As filed with the Securities and Exchange Commission on December 18, 2014
 
Securities Act File No. 333-182941
Investment Company Act File No. 811-22725
 
 
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________
Form N-2
 
ý REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
 
ý REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
 
o PRE-EFFECTIVE AMENDMENT NO.
 
ý POST-EFFECTIVE AMENDMENT NO. 6
_________________________________
Priority Income Fund, Inc.
(Exact Name of Registrant as Specified in the Charter)
_________________________________
  
10 East 40 th  Street, 42 nd  Floor
New York, NY 10016
(Address of Principal Executive Offices)
 
(212) 448-0702
(Registrant’s Telephone Number, Including Area Code)
 
M. Grier Eliasek
Priority Income Fund, Inc.
10 East 40 th  Street, 42 nd  Floor
New York, NY 10016
(Name and address of agent for service)
 
COPIES TO:
 
Steven B. Boehm, Esq.
John J. Mahon, Esq.
Sutherland Asbill & Brennan LLP
700 Sixth Street, NW Suite 700
Washington, DC 20001-3980
Tel: (202) 383-0100
Fax: (202) 637-3593
_________________________________
  
Approximate date of proposed public offering:
From time to time after the effective date of this Registration Statement.
 
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, as amended, other than securities offered in connection with a distribution reinvestment plan, check the following box.  ý




EXPLANATORY NOTE
 
This Post-Effective Amendment No. 6 to the Registration Statement on Form N-2 (File Nos. 333-182941 and 811-22725) of Priority Income Fund, Inc. (the “Registration Statement”) is being filed pursuant to Rule 462(d) under the Securities Act of 1933, as amended (the “Securities Act”), solely for the purpose of filing exhibits to the Registration Statement. Accordingly, this Post-Effective Amendment No. 6 consists only of a facing page, this explanatory note and Part C of the Registration Statement on Form N-2 setting forth the exhibits to the Registration Statement. This Post-Effective Amendment No. 6 does not modify any other part of the Registration Statement. Pursuant to Rule 462(d) under the Securities Act, this Post-Effective Amendment No. 6 shall become effective immediately upon filing with the Securities and Exchange Commission. The contents of the Registration Statement are hereby incorporated by reference.

PART C

Other Information
 
Item 25.  Financial Statements and Exhibits
 
(1)                                  Financial Statements
 
Financial statements are presented in the statement of additional information.
 
(2)                                  Exhibits
 
(a)(1)
Form of Second Articles of Amendment and Restatement of the Registrant(2)
(a)(2)
Form of Articles of Amendment of the Registrant(5)
(b)
Amended and Restated Bylaws of the Registrant(1)
(d)
Form of Subscription Agreement (included in the Prospectus as Appendix A and incorporated herein by reference)
(e)
Form of Distribution Reinvestment Plan(1)
(g)
Form of Investment Advisory Agreement by and between the Registrant and Priority Senior Secured Income Management, LLC(4)
(h)(1)
Form of Dealer Manager Agreement(3)
(h)(2)
Form of Selected Dealer Agreement (included as Exhibit A to the Form of Dealer Manager Agreement)
(j)
Custodian Agreement(1)
(k)(1)
Form of Administration Agreement by and between the Registrant and Prospect Administration LLC(1)
(k)(2)
Form of Investor Services Agreement by and between the Registrant and Behringer Harvard Priority Investor Services LLC(1)
(k)(3)
Form of Escrow Agreement(3)
(k)(4)
Form of Trademark License Agreement by and between the Registrant and Priority Senior Secured Income Management, LLC*
(k)(5)
Form of Amended and Restated Expense Support and Conditional Reimbursement Agreement by and between the Registrant and Priority Senior Secured Income Management, LLC*
(k)(6)
Form of Indemnity Agreement between the Registrant and Priority Senior Secured Income Management, LLC(6)
(l)
Opinion of Venable LLP, as special Maryland counsel for the Registrant(2)
(n)(1)
Consent of Venable LLP, as special Maryland counsel for the Registrant (incorporated by reference to Exhibit (l) hereto)
(n)(2)
Consent of Independent Registered Public Accounting Firm(5)
(n)(3)
Power of Attorney(1)
(r)
Form of Code of Ethics(4)
 


C- 1


(1
)
Incorporated by reference to the Registrant’s Form N-2 Pre-Effective Amendment No. 2 (File Nos. 333-182941 and 811-22725) filed on November 13, 2012.
 
 
(2
)
Incorporated by reference to the Registrant’s Form N-2 Pre-Effective Amendment No. 3 (File Nos. 333-182941 and 811-22725) filed on February 15, 2013.
 
 
(3
)
Incorporated by reference to the Registrant’s Form N-2 Pre-Effective Amendment No. 5 (File Nos. 333-182941 and 811-22725) filed on March 28, 2013.
 
 
(4
)
Incorporated by reference to the Registrant’s Form N-2 Pre-Effective Amendment No. 6 (File Nos. 333-182941 and 811-22725) filed on April 18, 2013.
 
 
(5
)
Incorporated by reference to the Registrant’s Form N-2 Post-Effective Amendment No. 5 (File Nos. 333-182941 and 811-22725) filed on October 27, 2014.

 
 
*

Filed herewith.
 
Item 26.  Marketing Arrangements
 
The information contained under the heading “Plan of Distribution” in this Registration Statement is incorporated herein by reference.

Item 27.  Other Expenses of Issuance and Distribution
 
SEC registration fee
$
182,800

FINRA filing fee
$
225,500

Advertising and sales literature
$
8,000,000

Accounting fees and expenses
$
1,000,000

Legal fees and expenses
$
1,500,000

Due Diligence expenses
$
2,600,000

Printing and engraving
$
600,000

Seminars
$
265,000

Transfer Agent fees
$
4,000,000

Miscellaneous fees and expenses
$
4,126,700

Total
$
22,500,000

 
The amounts set forth above, except for the SEC and FINRA fees, are in each case estimated. All of the expenses set forth above shall be borne by the Registrant.
 
Item 28.  Persons Controlled by or Under Common Control
 
See “Management” in the Prospectus and “Certain Relationships and Related Party Transactions” in the Statement of Additional Information contained herein.
 
Item 29.  Number of Holders of Securities
 
The following table sets forth the number of record holders of the Registrant’s capital shares at October 24, 2014.
Title of Class
Number of
Record Holders
Shares of common stock
425
 

C- 2


Item 30.  Indemnification
 
Directors and Officers
 
Reference is made to Section 2-418 of the Maryland General Corporation Law and the Registrant’s charter and bylaws.
 
Maryland law permits a Maryland corporation to include in its charter a provision limiting 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 established by a final judgment as being material to the cause of action. The Registrant’s charter contains such a provision which eliminates directors’ and officers’ liability to the maximum extent permitted by Maryland law, subject to the requirements of the Investment Company Act of 1940, as amended (the “1940 Act”).
 
The Registrant’s charter authorizes the Registrant, 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 serving as the Registrant’s director or officer and at the Registrant’s request, 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 person may become subject or which that person may incur by reason of his or her service in any such capacity and to pay or reimburse their reasonable expenses in advance of final disposition of a proceeding. The Registrant’s bylaws obligate the Registrant, 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 serving as the Registrant’s director or officer and at the Registrant’s request, 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 and who is made, or threatened to be made, a party to the proceeding by reason of his or her service in that capacity from and against any claim or liability to which that person may become subject or which that person may incur by reason of his or her service in any such capacity and to pay or reimburse his or her reasonable expenses in advance of final disposition of a proceeding. The charter and bylaws also permit the Registrant to indemnify and advance expenses to any person who served a predecessor of the Registrant in any of the capacities described above and any of the Registrant’s employees or agents or any employees or agents of the Registrant’s predecessor. In accordance with the 1940 Act, the Registrant 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 or her office.
 
Maryland law requires a corporation (unless its charter provides otherwise, which the Registrant’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 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 (1) was committed in bad faith or (2) 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. However, under Maryland law, a Maryland corporation may not indemnify for an adverse judgment in a suit by or in the right of the corporation or for a judgment of liability on the basis that a personal benefit was improperly received unless, in either case, a court orders indemnification, and then only for expenses. In addition, Maryland law permits a corporation to advance reasonable expenses to a director or officer in advance of final disposition of a proceeding 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.
 
Adviser and Administrator
 
The Investment Advisory Agreement provides that, absent willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of the reckless disregard of its duties and obligations, Priority Senior Secured Income Management, LLC (the “Adviser”) and its officers, managers, agents, employees, controlling persons, members and any other person or entity affiliated with it are entitled to indemnification from the Registrant for any damages, liabilities, costs and

C- 3


expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) arising from the rendering of the Adviser’s services under the Investment Advisory Agreement or otherwise as an investment adviser of the Registrant.
 
The Administration Agreement provides that, absent willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of the reckless disregard of its duties and obligations, Prospect Administration LLC and its officers, managers, agents, employees, controlling persons, members and any other person or entity affiliated with it are entitled to indemnification from the Registrant for any damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) arising from the rendering of Prospect Administration LLC’s services under the Administration Agreement or otherwise as administrator for the Registrant. Similar provisions are made with respect to a subsidiary of Behringer Harvard and its representatives under the Investor Services Agreement.
 
The law also provides for comparable indemnification for corporate officers and agents. Insofar as indemnification for liability arising under the Securities Act of 1933, as amended (the “Securities Act”) 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 Securities 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 Securities Act and will be governed by the final adjudication of such issue.
 
The Registrant has entered into indemnification agreements with its directors. The indemnification agreements are intended to provide the Registrant’s directors the maximum indemnification permitted under Maryland law and the 1940 Act. Each indemnification agreement provides that the Registrant shall indemnify the director who is a party to the agreement (an “Indemnitee”), including the advancement of legal expenses, if, by reason of his or her corporate status, the Indemnitee is, or is threatened to be, made a party to or a witness in any threatened, pending, or completed proceeding, other than a proceeding by or in the right of the Registrant.
 
Item 31.  Business and Other Connections of Investment Advisers
 
A description of any other business, profession, vocation, or employment of a substantial nature in which the Adviser, and each director or executive officer of the Adviser, is or has been during the past two fiscal years, engaged in for his or her own account or in the capacity of director, officer, employee, partner or trustee, is set forth in Part A of this Registration Statement in the sections entitled “Management—Board of Directors,” and “Executive Officers” and “Investment Advisory Agreement.” Additional information regarding the Adviser and its officers and directors is set forth in its Form ADV, as filed with the Securities and Exchange Commission (SEC File No. 801-77270), and is incorporated herein by reference.
 
Item 32.  Location of Accounts and Records
 
All accounts, books and other documents required to be maintained by Section 31(a) of the Investment Company Act of 1940, and the rules thereunder are maintained at the offices of:
 
(1)                                  the Registrant, Priority Income Fund, Inc., 10 East 40 th  Street, 42 nd  Floor, New York, New York 10016;
 
(2)                                  the Transfer Agent, DST Systems, Inc., 430 W. 7 th  Street, Kansas City, MO 64105;
 
(3)                                  the Custodian, U.S. Bank National Association, 1719 Range Way, Florence, South Carolina 29501;
 
(4)                                  the Adviser, Priority Senior Secured Income Management, LLC, 10 East 40 th  Street, 42 nd  Floor, New York, New York 10016; and
 
(5)                                  the administrator, Prospect Administration LLC, 10 East 40 th  Street, 42 nd Floor, New York, New York 10016.

Item 33.  Management Services
 
Not Applicable.
 

C- 4


Item 34.  Undertakings
 
We hereby undertake:
 
(1
)
to suspend the offering of shares until the prospectus is amended if (i) subsequent to the effective date of this registration statement, our net asset value declines more than ten percent from our net asset value as of the effective date of this registration statement, or (ii) our net asset value increases to an amount greater than our net proceeds as stated in the prospectus;
 
 
(2
)
to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement
 
 
 
(i)
to include any prospectus required by Section 10(a)(3) of the Securities Act;
 
 
 
 
(ii)
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; and
 
 
 
 
(iii)
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.
 
 
(3
)
that, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of those securities at that time shall be deemed to be the initial bona fide  offering thereof;
 
 
(4
)
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; and
 
 
(5
)
that, for the purpose of determining liability under the Securities Act to any purchaser, if the Registrant is subject to Rule 430C [17 CFR 230.430C]: Each prospectus filed pursuant to Rule 497(b), (c), (d) or (e) under the Securities Act [17 CFR 230.497(b), (c), (d) or (e)] as part of a registration statement relating to an offering, other than prospectuses filed in reliance on Rule 430A under the Securities Act [17 CFR 230.430A], 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; and
 
 
(6
)
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 an 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.
 
 
 
 
(i)
any preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule 497 under the Securities Act [17 CFR 230.497];
 
 
 
 
(ii)
the portion of any advertisement pursuant to Rule 482 under the Securities Act [17 CFR 230.482] relating to the offering containing material information about the undersigned Registrant or its securities provided by or on behalf of the undersigned Registrant; and
 
 
 

C- 5


 
(iii)
any other communication that is an offer in the offering made by the undersigned Registrant to the purchaser.
 
 
 
(7
)
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 statement of additional information.

C- 6


SIGNATURES
 
Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this Registration Statement on Form N-2 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on December 18, 2014.
 
 
 
Priority Income Fund, Inc.
 
 
 
 
 
 
 
 
By
/s/ M. GRIER ELIASEK
 
 
 
Name:
M. Grier Eliasek
 
 
 
Title:
Chief Executive Officer and President
 
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement on Form N-2 has been signed below by the following persons in the capacities and on the dates indicated:
 
Signature
 
Title
 
Date
 
 
 
 
 
/s/ M. GRIER ELIASEK
 
Chairman of the Board of Directors, Chief Executive Officer and President (Principal Executive Officer)
 
December 18, 2014
M. Grier Eliasek
 
 
 
 
 
 
 
 
 
 
 
 
 
/s/ BRIAN H. OSWALD
 
Chief Financial Officer, Chief Compliance Officer, Treasurer and Secretary (Principal Financial Officer and Principal Accounting Officer)
 
December 18, 2014
Brian H. Oswald
 
 
 
 
 
 
 
 
 
 
 
 
/s/ ROBERT S. AISNER*
 
Director
 
December 18, 2014
Robert S. Aisner
 
 
 
 
 
 
 
 
 
 
 
 
 
 
/s/ ANDREW C. COOPER*
 
Director
 
December 18, 2014
Andrew C. Cooper
 
 
 
 
 
 
 
 
 
 
 
 
 
 
/s/ WILLIAM J. GREMP*
 
Director
 
December 18, 2014
William J. Gremp
 
 
 
 
 
 
 
 
 
 
 
 
 
 
/s/ EUGENE S. STARK*
 
Director
 
December 18, 2014
Eugene S. Stark
 
 
 
 
 
 
 
 
 
 
 
 
 
 
*By:
/s/ M. GRIER ELIASEK
 
 
 
December 18, 2014
 
as Attorney-in-Fact
 
 
 
 


C- 7
Exhibit (k)(4)

FORM OF TRADEMARK LICENSE AGREEMENT
This TRADEMARK LICENSE AGREEMENT (this “ Agreement ”) is effective as of October ___, 2014 (the “ Effective Date ”) by and between Priority Senior Secured Income Management, LLC, a Delaware limited liability company (the “ Licensor ”), and Priority Income Fund, Inc., a Maryland corporation (the “ Corporation ”) (each a “ party ,” and collectively, the “ parties ”).
RECITALS
WHEREAS, Licensor is the owner in the United States of America (the “Territory”) of the trade name and service mark “PRIORITY INCOME” and an application to register “PRIORITY INCOME” in the U.S. Patent and Trademark Office (Serial No. 86439393) filed on October 30, 2014 (the “ Licensed Mark ”);
WHEREAS, the Corporation is a newly organized closed-end management investment company registered under the Investment Company Act of 1940 (the “1940 Act”);
WHEREAS, pursuant to that certain investment advisory agreement dated as of May 9, 2013 between Licensor and the Corporation (the “ Advisory Agreement ”), the Corporation has engaged Licensor to act as the investment adviser to the Corporation; and
WHEREAS, the Corporation desires to use the Licensed Mark in connection with the operation of its business, and Licensor is willing to permit the Corporation to use the Licensed Mark, subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE 1
LICENSE GRANT
1.1     License .  Subject to the terms and conditions of this Agreement, Licensor hereby grants to the Corporation, and the Corporation hereby accepts from Licensor, a personal, non-exclusive, royalty-free right and license to use the Licensed Mark solely and exclusively as an element of the Corporation’s own company name and URL address and in connection with marketing and promoting investments in the Corporation.  Except as provided above, neither the Corporation nor any affiliate, owner, director, officer, employee, or agent thereof shall otherwise use the Licensed Mark or any derivative thereof without the prior express written consent of Licensor in its sole and absolute discretion.  All rights not expressly granted to the Corporation hereunder shall remain the exclusive property of Licensor.
1.2     Licensor’s Use .  Nothing in this Agreement shall preclude Licensor, its affiliates, or any of their respective successors or assigns from using or permitting other entities


to use the Licensed Mark whether or not such entity directly or indirectly competes or conflicts with the Corporation’s business in any manner.
ARTICLE 2
OWNERSHIP
2.1     Ownership .  The Corporation acknowledges and agrees that Licensor is the owner of all right, title, and interest in and to the Licensed Mark, and all such right, title, and interest shall remain with the Licensor.  The Corporation shall not otherwise contest, dispute, or challenge Licensor’s right, title, and interest in and to the Licensed Mark.
2.2     Goodwill .  All goodwill and reputation generated by the Corporation’s use of the Licensed Mark shall inure to the benefit of Licensor.  The Corporation shall not by any act or omission use the Licensed Mark in any manner that disparages or reflects adversely on Licensor or its business or reputation.  Except as expressly provided herein, neither party may use any trademark or service mark of the other party without that party’s prior written consent, which consent shall be given in that party’s sole discretion.
ARTICLE 3
COMPLIANCE
3.1     Quality Control .  In order to preserve the inherent value of the Licensed Mark, the Corporation agrees to use reasonable efforts to ensure that it maintains the quality of the Corporation’s business and the operation thereof as prescribed by Licensor and further agrees to use the Licensed Mark in accordance with such quality standards as may be reasonably established by Licensor and communicated to the Corporation from time to time.
3.2     Compliance With Laws .  The Corporation agrees that the business operated by it in connection with the Licensed Mark shall comply with all laws, rules, regulations and requirements of any governmental body in the Territory or elsewhere as may be applicable to the operation, advertising and promotion of the business, and shall notify Licensor of any action that must be taken by the Corporation to comply with such law, rules, regulations or requirements.
3.3     Notification of Infringement .  Each party shall immediately notify the other party and provide to the other party all relevant background facts upon becoming aware of (i) any registrations of, or applications for registration of, marks in the Territory that do or may conflict with any Licensed Mark, and (ii) any infringements, imitations, or illegal use or misuse of the Licensed Mark in the Territory.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1     Mutual Representations .  Each party hereby represents and warrants to the other party as follows:

2


(a)     Due Authorization .  Such party is a limited liability company or a corporation, as applicable, duly incorporated and in good standing as of the Effective Date, and the execution, delivery and performance of this Agreement by such party have been duly authorized by all necessary action on the part of such party.
(b)     Due Execution .  This Agreement has been duly executed and delivered by such party and, with due authorization, execution and delivery by the other party, constitutes a legal, valid and binding obligation of such party, enforceable against such party in accordance with its terms.
(c)     No Conflict .  Such party’s execution, delivery and performance of this Agreement do not: (i) violate, conflict with or result in the breach of any provision of the charter or by-laws (or similar organizational documents) of such party; (ii) conflict with or violate any law or governmental order applicable to such party or any of its assets, properties or businesses; or (iii) conflict with, result in any breach of, constitute a default (or event which with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of any contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which it is a party.
ARTICLE 5
TERM AND TERMINATION
5.1     Term .  This Agreement shall expire (i) upon expiration or termination of the Advisory Agreement; (ii) if the Adviser or any of its affiliates ceases to serve as investment adviser to the Corporation; or (iii) upon sixty (60) days’ written notice by Licensor or the Corporation to the other party.
5.2     Upon Termination .  Upon expiration or termination of this Agreement, all rights granted to the Corporation under this Agreement with respect to the Licensed Mark shall cease, and the Corporation shall immediately discontinue use of the Licensed Mark.  For twelve (12) months following termination of this Agreement, the Corporation shall specify on all public-facing materials in a prominent place and in prominent typeface that the Corporation is no longer operating under the Licensed Mark and is no longer associated with Licensor or the Adviser.
ARTICLE 6
MISCELLANEOUS
6.1     Assignment .  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.  The Corporation may not assign, delegate or otherwise transfer this Agreement or any of its rights or obligations hereunder without the prior written consent of the Licensor.  No assignment by either party permitted hereunder shall relieve the applicable party of its obligations under this Agreement.  Any assignment by either party in accordance with the terms of this Agreement shall be pursuant to a written assignment agreement in which the assignee expressly assumes the assigning party’s rights and obligations hereunder.

3


6.2     Independent Contractor .  Except as expressly provided or authorized in the Advisory Agreement, neither party shall have, or shall represent that it has, any power, right or authority to bind the other party to any obligation or liability, or to assume or create any obligation or liability on behalf of the other party.
6.3     Notices .  All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service (with signature required), by facsimile, or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses:
If to Licensor:
 
Priority Senior Secured
Income Management, LLC
10 East 40 th  Street, 42 nd  Floor
New York, NY 10016
Tel. No.: (212) 488-0702
Fax No.: (212) 488-9652
Attn:  John F. Barry III
             M. Grier Eliasek
 
If to the Corporation:
 
Priority Income Fund, Inc.
10 East 40 th  Street, 42 nd  Floor
New York, NY 10016
Tel. No.: (212) 488-0702
Fax No.: (212) 488-9652
Attn:  M. Grier Eliasek
              Frank V. Saracino
6.4     Law .  This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts formed and to be performed entirely within the State of New York.  The parties unconditionally and irrevocably consent to the exclusive jurisdiction of the courts located in the State of New York and waive any objection with respect thereto, for the purpose of any action, suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
6.5     Amendment .  This Agreement may not be amended or modified except by an instrument in writing signed by all parties hereto.
6.6     No Waiver .  The failure of either party to enforce at any time for any period the provisions of or any rights deriving from this Agreement shall not be construed to be a waiver of such provisions or rights or the right of such party thereafter to enforce such provisions, and no waiver shall be binding unless executed in writing by all parties hereto.
6.7     Severability .  If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

4


6.8     Headings .  The descriptive headings contained in this Agreement are for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement.
6.9           Counterparts .  This Agreement may be executed in one or more counterparts, each of which when executed shall be deemed to be an original instrument and all of which taken together shall constitute one and the same agreement.
6.10         Entire Agreement .  This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior agreements and undertakings, both written and oral, between the parties with respect to such subject matter.
6.11         Third Party Beneficiaries .  Nothing in this Agreement, either express or implied, is intended to or shall confer upon any third party any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
[Remainder of Page Intentionally Blank]

5


 
IN WITNESS WHEREOF, each party has caused this Agreement to be executed as of the Effective Date by its duly authorized officer.
LICENSOR:

Priority Senior Secured Income Management, LLC



By: _____________________________
Name:
Title:

THE CORPORATION:

Priority Income Fund, Inc.



By: _____________________________
Name:
Title:


6

Exhibit (k)(5)

FORM OF AMENDED AND RESTATED
EXPENSE SUPPORT AND CONDITIONAL REIMBURSEMENT AGREEMENT
This Amended and Restated Expense Support and Conditional Reimbursement Agreement (the “Agreement” ) is made this ____ day of December, 2014, by and among Priority Income Fund, Inc. (the “Fund” ) and Priority Senior Secured Income Management, LLC (the “ Adviser ”).
WHEREAS, the Fund is a non-diversified, closed-end management investment company that has registered as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act” );
WHEREAS, the Fund and the Adviser have entered into an Investment Advisory and Management Services Agreement dated as of May 9, 2013 (the “ Advisory Agreement ”);
WHEREAS, the Fund and the Adviser have determined that it is appropriate and in the best interests of the Fund to reduce the Fund’s offering and operating expenses until the Fund has achieved economies of scale sufficient to ensure that it bears a reasonable level of expense in relation to its investment income;
WHEREAS, the original Expense Support and Conditional Reimbursement Agreement was entered into by the Fund and the Adviser on February 10, 2014 (the “ Original Agreement ”); and
WHEREAS, the Fund and the Adviser desire to amend and restate the Original Agreement to set forth in full their respective rights and obligations with respect to each other.
NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the parties hereby agree as follows:
1.      Adviser Expense Payments to the Fund
(a) Commencing with the calendar quarter ended March 31, 2014 and continuing monthly thereafter until May 9, 2016, which monthly continuance and final termination date may be extended by mutual agreement between the Fund and the Adviser (the “ Expense Support Payment Period ”), the Adviser hereby agrees to reimburse the Fund, at the Fund’s request and in the amount requested by the Fund for operating expenses in a maximum amount equal to the difference between the Fund’s distributions paid to the Fund’s stockholders in each month less Available Operating Funds (defined below) received by the Fund on account of its investment portfolio for such month. Any payments required to be made by the Adviser pursuant to the preceding sentence shall be referred to herein as an “ Expense Payment .” To the extent that no dividends or other distributions are paid to the Fund’s stockholders in any given month, then the Expense Payment for such month shall be equal to such amount necessary in order for Available Operating Funds for the month to equal zero.
(b) The Adviser’s obligation to make an Expense Payment shall automatically become a liability of the Adviser and the right to such Expense Payment shall be an asset of the Fund on the last business day of the applicable month. The Expense Payment for any month shall be paid by the Adviser to the Fund in any combination of cash or other immediately available funds, and/or offsets against amounts otherwise due from the Fund to the Adviser, no later than the earlier of (i) the date on which the Fund closes the books for such month and (ii) thirty days after the end of such month (the “ Expense Payment Date ”).
(c) For purposes of this Agreement, “ Available Operating Funds ” means the sum of (i) the Fund’s net investment income (minus any Reimbursement Payments payable to the Adviser pursuant to Section 2(c)), (ii) the Fund’s net realized capital gains/losses plus unrealized losses and (iii) dividends and other distributions paid to the Fund on account of its portfolio investments (to the extent such amounts listed in clause (iii) are not included under clauses (i) and (ii) above).
2.      Conditional Reimbursement of Expense Payments by the Fund
(a) The Fund hereby agrees to reimburse the Adviser in an amount equal to the total Expense Payments made by the Adviser to the Fund under this Agreement, with the repayment of each such Expense Payment to be made



within a period not to exceed three years from the end of the fiscal year in which such Expense Payment was made by the Adviser to the Fund. Following any calendar quarter in which Available Operating Funds in such calendar quarter exceed the cumulative distributions paid to the Fund’s stockholders in such calendar quarter (the amount of such excess being hereinafter referred to as “ Excess Operating Funds ”) on a date mutually agreed upon by the Adviser and the Fund (each such date, a “ Reimbursement Date ”), the Fund shall pay such Excess Operating Funds, or a portion thereof, to the extent that the Fund has cash available for such payment, in accordance with Section 2(b), to the Adviser until such time as all Expense Payments made by the Adviser to the Fund have been reimbursed; provided, that (i) the Operating Expense Ratio as of such Reimbursement Date is equal to or less than the Operating Expense Ratio as of the Expense Payment Date attributable to such specified Expense Payment; (ii) the Annualized Distribution Rate as of such Reimbursement Date is equal to or greater than the Annualized Distribution Rate as of the Expense Payment Date attributable to such specified Expense Payment; and (iii) such specified Expense Payment Date is not earlier than three years prior to the Reimbursement Date. Any payments required to be made by the Fund pursuant to this Section 2(a) shall be referred to herein as a “ Reimbursement Payment .”
(b) The amount of the Reimbursement Payment for any calendar quarter shall equal the lesser of (i) the Excess Operating Funds in such calendar quarter and (ii) the aggregate amount of all Expense Payments made by the Adviser to the Fund within three years prior to the last business day of such calendar quarter that have not been previously reimbursed by the Fund to the Adviser.
(c) Subject to Section 2(a), the Fund’s obligation to make a Reimbursement Payment shall automatically become a liability of the Fund and the right to such Reimbursement Payment shall be an asset of the Adviser on the last business day of the applicable calendar quarter. The Reimbursement Payment for any calendar quarter shall be paid by the Fund to the Adviser in any combination of cash or other immediately available funds no later than forty-five days after the end of such calendar quarter. Any Reimbursement Payments shall be deemed to have reimbursed the Adviser for Expense Payments in chronological order beginning with the oldest Expense Payment eligible for reimbursement under this Section 2.
(d) For purposes of this Agreement, the following definitions shall apply:
(i) “ Annualized Distribution Rate ” shall mean the per share amount of all regular cash distributions paid to stockholders of the Fund, but excluding special cash distributions or the effect of any stock dividends paid by the Fund, as of the applicable period, expressed as a percentage of the Fund’s public offering price per share as of the relevant measurement date;
(ii) “ Net Operating Expenses ” shall mean the sum of all Operating Expenses, excluding organization and offering expenses, the Base Management Fee (as defined in the Advisory Agreement), the Incentive Fee (as defined in the Advisory Agreement) and any interest expense attributable to indebtedness incurred by the Fund, as of the applicable period;
(iii) “ Operating Expenses ” for any period shall mean all costs and expenses paid or incurred by or on behalf of the Fund, as determined under U.S. generally accepted accounting principles, including, without limitation any interest expense attributable to indebtedness incurred by the Fund for such period and any fees payable to the Adviser pursuant to the Advisory Agreement; and
(iv) “ Operating Expense Ratio ” shall mean Net Operating Expenses, as of the applicable period, expressed as a percentage of the average net assets of the Fund as of the relevant measurement date.
3.      Termination and Survival
(a) This Agreement shall become effective as of the date of this Agreement.
(b) This Agreement may be terminated at any time, without the payment of any penalty and without notice, by the Fund. This Agreement may be terminated by the Adviser upon written notice to the Fund, except that once effective, the Adviser may not terminate its obligations under Section 1 hereof after the commencement of any monthly period referred to therein.


2

(c) This Agreement shall automatically terminate in the event of (i) the termination by the Fund of its investment advisory relationship with the Adviser or (ii) the board of directors of the Fund making a determination to dissolve or liquidate the Fund.
(d) Notwithstanding anything to the contrary set forth in this Agreement, if this Agreement terminates automatically pursuant to Section 3(c) or, following a termination of this Agreement pursuant to Section 3(b), an event described in Section 3(c) occurs, the Fund agrees to pay the Adviser an amount equal to all Expense Payments paid by the Adviser to the Fund within three years of the payment of such Expense Payments pursuant to Section 3(c) that have not been previously reimbursed by the Fund to the Adviser. Such repayment shall be made to the Adviser not later than thirty days after such date of termination.
(e) Sections 3 and 4 shall survive any termination of this Agreement. Notwithstanding anything to the contrary, Section 2 shall survive any termination of this Agreement with respect to any Expense Payments that have not been reimbursed by the Fund to the Adviser.
4.      Miscellaneous
(a) The captions of this Agreement are included for convenience only and in no way define or limit any of the provisions hereof or otherwise affect their construction or effect.
(b) This Agreement shall be governed by and construed in accordance with the laws of the State of New York (without reference to its conflicts of laws provisions) and the applicable provisions of the Investment Company Act, and the Investment Advisers Act of 1940, as amended (the “ Advisers Act ”). To the extent that the applicable laws of the State of New York or any of the provisions herein, conflict with the applicable provisions of the Investment Company Act or the Advisers Act, the latter shall control. Further, nothing herein contained shall be deemed to require the Fund to take any action contrary to the Fund’s Second Articles of Amendment and Restatement or Amended and Restated Bylaws, as each may be amended or restated, or to relieve or deprive the Fund’s board of directors of its responsibility for and control of the conduct of the affairs of the Fund.
(c) If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby and, to this extent, the provisions of this Agreement shall be deemed to be severable.
(d) The Fund shall not assign this Agreement or any right, interest or benefit under this Agreement without the prior written consent of the Adviser.
(e) This Agreement may be amended in writing by mutual consent of the parties. This Agreement may be executed by the parties on any number of counterparts, delivery of which may occur by facsimile or as an attachment to an electronic communication, each of which shall be deemed an original, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

[Signature page to follow]

3


IN WITNESS WHEREOF , the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the date first written above.
        

PRIORITY INCOME FUND, INC.
    
By: ____________________________
Name:         
Title:         


PRIORITY SENIOR SECURED INCOME MANAGEMENT, LLC     

By: ____________________________
Name:         
Title:     



4