans” and replacing it with “SOFR Loans”.

(s) Section 2.7(a) of the Loan Agreement is hereby amended and restated in its entirety as follows:

(a) Each SOFR Loan shall bear interest for each day during each applicable Interest Period with respect thereto at a rate per annum equal to the Adjusted Term SOFR Rate plus the Applicable Margin; provided, however, that during the continuance of an event described in Section 2.15(b), then each Loan shall bear interest for each day at a rate per annum equal to the Base Rate.

(t) Section 2.8(a) of the Loan Agreement is hereby amended and restated in its entirety as follows:

(a) Interest shall be calculated on the basis of a 360-day year for the actual days elapsed. Any change in the interest rate on the Loans resulting from a change in the Base Rate shall become effective as of the opening of business on the day on which such change becomes effective. The Lender shall as soon as practicable notify Borrower of the effective date and the amount of each such change in interest rate.

(u) Section 2.8(c) of the Loan Agreement is hereby amended and restated in its entirety as follows:

(c) Benchmark Replacement.

 

Page 4


(i) Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Loan Document, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior to any setting of the then-current Benchmark, then such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document.

(ii) Benchmark Replacement Conforming Changes. In connection with the implementation of a Benchmark Replacement, the Lender will have the right to make Benchmark Replacement Conforming Changes in consultation with the Borrower from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document.

(iii) Notices; Standards for Decisions and Determinations. The Lender will promptly notify the Borrower of (A) any occurrence of a Benchmark Transition Event and its related Benchmark Replacement Date, (B) the implementation of any Benchmark Replacement, (C) the effectiveness of any Benchmark Replacement Conforming Changes, (D) the removal or reinstatement of any tenor of a Benchmark pursuant to clause (iv) below and (E) the commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Lender pursuant to this Section 2.8(c) including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Loan Document, except, in each case, as expressly required pursuant to this Section 2.8(c).

(iv) Unavailability of Tenor of Benchmark. Notwithstanding anything to the contrary herein or in any other Loan Document, at any time (including in connection with the implementation of a Benchmark Replacement), (A) if the then-current Benchmark is a term rate (including Term SOFR Reference Rate) and either (1) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Lender in its reasonable discretion or (2) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is or will be no longer representative, then the Lender may modify the definition of “Interest Period” for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (B) if a tenor that was removed pursuant to clause (A) above either (1) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (2) is not, or is no longer, subject to an announcement that it is or will no longer be representative for a Benchmark (including a Benchmark Replacement), then the Lender may modify the definition of “Interest Period” for all Benchmark settings at or after such time to reinstate such previously removed tenor.

(v) Benchmark Unavailability Period. Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any request for a SOFR Loan of, conversion to or continuation of SOFR Loans to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the

 

Page 5


Borrower will be deemed to have converted any such request into a request for a Borrowing of or conversion to ABR Loans. During any Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of Base Rate based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of Base Rate.

(v) Section 2.13 of the Loan Agreement is amended by deleting each reference therein to “Eurodollar Loan” and replacing it with “SOFR Loan” and deleting the reference therein to “2022” and replacing it with “2024”.

(w) The heading for Section 2.15 of the Loan Agreement is hereby amended and restated in its entirety as follows:

2.15 Certain Increased Costs and SOFR Rate Events.

(x) Section 2.15(b) of the Loan Agreement is hereby amended and restated in its entirety as follows:

(b) If prior to the commencement of any Interest Period for a SOFR Loan:

(i) Lender determines (which determination shall be conclusive and binding absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted Term SOFR Rate for a Loan for the applicable Interest Period; or

(ii) Lender determines (which determination shall be conclusive and binding absent manifest error) that the Adjusted Term SOFR Rate for the applicable Interest Period will not adequately and fairly reflect the cost to Lender of making or maintaining its Loans included in such borrowing for such Interest Period,

then Lender shall give notice thereof to Borrower by telephone or telecopy as promptly as practicable thereafter and, until Lender notifies Borrower that the circumstances giving rise to such notice no longer exist, any request by Borrower for conversion of any SOFR Loan to, or continuation of any SOFR Loan for the applicable Interest Period, as the case may be, shall be ineffective and such Borrowing shall be made as an ABR Loan.

(y) Section 5.2 of the Loan Agreement is hereby amended and restated in its entirety as follows:

5.2 Certificates; Other Information. Furnish to Lender:

(a) within two (2) Business Days after the delivery of each annual and semi-annual financial statement referred to in Section 5.1, a certificate of Borrower stating that (i) Borrower during such period has observed or performed all of its covenants and other agreements, and satisfied every condition, contained in this Agreement and the other Loan Documents to be observed, performed or satisfied by it, (ii) the representations and warranties made by Borrower in or pursuant to the Loan Documents shall be true and correct on and as of such date of such financial statement (A) as stated if such representation and warranty contains an express materiality qualification or (B) in all material respects if such representation and warranty does not contain such a qualification, except to the extent the same expressly relate to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date, and (iii) no Default or Event of Default has occurred and is continuing;

 

Page 6


(b) as soon as available, but in any event not later than 10 days after the end of each month, the net asset value sheet of the Borrower as at the end of such month, in the form and detail similar to those customarily prepared by the Borrower’s management for internal use and reasonably satisfactory to Lender, certified by a Responsible Officer as being fairly stated in all material respects;

(c) within two (2) Business Days following the 15th and the last day of each month (or, if any such date is not a Business Day, on the next succeeding Business Day), a certificate of a Responsible Officer showing in reasonable detail the calculation of Borrower’s Asset Coverage Ratio as of the 15th or the last day of each such month, as applicable; and

(d) promptly, copies of all changes to the Prospectus and Registration Statement, and any additional financial and other information as Lender may from time to time reasonably request.

(z) Section 7(k) of the Loan Agreement is hereby amended by deleting the reference therein to “Banking Days” and replacing it with “Business Days”.

(aa) Exhibit B to the Loan Agreement is hereby deleted in its entirety and replaced with Exhibit A attached hereto.

2. Amendments to Other Loan Documents. All references in the Loan Documents to the Loan Agreement shall henceforth include references to such agreement as modified and amended hereby, and as may, from time to time, be further amended, modified, extended, renewed, or increased.

3. Conditions Precedent. This Amendment shall be effective upon satisfaction of the following conditions precedent:

(a) Lender shall have received duly executed counterparts of this Amendment.

(b) Lender shall have received a certificate evidencing the good standing of Borrower in its jurisdiction of formation.

(c) Lender shall have received the executed legal opinion of counsel to Borrower. Such legal opinion shall cover such matters incident to the transactions contemplated by this Agreement as Lender may reasonably require.

(d) Lender shall have received a duly completed Form FR U-1 executed by Borrower and all other documentation required or requested by Lender in connection with Regulation U.

(e) No Default or Event of Default shall or would result from the execution of this Amendment.

(f) Each of the representations and warranties made by Borrower in or pursuant to the Loan Documents shall be true and correct in all material respects on and as of the date hereof as if made on and as of such date, except to the extent the same expressly relate to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date.

 

Page 7


(g) Borrower shall have paid all fees and expenses due and owing from Borrower to Lender including, but not limited to, an upfront fee in the amount of $286,000.

4. Representations and Warranties.

(a) Borrower does hereby represent and warrant that the execution, delivery and performance of this Amendment are within its corporate powers, have been duly authorized by all necessary corporate action and do not (i) contravene its declaration of trust, by-laws, or any other organizational or governing document of Borrower, (ii) contravene any material contractual restriction binding on it or require any consent under any material agreement or instrument to which it is a party or by which any of its properties or assets is bound, (iii) result in or require the creation or imposition of any material Liens upon any property or assets of Borrower, or (iv) violate any material Requirement of Law applicable to it.

(b) Borrower represents and warrants that each of the representations and warranties contained in Section 3 of the Loan Agreement are true and correct in all material respects on and as of the date hereof, except to the extent the same expressly relate to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date.

5. Miscellaneous. Unless stated otherwise (a) the singular number includes the plural and vice versa and words of any gender include each other gender, in each case, as appropriate, (b) headings and captions may not be construed in interpreting provisions, (c) this Amendment shall be governed by, and construed in accordance with, the law of the State of New York, (d) if any part of this Amendment is for any reason found to be unenforceable, all other portions of it nevertheless remain enforceable, and (e) this Amendment may be executed in any number of counterparts with the same effect as if all signatories had signed the same document, and all of those counterparts must be construed together to constitute the same document.

6. ENTIRETIES. THE LOAN AGREEMENT AS AMENDED BY THIS AMENDMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES ABOUT THE SUBJECT MATTER OF THE LOAN AGREEMENT AS AMENDED BY THIS AMENDMENT AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

7. Parties. This Amendment shall be binding upon and inure to the benefit of Borrower and Lender, and their respective successors and assigns, except that Borrower may not assign or transfer any of its rights or obligations hereunder without the prior written consent of Lender.

8. Loan Document. Each party hereto acknowledges and agrees that this Amendment shall be a Loan Document.

[Signature pages follow]

 

Page 8


IN WITNESS WHEREOF, this Amendment has been duly executed and delivered by the parties as of the date and year first written above.

BORROWER:

APOLLO TACTICAL INCOME FUND INC.

 

By:  

LOGO

 

Name:   Joseph D. Glatt
Title:   Secretary

[Additional signature page follows]


LENDER:

SUMITOMO MITSUI BANKING CORPORATION

 

By:  

LOGO

 

Name:   Ryoji Ito
Title:   Managing Director


EXHIBIT A

EXHIBIT B

FORM OF BORROWING REQUEST

Date:                     ,             

To:     Sumitomo Mitsui Banking Corporation, as Lender

Ladies and Gentlemen:

Reference is made to that certain Second Amended and Restated Loan and Security Agreement, dated as of April 22, 2021 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), between Apollo Tactical Income Fund Inc., a diversified, closed-end management investment company registered under the Investment Company Act of 1940 (the “Borrower”), and Sumitomo Mitsui Banking Corporation, as Lender

The undersigned hereby requests a borrowing of a Revolving Loan:

1. On                                                          (a Banking Day);

2. In the amount of $             (the “Loan Amount”). The aggregate amount outstanding after giving effect to such borrowing shall be             .

[3. With respect to any SOFR Loan, the initial Interest Period shall be: 1 Month / 3 Months / 6 Months.1]

[4. $             of the Loan Amount shall be a SOFR Loan, $             of the Loan Amount shall be an ABR Loan and $             of the Loan Amount shall be a Fixed Rate Loan.]

[5. If any portion of the Loan Amount is a Fixed Rate Loan, the Fixed Rate for such portion shall be            .]2

The Loan requested herein complies with the proviso to the first sentence of Section 2.1(b) of the Agreement.

The Borrower hereby represents and warrants that the conditions specified in Section 4.2 of the Agreement are and shall be satisfied on and as of the Business Day set forth in Clause (1) above.

 

APOLLO TACTICAL INCOME FUND INC.
By:  

     

Name:  
Title:  

 

1 

6 Month Interest Period subject to availability (as determined by Lender in its sole discretion).

2 

If any portion of the Loan Amount is a Fixed Rate Loan, include any additional agreed upon terms for such Fixed Rate Loan

LOGO

 

   Exhibit (l)

May 24, 2022

Apollo Tactical Income Fund Inc.

100 Bellevue Parkway

Wilmington, Delaware 19809

Ladies and Gentlemen:

We have acted as special Maryland counsel to Apollo Tactical Income Fund Inc., a Maryland corporation (the “Company”), in connection with the registration under the Securities Act of 1933, as amended (the “Act”), of shares (the “Shares”) of the Company’s common stock, par value $0.001 per share (“Common Stock”), having an aggregate initial offering price of up to $50,000,000.00 on its Registration Statement on Form N-2 filed by the Company with the Securities and Exchange Commission on May 24, 2022 (File No. 333-262875) (together with all amendments through the date hereof, the “Registration Statement”).

We have examined the Registration Statement (exclusive of the exhibits thereto other than the Company’s governing documents) and such corporate records, certificates, and documents as we deemed necessary for the purpose of this opinion. We have relied as to certain factual matters on information obtained from public officials and officers of the Company. Based on that examination, we advise you that in our opinion the Shares offered by the Company have been duly authorized and, assuming that upon any issuance of Shares the total number of shares of Common Stock issued and outstanding will not exceed the total number of shares of Common Stock that the Company is then authorized to issue under its charter, when issued and delivered under the circumstances contemplated in the Registration Statement, will be legally issued, fully paid, and non-assessable.

In expressing the opinion set forth herein, we have assumed that (i) all documents submitted to us as originals are authentic, (ii) all documents submitted to us as copies conform with the originals of those documents, (iii) all signatures on all documents submitted to us for examination are genuine, (iv) each natural person executing any such document is legally competent to do so, (v) all public records reviewed by us or on our behalf are accurate and complete, and (vi) at the time of issuance of any of the Shares, (A) the Company will be in good standing under the laws of the State of Maryland, and (B) none of the governing documents of the Company will have been amended so as to cause such issuance of the Shares to conflict with or violate any provisions of the governing documents of the Company.

 

100 LIGHT STREET | BALTIMORE, MD 21202-1153 | 410.727.6464 | milesstockbridge.com

EASTON, MD FREDERICK, MD ROCKVILLE, MD TYSONS CORNER, VA WASHINGTON, D.C.


Apollo Tactical Income Fund Inc.

May 24, 2022

Page 2

   LOGO

 

We express no opinion with respect to the laws of, or the effect or applicability of the laws of, any jurisdiction other than, and our opinion expressed herein is limited to, the laws of the State of Maryland. The opinion expressed herein is limited to the matters expressly set forth in this letter and no other opinion should be inferred beyond the matters expressly stated.

We hereby consent to the use of our name and the discussion of this opinion under the headings “Legal Matters” in the Prospectus Supplement forming a part of the Registration Statement and to the filing of this opinion as an exhibit to the Registration Statement. In giving our consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Securities and Exchange Commission thereunder.

Very truly yours,

Miles & Stockbridge P.C.

 

By:  

/s/ Scott R. Wilson

  Principal

 

100 LIGHT STREET | BALTIMORE, MD 21202-1153 | 410.727.6464 | milesstockbridge.com

EASTON, MD FREDERICK, MD ROCKVILLE, MD TYSONS CORNER, VA WASHINGTON, D.C.

Exhibit (n)

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in this Registration Statement on Form N-2 of our report dated February 22, 2022, relating to the financial statements and financial highlights of Apollo Senior Floating Rate Fund Inc. and Apollo Tactical Income Fund Inc. appearing in the Annual Report on Form N-CSR for the year ended December 31, 2021, and to the references to us under the headings “Financial Highlights”, “Financial Statements”, and “Independent Registered Public Accounting Firm” in the Prospectus, which is part of such Registration Statement.

/s/ Deloitte & Touche LLP

New York, New York

May 24, 2022

Exhibit (r)(1)

CODE OF ETHICS

FOR

APOLLO SENIOR FLOATING RATE FUND INC.

APOLLO TACTICAL INCOME FUND INC.

(Each, the “Fund”)

Section I.     Statement of General Fiduciary Principles

This Code of Ethics (the “Code”) has been adopted by the Fund in compliance with Rule 17j-1 under the Investment Company Act of 1940 (the “Act”). The purpose of the Code is to establish standards and procedures for the detection and prevention of activities by which persons having knowledge of the investments and investment intentions of the Fund may abuse their fiduciary duty to the Fund, and otherwise to deal with the types of conflict of interest situations to which Rule 17j-1 is addressed.    

The Code is based on the principle that the directors and officers of the Fund, and the managers, members, officers and employees of Apollo Credit Management LLC (the “Adviser”), who provide services to the Fund, owe a fiduciary duty to the Fund to conduct their personal securities transactions in a manner that does not interfere with the Fund’s transactions or otherwise take unfair advantage of their relationship with the Fund. All Access Persons (as defined below) are expected to adhere to this general principle as well as to comply with all of the specific provisions of this Code that are applicable to them. With the exception of the Independent Directors of the Fund, Access Persons of the Fund are also subject to the Adviser’s Code of Ethics as Covered Persons of the Adviser (as defined in the Adviser’s Code of Ethics), and must comply with all applicable provisions of the Adviser’s Code of Ethics in addition to the provisions of this Code. The Fund also has adopted the Stock Trading Policy for Independent Directors, which governs transactions in stock of the Fund by the Independent Directors.

Technical compliance with the Code will not automatically insulate any Access Person from scrutiny of transactions that show a pattern of compromise or abuse of the individual’s fiduciary duty to the Fund. Accordingly, all Access Persons must seek to avoid any actual or potential conflicts between their personal interests and the interests of the Fund and its shareholders. In sum, all Access Persons shall place the interests of the Fund before their own personal interests.

All Access Persons must read and retain this Code.

Section II.     Definitions

(A) “Access Person” means an Advisory Person (as defined below) of the Fund or the Adviser. All of the Adviser’s directors, officers and members are presumed to be Access Persons, and all of the Fund’s directors and officers are presumed to be Access Persons.

(B) An “Advisory Person” of the Fund or the Adviser means: (i) any director, officer, member or employee of the Fund or the Adviser, or any company in a Control (as defined below) relationship to the Fund or the Adviser, who in connection with his or her regular functions or duties makes, participates in, or obtains information regarding the purchase or sale of any


Covered Security (as defined below) by the Fund, or whose functions relate to the making of any recommendation with respect to such purchases or sales; and (ii) any natural person in a Control relationship to the Fund or the Adviser, who obtains information concerning recommendations made to the Fund with regard to the purchase or sale of any Covered Security by the Fund.

(C) “Beneficial Ownership” is interpreted in the same manner as it would be under Rule 16a-1(a)(2) under the Securities Exchange Act of 1934 (the “1934 Act”) in determining whether a person is a beneficial owner of a security for purposes of Section 16 of the 1934 Act and the rules and regulations thereunder.

(D) “Chief Compliance Officer” means the Chief Compliance Officer of the Adviser who has overall responsibility for ensuring the effectiveness of the Adviser’s Code of Ethics.    

(E) “Control” shall have the same meaning as that set forth in Section 2(a)(9) of the Act.

(F) “Fund Chief Compliance Officer” means the Chief Compliance Officer of the Fund who has been appointed pursuant to Rule 38a-1 under the Act.

(G) “Covered Security” means a security as defined in Section 2(a)(36) of the Act, which includes: 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 (including a certificate of deposit) or on any 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.

Except that “Covered Security” does not include: (i) direct obligations of the Government of the United States; (ii) bankers’ acceptances, bank certificates of deposit, commercial paper and high quality short-term debt instruments, including repurchase agreements; and (iii) shares issued by open-end investment companies registered under the Act. References to a Covered Security in this Code (e.g., a prohibition or requirement applicable to the purchase or sale of a Covered Security) shall be deemed to refer to and to include any warrant for, option in, or security immediately convertible into that Covered Security, and shall also include any instrument that has an investment return or value that is based, in whole or in part, on that Covered Security (collectively, “Derivatives”). Therefore, except as otherwise specifically provided by this Code: (i) any prohibition or requirement of this Code applicable to the purchase or sale of a Covered Security shall also be applicable to the purchase or sale of a Derivative relating to that Covered Security; and (ii) any prohibition or requirement of this Code applicable to the purchase or sale of a Derivative shall also be applicable to the purchase or sale of a Covered Security relating to that Derivative.

 

- 2 -


(H) “Independent Director” means a director of the Fund who is not an “interested person” of the Fund within the meaning of Section 2(a)(19) of the Act.

(I) “Initial Public Offering” means an offering of securities registered under the Securities Act of 1933 (the “1933 Act”), the issuer of which, immediately before the registration, was not subject to the reporting requirements of Sections 13 or 15(d) of the 1934 Act.

(J) “Investment Personnel” of the Fund or the Adviser means: (i) any employee of the Fund or the Adviser (or of any company in a Control relationship to the Fund or the Adviser) who, in connection with his or her regular functions or duties, makes or participates in making recommendations regarding the purchase or sale of securities by the Fund; and (ii) any natural person who controls the Fund or the Adviser and who obtains information concerning recommendations made to the Fund regarding the purchase or sale of securities by the Fund.

(K) “Limited Offering” means an offering that is exempt from registration under the 1933 Act pursuant to Section 4(a)(2) or Section 4(a)(5) thereof or pursuant to Rule 504 or Rule 506 thereunder.

(L) “Purchase or sale of a Covered Security” includes, among other things, the writing of an option to purchase or sell a Covered Security.

(M) “Security Held or to be Acquired” by the Fund means: (i) any Covered Security which, within the most recent 15 days: (A) is or has been held by the Fund; or (B) is being or has been considered by the Fund or the Adviser for purchase by the Fund; and (ii) any option to purchase or sell, and any security convertible into or exchangeable for, a Covered Security described in Section II (M)i).

(N) “Automatic Investment Plan” means a program in which regular periodic purchases (or withdrawals) are made automatically in (or from) investment accounts in accordance with a predetermined schedule and allocation. An Automatic Investment Plan includes a dividend reinvestment plan.

Section III.     Objective and General Prohibitions

An Access Person may not engage in any investment transaction under circumstances in which the Access Person benefits from or interferes with the purchase or sale of investments by the Fund. In addition, Access Persons may not use information concerning the investments or investment intentions of the Fund, or their ability to influence such investment intentions, for personal gain or in a manner detrimental to the interests of the Fund.

Access Persons may not engage in conduct that is deceitful, fraudulent or manipulative, or that involves false or misleading statements, in connection with the purchase or sale of investments by the Fund. In this regard, Access Persons should recognize that Rule 17j-1 makes it unlawful for any affiliated person of or principal underwriter for the Fund, or any affiliated person of an investment adviser of or principal underwriter for the Fund, in connection with the purchase or sale, directly or indirectly, by the person of a Security Held or to be Acquired by the Fund to:

 

- 3 -


(i) employ any device, scheme or artifice to defraud the Fund;

(ii) make any untrue statement of a material fact to the Fund or omit to state a material fact necessary in order to make the statements made to the Fund, in light of the circumstances under which they are made, not misleading;

(iii) engage in any act, practice or course of business that operates or would operate as a fraud or deceit upon the Fund; or

(iv) engage in any manipulative practice with respect to the Fund.

Access Persons should also recognize that a violation of this Code or of Rule 17j-1 may result in the imposition of: (1) sanctions as provided by Section VIII below; or (2) administrative, civil and, in certain cases, criminal fines, sanctions or penalties.

Section IV.     Prohibited Transactions

(A) An Access Person may not purchase or otherwise acquire direct or indirect Beneficial Ownership of any Covered Security, and may not sell or otherwise dispose of any Covered Security in which he or she has direct or indirect Beneficial Ownership, if he or she knows or should know at the time of entering into the transaction that: (1) the Fund has purchased or sold the Covered Security within the last 15 calendar days, or is purchasing or selling or intends to purchase or sell the Covered Security in the next 15 calendar days; or (2) the Adviser has within the last 15 calendar days considered purchasing or selling the Covered Security for the Fund or within the next 15 calendar days intend to consider purchasing or selling the Covered Security for the Fund.

(B) Investment Personnel of the Fund or the Adviser must obtain approval before directly or indirectly acquiring Beneficial Ownership in any securities in any Initial Public Offering or in a Limited Offering, or Beneficial Ownership in any Covered Security, other than U.S. government and municipal securities, exchange-traded funds, mutual funds, variable annuities and transactions in fully managed accounts, where he/she has no investment control, influence or discretion. Such approval must be obtained from the Chief Compliance Officer, unless he or she is the person seeking such approval, in which case it must be obtained from the Chief Legal Officer of the Adviser.

(C) No Access Person shall recommend any transaction in any Covered Securities by the Fund without having disclosed to the Chief Compliance Officer, his or her interest, if any, in such Covered Securities or the issuer thereof, including: the Access Person’s Beneficial Ownership of any Covered Securities of such issuer; any contemplated transaction by the Access Person in such Covered Securities; any position the Access Person has with such issuer; and any present or proposed business relationship between such issuer and the Access Person (or a party in which the Access Person has a significant interest).

 

- 4 -


Section V.     Reports by Access Persons

(A) Personal Securities Holdings Reports

Except as otherwise hereinafter provided, all Access Persons shall within 5 days of the date on which they become Access Persons, and thereafter, within 45 days after the end of each calendar year, disclose the title, number of shares and principal amount of all Covered Securities in which they have any direct or indirect Beneficial Ownership as of the date the person became an Access Person, in the case of such person’s initial report, and as of the last day of the year, as to annual reports. A form of such report, which is hereinafter called a “Personal Securities Holdings Report,” shall be provided by the Chief Compliance Officer to any Access Person required to submit such report hereunder. Each Personal Securities Holdings Report must also disclose the name of any broker, dealer or bank with whom the Access Person maintained an account in which any securities were held for the direct or indirect benefit of the Access Person as of the date the person became an Access Person or as of the last day of the year, as the case may be. Each Personal Securities Holdings Report shall state the date it is being submitted and all information contained therein shall be current as of a date no more than 45 days prior to the date the person becomes an Access Person in the case of an initial report and prior to the date of submission in the case of an annual report.

(B) Quarterly Transaction Reports

Except as otherwise hereinafter provided, within 30 days after the end of each calendar quarter, each Access Person shall make a written report to the Chief Compliance Officer of all transactions occurring in the quarter in a Covered Security in which he or she had any Beneficial Ownership. A form of such report, which is hereinafter called a “Quarterly Securities Transaction Report,” shall be provided by the Chief Compliance Officer to any Access Person required to submit such report hereunder.

A Quarterly Securities Transaction Report must contain the following information with respect to each reportable transaction:

(1) Date and nature of the transaction (purchase, sale or any other type of acquisition or disposition);

(2) Title, interest rate and maturity date (if applicable), number of shares and principal amount of each Covered Security involved and the price of the Covered Security at which the transaction was effected;

(3) Name of the broker, dealer or bank with or through whom the transaction was effected; and

(4) The date the report is submitted by the Access Person.

 

- 5 -


(C) Exceptions to Reporting Requirements

Independent Directors

Notwithstanding the reporting requirements set forth in this Section V, an Independent Director who would be required to make a report under this Section V solely by reason of being a director of the Fund is not required to file a Personal Securities Holding Report upon becoming a director of the Fund or an annual Personal Securities Holding Report. Such an Independent Director also need not file a Quarterly Securities Transaction Report unless such director knew or, in the ordinary course of fulfilling his or her official duties as a director of the Fund, should have known that during the 15-day period immediately preceding or after the date of the transaction in a Covered Security by the director such Covered Security is or was purchased or sold by the Fund or the Fund or the Adviser considered purchasing or selling such Covered Security.

Access Persons

An Access Person need not make any report under Section V with respect to transactions effected for, and Covered Securities held in, any account over which the Access Person has no direct or indirect influence or control.

Covered Persons of the Adviser

Notwithstanding the reporting requirements set forth in this Section V, an Access Person who is a Covered Person of the Adviser need not make a Personal Securities Holdings Report or a Quarterly Transaction Report if all of the information in the report was provided pursuant to the Adviser’s Code of Ethics and would duplicate information required to be recorded pursuant to Rule 204-2(a)(13) under the Investment Advisers Act of 1940, as amended.

A Covered Person of the Adviser need not make a Quarterly Transaction Report with respect to transactions effected pursuant to an Automatic Investment Plan.    

(D) Brokerage Accounts and Statements

Access Persons, except Independent Directors and Covered Persons of the Adviser who are separately reporting under the Adviser’s Code of Ethics, shall:

(1) within 30 days after the end of each calendar quarter, identify the name of the broker, dealer or bank with whom the Access Person established an account in which any securities were held during the quarter for the direct or indirect benefit of the Access Person and identify any new account(s) and the date the account(s) were established. This information shall be included on the appropriate Quarterly Securities Transaction Report.

(2) instruct the brokers, dealers or banks with whom they maintain such an account to provide duplicate account statements to the Chief Compliance Officer.

 

- 6 -


(3) on an annual basis, certify that they have complied with the requirements of (1) and (2) above.

(E) Form of Reports

A Quarterly Securities Transaction Report may consist of broker statements or other statements that provide a list of all personal Covered Securities holdings and transactions in the time period covered by the report and contain the information required in a Quarterly Securities Transaction Report.

(F) Responsibility to Report

It is the responsibility of each Access Person to take the initiative to comply with the requirements of this Section V. Any effort by the Fund, or by the Adviser and its affiliates, to facilitate the reporting process does not change or alter that responsibility. A person need not make a report hereunder with respect to transactions effected for, and Covered Securities held in, any account over which the person has no direct or indirect influence or control.

(G) Where to File Reports

All Quarterly Securities Transaction Reports and Personal Securities Holdings Reports must be filed with the Chief Compliance Officer.

(H) Disclaimers

Any report required by this Section V may contain a statement that the report will not be construed as an admission that the person making the report has any direct or indirect Beneficial Ownership in the Covered Security to which the report relates.

Section VI.     Additional Prohibitions

These prohibitions apply only to Access Persons who are not Covered Persons under the Adviser’s Code of Ethics, which addresses similar issues:

(A) Confidentiality of the Fund’s Transactions.

Until disclosed in a public report to shareholders or to the Securities and Exchange Commission in the normal course, all information concerning the securities “being considered for purchase or sale” by the Fund shall be kept confidential by all Access Persons and disclosed by them only on a “need to know” basis. It shall be the responsibility of the Chief Compliance Officer to report any inadequacy found in this regard to the directors of the Fund.

(B) Outside Business Activities and Directorships

Access Persons may not engage in any outside business activities that may give rise to conflicts of interest or jeopardize the integrity or reputation of the Fund. Similarly, no such outside business activities may be inconsistent with the interests of the Fund. All directorships of public or private companies held by Access Persons shall be reported to the Chief Compliance Officer.

 

- 7 -


(C) Gratuities

Access Persons shall not, directly or indirectly, take, accept or receive gifts or other consideration in merchandise, services from any person, firm corporation, association or other entity that does business, or proposes to do business, with the Fund for the purchase or sale of any property to or for the Fund.    

Section VII.     Certification

(A) Initial and Annual Certification

Access Persons who are directors, managers, officers or employees of the Fund or the Adviser shall be required to certify initially and annually that they have read this Code and that they understand it and recognize that they are subject to it and have complied with its terms. Furthermore, each time an amendment to this Code is made, Access Persons shall be required to submit a written acknowledgement that they have received, read and understand the amendments to this Code and agree to comply with its terms.

(B) Board Review

No less frequently than annually, the Fund must furnish to the Fund’s board of directors, and the board must consider, a written report that: (A) describes any issues arising under this Code or procedures since the last report to the board, including, but not limited to, information about material violations of the Code or procedures and sanctions imposed in response to material violations; and (B) certifies that the Fund has adopted procedures reasonably necessary to prevent Access Persons from violating the Code.

Section VIII.     Sanctions

Any violation of this Code shall be subject to the imposition of such sanctions by the Fund as may be deemed appropriate under the circumstances to achieve the purposes of Rule 17j-1 and this Code. The sanctions to be imposed shall be determined by the board of directors, including a majority of the Independent Directors, provided, however, that with respect to violations by persons who are directors, managers, officers or employees of the Adviser (or of a company that controls the Adviser), the sanctions to be imposed shall be determined by the Adviser (or the controlling person thereof). Sanctions may include, but are not limited to, suspension or termination of employment, a letter of censure and/or restitution of an amount equal to the difference between the price paid or received by the Fund and the more advantageous price paid or received by the offending person.

Section IX.     Administration and Construction

(A) The administration of this Code shall be the responsibility of the Chief Compliance Officer, except insofar as it relates to the Independent Directors. Administration of this Code with respect to the Independent Directors shall be the responsibility of the Fund Chief Compliance Officer.

 

- 8 -


(B) The duties of the Chief Compliance Officer (or Fund Chief Compliance Officer to the extent set out in Section IX(A)) are as follows:

(1) Continuous maintenance of a current list of the names of all Access Persons with an appropriate description of their title or employment, including a notation of any directorships held by Access Persons who are officers or employees of the Adviser or of any company that Controls the Adviser, and informing all Access Persons of their reporting obligations hereunder;

(2) On an annual basis, providing all Access Persons a copy of this Code and informing such persons of their duties and obligations hereunder including any supplemental training that may be required from time to time;

(3) Maintaining or supervising the maintenance of all records and reports required by this Code;

(4) Preparing listings of all transactions effected by Access Persons who are subject to the requirement to file Quarterly Securities Transaction Reports and reviewing such transactions against a listing of all transactions effected by the Fund;

(5) Issuance either personally or with the assistance of counsel as may be appropriate, of any interpretation of this Code that may appear consistent with the objectives of Rule 17j-1 and this Code;

(6) Conducting such inspections or investigations as shall reasonably be required to detect and report, with recommendations, any apparent violations of this Code to the board of directors of the Fund;

(7) Submission of a report to the board of directors of the Fund, no less frequently than annually, a written report that describes any issues arising under the Code since the last such report, including but not limited to the information described in Section VII (B); and

(C) The Fund shall maintain and cause to be maintained in an easily accessible place at the principal place of business of the Fund, the following records:

(1) A copy of all codes of ethics adopted by the Fund or the Adviser, as the case may be, pursuant to Rule 17j-1 that have been in effect at any time during the past five (5) years;

(2) A record of each violation of such codes of ethics and of any action taken as a result of such violation for at least five (5) years after the end of the fiscal year in which the violation occurs;

(3) A copy of each report made by an Access Person for at least two (2) years after the end of the fiscal year in which the report is made, and for an additional three (3) years in a place that need not be easily accessible;

 

- 9 -


(4) A list of all persons who are, or within the past five (5) years have been, required to make reports pursuant to the Rule and this Code, or who are or were responsible for reviewing such reports;

(5) A copy of each report required by Section VII (B) for at least two (2) years after the end of the fiscal year in which it is made, and for an additional three (3) years in a place that need not be easily accessible; and

(6) A record of any decision, and the reasons supporting the decision, to approve the acquisition by Investment Personnel of securities in an Initial Public Offering or Limited Offering for at least five (5) years after the end of the fiscal year in which the approval is granted.

(D) This Code may not be materially amended or modified except in a written form that is approved by the board of directors, including by majority vote of the Independent Directors. The Fund’s board of directors must approve a material change to the Code no later than six months after the adoption of the material change.

This Code was adopted and approved by the board of directors of the Fund, including a majority of the Independent Directors, at a meeting on May 22, 2017.    

 

- 10 -

Exhibit (r)(2)

 

LOGO

APOLLO

CODE OF ETHICS

February 2021


1.

    

INTRODUCTION

     1  

2.

    

ADMINISTRATION OF THE CODE OF ETHICS

     2  
  2.1      PERSONS SUBJECT TO THE CODE      2  
  2.2      CONSULTANTS, AGENTS AND TEMPORARY WORKERS      2  
  2.3      CONSEQUENCES OF VIOLATING THE CODE      3  
  2.4      OBLIGATION TO REPORT VIOLATIONS      3  
  2.5      CURRENT VERSION OF THE CODE      3  
  2.6      CODE OF ETHICS ANNUAL CERTIFICATION      3  
  2.7      ANNUAL COMPLIANCE SURVEY & ACCOUNTS CERTIFICATION      3  

3.

    

STANDARD OF BUSINESS AND PERSONAL CONDUCT

     4  
  3.1      STANDARD OF BUSINESS CONDUCT      4  
  3.2      STANDARD OF PERSONAL CONDUCT      4  
  3.3      LIMITS OF YOUR AUTHORITY      4  
  3.4      USE OF RECORDING DEVICES      5  
    

3.4.1      PURPOSE

     5  
         3.4.2      POLICY    5  
  3.5      THREAT PROTOCOL      5  

4.

    

DATA PRIVACY AND CONFIDENTIALITY POLICY

     5  
  4.1      DEFINITIONS      6  
  4.2      GENERAL PRINCIPLES      7  
  4.3      STORAGE OF PERSONAL INFORMATION AND BUSINESS SENSITIVE INFORMATION      7  
  4.4      ACCESS TO PERSONAL INFORMATION AND BUSINESS SENSITIVE INFORMATION      8  
  4.5      TRANSPORTING PERSONAL INFORMATION AND BUSINESS SENSITIVE INFORMATION      8  
  4.6      REPORTING LOST, STOLEN, OR POTENTIALLY COMPROMISED PERSONAL INFORMATION OR BUSINESS SENSITIVE INFORMATION      9  
  4.7      THIRD PARTY ACCESS TO PERSONAL INFORMATION AND BUSINESS SENSITIVE INFORMATION      9  
  4.8      PRIOR EMPLOYERS CONFIDENTIAL INFORMATION AND TRADE SECRETS      9  
  4.9      EXTERNAL COMMUNICATIONS RELATING TO APOLLOS BUSINESS      10  
  4.10    EUROPEAN ECONOMIC AREA DATA TRANSFERS      10  
  4.11    REQUESTS TO EXERCISE RIGHTS REGARDING PERSONAL INFORMATION      10  
  4.12    ADDITIONAL POLICIES AND PROCEDURES      10  

5.

    

APPROPRIATE USE OF TECHNOLOGY AND APOLLO RESOURCES POLICY

     11  
  5.1      GENERALLY      11  
  5.2      USE OF THE SYSTEMS      12  
  5.3      PASSWORDS      13  
  5.4      DEVICE SECURITY      13  
  5.5      COMPUTER MALWARE      14  


     5.6        MOBILE DEVICE POLICY      14  
     5.7        MOBILE SECURITY POLICY      15  
     5.8        EMPLOYEE REMOTE NETWORK ACCESS POLICY      15  
6.         OTHER BUSINESS CONDUCT      15  
     6.1        ASSETS OF THE FIRM      15  
     6.2        INTERNAL CONTROLS, RECORD RETENTION, AND REPORTING      16  
     6.3        POST-EMPLOYMENT RESPONSIBILITIES      16  
     6.4        THIRD PARTY AGREEMENTS      17  
     6.5        INVESTOR COMPLAINTS      17  
7.         INSIDE INFORMATION      17  
     7.1        DEFINITION OF MATERIAL NON-PUBLIC INFORMATION      18  
     7.2        INSIDER TRADING AND TIPPING      19  
     7.3       
POLICIES AND PROCEDURES CONCERNING PROTECTION OF MATERIAL NON-PUBLIC INFORMATION AND OTHER
CONFIDENTIAL INFORMATION
     20  
        7.3.1      FIRM RESTRICTED LIST      20  
        7.3.2      CONFIDENTIAL INFORMATION PROCESS      21  
        7.3.3      COMMUNICATION WITH INSIDERS      21  
        7.3.4      COMMUNICATIONS WITH PUBLIC EMPLOYEES      21  
        7.3.5      INADVERTENT OR UNAUTHORIZED RECEIPT OF MATERIAL NON-PUBLIC INFORMATION      22  
     7.4        LIMITING INADVERTENT ACCESS TO MATERIAL NON-PUBLIC INFORMATION AND OTHER CONFIDENTIAL INFORMATION      22  
     7.5        ARRANGEMENTS WITH CONSULTANTS      22  
8.         PERSONAL SECURITIES TRANSACTIONS      22  
     8.1        PERSONAL TRADING SYSTEM      23  
     8.2        EMPLOYEE RELATED ACCOUNTS      23  
        8.2.1      NEW EMPLOYEE RELATED ACCOUNTS AND CLOSED ACCOUNTS      24  
        8.2.2      MANAGED AND MUTUAL FUND ONLY ACCOUNTS      24  
     8.3       
PRE-CLEARANCE FOR TRADES OTHER THAN IN APOLLO, APOLLO-SPONSORED, OR ATHENE PUBLICLY TRADED
SECURITIES
     24  
        8.3.1      PRE-CLEARANCE FOR TRADES IN FUNDS SUB-ADVISED BY APOLLO      26  
        8.3.2      PRE-CLEARANCE FOR PRIVATE PLACEMENT TRANSACTIONS, PRIVATE   
         FUNDS AND ALTERNATIVE INVESTMENTS      26  
        8.3.3      PRE-CLEARANCE FOR PERSONAL CRYPTOCURRENCY TRANSACTIONS      26  
         8.3.3.1    INFORMATION ON CRYPTOCURRENCY      26  
         8.3.3.2    CRYPTOCURRENCY MINING      26  
         8.3.3.3    INITIAL COIN OFFERINGS (“ICO”)      26  
         8.3.3.4    CRYPTOCURRENCY NON-ICO TRANSACTIONS      27  
        8.3.4      EMPLOYEE TRADING POLICIES FOR APOLLO, APOLLO-SPONSORED OR ATHENE PUBLICLY TRADED SECURITIES      27  
     8.4        REPORTING REQUIREMENTS      27  
        8.4.1      HOLDINGS REPORTS      27  
        8.4.2      TRANSACTIONS REPORTS      28  


 

8.5

   PIGGY-BACKING AND FRONT-RUNNING      29  

9.

     ANTI-MONEY LAUNDERING      29  
 

9.1

   AML COMPLIANCE OFFICER      29  
 

9.2

   MONEY LAUNDERING      30  
 

9.3

   KNOW YOUR CUSTOMER      30  
 

9.4

   OFAC PROHIBITED ASSETS      30  
 

9.5

   SUSPICIOUS ACTIVITY      31  

10.

     FATCA      32  
 

10.1

   HOW DOES FATCA IMPACT APOLLO?      32  
 

10.2

   ARE THERE TOPICS THAT COVERED PERSONS SHOULD NOT DISCUSS WITH INVESTORS?      32  

11.

     OUTSIDE ACTIVITIES, GIFTS AND OTHER POTENTIAL CONFLICTS OF INTEREST      33  
 

11.1

   MAKING IMPARTIAL BUSINESS DECISIONS      33  
 

11.2

   POTENTIAL CONFLICTS OF INTEREST UNDER LIMITED PARTNERSHIP AGREEMENTS AND OFFERING MATERIALS      33  
 

11.3

   DEALING WITH PORTFOLIO COMPANIES      33  
 

11.4

   PERSONAL RELATIONSHIPS      33  
 

11.5

   OUTSIDE BUSINESS AND MEMBERSHIPS      34  
     11.5.1    PURSUING FIRM BUSINESS OR INVESTMENT OPPORTUNITIES      34  
     11.5.2    OUTSIDE EMPLOYMENT AND BUSINESS ACTIVITIES      34  
 

11.6

   GIFTS      36  
 

11.7

   ENTERTAINMENT      37  

12.

     SOLICITATION OF POTENTIAL INVESTORS      37  

13.

     POLITICAL CONTRIBUTIONS      37  
 

13.1

   DEFINITION OF KEY TERMS      38  
     13.1.1    CONTRIBUTION      38  
     13.1.2    COVERED INVESTMENT POOL      39  
     13.1.3    EXECUTIVE OFFICER      39  
     13.1.4    GOVERNMENT ENTITY      40  
     13.1.5    OFFICIAL      40  
     13.1.6    PAYMENT      40  
     13.1.7    PLAN OR PROGRAM OF A GOVERNMENT ENTITY      40  
     13.1.8    REGULATED PERSON      41  
     13.1.9    SOLICIT      41  
 

13.2

   PRE-CLEARANCE OF POLITICAL CONTRIBUTIONS AND CONTRIBUTION RELATED ACTIVITY      42  
 

13.3

   PAYMENTS FOR SOLICITING A GOVERNMENT ENTITY      42  
 

13.4

   CORPORATE POLITICAL CONTRIBUTIONS AND BUNDLING      42  
 

13.5

   VOLUNTEER POLITICAL ACTIVITIES      42  


 

13.6

   SOLICITING COVERED PERSONS AND USE OF FIRM RESOURCES      43  
 

13.7

   REIMBURSEMENT OF CONTRIBUTIONS      44  
 

13.8

   POLITICAL CONTRIBUTIONS OF PORTFOLIO COMPANIES      44  
 

13.9

   FORMAL POLITICAL POSITIONS      44  

14.

     ANTI-BRIBERY POLICY AND PROCEDURES      45  
 

14.1

   FCPA OVERVIEW      46  
     14.1.1   ANTI-BRIBERY PROVISION      46  
       14.1.1.1    FOREIGN GOVERNMENT OFFICIALS      47  
       14.1.1.2    RESTRICTIONS ON PAYMENTS TO THIRD PARTIES      47  
     14.1.2   ACCOUNTING PROVISIONS      48  
       14.1.2.1    ACCURATE RECORDS      48  
       14.1.2.2    PAYMENTS, RECORDKEEPING AND REIMBURSEMENTS      48  
       14.1.2.3    FACILITATION PAYMENTS      48  
       14.1.2.4    COMMERCIAL BRIBERY      49  
 

14.2

   THE FIRMS ANTI-BRIBERY PROCEDURES      49  
     14.2.1   GIVING AND RECEIVING GIFTS      49  
     14.2.2   PROVIDING AND RECEIVING MEALS AND ENTERTAINMENT      50  
     14.2.3   PROVIDING TRAVEL      50  
     RESTRICTIONS ON REIMBURSEMENTS AND USE OF CASH      50  
     14.2.4   CONTRACTS WITH THIRD PARTY AGENTS AND CONSULTANTS (“COVERED INTERMEDIARIES”)      51  
       14.2.4.1    COVERED INTERMEDIARIES      51  
       14.2.4.2    DUE DILIGENCE REQUIRED TO ENGAGE A COVERED INTERMEDIARY      51  
       14.2.4.3    PROVISIONS REQUIRED TO BE INCLUDED IN CONTRACTS WITH COVERED INTERMEDIARIES      52  
     14.2.5   MERGERS, ACQUISITIONS AND JOINT VENTURES      52  
     14.2.6   CHARITABLE CONTRIBUTIONS      52  
     14.2.7   POLITICAL CONTRIBUTIONS      53  

15.

     WHISTLEBLOWER POLICY      53  

16.

     BUSINESS CONTINUITY PLAN      53  

17.

     NOTE FOR REGISTERED REPRESENTATIVES AFFLIATED WITH APOLLO GLOBAL SECURITIES, LLC      53  


1.

INTRODUCTION

Our integrity and reputation depend on our ability to do the right thing. Apollo is committed to promoting a culture that encourages ethical conduct and compliance with the law and all Firm policies and procedures. As used in the Apollo Code of Ethics (the “Code”), “Apollo” or the “Firm” refers to Apollo Management, L.P., Apollo Capital Management, L.P., Apollo Credit Management, LLC, Apollo Global Real Estate Management, L.P., Apollo Investment Management, L.P., affiliated investment advisers, any subsequently formed or acquired investment adviser (which, collectively, conduct a single advisory business) and all of their affiliated entities, which includes Apollo Management Holdings, L.P., and Apollo Global Management, Inc. (“AGM”). “Apollo” does not include any Apollo fund or Apollo fund portfolio company.

In our capacity as investment managers to various private funds, separately managed accounts, and other vehicles, we act as fiduciaries and thus owe a series of duties to these clients, including a general duty to act in their best interest at all times and avoid actual and apparent conflicts of interest. We have registered Apollo Management, L.P., Apollo Capital Management, L.P., Apollo Credit Management, LLC, Apollo Global Real Estate Management, L.P., and Apollo Investment Management, L.P. with the U.S. Securities and Exchange Commission (“SEC”). In addition, Apollo Management, L.P., Apollo Capital Management, L.P., and Apollo Global Real Estate Management, L.P. (the “filing advisers”) each have a number of “relying advisers” also deemed to be registered with the SEC as investment advisers.

For purposes of the Code, Apollo’s “clients” refers to private funds, separately managed accounts, and other vehicles or persons to which Apollo provides advisory services; “investors” refers to the persons or entities that invest in the Firm’s clients; and “related parties” refers to Apollo and its direct or indirect affiliates (excluding portfolio companies).

The Code describes legal and ethical responsibilities that all Apollo partners, employees, members, owners, principals, directors1 and officers and, where applicable, consultants (as defined in Section 2.2 and collectively “Covered Persons”) are expected to uphold. It is a guide that is intended to alert Covered Persons to significant issues that may arise. However, it is not a summary of all laws or policies that apply to Apollo’s business, nor can it serve as a substitute for good judgment. The Code is based on our fundamental understanding that no one at Apollo should ever sacrifice integrity—or give the impression that they have—even if they think it would help the Firm’s business. Each of us is accountable for our actions, and each of us is responsible for knowing and abiding by the policies that apply to us. You should look to this Code to guide your decisions in a variety of circumstances. However, no rulebook can anticipate every situation. Ultimately, the personal integrity, honesty and conduct of every person associated with Apollo define the character and reputation of our Firm. The good reputation of the Firm and those associated with it is critical to the success of Apollo.

Never underestimate the importance of your own personal and ethical conduct to the business and success of Apollo.

 

1 

Excludes independent directors of AGM.

 

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2.

ADMINISTRATION OF THE CODE OF ETHICS

The Code sets forth certain minimum expectations that Apollo has for you. You are expected to conduct the Firm’s business in full compliance with both the letter and spirit of the law, the Code, and any other policies and procedures that may be applicable to you.

The Code is administered by the Chief Compliance Officer or designee (collectively referred to as “Compliance”) and is intended to provide general guidance regarding your conduct as a Covered Person. The Code is not an exhaustive consideration of all policies and procedures that may be applicable to you, and you are responsible for knowing which policies and procedures (whether or not listed here) apply to you, and for understanding and complying with them.

The Firm will take reasonable steps to ensure that the Code is followed, including monitoring and auditing to confirm compliance and to detect any illegal activity. The Firm has designated the Chief Compliance Officer with the responsibility for administering and ensuring compliance with the Code.

As a registered investment adviser, Apollo must comply with the requirements set forth in the Advisers Act, and the rules and regulations promulgated thereunder. This Code has been adopted in compliance with Rule 204A-1 under the Advisers Act. In addition to providing general guidance regarding your conduct as a Covered Person, this Code, together with Apollo’s Supervisory Procedures Manual, is intended to set forth the relevant requirements that we must follow as fiduciaries and registered investment advisers.

The Firm conducts training for Covered Persons on various policies set forth in the Code. Additionally, as contemplated by Advisers Act Rule 206(4)-7, Apollo regularly reviews the adequacy of the policies and procedures described herein and the effectiveness of their implementation.

The Code does not create any rights to continued employment, is not an employment contract and does not result in a partnership between you and Apollo. The Firm expects you to be thoroughly knowledgeable regarding the policies and procedures of the Firm, including those outlined herein, at all times. Whenever you have a question as to a particular course of conduct or the interpretation of the Firm’s policies and procedures, you should consult Compliance.

 

2.1

Persons Subject to the Code

The Code applies to all Covered Persons. The provisions of the Code described in Section 6.3 also apply to former Covered Persons of, and other persons formerly associated with, the Firm.

 

2.2

Consultants, Agents and Temporary Workers

Certain temporary workers, independent contractors, third party service providers, operating executives or deal consultants (collectively, “Consultants”) are expected to comply with the Code. Specific arrangements with such persons will vary depending on their relationship to the Firm. Consult Compliance if you have questions about your obligations or those of others.

 

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2.3

Consequences of Violating the Code

Violating any laws or regulations that relate to the operation of our business, engaging in any other criminal conduct or failing to take reasonable steps to prevent or detect criminal conduct, insensitivity to, disregard of, or failure to comply with the Code and/or any other applicable policies and procedures of the Firm, or failure to cooperate as directed by the Firm with an internal or external investigation, may result in corrective and/or disciplinary action, up to and including immediate termination of employment. The Firm will take all reasonable actions to enforce the Code. In cases where a violation of the Code could cause the Firm irreparable harm, it may seek injunctive relief in addition to monetary damages.

 

2.4

Obligation to Report Violations

Apollo is committed to exercising due diligence to prevent and detect criminal conduct and promoting an organizational culture that encourages ethical conduct and commitment to compliance with the law. This Code and the policies and procedures of the Firm are designed, implemented and enforced with the intention of preventing and detecting criminal conduct and other violations law and/or regulation. Each Covered Person is essential in assisting the Firm in complying with these policies and procedures.

You must immediately report to Compliance any known or suspected violation of the Code or any applicable law or regulation, whether the suspected violation involves you or another person subject to the Code.

You must immediately report to Compliance any misdemeanor (other than a minor traffic violation), criminal charge, or arrest involving you personally, whether it relates to the business of the Firm or not.

 

2.5

Current Version of the Code

A copy of the Code is available through the Compliance portal on the Firm’s Intranet and is also distributed to each Covered Person upon initial hire and at least on an annual basis. The Code and other Firm policies and procedures may be amended from time to time. All amendments are considered part of this Code. The Firm expects Covered Persons to be thoroughly knowledgeable at all times regarding the policies and procedures of the Firm, including, without limitation, the Firm’s policies and procedures set forth herein. It is your responsibility to review the Code frequently to ensure that you understand it and comply with it.

 

2.6

Code of Ethics Annual Certification

At the start of employment and annually thereafter, all Covered Persons are required to complete a Code of Ethics Annual Certification. This Certification requires Covered Persons to attest that they have read, understand, and will continue to comply with the Firm’s Code.

 

2.7

Annual Compliance Survey & Accounts Certification

All Covered Persons are required to complete a compliance survey and accounts certification on an annual basis (the “Annual Compliance Survey”). The Annual Compliance Survey includes (i) a broker accounts confirmation, and (ii) a Code of Ethics survey.

 

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3.

STANDARD OF BUSINESS AND PERSONAL CONDUCT

 

3.1

Standard of Business Conduct

It is Apollo’s policy to adhere to the highest legal and ethical standards in the conduct of its business. All Covered Persons must adhere to this same standard of conduct which requires, among other things:

 

   

Complying with all applicable laws and regulations, including federal securities laws;

 

   

Being mindful of the Firm’s fiduciary duties at all times;

 

   

Appropriately managing actual and potential conflicts of interests;

 

   

Refraining from entering into transactions, including personal securities transactions, that are inconsistent with client interests; and

 

   

Promptly reporting violations of this Code.

 

3.2

Standard of Personal Conduct

The personal conduct of every person associated with Apollo impacts the reputation of the Firm and is critical to the success of Apollo. It is the Firm’s policy that all Covered Persons adhere to highest standards of legal and ethical behavior in their personal conduct and other dealings both inside and outside of the Firm.

 

3.3

Limits of Your Authority

Your authority to act on behalf of Apollo is limited by various laws, regulations, corporate charters, bylaws and resolutions and by internal policies and procedures. You may not sign any documents, or otherwise represent or exercise authority on behalf of any Apollo entity unless you are specifically authorized to do so.

Any Covered Person who is authorized to act on behalf of Apollo must first conduct appropriate inquiries and due diligence to determine that the taking of such action is appropriate and consistent with the Firm’s business objectives, policies and procedures. Covered Persons who are responsible for supervising any other person in connection with actions taken on behalf of the Firm must provide appropriate supervision under the circumstances, which may include independently verifying information and conducting additional inquiries, to ensure that it is appropriate to rely on such information.

 

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3.4

Use of Recording Devices

 

  3.4.1

Purpose

Apollo has an obligation and a compelling interest in protecting the security and confidentiality of both its clients’ and employees’ information. To reduce the risk of disclosing that information, the Firm prohibits the use of recording devices as discussed below.

Apollo believes that the use of such devices in the workplace, especially in secret, can negatively impact the open and honest communication and positive working environment that is critical to our success and may serve to exacerbate problems or disputes in the workplace rather than help resolve them. Toward that end, this policy is intended to reduce the risk that recording devices may be used by employees to resolve workplace issues or disputes on their own and without Apollo’s Human Capital, Compliance, or management personnel. Indeed, Apollo has policies and personnel in place to assist you with any workplace issues you may have, and Apollo encourages you to refer to these policies and personnel in the event of any such workplace issue. By contrast, nothing in the policy is meant to limit employees’ rights under any federal, state, or local laws. Notwithstanding the foregoing, however, please note that the laws of various states, including New York, prohibit as a felony the use of devices to record conversations without the consent of at least one party or all parties to a given conversation. As such, employees should be aware of these requirements for the use of recording devices especially while traveling.

 

  3.4.2

Policy

The recording of conversations between or among Covered Persons during work activities and hours, and at work locations (including client locations), is prohibited without the consent of the individuals being recorded and approval of Compliance. For purposes of this policy, “recording” includes audio and video recording on any device, including via Zoom or other teleconferencing application.

Compliance will evaluate violations of this policy to determine whether discipline should be issued. Depending on the nature and severity of a violation, and the risk a violation poses to Apollo’s confidential client and/or employee information, employee relations or other legitimate business practices, discipline may vary from a verbal warning up to and including termination.

 

3.5

Threat Protocol

In the event a Covered Person receives a communication containing a threat to any Covered Person or the Firm, he or she must notify the Firm’s Chief Compliance Officer. The Chief Compliance Officer shall coordinate escalation to the appropriate parties and determine a proper response, which may include implementing additional security measures.

 

4.

DATA PRIVACY AND CONFIDENTIALITY POLICY

While conducting Apollo business, we may collect and create Business Sensitive Information and Personal Information (as defined in Section 4.1). Such information may be entrusted to us by companies in which Apollo clients invest, prospective portfolio companies of our clients, clients, and investors, and we may receive such information from various other sources. To protect Apollo’s reputation and integrity and to comply with our legal obligations, we must all work to safeguard the Business Sensitive Information and Personal Information that we collect or create.

 

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This Data Privacy and Confidentiality Policy establishes Apollo’s expectations for the collection, storage, processing, and sharing of Business Sensitive Information and Personal Information. The Firm has adopted information security policies and procedures designed to support the Data Privacy and Confidentiality Policy. Summaries of these policies and procedures are contained in the Information Security Policy of Apollo’s Supervisory Procedures Manual. For further information regarding the Firm’s information security policies and procedures, please contact the Chief Information Security Officer.

Apollo expects all Covered Persons to familiarize themselves with the Data Privacy and Confidentiality Policy and the policies and procedures that are relevant to their job roles and responsibilities. The unauthorized collection, processing, storage, or disclosure of Business Sensitive Information or Personal Information could result in serious liability for the Firm and could substantially impact our reputation.

 

4.1

Definitions

“Personal Information” means any information collected or created in the course of conducting Apollo business that relates to an individual that is either directly identified by that information, or can be identified using a combination of other information, including, but not limited to, name, phone number (home or business), address (home or business), financial account number, social security number or equivalent, driver’s license number, date of birth, user id, device identifiers, cookie identifiers, or medical records. Personal Information includes information that relates to investors or Covered Persons. In the case of Covered Persons, that information may be contained in resumes, employment contracts, offer letters, work records (including information about disciplinary and grievance proceedings in which they have been involved), performance reviews, and other Human Capital-related records.

“Business Sensitive Information” means any confidential or proprietary business information, collected or created while conducting Apollo business, including information about the Firm, and information related to portfolio companies and prospective portfolio companies of Firm clients, investments, and clients. Business Sensitive Information may also include information about multiple competitors in an industry.

The following are examples of Business Sensitive Information:

 

   

Information about actual or potential investments, clients or investors;

 

   

Marketing plans or strategies of the Firm, clients or clients’ portfolio companies;

 

   

Financial information concerning the Firm, clients, related parties, clients’ portfolio companies, or investors;

 

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Research and development projects of the Firm, clients, related parties, or clients’ portfolio companies;

 

   

Reports or analyses prepared by the Firm, clients, related parties, or clients’ portfolio companies based on Business Sensitive Information; and

 

   

Information subject to written confidentiality agreements between the Firm, its clients, investors, related parties, clients’ portfolio companies and third parties.

Certain types of Business Sensitive Information may be considered material non-public information, which must be handled with additional care and is subject to additional controls as discussed in Section 7.

Personal Information and Business Sensitive Information may be contained in electronic documents, electronic communications, or hard-copy forms.

 

4.2

General Principles

Covered Persons should observe the following principles when dealing with Personal Information or Business Sensitive Information:

 

   

Treat all Personal Information and Business Sensitive Information as confidential;

 

   

Access Personal Information and Business Sensitive Information only for valid business purposes and with proper authorization;

 

   

Do not use or disclose Personal Information or Business Sensitive Information without a valid business purpose and proper authorization; and

 

   

Consult with a member of Legal or Compliance if you have any questions regarding the collection, use, storage, transfer or sharing of Personal Information or Business Sensitive Information.

 

4.3

Storage of Personal Information and Business Sensitive Information

Covered Persons should store Personal Information and Business Sensitive Information in a manner that respects and is appropriate for the sensitivity of the information. Apollo’s Supervisory Procedures Manual and information security policies establish requirements for storing Personal Information and Business Sensitive Information on Firm systems. Covered Persons should consult with their supervisors, Technology Support, or Compliance if they have any questions regarding how Personal Information or Business Sensitive Information should be stored.

Covered Persons should store Personal Information and Business Sensitive Information in accordance with applicable data retention and disposal policies and procedures. When Personal Information or Business Sensitive Information is no longer needed, Covered Persons should dispose of the information in accordance with the Firm’s policies and procedures regarding document retention and disposal, and applicable laws.

 

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Covered Persons may store Personal Information or Business Sensitive Information on removable media for a valid business purpose and only with authorization from Compliance and Technology Support. Removable media includes devices or media that allow for read or write access and can be moved from one device to another without modification. Such media includes flash memory devices (e.g., thumb drives), cameras, removable hard drives, hard drive-based mp3 players, optical discs (e.g., CD and DVD disks), and floppy discs. Contact Technology Support to assist with putting Personal Information or Business Sensitive Information on removable media to ensure the information is encrypted. Covered Persons should handle all information stored on a computer or downloaded to portable media such as diskette, USB drive or hard copies with appropriate care to prevent unauthorized disclosure of the information. Personal Information and Business Sensitive Information should be removed from removable media when no longer needed for business purposes.

Covered Persons should consult with their supervisors, Technology Support or Compliance if they have questions about the storage of Personal Information or Business Sensitive Information.

 

4.4

Access to Personal Information and Business Sensitive Information

Covered Persons should access Personal Information and Business Sensitive Information only as authorized and for valid business purposes. The Firm’s Access Management Policy maintained by the Technology department sets forth policies and procedures regarding access to Apollo’s computer and communications systems. Covered Persons should consult their supervisors, Technology Support, or Compliance if they have questions regarding this policy or other policies and procedures that may govern access to Personal Information or Business Sensitive Information. Apollo will take steps to provide Covered Persons with access to Personal Information and Business Sensitive Information consistent with their roles and responsibilities. Apollo has established policies and procedures to modify, update, or terminate Covered Persons’ access rights based upon changes in roles and responsibilities, or upon termination of the relationship with Apollo.

 

4.5

Transporting Personal Information and Business Sensitive Information

Covered Persons should transport Personal Information and Business Sensitive Information from the Firm’s premises only for valid business purposes and as necessary to perform job duties. Whenever Personal Information or Business Sensitive Information is transported off Firm premises, there is an increased risk that the information may be compromised. Covered Persons should therefore take reasonable steps to protect Personal Information and Business Sensitive Information during transport. For example:

 

   

Hard copy documents should not be left unattended in vehicles or public locations;

 

   

Covered Persons should take steps to ensure that unauthorized individuals (including family members) cannot see or read Personal Information and Business Sensitive Information; and

 

   

As set forth in Section 4.3, Covered Persons should store Personal Information and Business Sensitive Information on removable media, laptops, mobile devices, and other portable devices only when protected by appropriate encryption technologies or other safeguards and with authorization from Compliance and Technology Support.

 

8


The Information Security Officer will specify requirements for the transmission and storage of Personal Information and Business Sensitive Information. Covered Persons should follow those requirements when transmitting or storing Personal Information or Business Sensitive Information. Covered Persons should contact Technology Support with any questions about the storage or transmission of such information and to set up channels for transmitting such information as needed.

 

4.6

Reporting Lost, Stolen, or Potentially Compromised Personal Information or Business Sensitive Information

If a Covered Person has reason to believe that Personal Information or Business Sensitive Information in any form, including electronic and hard copy formats may have been lost (including where such information is temporarily unavailable), stolen, or otherwise compromised (e.g., made public, disclosed to, or accessed by a third party without authorization) the Covered Person should report the suspicion to Compliance and Technology Support immediately. The failure of any Covered Person to report lost, stolen or otherwise compromised Personal Information or Business Sensitive Information may be deemed a violation of the Code and may result in disciplinary action.

 

4.7

Third Party Access to Personal Information and Business Sensitive Information

Covered Persons should provide third parties with access to Personal Information and Business Sensitive Information only as authorized and only for valid business purposes. Before sharing Personal Information or Business Sensitive Information with third parties, Covered Persons should confirm that the sharing is consistent with applicable policies and procedures set forth in the Supervisory Procedures Manual. Before engaging service providers to access, store, or otherwise process Personal Information or Business Sensitive Information on behalf of Apollo, Covered Persons must submit the service provider for review in accordance with the Vendor Engagement and Management Policy. For additional information regarding this policy or the service provider review process, please contact the Vendor Management team at VendorManagement@apollo.com.

 

4.8

Prior Employer’s Confidential Information and Trade Secrets

Covered Persons should not disclose to Apollo or other Covered Persons any confidential or proprietary information or trade secret of a prior employer nor should Covered Persons use such information while engaged in Apollo business, unless the information or trade secret is then public information through no action of the Covered Person at issue or unless previously agreed to by the prior employer. In addition, Covered Persons must not encourage individuals to share information that may be confidential or proprietary to their current or former employers. All Covered Persons should contact Compliance if they believe they may have confidential information regarding former employers.

 

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4.9

External Communications Relating to Apollo’s Business

As a publicly traded company with a global footprint, the Firm frequently receives requests for information from various third-parties, including the media. Information disclosed publicly about Apollo can significantly impact Apollo’s business interests and reputation. Apollo seeks to ensure that its external communications are consistent and accurate when publishing press releases, communicating with the media, participating in conferences and speaking engagements, publishing written works, providing public testimony, posting content on social media and responding to federal and state information act requests.

The Firm’s External Communications Policy is set forth in Appendix 16 to the Supervisory Procedures Manual and sets forth guidelines and procedures relating to external communications made by Covered Persons on behalf of Apollo, including any content that may be posted on the Firm’s social media accounts. It is important that all Covered Persons are mindful of those guidelines and procedures. As a general matter, any communication from the media should be referred to Corporate Communications and Covered Persons should only engage with the media when joined by a member of the Corporate Communications team. In addition, any speaking engagement or conference participation, written publication or public testimony must be pre-approved by Corporate Communications and Compliance.

 

4.10

European Economic Area Data Transfers

Personal Information may be transferred outside of the European Economic Area, whether such transfer is between Apollo entities or between Apollo and a third party (such as a service provider in the U.S.), with appropriate documentation and related protections in place. If there is any doubt about whether such documentation and protections are in place, Covered Persons should consult with Legal or Compliance.

 

4.11

Requests to Exercise Rights Regarding Personal Information

Some jurisdictions in which Apollo operates provide individuals certain rights over the Personal Information which relates to them. These rights may include, subject to local laws, the right to receive a copy of Personal Information about them, the right to have Personal Information updated, corrected or deleted, the right to object to Apollo’s use of their Personal Information, the right to have certain Personal Information transmitted to a third party (also known as the “right to data portability”), the right to withdraw consent, and the right to complain to their local data protection regulatory authority. Covered Persons who receive such a request must follow the process set forth in Apollo’s Supervisory Procedures Manual for responding to requests from individuals about their Personal Information.

 

4.12

Additional Policies and Procedures

Additional policies and procedures are set forth in Apollo’s Supervisory Procedures Manual and its appendices to further Apollo’s compliance with its privacy and data security obligations, including under European Union and California data protection laws, and the Firm’s commitment to safeguarding Personal Information and Business Sensitive Information. Covered Persons may be provided with additional notices regarding the processing of Personal Information.

 

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5.

APPROPRIATE USE OF TECHNOLOGY AND APOLLO RESOURCES POLICY

 

5.1

Generally

We expect Covered Persons to apply their best judgment when using the Firm’s resources. The Firm provides computers, networks, systems, applications and other resources (collectively, “Systems”) for conducting Firm business. The Systems are Firm property, and, to the extent permitted by applicable laws, the Firm treats all electronic communications created, sent, received, or stored on the Systems as property of the Firm. Telephones, computers, email systems and other electronic communications devices provided by Apollo, whether in the workplace or elsewhere, are owned and maintained by the Firm. The Firm’s Systems are configured to retain records consistent with the relevant laws, regulations, and other applicable data retention requirements, including but not limited to Securities Exchange Act Rules 17a-3 and 17a-4 and Advisers Act Rule 204-2 (collectively, the “Books and Records Rules”).

To ensure Apollo is compliant with the Books and Records Rules, you must:

 

   

Send all business-related electronic communications through the Firm’s electronic communication systems at all times (e.g., Apollo-provided e-mail, Skype, Slack, Zoom, Bloomberg), including when away from the office;

 

   

Refrain from using text message, personal e-mail, messaging application (e.g., WhatsApp, WeChat), or social media for any business-related electronic communications, except as otherwise authorized by Compliance.2 This prohibition excludes purely ministerial (e.g., scheduling changes) and personal communications; and

 

   

Save and store all files, including but not limited to documents, spreadsheets, and presentations, only on the Firm network or on third party sites approved by Apollo.3 Business-related files may not be stored on unapproved third-party or personal sites (e.g., on personal Dropbox, Google Drive or similar sites).

Subject to applicable laws and regulations, the Firm reserves the right to monitor, review and disclose all electronic communications and all information created, stored, or transmitted via the Systems as the Firm deems appropriate for its legitimate purposes without further notice or consent. The Firm conducts regular monitoring of Systems and electronic communications. Covered Persons should expect to have their communications reviewed as part of this monitoring program.

 

2 

To the extent you engage in any business-related electronics communications through these channels that were not authorized by Compliance, contact Compliance to discuss the best means for ensuring such communications are brought onto firm systems. For additional information regarding social media usage, please see the External Communications Policy at Appendix 15 of the Supervisory Procedures Manual.

3 

Contact Technology Support for a list of approved third-party sites.

 

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5.2

Use of the Systems

The use of the Systems through the Firm is a privilege, not a right, and may be revoked. Covered Persons should generally access and use the Systems only to perform work on behalf of Apollo. Incidental personal use is permitted if it does not interfere with job performance or employment obligations, impact Apollo’s operations, compromise the Systems, consume more than a trivial amount of resources that would otherwise be used for business purposes, give rise to more than nominal additional costs, or interfere with the activities of other Covered Persons. Under no circumstances should the Systems be used for personal financial gain, to solicit others for activities unrelated to the Firm’s business, or in connection with political campaigns or lobbying without approval from Compliance.

For example, Covered Persons may not:

 

   

Engage in any activity that may harass, threaten or abuse others;

 

   

Engage in actions that damage Systems, computers, or networks, including hacking or attempting to gain access to a restricted computer or network;

 

   

Use the Systems to engage in illegal activity or activity that would violate the Firm’s policies and procedures;

 

   

Use the Systems to communicate, transmit, copy, publish, store, or otherwise handle Personal Information or Business Sensitive Information except as consistent with the Data Privacy and Confidentiality Policy or other applicable policies and procedures, or as authorized by supervisors or Legal;

 

   

Use the Systems to implement automatic forwarding rules for your Apollo designated email address in Outlook, unless approved by Compliance;

 

   

Use the Systems to copy and/or transmit any documents, software, or other information protected by copyright laws, trade secret, patent, or other intellectual property rights;

 

   

Use the Systems to intentionally access, create, store or transmit material which the Firm may deem offensive, indecent or obscene unless required for a defined business need;

 

   

Bypass, disable, or tamper with security controls, software, equipment, or security logs;

 

   

Attempt to access any data or programs on the Systems without authorization;

 

   

Connect any device to the Firm’s Network unless the device is authorized by Technology Support;

 

   

Attempt to bypass, disable, tamper or change any software, equipment, system configuration or network (including operating system, security controls, registry settings, web browser configuration or printer) without prior approval from Technology Support;

 

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Download or install software on any Firm computer without prior approval from Technology Support;

 

   

Make any warranty or guarantee on behalf of the Firm, either express or implied (unless this activity is part of normal job duties);

 

   

Download or upload any software or electronic files, including legitimate information, without up-to-date virus protection measures in place; or

 

   

Intentionally access, download, upload, save, or send sexual, pornographic, discriminatory, or criminal material.

Among other things, the following are also prohibited:

 

   

Statements, which if made in any other forum, would violate any of the Firm’s policies and procedures, including policies against discrimination and harassment and participation in impermissible or illegal activities;

 

   

Disclosing Personal Information (that is not your own) or Business Sensitive Information on social media web sites, chat rooms, electronic bulletin boards or blogs without prior approval from Compliance;

 

   

Establishing undocumented and unapproved Internet or other external network connections that could allow a non-Apollo user to gain access to Apollo systems and information; and

 

   

Placing Apollo material (software, internal memos, etc.) on any publicly accessible Internet computer without express prior written approval by Cyber Security and Risk Management.

 

5.3

Passwords

Each authorized user is assigned a unique user log-on ID and password. Covered Persons should take reasonable steps to preserve the confidentiality and security of their passwords. Covered Persons must not share passwords, nor may they store user passwords on paper or code them into programs. If Covered Persons suspect that their passwords have been compromised, they should immediately change their passwords and report such suspicions to Technology Support. Covered Persons should change their passwords regularly, consistent with the requirements published by Technology. See the Access Management Policy maintained by the Technology department for the Firm’s policy regarding password settings and maintenance.

 

5.4

Device Security

Covered Persons should comply with the Access Management Policy maintained by the Technology department. Covered Persons should not leave computers, laptops, tablets, smartphones, or other devices unattended without implementing lock screens or other safeguards.

 

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5.5

Computer Malware

Computer malware can be injected into the System through the receipt of emails, email attachments, or files from other systems. Covered Persons should use good judgment before opening files attached to emails from unknown senders.

Covered Persons must pay attention to and strictly comply with all warnings and instructions of the Firm relating to malware. Covered Persons must immediately inform Technology Support of the suspected presence of any malware on any Firm computer or the Systems of which they become aware.

Covered Persons should take steps to immediately disconnect from the Firm’s network any computer or device that is suspected of being infected with malware or other harmful code.

Covered Persons are prohibited from disabling or interfering with any malware-scanning software installed on their system.

 

5.6

Mobile Device Policy

This Mobile Device Policy governs the use of mobile and handheld devices, including broadband cards and broadband chips found in some laptops. The term “handheld device” encompasses any device which allows you to process, receive, or send data, or make voice calls on a cellular network without the use of a third-party application.

Apollo may provide certain Covered Persons with a mobile device and a corresponding data service plan. Apollo will determine the types of mobile devices and plans available to Covered Persons and may provide Covered Persons with a choice. Apollo may replace mobile devices as business needs dictate. Any mobile device provided by Apollo remains the property of the Firm and must be returned upon request.

Mobile devices are provided for Firm business, and Covered Persons should use handheld devices in accordance with Section 5.2.

Covered Persons are welcome and encouraged to use their personal mobile devices, provided they are set up by Technology Support for use on the Apollo network.

All mobile and handheld devices that Covered Persons use to connect to the Apollo network or send or receive Apollo Data are subject to Apollo’s Mobile Security Policy, which is set forth below.

If a Covered Person has questions about the proper use of the Systems, he/she should contact Technology Support, Legal, or Compliance.

If a mobile device is lost or stolen, including a personal device that has connectivity to Apollo’s network, Covered Persons must notify Technology Support immediately.

 

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5.7

Mobile Security Policy

This Mobile Security Policy applies to any device (personal or Firm-owned) that Covered Persons use to send or receive Apollo data and/or connect to the Apollo network. All such devices must be set up to receive mobile security applications and software that Apollo will push to the device. The Mobile Security Policy requires that the device is locked after at most five minutes of inactivity and that the device has a passcode. Apollo has the ability to wipe or remove the device from the Apollo network if the device is lost or stolen or if the device owner’s relationship with Apollo terminates.

 

5.8

Employee Remote Network Access Policy

This Employee Remote Network Access Policy is designed to minimize the potential exposure of the Firm to damages that may result from the unauthorized use of Systems. This Policy applies to all Covered Persons who utilize a Firm-owned or personally-owned computer, workstation, or other device to remotely connect to the Firm’s network.

Covered Persons must follow the Firm’s procedures published by the Technology department regarding secure remote access. Covered Persons must not conduct Firm business using resources not approved by Technology Support (e.g., Yahoo mail, Gmail, or unapproved cloud storage platforms, including Dropbox, Google Drive, and similar sites). Covered Persons should confirm that personal devices and equipment used to connect to Firm’s networks meet the requirements of Firm-owned equipment for remote access. Covered Persons should contact Technology Support if they have questions about the applicable requirements.

Subject to applicable laws and regulations, the Firm reserves the right to monitor, review, or disclose Covered Persons’ remote use of Systems as the Firm deems appropriate for its legitimate purposes without further notice or consent from Covered Persons users. Covered Persons should have no expectation of privacy when remotely accessing Systems.

 

6.

OTHER BUSINESS CONDUCT

You are expected to conduct the Firm’s business in accordance with the highest legal and ethical standards, respecting the Firm’s clients, investors and related parties, dealing responsibly with the Firm’s assets and complying with applicable legal and regulatory requirements.

 

6.1

Assets of the Firm

You are expected to protect the Firm’s and its clients’ assets.

The Firm’s assets include not only financial assets such as cash, securities and physical assets such as furnishings, equipment and supplies, but also client relationships and intellectual property including information about clients, investors, related parties, systems and people. All property created, obtained, or compiled by or on behalf of the Firm belongs to the Firm.

The Firm’s assets should be used only to conduct the Firm’s business. No one is permitted to engage in any activity that could harm a client’s financial interests or the client’s relationship with the Firm.

 

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6.2

Internal Controls, Record Retention, and Reporting

Internal controls and record retention policies and procedures have been established in order for Apollo to meet legal and business requirements.

The falsification of any book, record or account relating to the business of Apollo, its clients or to the disposition of assets of the Firm or its clients (including, without limitation, the submission of any false personal expense statement, claim for reimbursement of a non-business expense or a false record or claim under an employee benefit plan) is prohibited and may amount to a criminal offense.

All forms of recorded information created or received in the course of conducting the Firm’s business or involving the Firm’s legal obligations must be maintained and/or discarded in accordance with the Firm’s policies and procedures on record retention set forth in Apollo’s Supervisory Procedures Manual. Notwithstanding any other provision of such record retention policies and procedures, no document or record may be destroyed if you have been advised or otherwise should recognize that it may be relevant to a pending or threatened legal or regulatory proceeding.

 

6.3

Post-Employment Responsibilities

Certain responsibilities undertaken as part of a Covered Person’s employment or association with the Firm continue after termination of a Covered Person’s employment or association with the Firm. Specifically, all Covered Persons, after the termination of the Covered Person’s employment or other association, must (in addition to other specific requirements of the Code and any employment agreements with the Firm):

 

   

Return all Firm assets in the Covered Person’s possession, including, but not limited to, files, records, building access cards, keys, cell phones, mobile or remote computers, corporate credit cards, computer software, hardware, and disks;

 

   

Maintain the confidentiality of any Personal Information, Business Sensitive Information, or material non-public information (as defined in Section 7.1) relating to the Firm, its clients, investors, related parties, or any other confidential information obtained during the Covered Person’s employment;

 

   

Refrain from insider trading based on information obtained during employment by Apollo;

 

   

Assist Apollo with investigations, litigation and the protection of intellectual property relating to the Covered Person’s employment;

 

   

Refrain from soliciting business or investment opportunities that the Covered Person became aware of during employment or other association with the Firm; and

 

   

Refrain from engaging in any business opportunity belonging to the Firm or any client that the Covered Person became aware of during the Covered Person’s employment or other association with the Firm.

 

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6.4

Third Party Agreements

Following completion of the vendor management process, all services, supplier, and vendor contracts, agreements, and/or engagement letters with third parties (“Third Party Agreements”) should be sent to Legal for legal review and confirmation of signatory authority. All Third Party Agreements must be reviewed by and negotiated in coordination with Legal to ensure that Apollo’s interests are adequately represented, and only authorized persons may sign on behalf of Apollo. This policy applies to agreements that are being renewed as well as those being entered into with a third party in the first instance. Third Party Agreements should be sent to the appropriate email address based on what the agreement is related to:

 

   

Firm-wide matters – AGMVendorAgreements@Apollo.com

 

   

Private Equity – PEVendorAgreements@Apollo.com

 

   

Credit – CreditVendorAgreements@Apollo.com

 

   

Real Assets – REVendorAgreements@Apollo.com

 

6.5

Investor Complaints

You must promptly notify Investor Relations and Compliance if you receive written complaints. A “complaint” is defined as any written communication (including electronic communication) from an investor or any person acting on behalf of an investor, whether in an Apollo fund, AGM, or other Apollo-related entity, alleging a grievance involving the activities of the Firm or any of its Covered Persons. Compliance will take such action, if any, as it deems appropriate to resolve the complaint and will retain a central file for all written complaints received.

 

7.

INSIDE INFORMATION

Section 204A of the Advisers Act requires that the Firm establish, maintain and enforce written policies and procedures reasonably designed to prevent the Firm and its Covered Persons from misusing material non-public information, also known as inside information. Violations of the laws against insider trading and tipping by Covered Persons can expose the Firm and any Covered Person involved to severe criminal and civil liability. In addition, the Firm and its personnel have ethical and legal responsibilities to maintain the confidences of clients and to protect confidential and proprietary information developed by or entrusted to the Firm.

The Firm and any Covered Person involved may be exposed to potential insider trading or tipping liability under the federal securities laws if the Firm or any Covered Person executes transactions (whether for a client or otherwise) in or communicates information regarding securities for which the Firm or any Covered Person possesses material non-public information. This potential liability is particularly problematic because the Firm as a whole may be deemed to possess material non-public information known by any of its Covered Persons.

 

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The Firm has adopted and implemented the following policies and procedures to (i) ensure the propriety of trading activity by Covered Persons and the Firm; and (ii) protect and segment the flow of material non-public information and other confidential information. Apollo does not have information barriers, and therefore, if one employee has possession of material non-public information, the entire organization is deemed to have it as well. The Firm’s lack of information barriers increases the importance of Covered Persons complying with these policies and procedures.

 

7.1

Definition of Material Non-Public Information

Information is generally considered “material” if there is a substantial likelihood that a reasonable investor would use the information when deciding to buy, sell or hold the securities of a particular issuer, or if the information is reasonably certain to have an effect on the price of the securities. If the information would influence one’s decision on whether or not to trade, it should be considered material for purposes of the matters discussed in this Code.

“Non-public” information is information that is generally not available to ordinary investors in the marketplace or in general circulation. As a rule, in order to conclude that information is public, a Covered Person should be able to show that the information is generally available (e.g., its announcement in an SEC filing or in a major news publication such as the Wall Street Journal). The information must also have been publicly available for sufficient time for the market to react and reflect the information in the security’s price.

While it is not possible to identify in advance all information that would be deemed material non-public information, illustrations of such information may include:

 

   

Unannounced earnings or other financial performance measures (actual or projected), guidance, or anticipated changes to previously provided guidance;

 

   

Projections and strategic plans;

 

   

Unannounced merger, acquisition, disposition, tender offer, joint venture or other business combination or significant strategic partnership;

 

   

New major contracts, orders, suppliers, customers or finance sources, or the loss thereof;

 

   

Significant new products to be introduced and significant discoveries of natural resources;

 

   

Significant pricing changes;

 

   

Changes in dividend policies or amounts;

 

   

Public or private securities offerings or stock splits;

 

   

Stock repurchase programs;

 

   

Pending C-level terminations, new C-level hires or significant changes in management or operations;

 

   

Significant labor disputes or negotiations;

 

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Significant, non-public litigation, threats of litigation or regulatory/government investigation, or the resolution of such litigation or investigation;

 

   

Financial liquidity problems or extraordinary borrowings;

 

   

Material write-offs or restructurings;

 

   

Proposed issuance of new securities;

 

   

Significant increase or decrease in backlog orders or the award of a significant contract;

 

   

Governmental investigations, criminal actions or indictments and any collateral consequences including potential debarment from government contracts; and

 

   

Governmental decision-making affecting specific parties, including regulatory approval and awards of government contracts.

If there is any doubt as to whether information is material, treat the information as material.

 

7.2

Insider Trading and Tipping

Insider trading refers generally to transacting in any security (which, for purposes of these procedures shall include equity securities, bonds and other debt securities, convertible securities, bank loans, derivatives, options, any stock index including such securities as an element, and any other financial instruments) while in possession of material non-public information regarding the security or the issuer of the security. Insider trading may also include “tipping” such material non-public information. Tipping is the act of communicating material non-public information to any person who could use such information to purchase or sell securities.

Covered Persons who are in possession of material non-public information may not engage in insider trading or tipping. These prohibitions are applicable regardless of how the material non-public information is acquired. Penalties for trading on material non-public information are severe and may include both significant monetary fines and imprisonment.

Unless a decision has been made by Apollo that the receipt of material non-public information in connection with the Firm’s business is necessary or desirable, Covered Persons should affirmatively avoid directly or inadvertently coming into possession of material non-public information, or communicating material non-public information to others, including information in connection with their personal dealings (e.g., Covered Persons may not discuss Firm or client dealings with unrelated business contacts, family, friends, and other third parties). Such affirmative actions by Covered Persons will reduce the likelihood of insider trading and tipping and will avoid the unwanted imputation of material non-public information to the Firm.

Any Covered Person who comes into possession of material non-public information relating to a security or the issuer of a security must immediately contact Legal or Compliance. Covered Persons must refrain from (i) effecting transactions in securities of the issuer; and (ii) communicating the information to any person inside or outside the Firm unless and until Legal or Compliance advises the Covered Person to the contrary. Please remember that since Apollo does not have information barriers, if one employee has possession of material non-public information, the entire organization is deemed to have it as well. Therefore, it is critical to contact Legal or Compliance if you believe you have come into possession of such information.

 

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7.3

Policies and Procedures Concerning Protection of Material Non-Public Information and Other Confidential Information

It is imperative that the Firm exercise control over the circumstances in which it and its Covered Persons receive material non-public information and other confidential information. Without effective controls in this area, the Firm and its clients may be “frozen” in a position or precluded from taking a new position in a security if the Firm or one of its Covered Persons has come into possession of material non-public information. Covered Persons may find themselves in similar situations with respect to their personal investments. Therefore, it is essential that Covered Persons not seek information that they believe may be material non-public information without prior approval from Compliance.

 

  7.3.1

Firm Restricted List

The contents of the Firm’s Restricted List are confidential and proprietary information of the Firm and may not be communicated to anyone outside of the Firm without the prior approval of Compliance.

The Firm’s Restricted List is comprised of two parts.

Part I consists of the Holdings List, which is maintained by Operations and generally includes all issuers in which Apollo funds maintain a position. However, this list does not include the holdings of Apollo Insurance Solutions Group LP (“ISG”) clients or MidCap FinCo Limited (“MidCap”) clients. The ISG and MidCap holdings are both maintained separately and reviewed daily.

Part II is the Restricted List which is maintained by Compliance and contains the following:

 

   

Names of companies about which the Firm, ISG, Redding Ridge Asset Management LLC (“Redding Ridge”) or MidCap may have material non-public information;

 

   

Names of entities with which the Firm, ISG, Redding Ridge or MidCap has confidentiality agreements that may impose certain restrictions on investments; and

 

   

Names of entities for which members of the Firm, ISG, Redding Ridge or MidCap serve as directors, officers or members of a creditors committee.

The Restricted List is updated daily and is available both on the Firm’s Intranet and within the Firm’s order management system.

Transactions in securities of companies listed on the Restricted List require pre-clearance from Compliance. See the Trading Policy of Apollo’s Supervisory Procedures Manual for the Firm’s trade pre-clearance policy and procedures. See the Personal Securities Transactions Policy of Apollo’s Supervisory Procedures Manual for the Firm’s personal trade pre-clearance procedures.

 

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  7.3.2

Confidential Information Process

As a condition to the Firm receiving material non-public information or other confidential information, the Firm may be asked to enter into a confidentiality agreement whereby the Firm will, among other things, agree to keep such information confidential. No Covered Person is authorized to seek any material non-public information or other confidential information or enter into any written or oral confidentiality agreement on behalf of the Firm without the express prior approval of either Legal or Compliance. Procedures for receiving confidential information are set forth in the Confidential Information Process Policy of Apollo’s Supervisory Procedures Manual.

Covered Persons also shall notify Compliance in the event they receive any material non-public information or if they are uncertain as to whether the information they receive is material and non-public.

 

  7.3.3

Communication with Insiders

Covered Persons should exercise caution when communicating with representatives of companies, creditors’ committees, boards of directors, advisers or significant shareholders (collectively, “Insiders”). Covered Persons should: (i) identify themselves and the purpose of their communication; and (ii) make clear that the Firm is not seeking material non-public information or other confidential information and that the Firm will assume that any and all information given to it by an Insider has been publicly disclosed or is not material.

If a Covered Person wishes to obtain material non-public information or other confidential information during such discussions, the Covered Person must first request pre-clearance from Legal or Compliance. Legal or Compliance will then review the name of the issuer prior to the Covered Person receiving the material non-public information or other confidential information through the Confidential Information Process.

 

  7.3.4

Communications with Public Employees

Covered Persons should exercise caution with respect to non-public information received from communications with federal legislative, executive, and judicial branch employees (collectively, “Public Employees”). Under federal law, Public Employees are strictly prohibited from making a private profit using material non-public information derived from their position as a Public Employee or gained through performance of their official duties.

If a Covered Person wishes to obtain material non-public information or other confidential information from a Public Employee, the Covered Person must first request pre-clearance from Legal or Compliance. Legal or Compliance will then review the circumstances (including, if applicable, the name of the issuer regarding which the information is to be received) prior to the Covered Person receiving the material non-public information or other confidential information through the Confidential Information Process. Additionally, if a Covered Person is unsure as to whether material non-public information or other confidential information was received, the Covered Person should contact Legal or Compliance.

 

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  7.3.5

Inadvertent or Unauthorized Receipt of Material Non-Public Information

If a Covered Person inadvertently or without authorization comes into possession of material, non-public information, the Covered Person must notify Legal and Compliance immediately. Upon the receipt of such information, the Covered Person may not: (i) disclose the material, non-public information to others within or outside of the Firm; (ii) participate in discussions or deliberation with others within or outside of the Firm, or work on any transactions involving the company to which such information relates; or (iii) engage in transactions (or recommend or suggest that any person engage in transactions) in the securities to which such information relates, without the prior approval of, and subject to any and all restrictions imposed by, Compliance.

 

7.4

Limiting Inadvertent Access to Material Non-Public Information and Other Confidential Information

Covered Persons should take care that material non-public information is not left in public areas. Documents containing material non-public information, to the extent not being filed, should be shredded or otherwise destroyed when being disposed. Note that prior to disposing of a record or document, Covered Persons should check with Compliance to ensure that it is not required to be maintained by the Firm. Workspaces should be cleared of documents containing material non-public information at the end of each day and whenever left unattended. Computers should also be locked when leaving workspaces. Covered Persons should not discuss material non-public information in public areas, such as hallways, elevators, restaurants, airplanes or trains. Covered Persons should take care when transmitting material non-public information, electronically and should verify addresses to ensure that only the intended recipients receive the information.

To the extent that persons who have not entered into confidentiality agreements with the Firm visit the Firm’s offices, appropriate care should be taken to ensure that they are not afforded access to any material non-public information or other confidential information.

 

7.5

Arrangements with Consultants

From time to time, the Firm may retain the services of outside consultants to provide advice on economic, financial, political or other matters. Apollo’s standard agreement with consultants requires that consultants maintain the confidentiality of any information of the Firm or its clients that is shared with them and, moreover, that they not disclose to any person any material non-public information without the prior written approval of Legal or Compliance. However, if a Covered Person believes that he or she has come into possession of material non-public information from a consultant, the Covered Person should take the steps outlined above in Section 7.3.5, “Inadvertent or Unauthorized Receipt of Material Non-Public Information”.

 

8.

PERSONAL SECURITIES TRANSACTIONS

Your personal investment activities should always be conducted with the Firm’s reputation in mind and in compliance with all applicable laws and regulations. The Firm generally discourages personal securities transactions where pre-clearance is required. Apollo discourages active trading because of the potential conflicts of interest and distractions during business hours. Covered Persons are prohibited from engaging in day-trading.

 

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As an accommodation, however, the Firm permits limited personal trading where pre-clearance is required, as described below. In addition to complying with all other Code provisions and relevant policies and procedures, all trading in Employee Related Accounts (as defined below) must adhere to the following policies and procedures.

While personal securities transactions are permitted as described below, Compliance reserves the right to deny personal trading requests.

 

8.1

Personal Trading System

Compliance maintains a web-based application through which Covered Persons may conduct and/or complete various required processes, including the pre-clearance of personal trades. All new Covered Persons are required to register with the Firm’s personal trading system. The personal trading system may be accessed through the Firm’s Intranet home page or via the StarCompliance mobile application.

 

8.2

Employee Related Accounts

The Firm has adopted the following procedures concerning the pre-clearance of certain transactions in, and the reporting requirements with respect to, “Employee Related Accounts,” defined as:

 

   

All accounts in the name of (i) the Covered Person, (ii) the Covered Person’s spouse (iii) any member of the Covered Person’s immediate family to whose support the Covered Person significantly contributes, which may include the Covered Person’s children, stepchildren, grandchildren, parents, grandparents, stepparents, siblings, persons with whom the Covered Person has an adoptive or in-law relationship (collectively, “Relevant Persons”), or (iv) any other person to whose support the Covered Person significantly contributes;

 

   

All accounts in which any of the Relevant Persons has a direct or indirect beneficial ownership interest including all accounts in the name of the Covered Person’s spouse; and

 

   

All other accounts over which any Relevant Person exercises any investment control, influence or discretion (“Discretionary Brokerage Accounts”).

The term “beneficial ownership,” for purposes of the definition of Employee Related Accounts, is interpreted as set forth in Rule 16a-1(a)(2) of the Securities Exchange Act of 1934, as amended. Under this rule, a person has “beneficial ownership” of securities if the person, directly or indirectly, through any contract arrangement, understanding, relationship or otherwise, has or shares a direct or indirect pecuniary interest in the securities. A “pecuniary interest” in a security means the opportunity, directly or indirectly, to profit or share in any profit derived from a transaction in the security. A person is presumed to have an “indirect pecuniary interest” in securities held by members of such person’s immediate family sharing the same household, although this presumption may be rebutted. For additional information on what would be considered an “indirect pecuniary interest,” see Appendix 8.2.

 

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All Covered Persons who work in the U.S. and maintain Discretionary Brokerage Accounts must maintain such accounts at a brokerage firm on the approved broker list located in the Personal Securities Transactions Policy of Apollo’s Supervisory Procedures Manual. Any Discretionary Brokerage Account held by a U.S. employee not maintained with an Approved Broker, defined as a broker that allows duplicate statements to be reviewed by Compliance electronically, must be transferred to an Approved Broker within one month of his or her employment date. For Covered Persons who work in the U.S. and maintain Discretionary Brokerage Accounts held outside the U.S., please contact Compliance.

Consult with Compliance if you have any questions as to whether an account is covered by the policies and procedures in this Section 8.2.

 

  8.2.1

New Employee Related Accounts and Closed Accounts

Each Covered Person must promptly notify Compliance through the personal trading system of the opening of any Employee Related Account. The notice must include the broker or financial institution name, account holder name, account number, account classification and approximate account open date of such Employee Related Account. The notice must be given prior to funding the account.

Each Covered Person also must promptly notify Compliance if an Employee Related Account has closed.

 

  8.2.2

Managed and Mutual Fund Only Accounts

Investment transactions in managed accounts, where the Covered Person has no investment control, influence or discretion, or in accounts in which only mutual funds may be traded are both permitted without pre-clearance by Compliance. Certification as to account status is required at least annually though the Firm’s personal trading system and managed accounts should not be structured or used to circumvent the letter or spirit of the Code.

 

8.3

Pre-clearance for Trades Other Than in Apollo, Apollo-Sponsored, or Athene Publicly Traded Securities

Unless an exclusion listed below applies, all transactions in personal securities held in Discretionary Brokerage Accounts require pre-clearance from Compliance. Pre-clearance is authorized for a limited window period of up to three business days including the date of approval and is subject to a minimum holding period of 90 days as measured on a first in, first out basis. Compliance shall ensure that the appropriate pre-clearance limitations are displayed on approval notices through the Firm’s personal trading system.

Approval will not be granted for the purchase of securities of companies with a market capitalization on the date of request between $100 million and $10 billion (the “Market Cap Rule”). From time to time, exceptions may be made to the Market Cap Rule. If an exception from the restriction is granted, Compliance shall make and maintain a record of the basis for the

 

24


exception. In addition, the following transactions in securities are prohibited: (i) personal transactions in initial public offerings (except for those of special purpose acquisition companies (“SPACs”) or real estate investment trusts (“REITs”), which may be permitted subject to pre-approval by Compliance) and initial coin offerings; (ii) short sales; and (iii) purchases of options on equity securities. If a Covered Person currently holds an option position, please contact Compliance for further instructions.

The following types of transactions are excluded from the pre-clearance requirement, the Market Cap Rule (except as it relates to the Apollo or Athene’s publicly traded securities listed in Section 8.3.4) and the minimum holding period:

 

   

Government and municipal securities;

 

   

Exchange traded funds (“ETFs”) and closed-end funds, including any derivatives thereof, except for those closed-end funds advised or sub-advised by Apollo, to the extent transactions are executed by a Relevant Person who is also an access person (see Section 8.3.1);

 

   

Mutual funds (i.e., open-ended investment companies), except for those mutual funds advised or sub-advised by Apollo, to the extent transactions are executed by a Relevant Person who is also an access person (see Section 8.3.1);

 

   

Variable annuities;

 

   

Commodities;

 

   

Transactions in fully-managed accounts, where Relevant Persons have no investment control, influence or discretion; and

 

   

Grants of Apollo publicly traded stock awarded to employees as part of an equity incentive plan. An award agreement shall serve as pre-clearance for Apollo publicly traded stock awarded to employees as part of an equity incentive plan.

Compliance will promptly review and determine whether to approve trades requested by Relevant Persons. In determining whether approval should be granted, Compliance shall consider all relevant facts, including:

 

   

If the security is on the Restricted List, Apollo’s Holdings List, ISG’s Holdings List, MidCap’s Holdings List or deal pipeline;

 

   

If the Relevant Person has or can be attributed with material non-public information about the issuer;

 

   

If the transaction would otherwise violate the Code; and

 

   

If the transaction would usurp an opportunity that properly belongs to Apollo clients (including a consideration of the market capitalization of the company).

 

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  8.3.1

Pre-Clearance for Trades in Funds Sub-Advised by Apollo

Apollo may act as a sub-adviser for certain closed-end or open-ended funds (the “Sub-Advised Funds”). Certain employees of Apollo should be considered access persons for purposes of these sub-advisory mandates as a result of their role with respect to the funds, including but not limited to their access to information regarding the purchase or sale of securities by the fund. Relevant Persons who are also access persons must pre-clear all purchases and sales of the Sub-Advised Fund for which they are deemed to be an access person. See the Personal Securities Transactions Policy of Apollo’s Supervisory Procedures Manual for a list of Sub-Advised Funds.

 

  8.3.2

Pre-Clearance for Private Placement Transactions, Private Funds and Alternative Investments

Investments in connection with limited offerings that are not sponsored by Apollo (e.g., third party hedge funds, investment partnerships and other private placements) must be pre-cleared through the Firm’s personal trading system. The request must include the issuer name, transaction amount, investment description, percentage of investment in relation to the offering, any management roles, required time commitment, how the transaction was introduced, any relationships to principals of the issuer and any potential business relationships between Apollo and the issuer. Pre-clearance for investments in private placements sponsored by Apollo will be documented through the subscription process.

Relevant Persons shall notify Compliance of all sales of, or withdrawals from, private funds and alternative investments.

 

  8.3.3

Pre-Clearance for Personal Cryptocurrency Transactions

 

  8.3.3.1

Information on Cryptocurrency

Cryptocurrency is a form of digital currency that uses a decentralized network to affect and verify transactions. Examples include Bitcoin, Ethereum, Litecoin and Ripple.

 

  8.3.3.2

Cryptocurrency Mining

Cryptocurrency mining (“Mining”) is a process used to create new digital currency. Covered Persons are not permitted to engage in Mining activities, and Mining activities will not be approved as an outside business activity.

 

  8.3.3.3

Initial Coin Offerings (“ICO”)

An initial coin offering (an “ICO”) is a method of fundraising for a new venture wherein investors obtain interests (in the form of virtual coins or digital tokens) in exchange for legal tender or another established cryptocurrency. Interests in such ventures (i.e., the coins or tokens purchased) may be considered securities.

Accordingly, Covered Persons are not permitted to participate in an ICO or similar investment and requests to do so will not be approved for personal trading purposes.

 

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  8.3.3.4

Cryptocurrency Non-ICO Transactions

Cryptocurrency is generally considered a “commodity” and falls outside of the definition of a “security” under U.S. securities law. Accordingly, Covered Persons are not required to obtain pre-approval to transact in, and are not required to report, such virtual instruments.

If a Covered Person has any questions about whether a particular virtual instrument requires pre-clearance, he or she should contact Compliance before transacting in such virtual instrument.

 

  8.3.4

Employee Trading Policies for Apollo, Apollo-Sponsored or Athene Publicly Traded Securities

Personal transactions in AGM (NYSE: APO), Apollo Investment Corporation (NASDAQ: AINV), Apollo Commercial Real Estate Finance, Inc. (NYSE: ARI), Apollo Senior Floating Rate Fund Inc. (NYSE: AFT), Apollo Tactical Income Fund Inc. (NYSE: AIF), Athene Holding Ltd. (NYSE: ATH), Apollo Strategic Growth Capital (NYSE: APSG), or Apollo Strategic Growth Capital II (NYSE: APGB) (collectively, “Apollo or Athene’s Publicly Traded Securities”) require pre-clearance from Compliance. Pursuant to the employee trading policies, Compliance shall determine when there is an open trading window. For further details, see Appendix 8.3.4 for the Employee Trading Policies for Apollo or Athene’s Publicly Traded Securities.

 

8.4

Reporting Requirements

Each Covered Person, on both a quarterly and annual basis, must report to Compliance all holdings and transactions in Discretionary Brokerage Accounts.

 

  8.4.1

Holdings Reports

Covered Persons are required to submit through the personal trading system the holdings of all Relevant Persons in Discretionary Brokerage Accounts within five days of joining the Firm (“Initial Holdings Report”) and certify the holdings are accurate at least annually thereafter through the Annual Compliance Survey. The information contained in a Covered Person’s Initial Holdings Report must be current as of a date no more than 45 days prior to the date such person became a Covered Person. Subsequent holdings reports for each Relevant Person’s Discretionary Brokerage Account(s) must be provided no later than 30 days after the end of each calendar quarter, and must be current as of a date no more than 45 days prior to the date such holdings report was submitted (“Periodic Holdings Reports,” and together with Initial Holdings Reports, “Holdings Reports”). Duplicate copies of the most recent financial institutions statements of Relevant Persons submitted within the timeframe listed herein, will be sufficient to fulfill the Holdings Reports requirements if such statements include all required information as set forth herein. A sample authorization letter requesting brokerage firms to send duplicate statements to the Firm is available in Appendix 8.4.1.

With respect to Discretionary Brokerage Accounts held by Relevant Persons with Approved Brokers, Compliance will ensure that Periodic Holdings Reports will be transmitted electronically directly from the broker to the Firm’s personal trading system.

 

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Non-U.S. employees are not required to hold their Discretionary Brokerage Accounts with an Approved Broker. In instances where non-U.S. employees holding Discretionary Brokerage Accounts with a non-Approved Broker are unable to submit Periodic Holdings Reports electronically to the Firm’s personal trading system, the non-U.S. employees shall submit financial institution statements or manual reports to compliancestatements@apollo.com no later than 30 days after the end of each calendar quarter, reflecting all required information for Periodic Holdings Reports as set forth herein. See the Personal Securities Transactions Policy of Apollo’s Supervisory Procedures Manual for a sample Periodic Holdings Report.

Holdings Reports shall contain, at a minimum, the following information:

 

   

The title and type of security, and as applicable, the exchange ticker symbol or CUSIP number, number of shares and principal amount of each reportable security in which each Relevant Person has any direct or indirect beneficial ownership;

 

   

The name of any broker, dealer or bank with which each Relevant Person maintains an account in which any securities are held for the Relevant Person’s direct or indirect benefit;

 

   

If securities are held other than with a broker, dealer or bank, the location of the securities; and

 

   

The date that the Covered Person submits the report to Compliance.

 

  8.4.2

Transactions Reports

In addition to Holdings Reports, reports regarding transactions in all Relevant Persons’ Discretionary Brokerage Accounts must be provided to Compliance no later than 30 days after the end of each calendar quarter (“Transaction Reports”). With respect to Discretionary Brokerage Accounts held by Relevant Persons with Approved Brokers, Compliance will ensure that Transaction Reports will be transmitted electronically directly from the broker to the Firm’s personal trading system. In instances where non-U.S. employees holding Discretionary Brokerage Accounts with a non-Approved Broker are unable to submit Transaction Reports electronically to the Firm’s personal trading system, the non-U.S. employees shall instead submit financial institution statements or manual reports to compliancestatements@apollo.com no later than 30 days after the end of each calendar quarter, reflecting all required information for Transaction Reports as set forth herein.

The Transaction Reports shall cover, at a minimum, all transactions during the quarter, and shall include the following information:

 

   

The date of the transaction, the title and, as applicable, the exchange ticker symbol or CUSIP number, the interest rate and maturity date, the number of shares and the principal amount of each reportable security involved;

 

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The nature of the transaction (i.e., purchase, sale or any other type of acquisition or disposition);

 

   

The price of the security at which the transaction was effected;

 

   

The name of the broker, dealer or bank with or through which the transaction was effected;

 

   

If not executed through a broker, dealer or bank, the location of the securities and a description of how the transaction was effected; and

 

   

The date that the Covered Person submits the report to Compliance.

Transaction reports shall not be required for transactions excluded from the pre-clearance requirement listed in Section 8.3 above.

 

8.5

Piggy-Backing and Front-Running

You may not receive any personal advantage from information which has been obtained by, or in the course of, the performance of your duties at the Firm. Therefore, “piggy-backing” (trading a security in your own account after executing the same trade for a client) and “front-running” (trading a security in your own account prior to trading the same security for a client) are prohibited.

 

9.

ANTI-MONEY LAUNDERING

It is the policy of the Firm to comply with all applicable provisions of U.S. federal and state and non-U.S. laws and regulations designed to combat money laundering, including but not limited to the U.S. Bank Secrecy Act (“BSA”), as amended by Title III of the USA Patriot Act of 2001 (collectively, “Applicable AML Laws”). In general, money laundering consists of moving cash or other financial assets attributable to illicit activities through one or more legitimate accounts, businesses or other conduits for the purpose of making such cash or assets appear to be attributable to legitimate activities or otherwise more difficult to trace back to their illicit source. In this regard, the Firm’s goal is to accept capital contributions only from legitimate, law-abiding investors and to form business relationships and engage in transactions with legitimate, law-abiding counterparties. The Firm is committed to taking reasonable and practical steps to help achieve this goal.

 

9.1

AML Compliance Officer

The Chief Compliance Officer also serves as the AML Compliance Officer. The AML Compliance Officer is responsible for monitoring compliance with Applicable AML Laws, conducting or overseeing ongoing training programs designed to familiarize employees with the requirements of Applicable AML Laws and compliance efforts, and updating senior management of developments in AML compliance efforts and/or Applicable AML Laws. Any questions regarding these policies and procedures should be directed to the AML Compliance Officer or designee (collectively “AML Compliance”).

 

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9.2

Money Laundering

Money laundering is generally defined as engaging in acts designed to conceal or disguise the true origins of criminally derived proceeds so that the unlawful proceeds appear to have derived from legitimate origins or constitute legitimate assets. Generally, money laundering occurs in three stages. First cash enters the financial system at the “placement” stage, where the cash generated from criminal activities is converted into monetary instruments, such as digital currency, money orders or traveler’s checks, or deposited into accounts at financial institutions. Second, at the “layering” stage, the funds are transferred or moved into other accounts or other financial institutions to further separate the money from its criminal origin. Finally, at the “integration” stage, the funds are reintroduced into the economy and used to purchase legitimate assets or to fund other criminal activities or legitimate businesses.

Regulators and law enforcement agencies will prosecute firms and individuals for assisting a money launderer, disregarding legal requirements or deliberately “turning a blind eye” to criminal activity. Covered Persons are personally responsible for complying with Applicable AML Laws and are required to immediately report suspicions of money laundering to the AML Compliance Officer. The Firm’s Anti-Money Laundering Policy is set forth in Apollo’s Supervisory Procedures Manual.

 

9.3

Know Your Customer

Know Your Customer (“KYC”) is the process of verifying the identity of potential investors or counterparties. Appropriate due diligence must be completed prior to establishing a financial relationship. Procedures for verifying the identity of investors and counterparties are set forth in the Anti-Money Laundering Policy of Apollo’s Supervisory Procedures Manual.

 

9.4

OFAC Prohibited Assets

The Firm is required to comply with U.S. economic sanctions against certain countries, entities and persons. The U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) and the U.S. Department of State maintain lists of sanctioned foreign governments and “specially designated” persons and entities (“OFAC Sanctions Program”). In connection with KYC due diligence, AML Compliance will screen each potential investor and counterparty against the U.S. sanctions lists to ensure that funds are not accepted from or paid to any geographic region, person or entity subject to U.S. sanctions restrictions or country embargoes. Such screening must be completed prior to establishing a financial relationship. Procedures for verifying the identity of investors and counterparties are set forth in the Anti-Money Laundering Policy of Apollo’s Supervisory Procedures Manual.

The U.S. Department of Treasury has enacted regulations that prohibit effecting transactions in certain assets. Transactions in the following are generally prohibited:

 

   

Securities registered or inscribed in the name of a foreign national from a country which is the subject of an OFAC Sanctions Program;

 

   

Sovereign debt securities representing obligations of the governments of a country which is the subject of an OFAC Sanctions Program;

 

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Debt or equity securities representing obligations of, or ownership interests in, a company which is the subject of an OFAC Sanctions Program;

 

   

Debt or equity securities representing obligations of, or ownership interests in, companies located in a country which is the subject of an OFAC Sanctions Program; and

 

   

Any bankers’ acceptances or any other securities which represent obligations of, or ownership interests in, entities owned or controlled by restricted commercial or governmental entities subject to an OFAC Sanctions Program.

 

9.5

Suspicious Activity

Any “suspicious activities” of any of the Firm’s potential or current investors or counterparties must be reported promptly to AML Compliance. Suspicious activities are difficult to define, but may include:

 

   

A potential or current investor or counterparty that exhibits unusual concern regarding Apollo’s compliance with Applicable AML Laws or other government reporting requirements, or asks specific questions about how the process is conducted;

 

   

A potential or current investor (or persons/entities publicly associated with such investor) or counterparty that has a questionable background or is the subject of news reports indicating possible criminal, civil or regulatory violations;

 

   

A potential or current investor or counterparty who appears to be acting as the agent for another entity but declines, hesitates, or is reluctant to provide any information in response to questions about that entity without legitimate commercial reasons;

 

   

A potential or current investor or counterparty that refuses or declines to provide requested information;

 

   

Information provided by a potential or current investor or counterparty appears false or suspicious, is inconsistent or cannot be explained after additional inquiries;

 

   

The potential or current investor or counterparty appears to be controlled by a senior foreign political figure;

 

   

Wire transfers or transactions with individuals or entities, or through countries, identified by the U.S. Department of Treasury as being a “primary money laundering concern,” financial secrecy haven country, or otherwise reasonably suspected of money laundering, terrorism or other illegal activities without an apparent business reason; and

 

   

Any suspicious financial transactions, such as capital contributions that are attempted to be made in the form of cash, digital currency, travelers checks, money orders, cashier’s checks or third party checks.

For business and security purposes, no one other than AML Compliance may contact any investor suspected of suspicious activities.

 

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10.

FATCA

The Foreign Account Tax Compliance Act (“FATCA”) is U.S. legislation generally requiring foreign financial institutions (“FFIs”), and certain other non-financial foreign entities (“NFFEs”), to report on the foreign assets held by their U.S. account holders or be subject to withholding on U.S. withholdable payments. The Hiring Incentives to Restore Employment Act additionally requires U.S. persons to report, depending on the value, their foreign financial accounts and foreign assets. The goal of FATCA is to reduce the ability of U.S. individuals/entities to evade taxes by investing in or through non-U.S. entities.

 

10.1

How does FATCA impact Apollo?

A majority of Apollo foreign entities (excluding portfolio companies) are considered FFIs under FATCA and therefore subject to FATCA reporting requirements. Apollo maintains a robust FATCA compliance program tracking U.S. persons invested in foreign Apollo entities and reporting these to local tax authorities and the IRS as required. U.S. investors participating in one or more Apollo funds through a foreign Apollo investment vehicle (e.g., Cayman Islands limited partnership) are subject to reporting consistent with Apollo’s FATCA obligations. Information typically reported includes the investor’s name, address, taxpayer identification number and account balance (the dollar value of the investor’s investment in the Apollo entity with the reporting obligation).

To confirm the FATCA status of investors, Apollo requires every subscriber to furnish Forms W-8/W-9 as applicable when subscribing to an Apollo fund.

 

10.2

Are there topics that Covered Persons should not discuss with investors?

Covered Persons must be mindful when communicating with investors to ensure they are not providing advice on ways for the investor to avoid FATCA compliance. For example, Covered Persons should not advise individual investors who have dual citizenship with the U.S. not to disclose their U.S. citizenship status.

Providing advice to an investor on how to avoid FATCA could have serious financial implications for Apollo. As a result, Covered Persons may not provide any advice to any investor related to providing:

 

   

AML/KYC documentation; or

 

   

Tax documentation (Forms W-8 and W-9).

If you receive an inquiry from an investor on AML/KYC or tax documentation, refer them to their personal tax and/or legal advisor. If the investor is persistent and wants to discuss their FATCA compliance responsibilities with an Apollo representative, please refer the investor to the FATCA Program Manager.

 

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11.

OUTSIDE ACTIVITIES, GIFTS AND OTHER POTENTIAL CONFLICTS OF INTEREST

A conflict of interest may arise from a Covered Person’s involvement in outside interests or relationships that may either conflict with the Covered Person’s duty to the Firm, adversely affect the Covered Person’s judgment in the performance of his or her responsibilities or provide an actual or potential personal benefit. The benefit may be direct or indirect, financial or non-financial, through family connections, personal associations or otherwise. It is the policy of Apollo that all Covered Persons conduct the business affairs of the Firm in accordance with the highest principles of business ethics and in such a manner to avoid such conflicts of interest, whether actual or potential.

Covered Persons should promptly report to Compliance any situation or circumstance which may give rise to a conflict of interest.

While it is not possible to describe all circumstances where a conflict of interest exists or may exist, the following is intended to provide some guidance about potential conflicts of interest.

 

11.1

Making Impartial Business Decisions

To avoid a conflict of interest, Covered Persons should approach all persons doing or seeking to do business with Apollo in an entirely impartial manner. The only criterion of any business decision should be whether Apollo’s clients’ best interests are promoted, and any circumstances which could call such impartiality into question should be disclosed to Compliance. For example, any factors suggestive of a possible conflict in connection with recommending an investment must be disclosed, as should any personal connection that a Covered Person may have with an outside party, such as a consultant, with which the Firm is considering doing business.

 

11.2

Potential Conflicts of Interest Under Limited Partnership Agreements and Offering Materials

The Limited Partnership Agreements and offering materials of the Apollo funds contain various provisions relating to possible conflicts of interest, which are too detailed to summarize in this Code. If you are aware of circumstances that you feel might constitute a conflict of interest between Apollo or any of its Covered Persons and Apollo clients or their limited partners, you must bring the matter to the attention of a member of Legal.

 

11.3

Dealing with Portfolio Companies

Having an interest in a firm that does business with a portfolio company could create a conflict of interest. Covered Persons must make full disclosure of any such interests to Compliance.

 

11.4

Personal Relationships

In general, without prior approval from Compliance, you may not act on behalf of Apollo in any transaction or business relationship involving yourself, members of your family, or other persons or organizations with which you or your family have had any significant personal connection or financial interest.

 

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You may not engage in self-dealing or otherwise trade upon your position with Apollo, or accept or solicit any personal benefit from a client, investor, other persons who have a relationship with Apollo or related party that is not generally available to other persons or made available to you due to your position with Apollo (except in accordance with our policies and procedures regarding the occasional acceptance of gifts) without prior approval from Compliance.

Negotiating with Apollo on behalf of others with whom you or your family has or has had a significant connection should be avoided if there is a risk that your involvement would be perceived as a conflict of interest with your position with the Firm.

 

11.5

Outside Business and Memberships

Any outside activities must not reflect adversely on Apollo or give rise to a real or apparent conflict of interest with your duties to the Firm. You must be alert to potential conflicts of interest and be aware that, as a condition of your continued employment or other association with the Firm, you may be asked to discontinue any outside activity if a potential conflict arises. Outside activities must not interfere with your job performance or require such long hours to affect your physical or mental effectiveness. Your job at Apollo should always be your first work priority.

 

  11.5.1

Pursuing Firm Business or Investment Opportunities

You must obtain approval from Compliance before you:

 

   

Accept a business or investment opportunity from someone doing business or seeking to do business with Apollo that is made available to you because of your association with the Firm and whose acceptance would create a perception that actions you take may not be in the Firm’s or its clients’ best interest;

 

   

Take for yourself a business opportunity belonging to the Firm or any client; or

 

   

Engage in personal investing or trading, except as otherwise permitted herein.

 

  11.5.2

Outside Employment and Business Activities

Outside business activities include any form of employment other than Apollo. Outside business activities also include serving as a director or officer of another company or organization, including of a portfolio company of an Apollo fund, or any activity that has the potential to detract from a Covered Person’s ability to devote appropriate time and attention to the Covered Person’s responsibilities to the Firm.

Except as authorized by Compliance, Covered Persons may not be employed, engaged, provide services for, or receive remuneration from any person or entity other than the Firm or any related party (except in connection with such Covered Person’s employment responsibilities). In seeking approval to engage in an outside business activity, the Covered Person must disclose whether such company or organization has a relationship with the Firm. Covered Persons must notify Compliance if they serve as a director of a portfolio company of an Apollo fund, but pre-approval is not required.

 

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Examples of Activities Requiring Pre-Approval:

 

   

Any employment, consulting, or other arrangement with another person or entity in which the Covered Person will receive compensation;

 

   

Serving as a director or officer for another company (other than a portfolio company of an Apollo fund), or a charitable, non-profit, or professional organization;

 

   

Starting a business;

 

   

Becoming a candidate for any public office;

 

   

Serving in any government position or office, including, but not limited to, federal, state, or local government, in addition to school or library boards; and

 

   

Serving on a condo, co-op, or housing association.

Each Covered Person seeking to engage in outside business activities must complete and submit an outside business activity request through the personal trading system, describing the nature of the outside business activity, the time commitment involved, the parties for whom such Covered Person will be working or associated with, and any other relevant information regarding the outside business activity.

Compliance shall maintain a record of approvals, denials, exceptions to the policy and any conditions imposed on the Covered Person’s outside business activity.

On an annual basis, all Covered Persons must certify that:

 

   

Previously disclosed outside business activities remain active, or, if inactive, when the activity ceased;

 

   

All outside business activities have been disclosed to, and approved by, Compliance;

 

   

Outside business activities will not interfere with their duties and responsibilities as a Covered Person;

 

   

Outside business activities will not result in any conflicts of interest for Apollo or its affiliates;

 

   

They will not disclose or use any proprietary or confidential information in connection with their current or future involvement with outside business activities; and

 

   

They understand that Apollo and its affiliates have legal and ethical obligations which may govern or impact Covered Persons’ involvement in outside business activities.

 

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Memberships

The Firm supports its Covered Persons’ involvement in community activities, professional organizations and not-for-profit organizations; such activities do not require pre-clearance as long as they do not violate firm policies and procedures or affect the Firm. Before joining an organization or engaging in such activities, Covered Persons should evaluate whether membership or participation could cause a conflict of interest with Firm policies and procedures. If there is any question as to whether a conflict of interest exists or may exist, the Covered Person must consult with Compliance before joining such organizations or engaging in such activities.

 

11.6

Gifts

Covered Persons must (1) pre-clear with Compliance all gifts given to anyone doing business with, or who is seeking to do business with the Firm and (2) report to Compliance all gifts received from anyone doing business with, or who is seeking to do business with, the Firm regardless of value through the personal trading system.

Covered Persons are prohibited from giving or accepting gifts having an aggregate value of $100 per year from any person associated with a broker-dealer. Covered Persons are further prohibited from soliciting gifts for themselves or for anyone else, or accepting gifts from, or giving gifts to, anyone in return for any business, service, or confidential information of the Firm.

For the purposes of the Code, the term “gift” includes anything of value for which you are not required to pay the retail or usual and customary cost. A gift may include meals or refreshments, goods, services, tickets to entertainment or sporting events, or the use of a residence, vacation home, or other accommodations. Gifts given by others to members of your family, to those with whom you have a close personal relationship, and to charities designated by you, are considered to be gifts to you.

In addition to the above and in order to comply with European rules and regulations, Covered Persons working for Apollo’s U.K. entities and Covered Persons working on European mandates must pre-clear with Compliance through the Firm’s personal trading system any business-related meals, entertainment, outings or similar business related functions offered or accepted if the value per person exceeds (1) in any case, $500 / £350, or (2) if given by a third party to someone who supports Apollo U.K.’s discretionary mandates (“U.K. Discretionary Mandates”), $200 / £150. U.K. Discretionary Mandates include Apollo’s European collateralized loan obligation funds, Apollo Asset Management Europe LLP or Apollo Asset Management Europe PC LLP, or any individual who works on any direct single managed account with an Apollo U.K. firm. Covered Persons are required to obtain approval from their manager prior to seeking pre-clearance. When seeking pre-clearance, the Covered Person must confirm that, in their opinion, they do not view the entertainment or business hospitality as an inducement. Covered Persons may be asked for the rationale behind such confirmation.

 

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11.7

Entertainment

Covered Persons must pre-clear with Compliance any entertainment provided to a Government Official (e.g., employees at all levels of government, including all state agencies as well as employees of state-owned or state-controlled commercial enterprises, such as banks, and political parties and candidates) regardless of value. Additionally, entertainment provided to or received from anyone doing business with or seeking to do business with the Firm that exceeds $1,000 in total value per person must be pre-cleared with Compliance.

 

12.

SOLICITATION OF POTENTIAL INVESTORS

Proper solicitation of potential investors should emphasize the experience and other benefits of Apollo and concentrate on providing accurate information to investors, so they can make informed decisions. Solicitations that could cast doubt on the integrity of Apollo, its Covered Persons, or its portfolio companies are prohibited regardless of the justification for such activities. Prohibited activities include:

 

   

Using deceptive or misleading statements;

 

   

Attempting to induce individuals to place their personal interests above those of the companies or organizations they represent;

 

   

Inducing an individual to breach a contract with a third party;

 

   

Violating any law, regulation or Apollo policy related to marketing or solicitation;

 

   

Engaging in any activity that could damage Apollo’s reputation; and

 

   

Entering agreements with competitors or violating antitrust laws.

In sum, Covered Persons may only use legal, ethical, and proper methods to solicit potential investors. No Covered Person shall make any payments to potential investors for solicitation purposes.

 

13.

POLITICAL CONTRIBUTIONS

Any Covered Person wishing to make a political contribution to any election (local, state, federal), committee, political party, political action committee (“PAC”), or other politically-active entity (e.g., a 527 or 501(c)(4) organization) must receive pre-approval from Compliance.

Improper contact with Public Employees (as defined in section 7.3.4) at any level of government—including elected officials, appointed officials, candidates for public office, and Public Employees at the federal, state, and local levels—may adversely impact the Firm’s business interests and reputation. Improper contact may also lead to civil and criminal liability for the Covered Person, and potentially for the Firm as well. This section of the Code sets forth the Firm’s policies and procedures for political giving and related activities.

 

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The Firm and its Covered Persons are prohibited from:

 

   

Making a contribution that is not in compliance with this section of the Code;

 

   

Providing or agreeing to provide, directly or indirectly, payment to any person to solicit a government entity for investment advisory services, unless such person is a regulated person or is an executive officer, general partner, managing member (or, in each case, a person with a similar status or function), or employee of the investment adviser; and

 

   

Coordinating or soliciting any person or PAC to make, any:

 

   

Contribution to an official of a government entity to which the Firm is providing or seeking to provide investment advisory services; or

 

   

Payment to a political party of a state or locality where the Firm is providing or seeking to provide investment advisory services to a government entity.

The Firm and its Covered Persons are prohibited from doing anything indirectly that they would be prohibited from doing directly, including making “conduit” contributions through third parties, including through family members, affiliates, or other persons or entities.

The above prohibitions also apply to covered investment pools. Specifically, an investment adviser to a covered investment pool in which a government entity invests or is solicited to invest is treated as though that investment adviser was providing or seeking to provide investment advisory services directly to the government entity.

Key terms relevant to this section of the Code are defined below.

 

13.1

Definition of Key Terms

 

  13.1.1

Contribution

The term “contribution” means any gift, subscription, loan, advance, or deposit of money or anything of value made for the purpose of:

 

   

Influencing any election for federal, state or local office;

 

   

Paying debt incurred in connection with any such election;

 

   

Paying transition or inaugural expenses of the successful candidate for state or local office; or

 

   

Influencing the outcome of any ballot initiative or referendum.

For avoidance of doubt, the term “contribution” includes any gift subscription, loan, advance, or deposit of money or anything of value made to any of the following persons or entities:

 

   

A PAC organized under federal or state law (including a “Super PAC”);

 

   

A national, state or local political party committee, including any convention, building or legal account established by a political party;

 

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A person or any entity, including a for-profit or non-profit entity, that (i) is organized for the purpose of influencing any election for federal, state, or local office, (ii) acts to influence any election for federal, state, or local office, or (iii) is organized for the purpose of influencing the outcome of any ballot initiative or referendum (including a Section 527 organization or a politically-active Section 501(c)(4) organization);

 

   

Any legal defense fund established for the benefit of a person elected to federal, state, or local office;

 

   

Any joint fundraising committee or similar entity composed of or organized to benefit the foregoing entities; or

 

   

Any entity organized, at least in part, for the purpose of, or which now serves as a conduit for, making contributions to a candidate or any of the foregoing entities.

“Contribution” includes “in-kind” contributions, which are non-monetary, such as using corporate resources (e.g., the use of phones, email, conference rooms, or staff time) to conduct campaign activities or to host campaign events.

 

  13.1.2

Covered Investment Pool

For purposes of this section of the Code, “covered investment pool” means:

 

   

An investment company registered under the Investment Company Act of 1940 (the “Investment Company Act”) that is an investment option of a plan or program of a government entity; or

 

   

Any company that would be an investment company under Section 3(a) of the Investment Company Act, but for the exclusion provided from that definition by either Section 3(c)(1), Section 3(c)(7) or Section 3(c)(11) of the Investment Company Act.

 

  13.1.3

Executive Officer

For purposes of this section of the Code, the term “executive officer” of an investment adviser means:

 

   

The president;

 

   

Any vice president in charge of a principal business unit, division or function (such as sales, administration or finance);

 

   

Any other officer who performs a policy-making function; or

 

   

Any other person who performs similar policy-making functions for the investment adviser.

Please note that a person who is not an employee of the Firm may be deemed to be an “executive officer” in respect of his/her role.

 

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  13.1.4

Government Entity

For purposes of this section of the Code, “government entity” means any state or political subdivision of a state, including:

 

   

Any agency, authority, or instrumentality of the state or political subdivision;

 

   

A pool of assets sponsored or established by the state or political subdivision or any agency, authority or instrumentality thereof, including, but not limited to a “defined benefit plan” as defined in Section 414(j) of the Internal Revenue Code (26 U.S.C. 414(j)), or a state general fund;

 

   

A plan or program of a government entity; and

 

   

Officers, agents, or employees of the state or political subdivision or any agency, authority or instrumentality thereof, acting in their official capacity.

 

  13.1.5

Official

For purposes of this section of the Code, “official” means any person (including any election committee for the person) who was, at the time of the contribution, an incumbent, candidate or successful candidate for elective office of a government entity, if the office:

 

   

Is directly or indirectly responsible for, or can influence the outcome of, the hiring of an investment adviser by a government entity; or

 

   

Has authority to appoint any person who is directly or indirectly responsible for, or can influence the outcome of, the hiring of an investment adviser by a government entity.

 

  13.1.6

Payment

For purposes of this section of the Code, “payment” means any gift, subscription, loan, advance, or deposit of money, in-kind donations of goods and services or anything of value. In-kind contributions include goods and services offered free of charge or at a discount to a campaign, as well as payments to third party vendors for goods and services provided to a campaign.

 

  13.1.7

Plan or Program of a Government Entity

For purposes of this section of the Code, “plan or program of a government entity” means any participant-directed investment program or plan sponsored or established by a state or political subdivision or any agency, authority or instrumentality thereof, including, but not limited to, a “qualified tuition plan” authorized by Section 529 of the Internal Revenue Code (26 U.S.C. 529), a retirement plan authorized by Section 403(b) or 457 of the Internal Revenue Code (26 U.S.C. 403(b) or 457), or any similar program or plan.

 

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  13.1.8

Regulated Person

For purposes of this section of the Code, “regulated person” means:

 

   

An investment adviser registered with the SEC that has not, and whose covered associates have not, within two years of soliciting a government entity:

 

   

Made a contribution to an official of that government entity, other than de minimis contribution; and

 

   

Coordinated or solicited any person or PAC to make any contribution or payment described in Section 13.2; or

 

   

A “broker,” as defined in Section 3(a)(4) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(4)) or a “dealer,” as defined in Section 3(a)(5) of that Act (15 U.S.C. 78c(a)(5)), that is registered with the SEC, and is a member of a national securities association registered under Section 15A of that Act (15 U.S.C. 78o-3), provided that:

 

   

The rules of the association prohibit members from engaging in distribution or solicitation activities if certain contributions have been made; and

 

   

The SEC, by order, finds that such rules impose substantially equivalent or more stringent restrictions on broker-dealers than Rule 206(4)-5 imposes on investment advisers and that such rules are consistent with the objectives of Rule 206(4)-5.

 

  13.1.9

Solicit

For purposes of this section of the Code, “solicit” means:

 

   

With respect to investment advisory services, to communicate, directly or indirectly, for the purpose of obtaining or retaining a client for, or referring a client to, an investment adviser; and

 

   

With respect to a contribution or payment, to communicate, directly or indirectly, for the purpose of obtaining or arranging a contribution or payment.

 

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13.2

Pre-clearance of Political Contributions and Contribution Related Activity

All Covered Persons are required to obtain approval from Compliance prior to making any political contribution.

This requirement to obtain prior approval before making a contribution also applies to:

 

   

Any Covered Person’s spouse;

 

   

Any immediate family member who resides with the Covered Person; and

 

   

Any person to whom the Covered Person provides significant financial support, which may include but is not limited to children, stepchildren, grandchildren, parents, grandparents, and persons with whom the Covered Person has an adoptive or in-law relationship.

Requests to make a contribution shall include the following information: (1) the name of the person proposing to make the contribution; (2) the proposed contribution amount; (3) the name and (if applicable) office of the candidate, committee, political party, PAC, or other politically-active entity (e.g., a 527 or 501(c)(4) organization) that would receive the contribution; and (4) an indication of whether or not the person proposing to make the contribution is entitled to vote for the candidate in question. For entities that pose circumvention risks (e.g., PACs, political parties, and other politically-active entities), prior to approving the contribution Compliance must receive an executed representation letter from the recipient to ensure that the contribution is used in a manner that complies with all relevant restrictions.

 

13.3

Payments for Soliciting a Government Entity

Prior to paying or agreeing to provide, directly or indirectly, payment to any person to solicit a government entity to engage Apollo to provide investment advisory services, a written (email acceptable) request must be made to Compliance and approval obtained.

 

13.4

Corporate Political Contributions and Bundling

As a matter of policy, the Firm will not make direct contributions in connection with federal, state or local elections. Because the use of corporate facilities and personnel may result in an “in-kind” direct corporate contribution, as discussed in Section 13.6 below, pre-clearance is required for any use of corporate resources in connection with campaign or political events. In reviewing the pre-clearance request, Compliance will consider whether an in-kind contribution would result.

Federal, and some state, laws prohibit corporate employees from “bundling” political contributions (i.e., physically collecting and forwarding political contribution checks made by others or otherwise providing a means of transmitting such checks including providing envelopes or postage for a contributor to send in his or her political contribution check).

 

13.5

Volunteer Political Activities

Covered Persons are generally permitted to voluntarily participate in political activities on behalf of a candidate, committee, political party or other politically active entity. This includes volunteer activity to support a campaign or political party that does not involve making contributions, engaging in political fundraising, or holding a formal political position. However, to ensure that such activity does not inadvertently cause Apollo to make an impermissible corporate contribution or otherwise implicate applicable restrictions, Covered Persons are required to obtain prior approval from Compliance by emailing ApolloPoliticalContributions@Apollo.com before engaging in such volunteer political activity, even where such activity is occasional and isolated.

 

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13.6

Soliciting Covered Persons and Use of Firm Resources

Federal, state, and local campaign finance laws prohibit coercion in connection with the solicitation of campaign finance contributions. To avoid coercion and the appearance of coercion, Covered Persons should:

 

   

Refrain from soliciting individuals who are not the same management level (i.e., partners should not solicit junior employees);

 

   

Avoid linking a contribution, whether directly or by implication, with the potential donor’s employment at the Firm, their prospects for a promotion, or any other condition of their employment;

 

   

Inform the potential donor that contributions are voluntary and will not be reimbursed, and that the potential donor may refuse to contribute without fear of reprisal;

 

   

Refrain from pressuring colleagues to make a contribution if they express hesitation about doing so; and

 

   

Refrain from stating that the election of the candidate would benefit Apollo.

Apollo generally discourages use of Firm resources (e.g., use of Apollo computers, phones, staff and letterhead) to solicit contributions during normal business hours. Use of such Firm resources beyond incidental use may constitute a contribution of in-kind goods or services by Apollo.

As a result, Covered Persons are required to obtain approval from Compliance by emailing ApolloPoliticalContributions@Apollo.com prior to coordinating or soliciting any person or PAC to make any contribution. This requirement also applies to certain family members of a Covered Person as described in Section 13.2 above.

Requests to coordinate or solicit a contribution shall include the following information: (1) the name of the person proposing to coordinate or solicit the contribution; (2) the form of the coordination or solicitation; (3) the name and (if applicable) office of the candidate, committee, or PAC that would receive the contribution; and (4) whether Firm resources will be used in connection with soliciting contributions. Compliance may require additional information.

Depending on the circumstances, holding a political event (e.g., fundraiser, candidate or officeholder event) on Apollo premises or using Apollo resources could result in Apollo making an “in-kind” contribution to the candidate or party on whose behalf the event is held, or could trigger gift or lobbying laws. As a result, all political events held on Apollo premises or using Apollo resources must be pre-cleared with Compliance.

 

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Covered Persons seeking to host a political event on Apollo premises or using Apollo resources (e.g., Zoom, an Apollo conference line) are required to obtain advance approval from Compliance by emailing ApolloPoliticalContributions@Apollo.com with details regarding the event (e.g., the event flier and invitees).

Since the provision of in-kind goods or services may constitute a contribution from Apollo to the campaign, the Firm must obtain reimbursement for the event space and all expenses incurred by the Firm in connection with a political event. The cost of the event space will be reflective of market rates for rental space in the hosting office’s location. Additional costs that should be reimbursed by the campaign and reported to Compliance if incurred in connection with a political event include:

 

   

Any refreshments or entertainment supplied by Apollo;

 

   

Staff time spent assisting with or organizing the event; or

 

   

Any other Firm resources used in connection with an event.

The Covered Person responsible for coordinating the political event is required to obtain reimbursement for all expenses and provide evidence of payment (e.g., copy or scan of check) to Compliance.

Finally, contributions made in connection with political events are strictly voluntary, and Covered Persons may choose not to make a contribution in connection with a political event without fear of reprisal. Any recommended contribution amounts are merely suggestions and Covered Persons may contribute a different amount or elect not to contribute, and Apollo will not favor or disadvantage anyone by reason of the amount of their contribution or their decision not to contribute. In accordance with Section 13.2 above, all Covered Persons are required to pre-clear with Compliance any contribution(s) made in connection with attending an Apollo-hosted political event.

 

13.7

Reimbursement of Contributions

The reimbursement of campaign contributions is a violation of federal, state, and local campaign finance law, and should be diligently avoided. Solicitors are prohibited under any circumstances from agreeing to reimburse all or any portion of a contribution or imply that reimbursement will be forthcoming.

 

13.8

Political Contributions of Portfolio Companies

It is Apollo’s policy not to direct or make recommendations regarding the political contributions of its portfolio companies.

 

13.9

Formal Political Positions

To the extent that a Covered Person holds a formal position with a political campaign, PAC, political party, or other entity, the political contributions and activities of that entity may be attributed to the Covered Person and, through that individual, to Apollo. This attribution may result in pay-to-play and conflict of interest issues for Apollo. Accordingly, Covered Persons are required to request pre-clearance through the firm’s personal trading system prior to assuming a formal political position. This requirement to obtain prior approval before assuming a formal political position also applies to certain family members of a Covered Person in accordance with Section 13.2 above.

 

44


Requests to assume a formal political position shall include the following information: (1) the name of the person proposing to assume the formal political position; (2) the nature of the formal political position; and (3) the name and (if applicable) office of the candidate, committee, or PAC associated with the formal political position. Compliance may require additional information.

 

14.

ANTI-BRIBERY POLICY AND PROCEDURES

Apollo is committed to upholding the highest ethical standards and operates a zero-tolerance policy with respect to bribery. Compliance with the Anti-Bribery Policy and Procedures is part of that responsibility. To that end, it is Apollo’s policy to strictly comply with the Foreign Corrupt Practices Act (“FCPA”) and similar anti-bribery laws and regulations in the jurisdictions in which we do business, including, but not limited to, the United Kingdom Bribery Act 2010 (“U.K. Bribery Act”).

The Anti-Bribery Policy and Procedures apply to all Covered Persons and prohibit any Covered Person from giving or taking bribes of any kind. Any violation of this Policy or the Procedures will result in disciplinary action, up to and including termination of employment or engagement.

The FCPA makes it unlawful for any person to promise, authorize, offer or give anything of value, directly or indirectly, to “Foreign Government Officials” (a broad term that includes employees at all levels of government, including all state agencies as well as employees of state-owned or state-controlled commercial enterprises, such as banks, and non-U.S. political parties and candidates) to corruptly influence them to misuse their position or obtain an improper advantage for the purpose of obtaining or retaining business for Apollo. The FCPA applies to the conduct of Apollo and its officers, employees and agents worldwide because Apollo is a U.S. based company.

Countries besides the U.S. also prohibit bribery of domestic and Foreign Government Officials and corrupt payments to private individuals. One such key piece of legislation is the U.K. Bribery Act. Like the FCPA, the U.K. Bribery Act prohibits individuals from offering, promising, or giving a financial or other advantage to a Foreign Government Official with the intent to influence the official in his or her official capacity in order to obtain or retain business or an advantage in the conduct of business. The U.K. Bribery Act also prohibits bribery of domestic (U.K.) public officials. Importantly, the U.K. Bribery Act prohibits the bribery of individuals in the private sector (so-called “business-to-business” or “commercial bribery”), as well as receipt of bribes from any third party. The U.K. Bribery Act is therefore broader than the FCPA.4

 

4 

This document focuses on compliance with the FCPA, but also sets out more restrictive requirements created under the U.K. Bribery Act. All of our obligations under the U.K. Bribery Act are set out in more detail in the U.K. Supplement to the Apollo Code of Ethics. Those to whom the U.K. Supplement applies must comply with the policies and procedures in both this document and the U.K. Supplement.

 

45


Relevant anti-corruption laws prohibit corrupt payments to Foreign Government Officials through a third party. Apollo prohibits Covered Persons and persons acting on its behalf from making payments to third parties where there is likelihood that the third party will use any of the funds to make a prohibited payment to a Foreign Government Official. The Firm prohibits Facilitation Payments (defined below). Reasonable and proportionate hospitality and promotional expenditures directly related to the promotion, demonstration or explanation of Apollo’s products or services or the execution or performance of a contract, however, may be approved on a case-by-case basis, but such expenditures require review by Compliance before such a payment is made and must be reported to Compliance and recorded accurately. Apollo further prohibits Covered Persons and persons acting on its behalf from taking payments from third parties to improperly influence their conduct and performance of their duties within the scope of activities associated with Apollo.

Covered Persons must promptly report any violation or suspected violation of the Anti-Bribery Policy and Procedures to Compliance.

Apollo will investigate all reports made and will not tolerate any kind of retaliation for reports or complaints made where the person making the report had a reasonable belief in its truth. To the contrary, Apollo protects all reporters, and employees are expected to cooperate in internal investigations.

 

14.1

FCPA Overview

The FCPA applies to the worldwide conduct of Apollo, its Covered Persons, and its consultants, agents, joint venture partners and other persons acting on behalf of the Firm, regardless of citizenship or geography at any given time. The FCPA has two principal parts: (1) prohibitions against corrupt payments and bribes, and (2) affirmative requirements related to the accuracy of Apollo’s books and records and the proper functioning of its internal controls and approvals over any business activity.

 

  14.1.1

Anti-Bribery Provision

Generally, the FCPA prohibits Apollo and its Covered Persons from promising, authorizing, giving, or offering payment of money or anything of value (including gifts, meals and entertainment), or providing any other benefit (e.g., such as improperly offering an intern position to a relative of a Foreign Government Official (as defined in Section 14.1.1.1)), directly or indirectly (e.g., through third parties such as agents), to a Foreign Government Official in order to induce the recipient to misuse his or her official position or to allow Apollo to retain or obtain an improper advantage.

 

46


  14.1.1.1

Foreign Government Officials

Under the FCPA, “Foreign Government Official” is defined broadly to cover any employee of any instrumentality at any level (federal, state, or local) of a non-U.S. government, a non-U.S.

political party, or a “public international organization,” a term that includes, among other entities, the United Nations, the World Bank, and the World Health Organization. This definition covers any employees, officers, or agents of any entity in which a non-U.S. government has substantial direct or indirect ownership or control, and therefore includes employees of commercial enterprises in which there is a sufficient level of governmental ownership or control.    

Foreign Government Officials under the FCPA often encompass a broader group of people than the commonplace concept of a government official or public official under the law where the official lives. Thus, an individual may be a Foreign Government Official even if he or she does not have a government title or is not directly employed by a government agency. For example, employees of state-owned or controlled banks, airlines, hospitals, airports, phone companies and other entities subject to government ownership interests are covered under the FCPA, as are the family members of any Foreign Government Official.

Many governments operate through a state-owned or controlled entity (“SOE”), particularly in such areas as aerospace and defense manufacturing, banking and finance, healthcare and life sciences, energy and extractive industries, telecommunications, and transportation. Whether a particular entity constitutes a SOE or instrumentality under the FCPA requires a fact-specific analysis of an entity’s ownership, control, status, and function. Covered Persons are required to consult in advance with Compliance for guidance regarding an entity’s SOE status before providing anything of value to an employee or representative of such entity. Determining whether a particular person is a Foreign Government Official can be complex and may require legal advice. If you are uncertain whether any individual with whom you have business contacts meets this definition, please consult Compliance.

 

  14.1.1.2

Restrictions on Payments to Third Parties

Under the FCPA, you must never promise, authorize, give, or offer anything of value to a third party that you suspect or have reason to believe may be passed to Foreign Government Officials or other persons to improperly influence any person’s decision-making. You must not allow or ignore the risk that certain parties, such as an agent, consultant, representative or business partner (e.g., a joint venture participant), will make any such payment.

Under the FCPA, Apollo and its Covered Persons may be held liable for consciously disregarding indications (by ignoring or failing to investigate warning signs) that a third party may be making improper payments. Examples include:

 

   

The third-party requests payment to offshore bank accounts;

 

   

The size of a payment is not commensurate with services performed; or

 

   

There is a general lack of a visibility into the third-party agent’s activities.

If you suspect or have reason to suspect that a third party is using even its own funds to make such payments, you must report your suspicions to Compliance.

 

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  14.1.2

Accounting Provisions

The FCPA also prohibits the submission of false or misleading reports or financial statements (e.g., misstating the number of guests at a business dinner in an employee expense report, or attaching a fictitious receipt to support an expense report).

 

  14.1.2.1

Accurate Records

Apollo’s books, records, accounts and financial statements must be maintained in reasonable detail, must accurately reflect Apollo’s transactions, and must be maintained in accordance with Apollo’s system of internal controls.

Any Covered Person who creates or causes the creation of a false or misleading record or accounting entry, or fails to disclose payments, assets or liabilities will be subject to disciplinary action, up to and including dismissal. If you learn of any false or misleading entries, or unrecorded payments, you should report them immediately to Compliance. As noted above, Apollo protects all reporters and will not tolerate any retaliation against parties who report behavior that may be improper.

 

  14.1.2.2

Payments, Recordkeeping and Reimbursements

Covered Persons making business payments must always ensure that any such payments:

 

   

Reflect the actual value of the services provided;

 

   

Are made for a proper business reason;

 

   

Are made to legitimate service providers;

 

   

Are accurately and completely recorded; and

 

   

Meet the requirements of the laws of the U.S., U.K., and of other countries where we do business.

These fundamental requirements take on even greater significance in connection with Apollo’s international business.

 

  14.1.2.3

Facilitation Payments

Facilitation Payments are typically small, often cash payments made to obtain or accelerate a routine government action by a government official. Indeed, Foreign Government Officials sometimes request payments or other things of value to expedite or “facilitate” routine, non-discretionary government actions, such as obtaining utility services or visas, obtaining electrical service, or processing certain papers (“Facilitation Payments”).

Apollo prohibits Facilitation Payments. Facilitation Payments are unlawful under a number of applicable anti-corruption laws, including the U.K. Bribery Act, and they expose the Firm to undue risk.

 

48


  14.1.2.4

Commercial Bribery

The U.K. Bribery Act and other global anti-corruption laws that apply to Apollo and its Covered Persons prohibit so-called “commercial” bribery (i.e., bribes, kickbacks or other compensation paid to, or received by an officer, director, partner, employee or agent of a non-governmental business organization to obtain a business advantage).

Under no circumstances may Apollo or its Covered Persons, consultants, contractors or sub-contractors receive, or agree to receive, give, pay, offer or promise to pay, or authorize the giving or payment of money or anything of value to any person (i) for the purpose of (a) improperly obtaining or retaining business or securing an improper business advantage or (b) inducing or rewarding improper performance of a relevant function or activity, or (ii) when such person knows or believes that acceptance of the advantage would itself constitute the improper performance of a relevant function or activity, regardless of whether that person is a public official or private actor.

14.2 The Firm’s Anti-Bribery Procedures

 

  14.2.1

Giving and Receiving Gifts

As noted above, the FCPA and U.K. Bribery Act prohibit improperly giving, promising, authorizing, or offering the payment of anything of value to a Foreign Government Official to induce the official to misuse his or her office or secure an improper advantage to obtain or retain business. Accordingly, the FCPA’s and U.K. Bribery Act’s restrictions extend to many forms of travel and entertainment expenditures for the benefit of Foreign Government Officials, as well as non-cash gifts and other benefits, such as offers of employment, educational placement, internships, secondments, and charitable donations to entities related to Foreign Government Officials. Regulators routinely bring criminal anti-corruption cases premised on improper provision of such value, even where no cash changes hands.

As a general matter, gifts are permissible to a Foreign Government Official when they:

 

   

Meet the applicable value limits and pre-clearance requirements set forth in Section 11.6;

 

   

Do not involve cash or cash equivalent gifts (e.g., gift cards, pre-paid store cards, gambling chips);

 

   

Are permitted under both local law and the policies of the recipient’s employer;5

 

   

Are presented openly with complete transparency;

 

   

Are properly recorded in Apollo’s books and records; and

 

 

5 

Many U.S. and non-U.S. pension funds employees are under strict limits (sometimes as low as $50 or $100 per year) regarding permissible gifts, meals, entertainment, and hospitality that they may accept from a business counterparty like Apollo.

 

49


   

Are provided as a token of esteem, courtesy or in return for hospitality and comports with local custom.

 

  14.2.2

Providing and Receiving Meals and Entertainment

Gifts differ from entertainment, which is characterized by both the provider and recipient attending an event at which there are business opportunities or business discussions. Reasonable and proportionate incidental business hospitality of a small value which seeks to improve the Firm’s image, to better present the Firm’s services, or to establish a cordial business relationship may be permitted, provided that the purpose of the hospitality is not to induce or reward improper action by any person, or to influence a Foreign Government Official in order to obtain such business.     Whether the entertainment is provided for bona fide reasons and the reasonableness and proportionality of the entertainment will be determined by the surrounding circumstances. Adult entertainment is strictly prohibited.

As a general matter, business meals and entertainment with a Foreign Government Official are permissible when they:

 

   

Meet the applicable value limits and pre-clearance requirements set forth in Section 11.7;

 

   

Are related to the promotion of Apollo’s services or to the execution or performance of its contract with a customer;

 

   

Are permitted under local law and the policies of the recipient’s employer;

 

   

Are customary under local business practices;

 

   

Are reasonable under the circumstances and not lavish or extravagant; and

 

   

Avoid the appearance of impropriety.

 

  14.2.3

Providing Travel

Approval by Compliance is required prior to any payment of a counterparty’s travel, and it will only be approved if it is bona fide, reasonable, and directly related to (a) promotion, demonstration or explanation of products or services, or (b) execution or performance of a contract with a foreign government.

Restrictions on Reimbursements and Use of Cash

Apollo will only pay reimbursements for goods, services, or other expenditures that are fully and properly supported by third-party invoices or receipts in accordance with Apollo’s Travel & Expense Reimbursement Policy and Procedures. With the exception of normal and customary petty cash requirements, cash transactions in connection with Apollo’s business should be avoided.

 

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  14.2.4

Contracts with Third Party Agents and Consultants (“Covered Intermediaries”)

You, as an individual, and Apollo can be held criminally liable for improper payments by third parties acting on behalf of Apollo. For this reason, Apollo requires that you follow certain steps, detailed below, when obtaining the services of a certain category of third parties (referred to below as “Covered Intermediaries”) in connection with Apollo’s business. These steps include due diligence procedures to be performed before engaging Covered Intermediaries and certain contractual provisions that must be included in the relevant agreements.

14.2.4.1 Covered Intermediaries

“Covered Intermediaries” include all third parties engaged by Apollo:

 

   

To assist in obtaining, conducting or retaining business outside of the U.S. with a government entity or state-owned entity;

 

   

To assist in obtaining permits, licenses or other documentation or certification needed to conduct business outside of the U.S.; or

 

   

To represent Apollo in dealing or having contact with any Foreign Government Officials or government or state-owned entities.

Examples of the types of third parties subject to this policy are:

 

   

Apollo’s “authorized agents” such as placement agents; and

 

   

Certain consultants not typically engaged by Apollo in high-risk countries who deal with discretionary matters relating to Apollo’s business with Foreign Government Officials. A high-risk country is a country that has a score of 60 or less on Transparency International’s Corruption Perceptions Index.6

For countries not listed on the Transparency International Corruption Perceptions Index, please contact Compliance for guidance.

Determining whether a third party falls within the definition of Covered Intermediary can be difficult and may require legal advice. However, any “authorized agent” (i.e., parties contractually designated as agents authorized to act on Apollo’s behalf) and any third party acting on Apollo’s behalf in dealing with any unit of government (including state-owned enterprises) will fall within the definition. If you are uncertain whether any third party with whom you have business contacts meets this definition, please consult Compliance.

14.2.4.2 Due Diligence Required to Engage a Covered Intermediary

Before entering into any contract with a Covered Intermediary, you must first conduct a reasonable due diligence investigation into the background, reputation, and business capabilities of the intermediary. Consult with Compliance to determine an appropriate risk-based program.

 

 

6 

Access the index here: https://www.transparency.org/en/cpi.

 

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A copy of the due diligence file shall be maintained by Compliance for each Covered Intermediary reviewed, whether or not retained.

14.2.4.3 Provisions Required to be Included in Contracts with Covered Intermediaries

Every Covered Intermediary must enter into a written agreement with Apollo, which must contain representations relating to the FCPA as approved by Compliance. Where applicable, annual certifications should also be obtained from Covered Intermediaries by the appropriate business unit representative and submitted to Compliance.

Contracts that provide for payments to parties other than the contracting Covered Intermediary, or payments to countries other than the home country of the contracting party, are generally not acceptable.

Compensation to Covered Intermediaries must be commercially reasonable and commensurate with the tasks that the contractor undertakes. Payments to Covered Intermediaries must be made in accordance with the terms of their contracts. You must not honor requests to vary the terms of contracts by:

 

   

Increasing or decreasing agreed amounts on any invoice if such a request is contrary to Apollo’s standards, procedures or applicable laws; or

 

   

Submitting multiple invoices if you suspect such invoices may be used in a manner contrary to Apollo standards, procedures or applicable laws or otherwise used improperly.

 

  14.2.5

Mergers, Acquisitions and Joint Ventures

From time to time, Apollo will engage in business transactions such as mergers, acquisitions and/or joint ventures. As part of due diligence procedures for Anti-Corruption, and prior to the execution of these transactions, the Deal Team must ensure that outside counsel representing the Firm on such transactions conducts and documents an appropriate FCPA and U.K. Bribery Act review as described in the AGM Deal Manual to ensure that the joint venture business partner maintains a system of internal controls, accurate books and records and does not engage in corrupt payments. Documentation shall be forwarded and maintained by the Legal Department or by the law firm conducting the review. For additional information regarding Mergers, Acquisitions, and/or joint ventures, please contact the Legal Department and refer to the AGM Deal Manual.

 

  14.2.6

Charitable Contributions

From time to time, Apollo will elect to make charitable contributions. Any known related party interest in the charity involving a Foreign Government Official, or any charitable donations that are requested by a Foreign Government Official, must be reviewed in advance by Compliance prior to any payment being promised, authorized, offered, or made.

 

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  14.2.7

Political Contributions

For information on Apollo’s policies and procedures related to political contributions, please see Section 13 above. Employees should be mindful that political contributions that comply with Section 13 above, may still violate the FCPA and other applicable anti-bribery laws if made for improper purposes.

 

15.

WHISTLEBLOWER POLICY

See Appendix 15 for the Firm’s Whistleblower Policy.

 

16.

BUSINESS CONTINUITY PLAN

Apollo has created a business continuity plan (the “BCP”) to provide guidance to all Covered Persons in the event of an emergency. The purpose of the BCP is to ensure that Apollo can continue to conduct its business in the event of an emergency that results in a business disruption. A copy of the BCP is distributed only to those with a role in implementing the BCP. Covered Persons should call the following emergency hotline number if a business interruption has occurred:

Hotline: +1 (855) 336-1510

 

17.

NOTE FOR REGISTERED REPRESENTATIVES AFFLIATED WITH APOLLO GLOBAL SECURITIES, LLC

Registered Representatives and Associated Persons of Apollo Global Securities, LLC (“AGS”), are subject to additional obligations in conjunction with those described in this Code. Registered Representatives should review this document in conjunction with the AGS Compliance Manual and Written Supervisory Procedures.

 

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LOGO

APOLLO GLOBAL MANAGEMENT, INC.

CODE OF ETHICS

February 2021

INDEX OF APPENDICES

 

Description of Form / Document

   Appendix  

Indirect Pecuniary Interest

     8.2  

Employee Trading Policy for Apollo Publicly Traded Securities:

     8.3.4  

Apollo Global Management, Inc.

  

Apollo Investment Corporation

  

Apollo Commercial Real Estate Finance, Inc.

  

Apollo Senior Floating Rate Fund Inc. & Apollo Tactical Income Fund Inc.

  

Apollo Strategic Growth Capital

  

Apollo Strategic Growth Capital II

  

Sample Authorization Letter for Duplicate Account Statements

     8.4.1  

Whistleblower Policy

     15  


LOGO

APPENDIX 8.2

INDIRECT PECUNIARY INTEREST

The following may result in you having an “indirect pecuniary interest” in an investment:

 

   

A general partner’s proportionate interest in the portfolio securities held by a general or limited partnership;

 

   

Subject to certain exceptions, a performance-related fee, other than an asset-based fee, received by any broker, dealer, bank, insurance company, investment company, investment adviser, investment manager, trustee or person or entity performing a similar function;

 

   

A person’s right to dividends that is separate or separable from the underlying securities;

 

   

A person’s interest in securities held by a trust; and

 

   

A person’s right to acquire equity securities through the exercise or conversion of any derivative security, whether or not presently exercisable. “Derivative security” means any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege at a price related to an equity security or similar securities with a value derived from the value of an equity security.

A shareholder of a corporation or similar entity is not deemed to have a pecuniary interest in the portfolio securities held by a corporation or similar entity in which the person owns securities, if the shareholder is not a controlling shareholder of the entity and does not have or share investment control over the entity’s portfolio.


LOGO

APPENDIX 8.3.4

EMPLOYEE TRADING POLICIES FOR APOLLO OR ATHENES PUBLICLY TRADED SECURITIES

See attached trading policies for the following companies:

 

   

Apollo Global Management, Inc.

 

   

Apollo Investment Corporation

 

   

Apollo Commercial Real Estate Finance, Inc.

 

   

Apollo Senior Floating Rate Fund Inc. & Apollo Tactical Income Fund Inc.

 

   

Athene Holding Ltd. Securities

 

   

Apollo Strategic Growth Capital

 

   

Apollo Strategic Growth Capital II


APOLLO GLOBAL MANAGEMENT, INC.

INSIDER TRADING POLICY

Apollo Global Management, Inc. (the “Company”) has adopted this Insider Trading Policy (this “Policy”), which prohibits Covered Persons (as defined herein) from trading in the Company’s securities while in possession of material non-public information regarding the Company and outlines the procedures that all Covered Persons must follow in order to transact in Company securities. This Policy and the procedures described herein arise from the Company’s responsibility as a publicly traded company and the federal securities laws that prohibit insider trading. Failure to comply with this Policy and the required procedures could result in a serious violation of the securities laws by you and/or the Company and give rise to both civil and criminal penalties. It is important that you review this Policy carefully.

IT IS THE COMPANY’S POLICY THAT IF ANY COVERED PERSON HAS ANY MATERIAL NON-PUBLIC INFORMATION, HE OR SHE MUST REFRAIN FROM TRADING IN THE COMPANY’S SECURITIES OR DISCLOSING THE INFORMATION TO SOMEONE ELSE UNTIL THE INFORMATION HAS BEEN PROPERLY DISCLOSED BY THE COMPANY TO THE PUBLIC AND THE OTHER REQUIREMENTS SET FORTH HEREIN ARE SATISFIED.

 

1.

Definition of Insider; Covered Persons; Reason for the Policy

In general, an “insider” is any person who possesses, or has access to, Material Information (as defined below) concerning the Company that has not been fully disclosed to the public. Insiders may be subject to criminal prosecution and/or civil liability for engaging in a transaction (purchase or sale) in the Company securities when they know of Material Information concerning the Company that has not been fully disclosed to the public. This policy applies to: (1) members of the Board of Directors of the Company (the “Board of Directors”) and officers of the Company, (2) employees, partners, members, owners or principals of the Company and its subsidiaries, (3) certain consultants, representatives or independent contractors of the Company who have knowledge of Material Information regarding the Company that has not been fully disclosed to the public, (4) with respect to a person covered by the foregoing subsections (1) through (3), any member of such person’s immediate family who resides with such person and to whose support such person significantly contributes, any other person to whose support such person significantly contributes and any entity controlled by such person and (5) any other person as may be designated from time to time by the Chief Compliance Officer (as defined herein) (persons covered by any of the foregoing subsections (1) through (5), collectively, referred to as “Covered Persons”).

Insider trading prohibitions are not limited to actual trading by an insider, but they also make it illegal for an insider or certain other persons to advise others to trade on the basis of Material Information that has not been fully disclosed to the public. Liability in such cases can extend both to the “tippee” (the person to whom the insider disclosed inside information) and to the “tipper” (the insider disclosing such information). It should be noted that while an insider’s parents or siblings may not be considered a Covered Person or insider (unless that person lives in the same household), such person may be deemed a “tippee” for securities laws purposes.


Potential penalties for insider trading violations include: (1) imprisonment for up to 20 years, (2) criminal fines of up to $5 million, and (3) civil fines of up to three times the profit gained or loss avoided. If the Company fails to take appropriate steps to prevent illegal insider trading, the Company may have “controlling person” liability for a trading violation, with civil penalties of up to the greater of $1 million and three times the profit gained or loss avoided, as well as criminal penalties of up to $25 million. The civil penalties can extend personal liability to the Company’s directors, officers and other supervisory personnel if they fail to take appropriate steps to prevent insider trading. Finally, in addition to the potential criminal and civil liabilities mentioned above, in certain circumstances the Company may be able to recover all profits made by an insider and collect other damages.

Without regard to the penalties that may be imposed by others, willful violation of this Policy constitutes grounds for immediate removal from the Board of Directors to the extent permitted by applicable law, termination of employment from the Company or, with respect to the Company’s or its subsidiaries’ partners, members, stockholders, owners, principals, consultants, representatives or independent contractors, termination of their relationships with the Company.

Finally, insider trading can have a negative effect on the public and the securities markets’ confidence in the Company and its securities, which could have a significant adverse impact on the Company and its stockholders.

 

2.

Definition of Full Disclosure

Full disclosure to the public generally means a press release followed by publication in the mainstream print media, a press release issued by a national wire service or a public filing with the Securities and Exchange Commission (the “SEC”) such as a disclosure made in a Current Report on Form 8-K. On the other hand, a speech to an audience, a TV or radio appearance, or an article in an obscure magazine does not qualify as full disclosure. Full disclosure means that the securities markets have had the opportunity to digest the news.

 

3.

Definition of Material Information

There is no bright-line test for determining what constitutes “Material Information.” A fact may be deemed to be Material Information if there is a substantial likelihood that a reasonable investor would consider it important in making a decision to buy, sell or hold a security or where the fact is likely to have an effect on the market price of the security. While it may be difficult under this standard to determine whether certain information is Material Information, there are various categories of information that would almost always be regarded as Material Information, such as:

 

   

Earnings information;

 

   

Changes in forecasts or guidance;

 

   

Mergers, acquisitions, tender offers, joint ventures or changes in assets;

 

   

Changes in control or in management;

 

   

Significant developments involving corporate relationships;

 

   

Changes in the outside auditor or notification by the auditor that the issuer may no longer rely on an auditor’s report;

 

2


   

Events regarding the issuer’s securities, for example, defaults on senior securities, calls of securities for redemption, repurchase plans, stock splits or changes in dividends, changes to the rights of security holders and public or private sales of debt or equity securities;

 

   

Significant borrowings or write-offs;

 

   

Bankruptcies or receiverships; and

 

   

Lawsuits (or threats of lawsuits) involving substantial potential liability and the settlement of such lawsuits.

The contents of any earnings update teleconference or earnings-related press release shall, for purposes of the Policy, always constitute Material Information.

If any person has questions as to the materiality of information, he or she should contact the Company’s Chief Compliance Officer or his or her designee (the “Chief Compliance Officer”) for clarification.

 

4.

Specific Requirements

A. Except as may otherwise be provided herein, before any Covered Person executes a trade in the Company securities, including the placing of limit orders, such Covered Person must submit a request via PTCC (https://secure.complysci.com), which will then be subject to approval by the Chief Compliance Officer or his or her designee, as appropriate. In connection with a request to trade submitted via PTCC, a Covered Person must make a representation that they are not in possession of non-public Material Information and, in the case of proposed sales, that the securities have been held for a minimum of 90 days. Approved trades will be authorized for a limited window period of up to 3 business days and will be subject to a minimum holding period of 90 days. If the Covered Person has not completed the trade within 3 business days of approval of the trade, then he or she must re-submit the request via PTCC to receive a new approval from the Chief Compliance Officer or his or her designee and re-verify the nonexistence of any restrictions on such trade. This restriction does not apply to the exercise of options issued under the Company’s 2007 Omnibus Equity Incentive Plan (the “Equity Plan”).

B. Except as may otherwise be provided herein, and subject to approval by the Chief Compliance Officer, Covered Persons may not purchase or sell securities of the Company during the period of time that commences on the 8th day of the month in which any fiscal quarter of the Company ends and that ends 24 hours after the release of the Company’s quarterly or annual financial information in a press release reporting the results of such fiscal quarter (“Blackout Period”). For any period other than a Blackout Period, purchases and sales of the Company’s securities may be made only after receiving the approval as outlined in paragraph 4A above.

C. Covered Persons who are directors, officers or 10% beneficial owners of the Company are subject to reporting of transactions under Section 16(a) and the restrictions set forth in Section 16(b) of the Securities Exchange Act of 1934 with respect to round-trip transactions in securities of the Company. Section 16(b) generally prohibits a round-trip transaction in securities of the Company in any period of less than 6 months by such individuals. Any profits made in a round-trip transaction by such individuals are recoverable by the Company, even if the round-trip transaction was done inadvertently.

 

3


D. Covered Persons may not engage in transactions of a speculative nature involving the Company securities at any time, including, but not limited to, the purchase or sale of put options. All Covered Persons are prohibited from short-selling the Company securities or engaging in transactions involving other Company-based Derivative Securities or that hedge or offset, or are designed to hedge or offset, any decrease in the market value of the Company securities. “Derivative Securities” are options, warrants, restricted stock units, stock appreciation rights or similar rights whose value is derived from the value of an equity security, such as the Company’s common stock. This prohibition includes, but is not limited to, trading in Company-based put option contracts, transacting in straddles, and the like. However, the receipt of grants of Derivative Securities issued under the Equity Plan or the exercise of options granted under the Equity Plan is not prohibited by this Policy.

E. Covered Persons who are directors, officers or 10% beneficial owners of the Company that are subject to reporting of transactions under Section 16(a) and the restrictions set forth in Section 16(b) of the Securities Exchange Act of 1934 are prohibited from pledging the Company securities as collateral for a loan or holding such securities in a margin account. Covered Persons not restricted by the foregoing may pledge the Company securities as collateral for a loan or hold such securities in a margin account, provided they receive prior written approval from the Company’s compliance department to engage in such transactions.

F. The Chief Compliance Officer has the authority to impose restrictions on trading in the Company securities by appropriate individuals at any time. In such event, the affected individuals will be notified, either personally or by email or voicemail, and informed of the restrictions.

G. Any Covered Person who has placed a limit order or open instruction to buy or sell the Company securities shall bear responsibility for canceling such instructions immediately in the event restrictions are imposed on such person’s ability to trade.

H. All Covered Persons should be particularly careful to avoid the appearance of engaging in transactions in the Company’s securities on the basis of non-public Material Information, which is as important as avoiding a transaction actually based on such information.

 

5.

Very Few Exceptions

There are almost no exceptions to the prohibition against insider trading. For example, it does not matter that the transactions in question may have been planned or committed to before the Covered Person came into possession of the non-public Material Information, regardless of the economic loss that the person may believe he or she might suffer as a consequence of not trading. It is also irrelevant that publicly disclosed information about the Company might, even aside from the non-public Material Information, provide a substantial basis for engaging in the transaction. The existence of a personal financial emergency also does not excuse you from compliance with this Policy. You simply cannot trade in the Company securities while in possession of non-public Material Information about the Company.

There are no limits on the size of a transaction that will trigger insider trading liability; relatively small trades have in the past occasioned SEC investigations and lawsuits.

 

4


The only exceptions to this Policy are as follows:

A. Exercise of options issued under the Equity Plan. Note that this exception does not include a subsequent sale of the shares acquired pursuant to the exercise of options issued under the Equity Plan.

B. Sales made pursuant to a Qualified Selling Plan. For purposes of this exception, a “Qualified Selling Plan” is a written plan adopted by a Covered Person for selling the Company securities which (i) is approved in advance by the Chief Compliance Officer or his or her designee, (ii) conforms to all requirements of Section § 240.10b5-1(c)(1)(i) of the Code of Federal Regulations as then in effect and (iii) conforms to any other requirements deemed appropriate by the Company in its sole discretion.

C. Transactions for Estate Planning Purposes. Transfers or bona fide gifts of the Company securities by a Covered Person to a trust formed for estate-planning purposes or a family limited partnership, charitable foundation or similar entity shall be exempt from this Policy, if (i) the transfer is approved in advance by the Chief Compliance Officer, (ii) the investment and voting decisions of such transferee organization are controlled by the Covered Person, such that the transfer would not involve a change in beneficial ownership, and (iii) the Covered Person has confirmed in writing to the Chief Compliance Officer that he/she will not permit the transferee organization to sell or otherwise transfer the Company securities during a Blackout Period.

D. Exceptions for Extraordinary Circumstances. Note that transactions under this exception require prior written approval from the Chief Compliance Officer. For purposes of this exception, the determination of whether an extraordinary circumstance exists shall be made at the discretion of the Chief Compliance Officer.

 

6.

Post-Termination Transactions

This Policy continues to apply to your transactions in Company securities even after you have terminated employment with or the performance of services to the Company. If you are in possession of non-public Material Information when your employment or service relationship terminates, you may not trade in Company securities until that information has been fully disclosed to the public or is no longer Material Information.

If you have any questions about this Policy, please contact the Chief Compliance Officer.

 

5


POLICY TO APOLLO EMPLOYEES, PARTNERS AND RELATED PARTIES FOR TRADING IN AINV STOCK

General Statement

All employees, partners, directors and officers (“Employees”) of Apollo Investment Management, L.P. (“AIM”), Apollo Investment Corporation (the “Company”), Apollo Management L.P. (together with its affiliated investment managers, “Apollo Management” and together with AIM and the Company, “Apollo”), other than directors of the Company that are “disinterested directors” of the Company as defined under Rule 0-1 under the Investment Company Act of 1940,1 are subject to this Employee Trading Policy for AINV Stock (this “Policy”). Employees of Apollo may purchase or sell shares of the Company only in accordance with this Policy. Any Employee who purchases or sells shares of the Company other than in accordance with this Policy will be subject to discipline, up to and including termination. All Employees remain subject to any applicable securities reporting requirements under the Code of Ethics of the applicable Apollo entity. In addition to any requirements set out in this Policy, any transaction in shares of the Company by an Employee is subject to applicable law and all applicable policies and procedures adopted by Apollo with respect to insider trading and the use of material, nonpublic information.

Pre-Clearance

Before an Employee may purchase or sell shares of the Company, they must submit a request via the personal trading system, which will then be approved by the Chief Compliance Officer or Chief Legal Officer of the Company or his or her designee, as appropriate. Any approved purchase or sale must be made within 72 hours of such approval.

Black-out Period

Employees may not purchase or sell shares of the Company during the period of time that commences 15 calendar days prior to any fiscal quarter end of the Company and that ends 24 hours after the release of the Company’s quarterly or annual financial information in a press release reporting the results of such fiscal quarter (the “Black-out Period”). For any other period, purchases and sales of shares may be made only after receiving pre-clearance as outlined above. Note that the Chief Compliance Officer or Chief Legal Officer of the Company may designate other Black-out Periods as he or she deems appropriate.

Notwithstanding the foregoing, Employees may purchase or sell shares issued by the Company during a Black-out Period pursuant to an arrangement meeting the conditions specified in clause (c)(1) of Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, which arrangement has been approved in writing by the Chief Compliance Officer.

 

 

1 

Purchases and sales of shares of the Company by Independent Directors of the Company are addressed under the Company’s Stock Trading Policy for Independent Directors.

 

1


Short Sales or Transactions in Company-based Derivative Securities

Employees may not engage in transactions of a speculative nature involving the Company shares at any time, including, but not limited to, the purchase or sale of put options. All Employees are prohibited from short-selling the Company shares or engaging in transactions involving other Company-based Derivative Securities. “Derivative Securities” are options, warrants, restricted stock units, stock appreciation rights or similar rights whose value is derived from the value of an equity security, such as the Company’s common stock. This prohibition includes, but is not limited to, trading in Company-based put option contracts, transacting in straddles, and the like. The receipt of grants of Derivative Securities issued under, or the exercise of options granted under, an equity incentive plan adopted by the Company is not prohibited by this Policy.

Short-Term Trading and Reporting Requirements

Notwithstanding anything to the contrary set out above, absent extraordinary circumstances, Employees will not be permitted to make a round-trip transaction in shares of the Company (in other words, a purchase followed by a sale, or sale followed by a purchase) until the release of the financial information for the next quarterly or annual report and in accordance with this Policy.

In addition, Employees who are directors, officers or ten percent beneficial owners (each an “Insider”) of the Company are subject to the reporting of transactions under Section 16(a) and the restrictions set out in Section 16(b) of the Securities Exchange Act of 1934 with respect to round-trip transactions in shares of the Company. Section 16(b) generally prohibits a round-trip transaction in shares of the Company in any period of less than six months by any Insider. Any profits made in a round-trip transaction by any Insider of the Company are recoverable by the Company, even if the round-trip transaction was done inadvertently.

 

2


INSIDER TRADING POLICY

FOR TRADING IN ARI SECURITIES

General Statement

The following persons are subject to this Insider Trading Policy (this “Policy”) for the trading in securities of Apollo Commercial Real Estate Finance, Inc. (the “Company”):

 

   

Any director of the Company who is an “independent director” of the Company as defined under Section 303A.02 of the New York Stock Exchange Listed Company Manual (each, an “Independent Director”) and any family member residing within the same household as any such Independent Director, or any entity controlled by any such Independent Director (each such person, together with Independent Directors, an “Independent Director Covered Person”); and

 

   

All employees, partners, directors and officers (each such person an “Apollo Employee”) of Apollo Global Management, Inc. and its subsidiaries (“Apollo Management”) and any family member residing within the same household as any such Apollo Employee, or any entity controlled by any such Apollo Employee (each such person, together with Apollo Employees, an “Apollo Covered Person”).

Independent Director Covered Persons and Apollo Covered Persons are together herein referred to as “Covered Persons.”

Covered Persons may purchase or sell securities of the Company only in accordance with this Policy. Any Independent Director or Apollo Employee who purchases or sells securities of the Company other than in accordance with this Policy will be subject to discipline, up to and including termination. All Independent Directors and Apollo Employees remain subject to any applicable securities reporting requirements under applicable securities laws, the Code of Ethics of the Company and/or the applicable Apollo Management entity. In addition to any requirements set out in this Policy, any transaction in securities of the Company by an Apollo Employee is subject to all applicable policies and procedures adopted by Apollo Management with respect to insider trading and the use of material, nonpublic information. Exceptions to this policy must be evidenced by prior written approval of the Chief Compliance Officer or Chief Legal Officer of Apollo Global Management, Inc. and its subsidiaries, or his or her designee, as appropriate (the “Chief Compliance Officer”), which approval will only be given under extraordinary circumstances.

Pre-Clearance

Independent Directors

Before an Independent Director Covered Person may purchase or sell securities of the Company, a written request must be made for approval to the Chief Compliance Officer or his or her designee. Independent Directors must provide the information required by the Independent Director Trading Request Form for Trading in ARI Securities, which is included with this Policy, and make the certifications contained therein. The completed form may be submitted via e-mail. Approved purchases and sales are required to be made within 72 hours of such approval unless otherwise designated in the approval.

Apollo Employees

Before an Apollo Covered Person may purchase or sell securities of the Company, an Apollo Employee must submit a request via the personal trading system, which will then be approved by the Chief Compliance Officer or his or her designee. Any approved purchase or sale must be made within 72 hours of such approval.    

 

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Black-out Period

Except as may otherwise be provided herein, Covered Persons may not purchase or sell securities of the Company during the period of time that commences on the 8th day of the month in which any fiscal quarter end of the Company and that ends 24 hours after the release of the Company’s quarterly or annual financial information in a press release reporting the results of such fiscal quarter (the “Black-out Period”). For any other period, purchases and sales of the securities may be made only after receiving pre-clearance as outlined above.

Notwithstanding the foregoing, Covered Persons may purchase or sell a security issued by the Company during a Black-out Period pursuant to an arrangement meeting the conditions specified in clause (c)(1) of Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, which arrangement has been approved in writing by the Chief Compliance Officer.

Short Sales or Transactions in Company-based Derivative Securities

Covered Persons may not engage in transactions of a speculative nature involving the Company securities at any time, including, but not limited to, the purchase or sale of put options. All Covered Persons are prohibited from short-selling the Company securities or engaging in transactions involving other Company-based Derivative Securities. “Derivative Securities” are options, warrants, restricted stock units, stock appreciation rights or similar rights whose value is derived from the value of an equity security, such as the Company’s common stock. This prohibition includes, but is not limited to, trading in Company-based put option contracts, transacting in straddles, and the like. The receipt of grants of Derivative Securities issued under, or the exercise of options granted under, an equity incentive plan adopted by the Company is not prohibited by this Policy.

Short-Term Trading and Reporting Requirements

Notwithstanding anything to the contrary set out above, absent extraordinary circumstances, Covered Persons will not be permitted to make a round-trip transaction in shares of the Company (in other words, a purchase followed by a sale, or sale followed by a purchase) until the release of the financial information for the next quarterly or annual report and in accordance with this Policy.

In addition, Independent Directors and Apollo Employees who are directors, officers or ten percent beneficial owners (each an “Insider”) of the Company are subject to the reporting of transactions under Section 16(a) and the restrictions set out in Section 16(b) of the Securities Exchange Act of 1934 with respect to round-trip transactions in shares of the Company. Section 16(b) generally prohibits a round-trip transaction in shares of the Company in any period of less than six months by any Insider. Any profits made in a round-trip transaction by any Insider of the Company are recoverable by the Company, even if the round-trip transaction was done inadvertently.

Compliance

Independent Directors and Apollo Employees are responsible for assuring that their respective Covered Persons comply with this Policy and all applicable securities laws, rules and regulations.

 

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INDEPENDENT DIRECTOR TRADING REQUEST FORM

FOR TRADING IN ARI SECURITIES

In accordance with the Insider Trading Policy for Trading in ARI Securities (the “Policy”), I request to enter into the following transaction in securities of Apollo Commercial Real Estate Finance, Inc. (the “Company”):

 

Proposed Date of

Transaction

  

Nature of Transaction

(Purchase/Sale)

  

Number of Shares

(or other Securities)

 

  

 

  

 

In making the above request, I certify on behalf of myself and, if applicable, on behalf of any family member residing within the same household as me, or any entity controlled by me (all such persons, “Covered Persons”), that in purchasing or selling securities of the Company as permitted under the Policy, at the time of such purchase or sale, neither I nor any Covered Person, if applicable, is in possession of material, non-public information about the Company, and that the transaction is in compliance with applicable law and all policies and procedures adopted by the Company with respect to insider trading and the use of material, non-public information.

 

Submitted by:

   

Signature:

 

 

Date:

 

 

 

Approved by:

 

 

Signature:

 

 

Date:

 

 

 

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EMPLOYEE TRADING POLICY FOR AFT AND AIF STOCK

General Statement

All employees, members, directors and officers (“Employees”) of Apollo Senior Floating Rate Fund Inc. and Apollo Tactical Income Fund Inc. (together, the “Funds”) and Apollo Credit Management, LLC (the “Adviser”) (together with its affiliated investment managers, “Apollo Management” and together with the Funds, “Apollo”), other than directors of the Funds that are not “interested persons,” as defined in the Investment Company Act of 1940, of the Funds (the “Independent Directors”) are subject to this Employee Trading Policy for AFT and AIF Stock (this “Policy”). Employees of Apollo may purchase or sell shares of the Funds only in accordance with this Policy. Any Employee who purchases or sells shares of the Funds other than in accordance with this Policy will be subject to discipline, up to and including termination. All Employees remain subject to any applicable securities reporting requirements under the Code of Ethics of the applicable Apollo entity. In addition to any requirements set out in this Policy, any transaction in shares of the Funds by an Employee is subject to applicable law and all applicable policies and procedures adopted by Apollo with respect to insider trading and the use of material, nonpublic information.

Pre-Clearance

Before an Employee may purchase or sell shares of the Funds, he or she must submit his or her request via the personal trading system, which will then be approved by the Chief Compliance Officer or Chief Legal Officer of the Funds or his or her designee, as appropriate. Any approved purchase or sale must be made within 72 hours of such approval.

Trading Blackout Periods

Employees may not purchase or sell shares of the Funds during the following periods:

 

   

During the period seven (7) days prior to, and 24 hours following, the public release of the Funds’ semi-annual or annual financial reports,

 

   

During the period 48 hours prior to, and 48 hours following a public release of information regarding the timing or amount of Funds’ dividends or distributions;

 

   

During any period, the commencement of which will be determined by the Chief Compliance Officer (in consultation with the Chief Legal Officer), over the course of which the Board of Directors will be asked to approve a material change to the investment operations, financial condition or management of the Funds,1 which period shall end (i) 48 hours following the public release of such information or (ii) immediately upon the Board’s determination not to take such action (if no public announcement shall be made);

 

1 

Examples of such actions may include, without limitation, changes to the Funds’ investment objective, principal investment strategies, dividend declaration policy, investment manager, principal portfolio managers, charter, capitalization or other matters that, in the reasonable view of the Chief Compliance Officer, are likely to be considered material to a Funds investor.

 

1


   

Any other period the Chief Compliance Officer or Chief Legal Officer of the Funds shall consider appropriate.

Short-Term Trading and Reporting Requirements

Notwithstanding anything to the contrary set out above, Employees will not be permitted to make a round-trip transaction in shares of the Funds (in other words, a purchase followed by a sale, or sale followed by a purchase) during any 90-day period.

In addition, every person who is directly or indirectly the beneficial owner of more than 10% of any class of outstanding securities (other than short-term paper) of the Funds or who is an officer, director, member of an advisory board, investment adviser, or affiliated person of an investment adviser (each an “Insider”) of the Funds are subject to the reporting of transactions under Section 16(a) and the restrictions set out in Section 16(b) of the Securities Exchange Act of 1934 with respect to round-trip transactions in shares of the Funds. Section 16(b) generally prohibits a round-trip transaction in shares of the Funds in any period of less than six months by any Insider. Any profits made in a round-trip transaction by any Insider of the Funds are recoverable by the Funds, even if the round-trip transaction was done inadvertently.

 

2


APOLLO GLOBAL MANAGEMENT, INC.

INSIDER TRADING POLICY

FOR TRADING IN ATHENE HOLDING LTD. SECURITIES

Due to Apollo Global Management, Inc.’s (the “Apollo”) relationship with Athene Holding Ltd. (“Company”), Apollo has adopted this Insider Trading Policy (this “Policy”), which prohibits Covered Persons (as defined herein) from trading in the Company’s securities (“Company Securities”) while in possession of material non-public information regarding the Company and outlines the procedures that all Covered Persons must follow in order to transact in the Company’s Securities. This Policy and the procedures described herein arise from federal securities laws that prohibit insider trading. Failure to comply with this Policy and the required procedures could result in a serious violation of the securities laws by you and/or Apollo and give rise to both civil and criminal penalties. It is important that you review this Policy carefully.

IT IS APOLLO’S POLICY THAT IF ANY COVERED PERSON HAS ANY MATERIAL NON-PUBLIC INFORMATION WITH REGARD TO THE COMPANY, HE OR SHE MUST REFRAIN FROM TRADING IN THE COMPANY’S SECURITIES OR DISCLOSING THE INFORMATION TO SOMEONE ELSE UNTIL THE INFORMATION HAS PROPERLY DISCLOSED BY THE COMPANY TO THE PUBLIC AND OTHER REQUIREMENTS SET FORTH HEREIN ARE SATISFIED.

 

1.

Definition of Insider; Covered Persons; Reason for the Policy

In general, an “insider” is any person who possesses, or has access to, Material Information (as defined below) concerning the Company that has not been fully disclosed to the public. Insiders may be subject to criminal prosecution and/or civil liability for engaging in a transaction (purchase or sale) in the Company’s Securities when they know of Material Information concerning the Company that has not been fully disclosed to the public.

This policy applies to: (1) employees, partners, members, owners, principals, directors or officers of Apollo and its subsidiaries (other than independent directors on Apollo’s board of directors), (2) certain consultants, representatives or independent contractors of Apollo who have knowledge of Material Information regarding the Company that has not been fully disclosed to the public, (3) with respect to a person covered by the foregoing subsections (1) and (2), any member of such person’s immediate family who resides with such person and to whose support such person significantly contributes, any other person to whose support such person significantly contributes and any entity controlled by such person and (4) any other person as may be designated from time to time by the Chief Compliance Officer (as defined herein) (persons covered by any of the foregoing subsections (1) through (4), collectively, referred to as “Covered Persons”).

Insider trading prohibitions are not limited to actual trading by an insider, but they also make it illegal for an insider or certain other persons to advise others to trade on the basis of Material Information that has not been fully disclosed to the public. Liability in such cases can extend both to the “tippee” (the person to whom the insider disclosed inside information) and to the “tipper” (the insider disclosing such information). It should be noted that while an insider’s parents or siblings may not be considered a Covered Person or insider (unless that person lives in the same household), such person may be deemed a “tippee” for securities laws purposes.


Potential penalties for insider trading violations include: (1) imprisonment for up to 20 years, (2) criminal fines of up to $5 million, and (3) civil fines of up to three times the profit gained or loss avoided. If Apollo fails to take appropriate steps to prevent illegal insider trading, Apollo may have “controlling person” liability for a trading violation, with civil penalties of up to the greater of $1 million and three times the profit gained or loss avoided, as well as criminal penalties of up to $25 million. The civil penalties can extend personal liability to the Apollo’s directors, officers and other supervisory personnel if they fail to take appropriate steps to prevent insider trading. Finally, in addition to the potential criminal and civil liabilities mentioned above, in certain circumstances the Company may be able to recover all profits made by an insider and collect other damages.

Without regard to the penalties that may be imposed by others, willful violation of this Policy constitutes grounds for immediate removal as an officer or director, termination of employment from Apollo or, with respect to Apollo’s or its subsidiaries’ partners, members, owners, principals, directors, officers, consultants, representatives or independent contractors, termination of their relationships with Apollo.

Finally, insider trading can have a negative effect on the public and the securities markets’ confidence in Apollo, its securities, the Company and its securities, which could have a significant adverse impact on Apollo and its’ shareholders as well as the Company and its’ shareholders.

 

2.

Definition of Full Disclosure

Full disclosure to the public generally means a press release followed by publication in the mainstream print media, a press release issued by a national wire service or a public filing with the Securities and Exchange Commission (the “SEC”) such as a disclosure made in a Current Report on Form 8-K. On the other hand, a speech to an audience, a TV or radio appearance, or an article in an obscure magazine does not qualify as full disclosure. Full disclosure means that the securities markets have had the opportunity to digest the news.

 

3.

Definition of Material Information

There is no bright-line test for determining what constitutes “Material Information.” A fact may be deemed to be Material Information if there is a substantial likelihood that a reasonable investor would consider it important in making a decision to buy, sell or hold a security or where the fact is likely to have an effect on the market price of the security. While it may be difficult under this standard to determine whether certain information is Material Information, there are various categories of information that would almost always be regarded as Material Information, such as:

 

   

Earnings information;

 

   

Changes in forecasts or guidance;

 

2


   

Mergers, acquisitions, tender offers, joint ventures or changes in assets;

 

   

Changes in control or in management;

 

   

Significant developments involving corporate relationships;

 

   

Changes in the outside auditor or notification by the auditor that the issuer may no longer rely on an auditor’s report;

 

   

Events regarding the issuer’s securities, for example, defaults on senior securities, calls of securities for redemption, repurchase plans, stock splits or changes in dividends, changes to the rights of security holders and public or private sales of debt or equity securities;

 

   

Significant borrowings or write-offs;

 

   

Bankruptcies or receiverships; and

 

   

Lawsuits (or threats of lawsuits) involving substantial potential liability and the settlement of such lawsuits.

The contents of any earnings update teleconference or earnings-related press release shall, for purposes of the Policy, always constitute Material Information.

If any person has questions as to the materiality of information, he or she should contact Apollo’s Chief Compliance Officer or his or her designee (the “Chief Compliance Officer”) for clarification.

 

4.

Specific Requirements

A. Except as may otherwise be provided herein, before any Covered Person executes a trade in the Company Securities, even during an Open Window Period, such Covered Person must submit a request via the personal trading system, which will then be subject to approval by the Chief Compliance Officer or his or her designee, as appropriate. In connection with a request to trade submitted via the personal trading system, a Covered Person must make a representation that they are not in possession of non-public Material Information and, in the case of proposed sales, that the securities have been held for a minimum of 90 days. Approved trades will be authorized for a limited window period of up to 3 business days and will be subject to a minimum holding period of 90 days. If the Covered Person has not completed the trade within 3 business days of approval of the trade, then he or she must re-submit the request via the personal trading system to receive a new approval from the Chief Compliance Officer or his or her designee and re-verify the nonexistence of any restrictions on such trade.

B. Except as may otherwise be provided herein, and subject to the approval by the Chief Compliance Officer, Covered Persons may not purchase or sell Company Securities or otherwise trade in Company Securities during the period that commences on the 15th day of the last month of each fiscal quarter of the Company and that ends one Full Trading Day after the date on which the Company issues quarterly or, in the case of the fourth fiscal quarter, annual financial information in a press release reporting the results of such quarterly or, in the case of the fourth fiscal quarter, annual period (“Blackout Period”, and any period other than a Blackout Period, an “Open Window Period”). For purposes of this Policy, the term “Full Trading Day” means a complete trading daily period on any exchange or quotation system on which the Company’s equity securities may be listed or quoted and prior to the time that such equity securities are listed or quoted, a complete trading daily period on The New York Stock Exchange. For any period other than a Blackout Period, purchases and sales of the Company’s securities may be made only after receiving the approval as outlined in paragraph 4A above.

 

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C. Covered Persons who are directors, officers or 10% beneficial owners of the Company are subject to reporting of transactions under Section 16(a) and the restrictions set forth in Section 16(b) of the Securities Exchange Act of 1934 with respect to round-trip transactions in securities of the Company. Section 16(b) generally prohibits a round-trip transaction in securities of the Company in any period of less than 6 months by such individuals. Any profits made in a round-trip transaction by such individuals are recoverable by the Company, even if the round-trip transaction was done inadvertently.

D. Covered Persons may not engage in transactions of a speculative nature involving the Company Securities at any time, including, but not limited to, the purchase or sale of put options. All Covered Persons are prohibited from short-selling the Company Securities or engaging in transactions involving other Company-based Derivative Securities. “Derivative Securities” are options, warrants, restricted stock units, stock appreciation rights or similar rights whose value is derived from the value of an equity security, such as the Company’s common stock. This prohibition includes, but is not limited to, trading in Company-based put option contracts, transacting in straddles, and the like.

E. Covered Persons who are directors, officers or 10% beneficial owners of the Company that are subject to reporting of transactions under Section 16(a) and the restrictions set forth in Section 16(b) of the Securities Exchange Act of 1934 are prohibited from pledging the Company Securities as collateral for a loan or holding such securities in a margin account. Covered Persons not restricted by the foregoing may pledge the Company Securities as collateral for a loan or hold such securities in a margin account, provided they receive prior written approval from the Chief Compliance Officer to engage in such transactions.

F. The Chief Compliance Officer has the authority to impose restrictions on trading in the Company Securities by appropriate individuals at any time. In such event, the affected individuals will be notified, either personally or by email or voicemail, and informed of the restrictions.

G. Any Covered Person who has placed a limit order or open instruction to buy or sell the Company Securities shall bear responsibility for canceling such instructions immediately in the event restrictions are imposed on such person’s ability to trade.

H. All Covered Persons should be particularly careful to avoid the appearance of engaging in transactions in the Company’s Securities on the basis of non-public Material Information, which is as important as avoiding a transaction actually based on such information.

 

4


5.

Very Few Exceptions

There are almost no exceptions to the prohibition against insider trading. For example, it does not matter that the transactions in question may have been planned or committed to before the Covered Person came into possession of the non-public Material Information, regardless of the economic loss that the person may believe he or she might suffer as a consequence of not trading. It is also irrelevant that publicly disclosed information about the Company might, even aside from the non-public Material Information, provide a substantial basis for engaging in the transaction. The existence of a personal financial emergency also does not excuse you from compliance with this Policy. You simply cannot trade in the Company Securities while in possession of non-public Material Information about the Company.

There are no limits on the size of a transaction that will trigger insider trading liability; relatively small trades have in the past occasioned SEC investigations and lawsuits.

The only exceptions to this Policy are as follows:

A. Sales made pursuant to a Qualified Selling Plan. For purposes of this exception, a “Qualified Selling Plan” is a written plan adopted by a Covered Person for selling the Company Securities which (i) is approved in advance by the Chief Compliance Officer or his or her designee, (ii) conforms to all requirements of Section § 240.10b5-1(c)(1)(i) of the Code of Federal Regulations as then in effect and (iii) conforms to any other requirements deemed appropriate by Apollo in its sole discretion.

B. Transactions for Estate Planning Purposes. Transfers or bona fide gifts of the Company Securities by a Covered Person to a trust formed for estate-planning purposes or a family limited partnership, charitable foundation or similar entity shall be exempt from this Policy, if (i) the transfer is approved in advance by the Chief Compliance Officer, (ii) the investment and voting decisions of such transferee organization are controlled by the Covered Person, such that the transfer would not involve a change in beneficial ownership and (iii) the Covered Person has confirmed in writing to the Chief Compliance Officer that he/she will not permit the transferee organization to sell or otherwise transfer the Company Securities during a Blackout Period.

C. Exceptions for Extraordinary Circumstances. Note that transactions under this exception require prior written approval from the Chief Compliance Officer. For purposes of this exception, the determination of whether an extraordinary circumstance exists shall be made at the discretion of the Chief Compliance Officer.

 

6.

Post-Termination Transactions

This Policy continues to apply to your transactions in Company Securities even after you have terminated employment with or the performance of services to Apollo. If you are in possession of non-public Material Information when your employment or service relationship terminates, you may not trade in Company Securities until that information has been fully disclosed to the public or is no longer Material Information.

If you have any questions about this Policy, please contact the Chief Compliance Officer.

 

5


APOLLO STRATEGIC GROWTH CAPITAL

SECURITIES TRADING POLICY

Purpose

To describe the standards concerning the handling of non-public information relating to Apollo Strategic Growth Capital (the “Company”) and the buying and selling of securities of the Company.

Persons Affected and Prohibited Transactions

The general prohibitions of this Policy apply to all directors, officers and employees of the Company and all officers, directors, partners and employees of Apollo Global Management, Inc. (“AGM”) and its subsidiaries.

The same restrictions described in this Policy also apply to your spouse, minor children and anyone else living in your household, partnerships in which you are a general partner, trusts of which you are a trustee, estates of which you are an executor and investment funds or other similar vehicles with which you are affiliated (collectively “Related Parties”). You will be responsible for compliance with this Policy by your Related Parties.

For purposes of this Policy, references to “trading” or to “transactions in securities of the Company” include purchases or sales of Company shares, options, puts and calls or other derivative securities based on securities of the Company, gifts of Company securities, loans of Company securities, hedging transactions involving or referencing Company securities, contributions of Company securities to a trust, sales of Company shares acquired upon the exercise of share options, broker-assisted cashless exercises of share options, market sales to raise cash to fund the exercise of share options and trades in Company shares made under an employee benefit plan, such as a 401(k) plan.

Policy Statement

If you possess material nonpublic information (as further discussed below) relating to the Company, neither you nor any Related Party:

 

   

may effect transactions in securities of the Company (other than pursuant to a pre-arranged trading plan that complies with Rule 10b5-1 (“Rule 10b5-1”) under the Securities Exchange Act of 1934, as amended (the Exchange Act”), as described below) or engage in any other action that take advantage of that information;

 

   

may pass that information on to any person outside the Company, except as permitted under applicable Company policies and procedures;


   

suggest or otherwise recommend that any person effect a transaction in securities of the Company or engage in any other action that takes advantage of that information; or

 

   

assist anyone engaged in any of the foregoing activities.

This Policy will continue to apply after termination of employment to the extent that you are in possession of material nonpublic information at the time of termination. In such case, no transaction in securities of the Company may take place until the information becomes public or ceases to be material.

This Policy also applies to information, obtained in the course of employment with, or by serving as a director of, the Company, relating to any other company, including any entity with which we may be negotiating a major transaction or business combination.

Neither you nor any Related Party may effect transactions in the securities of any such other company while in possession of material nonpublic information concerning such company that was obtained in the course of employment with the Company.

Transactions that may be necessary or justifiable for independent reasons (such as the need to raise money for an emergency expenditure) are no exception. Even the appearance of an improper transaction must be avoided to preserve our reputation for adhering to the highest standards of conduct.

Material Information. “Material information” is any information that a reasonable investor would consider important in a decision to effect a transaction in securities of the Company. In short, any information that could reasonably affect the price of such securities. Either positive or negative information may be material. Common examples of information that will frequently be regarded as material are:

 

   

a pending or proposed merger, joint venture, acquisition or tender offer;

 

   

the offering of additional securities;

 

   

changes in senior management or other key employees;

 

   

significant legal or regulatory exposure due to a pending or threatened lawsuit or investigation;

 

   

impending bankruptcy or other financial liquidity problems; and

 

   

changes in legislation affecting our business.

 

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20-20 Hindsight. Remember, if your transaction in securities of the Company becomes the subject of scrutiny, it will be viewed after-the-fact with the benefit of hindsight. As a result, before engaging in any transaction you should carefully consider how regulators and others might view your transaction in hindsight.

Tipping Information to Others. Whether the information is proprietary information about the Company or other information that could have an impact on the price of the Company’s securities, you must not pass the information on to others. Penalties will apply whether or not you derive, or even intend to derive, any profit or other benefit from another’s actions.

When Information is Public. You may not trade on the basis of material information that has not been broadly disclosed to the marketplace, such as through a press release or a filing with the Securities and Exchange Commission (the “SEC”), and the marketplace has had time to absorb the information.

Confidentiality Obligations.The restrictions set forth in this Policy are designed to avoid misuse of material nonpublic information in violation of the securities laws. These restrictions are in addition to, and in no way alter, the general obligations that you have to maintain the confidentiality of all confidential or proprietary information concerning the Company and its business, as well as any other confidential information, that may be learned in the course of service or employment with the Company. No such information is to be disclosed to any other person in the Company, unless that person has a clear need to know that information, and no such information may be disclosed to any third parties, except as required or otherwise contemplated by your function or position.

You should take precautions to prevent the unauthorized disclosure or other misuse of such information by maintaining files securely, avoiding discussions of such information in public and taking extra care when distributing such information electronically.

Additional Prohibited Transactions

Because we believe it is improper and inappropriate for any person to engage in short-term or speculative transactions involving the Company’s securities, you, and your Related Parties, are prohibited from engaging in any of the following activities with respect to securities of the Company:

Purchases of securities of the Company on margin. You may not purchase securities of the Company on margin or pledge, or otherwise grant a security interest in, securities of the Company in margin accounts

Short sales (i.e., selling shares you do not own and borrowing the shares to make delivery). The SEC effectively prohibits directors and officers from selling Company securities short. This Policy is simply expanding this prohibition to cover partners and employees.

 

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Buying or selling puts, calls, options or other derivatives in respect of securities of the Company. This prohibition extends to any instrument whose value is derived from the value of any securities (e.g., ordinary shares) of the Company. This prohibition does not apply to the Company’s warrants.

You, and your designees, are prohibited from purchasing any financial instruments (including prepaid variable forward contracts, equity swaps, collars and exchange funds) or otherwise engaging in transactions that are designed to or have the effect of hedging or offsetting any decrease in the market value of the Company’s equity securities whether they are (1) granted to you by the Company as part of your compensation; or (2) otherwise held, directly or indirectly, by you.

Although the Company is not prohibiting standing or limit orders, you should use extreme caution if you engage in standing or limit orders (other than as established in connection with a Rule 10b5-1 plan as described below) since you might become aware of material non-public information after establishing an order. This could lead to inadvertent trading while in possession of material non-public information.

Blackout Periods

During the time that the Company is seeking a target for its initial business combination, the Company will not institute blackout periods in connection with the Company’s announcement of quarterly financial results.

Nevertheless, the Company may from time to time establish blackout periods, during which you and your Related Parties are prohibited from effecting transactions in securities of the Company (except as otherwise expressly provided below). The Chief Financial Officer of the Company will notify the Chief Compliance Officer of Apollo Global Management, Inc. or his or her designee (the “Chief Compliance Officer”) of any such blackout periods, such that the AGM Compliance team can, as described in more detail below, effectively process all trade pre-clearance requests as well as monitor trading in the Company’s securities as necessary.

You should be aware that the blackout periods described above may be imposed, modified or terminated by the Company at any time. You will receive notice of any prohibition on trading prior to the start of such blackout period. Persons subject to the blackout period restrictions who terminate their employment with the Company during a blackout period will remain subject to the restrictions until the end of such period.

The prohibition described in this Policy shall not apply to gifts of Company securities and contributions of Company securities to a trust so long as the requirements of this Policy below are complied with. We do, however, recommend that gifts and contributions be made, whenever possible, outside of a blackout period. The prohibition shall also not apply with respect to a public offering of Company securities specifically authorized by the Company’s board of directors or duly authorized board committee. In addition, the Chief Compliance Officer may, on a case-by-case basis,

 

6


authorize effecting a transaction in Company securities during a blackout period if the person who wishes to effect such a transaction (i) has, prior to the anticipated transaction date, notified the Company in writing of the circumstances and the amount and nature of the proposed transaction and (ii) has certified to the Company that he or she is not in possession of material nonpublic information concerning the Company.

Pre-Clearance of Securities Transactions

To provide assistance in preventing inadvertent violations of the law (which could result for example, from failure by directors and officers subject to reporting obligations under Section 16 of the Exchange Act) and avoiding even the appearance of an improper transaction (which could result, for example, where an officer engages in a trade while unaware of a pending major development), we are implementing the following procedure:

All transactions in securities of the Company by you or your Related Parties must be pre-cleared with the Chief Compliance Officer.

Persons subject to these restrictions should contact the Chief Compliance Officer in advance and may not effect any transaction subject to the pre-clearance request unless given clearance to do so, which clearance, if granted, will be valid only for three business days following the approval date. If a transaction for which clearance has been granted is not effected (i.e., the trade is not placed) within such three business day period, the transaction must again be pre-cleared.

To the extent that a material event or development affecting the Company remains nonpublic, persons subject to pre-clearance will not be given permission to effect transactions in securities of the Company. Such persons may not be informed of the reason why they may not trade. Any person that is made aware of the reason for an event-specific prohibition on trading should in no event disclose the reason for the prohibition to third parties and should avoid disclosing the existence of the prohibition, if possible. Caution should be exercised when telling a broker or other person who suggested a trade that the trade cannot be effected at the time.

Note that the pre-clearance procedures may delay the disposition of any security after it is purchased.

10b5-1 Plans

The SEC has adopted a safe harbor rule, Rule 10b5-1, which provides a defense against insider trading liability for trades that are effected pursuant to a pre-arranged trading plan that meets specified conditions. The trading plan must be properly documented and all of the procedural conditions of the Rule must be satisfied to avoid liability.

 

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Rule 10b5-1 plans allow transactions for the account of an insider to occur during blackout periods or while the insider has material nonpublic information provided the insider has previously given instructions or other control to effect pre-planned transactions in securities of the Company to a third party. The insider must establish the plan at a time when he or she is not in possession of material nonpublic information and the insider may not exercise any subsequent influence over how, when or whether to effect transactions. In addition to other specified conditions, a Rule 10b5-1 plan would specify in writing in advance the amount and price of the securities to be sold and the date for the sale (or a formula for determining the amount, price and date) or would otherwise not permit the insider to exercise any subsequent influence over how, when or whether to effect the sales. After adopting a valid Rule 10b5-1 plan, the insider will have an affirmative defense that a sale under the plan was not made “on the basis of” material nonpublic information.

The Company will treat the creation, modification or termination of a pre-planned trading program or arrangement established to meet the requirements of Rule 10b5-1 as a transaction subject to the blackout period rules set forth in this Policy. Transactions effected pursuant to a properly established Rule 10b5-1 plan however will not be subject to the blackout periods under this Policy.

The Company will treat the creation, modification or termination of a pre-planned trading program or arrangement established to meet the requirements of Rule 10b5-1 as a transaction subject to pre-clearance under this Policy at the time the plan is established, modified or terminated. Persons subject to the pre-clearance policy should coordinate any such plans or arrangements with the Chief Compliance Officer. Even though each transaction effected under a Rule 10b5-1 plan does not need to be pre-cleared, it nonetheless must be made in accordance with Rule 144 and must be reported on a Form 4 under Section 16 of the Exchange Act.

Assistance

Any person who has any questions about this Policy or about specific transactions may contact the Chief Compliance Officer. Remember, however, that the ultimate responsibility for adhering to this Policy and avoiding improper transactions rests with you. In this regard, it is imperative that you use your best judgment and to ask before acting if you are unsure.

 

8


APOLLO STRATEGIC GROWTH CAPITAL II

SECURITIES TRADING POLICY

February 9, 2021

To Directors, Officers and Employees of Apollo Strategic Growth Capital II (the “Company”) and Directors, Officers, Partners and Employees of Apollo Global Management, Inc. (“AGM”) and its subsidiaries:

Attached is the Securities Trading Policy (the “Policy”) for directors, officers and employees of the Company, which has been adopted by the Board of Directors. This policy also applies to directors, officers, partners and employees of AGM and its subsidiaries. Please read this Policy very carefully.

The Policy

The purchase or sale of, or other transactions in, publicly traded securities of the Company while you are aware of material nonpublic information, or the disclosure of material nonpublic information to others who then trade in publicly traded securities of the Company, is prohibited by the federal securities laws.

The federal securities laws impose liability not only on persons who trade, or tip inside information to others who trade, but on companies and other controlling persons who fail to take reasonable steps to prevent insider trading by company employees. As a result, if we do not take active steps to adopt preventive policies and procedures covering securities trades by personnel (including service providers) of the Company, the consequences could be severe.

We are adopting this Policy to avoid even the appearance of improper conduct by anyone employed by or associated with the Company (not just so-called “insiders”). We cannot afford to have that reputation damaged.

In addition to the limitations on trading contained in this Policy, directors and officers of the Company and beneficial owners of more than 10% of the Company’s ordinary shares are also subject to certain reporting requirements under Section 16 of the U.S. Securities Exchange Act of 1934 (the “Exchange Act”). In addition, any person who beneficially owns 5% or more of the Company’s ordinary shares is subject to certain reporting requirements under Section 13(d) of the Exchange Act. You should contact the Company’s Chief Financial Officer or the Chief Compliance Officer of AGM, or their designees, if you need further information with respect to these reporting obligations.


The Consequences

The U.S. Securities and Exchange Commission (the “SEC”) and the U.S. securities exchanges are extremely effective in detecting insider trading. The SEC and the Department of Justice have prosecuted cases involving trading or tipping by employees at all levels of a business, trading or tipping by family members and friends, trading involving offshore accounts and trading involving only a small amount of shares. The consequences of insider trading violations can be severe:

For individuals who trade on inside information (or tip information to others):

 

   

civil penalties of up to three times the profit gained or loss avoided;

 

   

criminal fines (no matter how small the profit); and

 

   

jail terms.

For a company (as well as possibly any supervisory person) that fails to take appropriate steps to prevent illegal trading, civil and criminal penalties.

Moreover, if any employee violates this Policy, Company-imposed sanctions, including dismissal for misconduct or cause, could result. Needless to say, any of the above consequences, even an investigation by the SEC that does not result in prosecution, can tarnish the reputation of the Company, its management and the person involved, and irreparably damage a career.

If you have any questions, please feel free to contact the Company’s Chief Financial Officer at (212) 515-3200.

Once again, please read this material very carefully.

 

 

Yours truly,

 

Sanjay Patel

  Chief Executive Officer

Enclosure

 

2


APOLLO STRATEGIC GROWTH CAPITAL II

SECURITIES TRADING POLICY

Purpose

To describe the standards concerning the handling of non-public information relating to Apollo Strategic Growth Capital II (the “Company”) and the buying and selling of securities of the Company.

Persons Affected and Prohibited Transactions

The general prohibitions of this Policy apply to all directors, officers and employees of the Company and all officers, directors, partners and employees of Apollo Global Management, Inc. (“AGM”) and its subsidiaries.

The same restrictions described in this Policy also apply to your spouse, minor children and anyone else living in your household, partnerships in which you are a general partner, trusts of which you are a trustee, estates of which you are an executor and investment funds or other similar vehicles with which you are affiliated (collectively “Related Parties”). You will be responsible for compliance with this Policy by your Related Parties.

For purposes of this Policy, references to “trading” or to “transactions in securities of the Company” include purchases or sales of Company shares, options, puts and calls or other derivative securities based on securities of the Company, gifts of Company securities, loans of Company securities, hedging transactions involving or referencing Company securities, contributions of Company securities to a trust, sales of Company shares acquired upon the exercise of share options, broker-assisted cashless exercises of share options, market sales to raise cash to fund the exercise of share options and trades in Company shares made under an employee benefit plan, such as a 401(k) plan.

Policy Statement

If you possess material nonpublic information (as further discussed below) relating to the Company, neither you nor any Related Party:

 

   

may effect transactions in securities of the Company (other than pursuant to a pre-arranged trading plan that complies with Rule 10b5-1 (“Rule 10b5-1”) under the Securities Exchange Act of 1934, as amended (the Exchange Act”), as described below) or engage in any other action that take advantage of that information;

 

   

may pass that information on to any person outside the Company, except as permitted under applicable Company policies and procedures;


   

suggest or otherwise recommend that any person effect a transaction in securities of the Company or engage in any other action that takes advantage of that information; or

 

   

assist anyone engaged in any of the foregoing activities.

This Policy will continue to apply after termination of employment to the extent that you are in possession of material nonpublic information at the time of termination. In such case, no transaction in securities of the Company may take place until the information becomes public or ceases to be material.

This Policy also applies to information, obtained in the course of employment with, or by serving as a director of, the Company, relating to any other company, including any entity with which we may be negotiating a major transaction or business combination.

Neither you nor any Related Party may effect transactions in the securities of any such other company while in possession of material nonpublic information concerning such company that was obtained in the course of employment with the Company.

Transactions that may be necessary or justifiable for independent reasons (such as the need to raise money for an emergency expenditure) are no exception. Even the appearance of an improper transaction must be avoided to preserve our reputation for adhering to the highest standards of conduct.

Material Information. “Material information” is any information that a reasonable investor would consider important in a decision to effect a transaction in securities of the Company. In short, any information that could reasonably affect the price of such securities. Either positive or negative information may be material. Common examples of information that will frequently be regarded as material are:

 

   

a pending or proposed merger, joint venture, acquisition or tender offer;

 

   

the offering of additional securities;

 

   

changes in senior management or other key employees;

 

   

significant legal or regulatory exposure due to a pending or threatened lawsuit or investigation;

 

   

impending bankruptcy or other financial liquidity problems; and

 

   

changes in legislation affecting our business.

 

4


20-20 Hindsight. Remember, if your transaction in securities of the Company becomes the subject of scrutiny, it will be viewed after-the-fact with the benefit of hindsight. As a result, before engaging in any transaction you should carefully consider how regulators and others might view your transaction in hindsight.

Tipping Information to Others. Whether the information is proprietary information about the Company or other information that could have an impact on the price of the Company’s securities, you must not pass the information on to others. Penalties will apply whether or not you derive, or even intend to derive, any profit or other benefit from another’s actions.

When Information is Public. You may not trade on the basis of material information that has not been broadly disclosed to the marketplace, such as through a press release or a filing with the Securities and Exchange Commission (the “SEC”), and the marketplace has had time to absorb the information.

Confidentiality Obligations.The restrictions set forth in this Policy are designed to avoid misuse of material nonpublic information in violation of the securities laws. These restrictions are in addition to, and in no way alter, the general obligations that you have to maintain the confidentiality of all confidential or proprietary information concerning the Company and its business, as well as any other confidential information, that may be learned in the course of service or employment with the Company. No such information is to be disclosed to any other person in the Company, unless that person has a clear need to know that information, and no such information may be disclosed to any third parties, except as required or otherwise contemplated by your function or position.

You should take precautions to prevent the unauthorized disclosure or other misuse of such information by maintaining files securely, avoiding discussions of such information in public and taking extra care when distributing such information electronically.

Additional Prohibited Transactions

Because we believe it is improper and inappropriate for any person to engage in short-term or speculative transactions involving the Company’s securities, you, and your Related Parties, are prohibited from engaging in any of the following activities with respect to securities of the Company:

Purchases of securities of the Company on margin. You may not purchase securities of the Company on margin or pledge, or otherwise grant a security interest in, securities of the Company in margin accounts

Short sales (i.e., selling shares you do not own and borrowing the shares to make delivery). The SEC effectively prohibits directors and officers from selling Company securities short. This Policy is simply expanding this prohibition to cover partners and employees.

 

5


Buying or selling puts, calls, options or other derivatives in respect of securities of the Company. This prohibition extends to any instrument whose value is derived from the value of any securities (e.g., ordinary shares) of the Company. This prohibition does not apply to the Company’s warrants.

You, and your designees, are prohibited from purchasing any financial instruments (including prepaid variable forward contracts, equity swaps, collars and exchange funds) or otherwise engaging in transactions that are designed to or have the effect of hedging or offsetting any decrease in the market value of the Company’s equity securities whether they are (1) granted to you by the Company as part of your compensation; or (2) otherwise held, directly or indirectly, by you.

Although the Company is not prohibiting standing or limit orders, you should use extreme caution if you engage in standing or limit orders (other than as established in connection with a Rule 10b5-1 plan as described below) since you might become aware of material non-public information after establishing an order. This could lead to inadvertent trading while in possession of material non-public information.

Blackout Periods

During the time that the Company is seeking a target for its initial business combination, the Company will not institute blackout periods in connection with the Company’s announcement of quarterly financial results.

Nevertheless, the Company may from time to time establish blackout periods, during which you and your Related Parties are prohibited from effecting transactions in securities of the Company (except as otherwise expressly provided below). The Chief Financial Officer of the Company will notify the Chief Compliance Officer of Apollo Global Management, Inc. or his or her designee (the “Chief Compliance Officer”) of any such blackout periods, such that the AGM Compliance team can, as described in more detail below, effectively process all trade pre-clearance requests as well as monitor trading in the Company’s securities as necessary.

You should be aware that the blackout periods described above may be imposed, modified or terminated by the Company at any time. You will receive notice of any prohibition on trading prior to the start of such blackout period. Persons subject to the blackout period restrictions who terminate their employment with the Company during a blackout period will remain subject to the restrictions until the end of such period.

The prohibition described in this Policy shall not apply to gifts of Company securities and contributions of Company securities to a trust so long as the requirements of this Policy below are complied with. We do, however, recommend that gifts and contributions be made, whenever possible, outside of a blackout period. The prohibition shall also not apply with respect to a public offering of Company securities specifically authorized by the Company’s board of directors or duly authorized board committee. In addition, the Chief Compliance Officer may, on a case-by-case basis,

 

6


authorize effecting a transaction in Company securities during a blackout period if the person who wishes to effect such a transaction (i) has, prior to the anticipated transaction date, notified the Company in writing of the circumstances and the amount and nature of the proposed transaction and (ii) has certified to the Company that he or she is not in possession of material nonpublic information concerning the Company.

Pre-Clearance of Securities Transactions

To provide assistance in preventing inadvertent violations of the law (which could result for example, from failure by directors and officers subject to reporting obligations under Section 16 of the Exchange Act) and avoiding even the appearance of an improper transaction (which could result, for example, where an officer engages in a trade while unaware of a pending major development), we are implementing the following procedure:

All transactions in securities of the Company by you or your Related Parties must be pre-cleared with the Chief Compliance Officer.

Persons subject to these restrictions should contact the Chief Compliance Officer in advance and may not effect any transaction subject to the pre-clearance request unless given clearance to do so, which clearance, if granted, will be valid only for three business days following the approval date. If a transaction for which clearance has been granted is not effected (i.e., the trade is not placed) within such three business day period, the transaction must again be pre-cleared.

To the extent that a material event or development affecting the Company remains nonpublic, persons subject to pre-clearance will not be given permission to effect transactions in securities of the Company. Such persons may not be informed of the reason why they may not trade. Any person that is made aware of the reason for an event-specific prohibition on trading should in no event disclose the reason for the prohibition to third parties and should avoid disclosing the existence of the prohibition, if possible. Caution should be exercised when telling a broker or other person who suggested a trade that the trade cannot be effected at the time.

Note that the pre-clearance procedures may delay the disposition of any security after it is purchased.

10b5-1 Plans

The SEC has adopted a safe harbor rule, Rule 10b5-1, which provides a defense against insider trading liability for trades that are effected pursuant to a prearranged trading plan that meets specified conditions. The trading plan must be properly documented and all of the procedural conditions of the Rule must be satisfied to avoid liability.

 

7


Rule 10b5-1 plans allow transactions for the account of an insider to occur during blackout periods or while the insider has material nonpublic information provided the insider has previously given instructions or other control to effect pre-planned transactions in securities of the Company to a third party. The insider must establish the plan at a time when he or she is not in possession of material nonpublic information and the insider may not exercise any subsequent influence over how, when or whether to effect transactions. In addition to other specified conditions, a Rule 10b5-1 plan would specify in writing in advance the amount and price of the securities to be sold and the date for the sale (or a formula for determining the amount, price and date) or would otherwise not permit the insider to exercise any subsequent influence over how, when or whether to effect the sales. After adopting a valid Rule 10b5-1 plan, the insider will have an affirmative defense that a sale under the plan was not made “on the basis of” material nonpublic information.

The Company will treat the creation, modification or termination of a pre-planned trading program or arrangement established to meet the requirements of Rule 10b5-1 as a transaction subject to the blackout period rules set forth in this Policy. Transactions effected pursuant to a properly established Rule 10b5-1 plan however will not be subject to the blackout periods under this Policy.

The Company will treat the creation, modification or termination of a pre-planned trading program or arrangement established to meet the requirements of Rule 10b5-1 as a transaction subject to pre-clearance under this Policy at the time the plan is established, modified or terminated. Persons subject to the pre-clearance policy should coordinate any such plans or arrangements with the Chief Compliance Officer. Even though each transaction effected under a Rule 10b5-1 plan does not need to be pre-cleared, it nonetheless must be made in accordance with Rule 144 and must be reported on a Form 4 under Section 16 of the Exchange Act.

Assistance

Any person who has any questions about this Policy or about specific transactions may contact the Chief Compliance Officer. Remember, however, that the ultimate responsibility for adhering to this Policy and avoiding improper transactions rests with you. In this regard, it is imperative that you use your best judgment and to ask before acting if you are unsure.

 

8


LOGO

APPENDIX 8.4.1

SAMPLE AUTHORIZATION LETTER FOR DUPLICATE ACCOUNT STATEMENTS

[DATE]

[CONTACT]

[NAME]

[ADDRESS]

[CITY, STATE, ZIP]

Re: Account Number [            ]

To Whom It May Concern:

[Employee Name] is an employee of Apollo Management Holdings, L.P., which is an affiliate of Apollo Global Securities, LLC, a member of FINRA. This individual is hereby permitted to maintain accounts and to execute transactions at other FINRA member firms provided that duplicate copies of confirmations and statements are sent to Apollo Global Securities, LLC. To comply with FINRA Rule 3120, please send all employee trade information, including duplicate account statements, in electronic form for all accounts held by the individual listed above directly to StarCompliance. Please feel free to contact Dana Holzberg at (917) 286-5983 or via e-mail at dholzberg@apollo.com, if you have any questions or require further information.

Regards,

Amanda Huttenlocher

Chief Compliance Officer of Apollo Global Securities, LLC

 

9 WEST 57 TH STREET, 43 RD FLOOR
NEW YORK, NEW YORK 10019
212.515.3200


APOLLO GLOBAL MANAGEMENT, INC.

WHISTLEBLOWER POLICY

 

1.

Statement of Policy

Apollo Global Management, Inc. (together with its subsidiaries, the “Company”) is committed to providing a workplace conducive to open discussion of the Company’s business practices and is committed to complying with the laws and regulations to which the Company is subject, as well as the Code of Business Conduct and Ethics of the Company (the “Code”) and the code of ethics of the investment adviser subsidiaries of the Company (the “Advisers Act Code of Ethics”). Accordingly, the Company will not tolerate conduct that is in violation of such laws, regulations, the Code or the Advisers Act Code of Ethics. Each of the Company’s officers, partners, members, owners, principals, employees and stockholders (collectively, “Covered Persons”) has a responsibility, consistent with applicable law, to promptly report any suspected misconduct, illegal activities or fraud, including any questionable accounting, internal accounting controls and auditing matters, or other violations of federal and state laws, of the Code or of the Advisers Act Code of Ethics (collectively “Misconduct”) in accordance with the provisions of this Whistleblower Policy (this “Policy”). Country-specific limitations or requirements for reporting and/or handling information in relation to this Policy are described in Appendix A. Any other third party, such as vendors, clients or competitors also may report, under the procedures provided in this Policy, a good faith complaint regarding accounting or auditing matters. In order to facilitate the reporting of communications regarding alleged Misconduct, the Audit Committee of the Board of Directors of the Company (the “Audit Committee”) has established procedures set forth herein for (i) the submission by Covered Persons of reports of alleged Misconduct and (ii) the receipt, retention and treatment of these reports.

 

2.

Policy of Non-Retaliation

It is the Company’s policy to comply with all applicable laws that protect its Covered Persons against unlawful discrimination or retaliation as a result of their lawfully reporting information regarding, or their participation in investigations involving, alleged Misconduct by the Company or its agents. Specifically, this Policy is designed to prevent Covered Persons from being subject to disciplinary or retaliatory action by the Company or any of its agents or Covered Persons as a result of a Covered Person’s:

 

   

disclosing information to a government or law enforcement agency or a representative of the Company, where the Covered Person has a good faith, reasonable belief that the information demonstrates a violation or possible violation of a federal or state law, rule or regulation;

 

   

providing information, filing, testifying or participating in a proceeding filed or about to be filed, or otherwise assisting in an investigation or proceeding regarding any conduct that the Covered Person reasonably and in good faith believes involves a violation or possible violation of a federal or state law, rule or regulation; or


   

providing information to the Company’s representatives or other persons where the Covered Person has a good faith, reasonable belief that the information discloses a violation or possible violation of the Code or the Advisers Act Code of Ethics.

If any Covered Person believes he or she has been subjected to any discrimination or retaliation or other action by the Company or its agents for reporting suspected Misconduct in accordance with this Policy, he or she may file a complaint with the Company’s Chief Compliance Officer (the “Compliance Officer”) by following the procedures set forth below under the heading “Method of Reporting.” If it is determined that a Covered Person has experienced any improper employment action in violation of this Policy, the Company endeavors to promptly take appropriate corrective action.

 

3.

Method of Reporting

The Audit Committee has designated the Compliance Officer as the individual responsible for administering this Policy. The Company has established a procedure under which alleged Misconduct, including alleged Misconduct relating to questionable accounting, internal accounting controls or auditing matters may be reported anonymously and confidentially, where permitted under applicable laws. Countries in which anonymous reports are restricted or not permitted are listed in Appendix A. Consistent with applicable laws, Covered Persons may be permitted to anonymously report an alleged violation to (i) the Company’s Compliance Hotline at (877) 827-5434, (ii) the Company’s Compliance Reporting Website at www.reportlineweb.com/agm, or by delivering the report via regular mail to c/o Audit Committee, Apollo Global Management, Inc. 9 West 57th Street, 43rd Floor, New York, New York 10019. Reports regarding retaliation for reporting suspected Misconduct may also be reported by any of these methods.

Covered Persons should make every effort to report their concerns using one or more of the methods specified above. The reporting procedure is specifically designed so that Covered Persons have a mechanism that allows the Covered Person to bypass a supervisor he or she believes is engaged in prohibited conduct under this Policy. Reports should be factual instead of speculative or conclusory and should contain as much specific information as possible to allow the persons investigating the report to adequately assess the nature, extent and urgency of the situation. Covered Persons should realize that if a report cannot be properly investigated without additional information, the Company may have to close the matter for lack of sufficient information.

 

4.

Confidentiality

If a reporting Covered Person wishes to disclose his or her identity, the Covered Person may do so. Confidentiality of the Covered Person submitting the report will be maintained to the fullest extent possible, consistent with applicable laws and the need to conduct an adequate investigation. In the course of any investigation, the Company may find it necessary to share information with others (e.g., legal counsel, auditors, law enforcement, and government authorities) on a “need to know” basis.

 

2


5.

Policy for Receiving and Investigating Reports

Upon receipt of any reported violation of the Code by any person other than an executive officer or director of the Company, the Compliance Officer will, following due inquiry, determine whether the information alleged in the report alleges or contains allegations that might constitute a violation of the Code or the Advisers Act Code of Ethics. To the extent the Compliance Officer deems appropriate, he or she will appoint one or more internal and/or external investigators to promptly and fully investigate such report under the supervision of the Compliance Officer. The Compliance Officer shall, to the extent deemed appropriate, consult with the Audit Committee with respect to conduct or results of any such investigation. The Compliance Officer will inform the reporting person (if his or her identity is known) that the report has been received and, to the extent appropriate, provide him or her with the name of, and contact information for, the investigator assigned to the report.

With respect to any other report pursuant to this Policy, upon receipt of such report, the Compliance Officer will determine whether the information alleged in the report alleges or contains allegations that might constitute Misconduct. The Audit Committee shall be notified promptly of reports of alleged Misconduct determined to involve accounting, internal accounting controls and auditing concerns or alleged violations of the Code or the Advisers Act Code of Ethics by executive officers or directors of the Company. The Audit Committee will, to the extent it deems appropriate, appoint one or more internal and/or external investigators to promptly and fully investigate claims of alleged Misconduct, under the supervision of the Compliance Officer, or, in the case of (i) alleged Misconduct relating to accounting, internal accounting controls and auditing concerns or (ii) alleged violations of the Code or the Advisers Act Code of Ethics by executive officers or directors of the Company, under the supervision and oversight of the Audit Committee or such other persons as the Audit Committee determines to be appropriate under the circumstances. The Compliance Officer will inform the reporting person (if his or her identity is known) that the report has been received and, to the extent appropriate, provide him or her with the name of, and contact information for, the investigator assigned to the report.

If the investigation confirms that Misconduct has occurred, the Company will promptly take appropriate corrective action with respect to the person(s) involved, including possible termination of such person(s), and will also take appropriate steps to correct and remedy any Misconduct.

 

6.

Retention of Reports

The Compliance Officer or his or her designee, as appropriate, will maintain a log of all reports, tracking their receipt, investigation and resolution. Each member of the Audit Committee and, at the discretion of the Compliance Officer, other personnel involved in the investigation of reports, shall have access to the log on a need to know basis. Copies of the log and all documents obtained or created in connection with any investigation will be retained for a period of three years, unless another retention period is required under applicable laws.

 

3


APPENDIX A

Country-specific Limitations/Requirements

The countries listed in the table below have laws limiting the types of issues that may be reported via hotlines or websites, or the manner in which reports may be made. Unless stated otherwise below, the Company’s Compliance Reporting Website may be used in European Union countries only for reports related to accounting, internal accounting controls, audit irregularities, bribery, corruption, securities laws, insider trading, data privacy, and conduct adversely affecting the Company’s ethical commitments.

The General Data Protection Regulation (EU) 2016/679 (the “GDPR”) applies in each of the countries listed in the table below where personal data are collected, used, stored and disclosed by the Company. In particular, the GDPR requires that collection of data is limited to what is strictly necessary, individuals are informed about the processing of their personal data, rights of access to data are respected, and data collected through reporting are subject to narrow retention periods. Please contact the Compliance Officer or his or her designee with any questions.

 

Germany    For reporting related to conduct in Germany, the Company’s Compliance Reporting Website is available to all Covered Persons to report serious offenses and misconduct such as criminal activity, discrimination, sexual harassment, bribery, corruption, betrayal of trade secrets and confidence, theft, incorrect accounting and auditing. If a report relates to any other issue, Covered Persons should use the alternative procedures outlined in Section 3 of this Policy. Further, reporting is not permitted for issues concerning private or intimate life, breach of non-smoking rules or allegations of bullying.
   If no disciplinary or legal action is taken in response to a report, records of the report will be deleted promptly after the decision to not take such action is made.
   Issues may be reported on an anonymous or non-anonymous basis (the former is strongly encouraged).
Luxembourg    For reporting related to conduct in Luxembourg, the Company’s Compliance Reporting Website and other reporting channels may be used only to report issues related to accounting, internal accounting controls, audit, banking, bribery, corruption, and financial crimes.
   Given the nature and sensitivity of the Luxembourg entities’ activities, all local employees are eligible to file reports, or to be reported for the above matters.
   Luxembourg personnel are encouraged to disclose their identities when reporting misconduct. However, anonymous reporting is permitted provided that the reports relate only to first-hand observations rather than rumors or mere suspicions.


   Records of reporting will be retained for no longer than two months after the completion of any internal investigation, unless legal proceedings are initiated.
Spain    For reporting related to conduct in Spain, the Company’s Compliance Reporting Website is restricted to reporting misconduct relating to applicable laws and regulations and to the Company’s Code and Adviser’s Act Code of Ethics.
   Access to personal data relating to the reports is limited to individuals who carry out internal control and compliance functions and to other individuals designated by the Company.
   Records of reporting will be retained for no longer than three months unless the record is required as evidence relating to the commission of a crime.
   Issues may be reported on an anonymous or non-anonymous basis.

United

Kingdom

   For reporting related to conduct in the UK, anonymous reporting is not encouraged but is permitted when reports are related to accounting or audit irregularities.
  

Any issues may be reported on a non-anonymous basis.

 

5

Exhibit (s)

Calculation of Filing Fee Tables

FORM N-2

(Form Type)

APOLLO TACTICAL INCOME FUND INC.

(Exact Name of Registrant as Specified in its Charter)

Table 1: Newly Registered and Carry Forward Securities

 

      Security
Type
     Security
Class Title
     Fee
Calculation
or Carry
Forward
Rule
    Amount
Registered
     Proposed
Maximum
Offering
Price Per
Unit
     Maximum
Aggregate
Offering Price
     Fee Rate      Amount of
Registration
Fee
     Carry
Forward
Form
Type
     Carry
Forward
File
Number
     Carry
Forward
Initial
effective
date
     Filing Fee
Previously Paid
In Connection
with Unsold
Securities to be
Carried
Forward
 
Newly Registered Securities

 

Fees to Be Paid

     Equity       

Common

Stock

 

 

     Rule 457(o)                       $ 49,000,000       
$92.70 per
$1,000,000
 
 
   $ 4,542.30                                      

Fees Previously Paid

     Equity       
Common
Stock
 
 
     Rule 457(o)                       $ 1,000,000       
$92.70 per
$1,000,000
 
 
   $ 92.70                                      
Carry Forward Securities

 

Carry Forward Securities

                                                                                                          

Total Offering Amounts

 

            $ 50,000,000               $ 4,635.00                                      

Total Fees Previously Paid

 

                              $ 92.70                                      

Total Fee Offsets

 

                                —                                        

Net Fee Due

 

                              $ 4,542.30                                      


Table 2: Fee Offset Claims and Sources

 

     Registrant
or Filer
Name
    Form
or
Filing
Type
    File
Number
    Initial
Filing
Date
    Filing
Date
    Fee
Offset
Claimed
    Security
Type
Associated
with Fee
Offset
Claimed
    Security
Title
Associated
with Fee
Offset
Claimed
    Unsold
Securities
Associated
with Fee
Offset
Claimed
   

Unsold

Aggregate
Offering
Amount
Associated
with Fee
Offset
Claimed

    Fee Paid
with Fee
Offset
Source
 
Rules 457(b) and 0-11(a)(2)

 

Fee Offset Claims

                                                                                       

Fee Offset Sources

                                                                                       
Rule 457(p)

 

Fee Offset Claims

                                                                                       

Fee Offset Sources

                                                                                       

Table 3: Combined Prospectuses

 

Security Type  

Security Class

Title

    Amount of Securities
Previously Registered
   

Maximum Aggregate

Offering Price of
Securities Previously

Registered

    Form Type     File
Number
    Initial
Effective
Date
 
                                                 

 

- 2 -