Item 1.01. Entry into a Material Definitive
Agreement.
On January 13, 2022, Saratoga
Investment Corp. (the “Company”) entered into an underwriting agreement (the “Underwriting Agreement”) by and
among the Company, Saratoga Investment Advisors, LLC and Raymond James & Associates, Inc., as representative of the several underwriters
named in Exhibit A thereto, in connection with the issuance and sale of $75 million aggregate principal amount of the Company’s
4.35% Notes due 2027 (the “Notes”) and the issuance and sale of the Notes, the “Offering”).
On January 19, 2022, the
Company and U.S. Bank National Association, as trustee (the “Trustee”), entered into a Ninth Supplemental Indenture (the “Ninth
Supplemental Indenture”) to the Base Indenture, dated May 10, 2013, between the Company and the Trustee (the “Base Indenture”;
and together with the Ninth Supplemental Indenture, the “Indenture”). The Ninth Supplemental Indenture relates of the Notes.
The Notes bear interest
at a rate of 4.35% per year payable semi-annually in arrears on February 28 and August 28 of each year, beginning on August 28, 2022.
The Notes will mature on February 28, 2027 and may be redeemed in whole or in part at the Company’s option at any time prior to
November 28, 2026, at par plus a “make-whole” premium, and thereafter at par.
The
Company intends to use the net proceeds from the Offering to make investments in middle-market companies (including investments
made through Saratoga Investment Corp. SBIC LP and Saratoga Investment Corp. SBIC II LP, each a wholly owned subsidiary of the Company
that is licensed as a small business investment company) in accordance with the Company’s investment objective and strategies and
for general corporate purposes.
The Notes are the direct
unsecured obligations of the Company and rank pari passu with all existing and future unsubordinated unsecured indebtedness
issued by the Company, senior to any of the Company’s future indebtedness that expressly provides it is subordinated to the Notes,
effectively subordinated to all of the existing and future secured indebtedness issued by the Company (including indebtedness that
is initially unsecured in respect of which the Company subsequently grants security), to the extent of the value of the assets securing
such indebtedness, including, without limitation, borrowings under the Company’s senior secured revolving credit facility, as amended,
and structurally subordinated to all existing and future indebtedness and other obligations of any of the Company’s subsidiaries.
The Indenture contains certain
covenants, including certain covenants requiring the Company to comply with Section 18(a)(1)(A) as modified by Section 61(a)(2) of
the Investment Company Act of 1940, as amended (the “1940 Act”), or any successor provisions, whether or not
the Company continues to be subject to such provisions of the 1940 Act, but giving effect, in either case, to any exemptive relief
granted to the Company by the U.S. Securities and Exchange Commission (the “SEC”); to agree that for the period
of time during which the Notes are outstanding, the Company will not declare any dividend (except a dividend payable in our stock), or
declare any other distribution, upon a class of our capital stock, or purchase any such capital stock, unless, in every such case, at
the time of the declaration of any such dividend or distribution, or at the time of any such purchase, the Company has an asset coverage
(as defined in the 1940 Act) of at least the threshold specified in Section 18(a)(1)(B) as modified by such provisions of Section 61(a)(2)
of the 1940 Act as may be applicable to the Company from time to time or any successor provisions thereto of the 1940 Act, as such obligation
may be amended or superseded, after deducting the amount of such dividend, distribution or purchase price, as the case may be, and in
each case giving effect to (i) any exemptive relief granted to the Company by the SEC, and (ii) any SEC no-action relief
granted by the SEC to another business development company (“BDC”) (or to the Company if it determines to seek
such similar no-action or other relief) permitting the BDC to declare any cash dividend or distribution notwithstanding the
prohibition contained in Section 18(a)(1)(B) as modified by such provisions of Section 61(a)(2) of the 1940 Act as may be applicable
to the Company from time to time; and to provide financial information to the holders of the Notes
and the Trustee if the Company should no longer be subject to the reporting requirements under the Securities Exchange Act of 1934, as
amended. These covenants are subject to important limitations and exceptions that are described in the Indenture.
In addition, holders of
the Notes can require the Company to repurchase some or all of the Notes at a purchase price equal to 100% of their principal amount,
plus accrued and unpaid interest to, but not including, the repurchase date upon the occurrence of a “Change of Control Repurchase
Event,” as defined in the Ninth Supplemental Indenture.
The
Notes were offered and sold in an offering registered under the Securities Act of 1933, as amended, pursuant to the Registration Statement
on Form N-2 (File No. 333-256366), the prospectus supplement dated January 13, 2022
and the pricing term sheet filed with the SEC on January 13, 2022. The transaction closed on January 19, 2022. The net proceeds to the
Company were approximately $72.7 million, based on a public offering price of 99.317% of par, after deducting the underwriting discount
of $1.5 million and the estimated offering expenses of approximately $250,000 payable by the Company.
The foregoing descriptions
of the Underwriting Agreement, the Ninth Supplemental Indenture, and the Notes do not purport to be complete and are qualified in their
entirety by reference to the full text of the the Underwriting Agreement, the Ninth Supplemental Indenture, and the form of global note
representing the Notes, respectively, each filed as exhibits hereto and incorporated by reference herein.