Washington, D.C. 20549
FOURTH AMENDED AND RESTATED APPLICATION
FOR AN ORDER UNDER SECTIONS 17(d) AND 57(i) OF THE INVESTMENT COMPANY ACT OF 1940 AND RULE 17d-1 UNDER THE INVESTMENT COMPANY
ACT OF 1940 PERMITTING CERTAIN JOINT TRANSACTIONS OTHERWISE PROHIBITED BY SECTIONS 17(d) AND 57(a)(4) OF THE INVESTMENT
COMPANY ACT OF 1940 AND RULE 17d-1.
UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
In the Matter of:
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ALCENTRA CAPITAL CORPORATION
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FOURTH AMENDED AND RESTATED APPLICATION FOR AN ORDER UNDER SECTIONS 17(d) AND 57(i) OF THE INVESTMENT COMPANY ACT OF 1940 AND RULE 17d-1 UNDER THE INVESTMENT COMPANY ACT OF 1940 PERMITTING CERTAIN JOINT TRANSACTIONS OTHERWISE PROHIBITED BY SECTIONS 17(d) AND 57(a)(4) OF THE INVESTMENT COMPANY ACT OF 1940 AND RULE 17d-1.
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Alcentra Middle Market Fund IV, L.P.
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ALCENTRA NY, LLC
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ALCENTRA BDC EQUITY HOLDINGS, LLC
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David P. Scopelliti
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President and Chief Executive Officer
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Alcentra Capital Corporation
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200 Park Avenue, 7th Floor
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New York, New York 10166
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THE DREYFUS CORPORATION
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DREFYFUS ALCENTRA GLOBAL CREDIT INCOME 2024 TARGET TERM FUND, INC.
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Jeff S. Prusnofsky, Esq.
Vice President
Dreyfus Alcentra Global Credit Income 2024 Target Term Fund, Inc.
200 Park Avenue New York, New York 10166
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STIRA ALCENTRA GLOBAL CREDIT FUND
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STIRA INVESTMENT ADVISER, LLC
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Christopher Hilbert
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Chief Executive Officer
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Stira Alcentra Global Credit Fund
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18100 Von Karman Avenue, Suite 500
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Irvine, CA 92612
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(877) 567-7246
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File No.
812-14760
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Investment Company Act of 1940
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INTRODUCTION
The following entities hereby apply for an
order (the
“Order”
) of the U.S. Securities and Exchange Commission (the
“Commission”
)
pursuant to Sections 17(d) and 57(i) of the Investment Company Act of 1940, as amended (the “
Act
”),
1
and Rule 17d-1 thereunder,
2
authorizing
certain joint transactions that may otherwise be prohibited by either or both of Sections 17(d) and 57(a)(4) of the Act:
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Alcentra
Capital Corporation (the “
Company
”),
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Stira
Alcentra Global Credit Fund (“
Stira Alcentra
”),
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Dreyfus
Alcentra Global Credit Income 2024 Target Term Fund, Inc. ("
DCF
" and, collectively with the Company and
Stira Alcentra, the “
Existing Regulated Funds
”),
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Alcentra
BDC Equity Holdings, LLC (the “
Subsidiary
”),
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Alcentra
Middle Market Fund IV, L.P. (the “
Existing Co-Investment Affiliate
”),
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Alcentra
NY, LLC (“
Alcentra NY
”),
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Stira
Investment Adviser, LLC (“
Stira Adviser
”), and
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The
Dreyfus Corporation (“
Dreyfus
,” and together with the Existing Regulated Funds, the Subsidiary, the
Existing Co-Investment Affiliate, Alcentra NY, and Stira Adviser, the “
Applicants
”).
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The Order would supersede an exemptive order
issued by the Commission on December 30, 2015 (the “
Prior Order
”)
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that
was granted pursuant to Sections 17(d) and 57(i) and Rule 17d-1, with the result that no person will continue to rely
on the Prior Order if the Order is granted.
In particular, the relief requested in this
application (the “
Application
”) would allow a Regulated Fund
4
(or a Wholly-Owned Investment Sub, as defined below) and one or more other
1
Unless otherwise indicated, all section references herein are to the Act.
2
Unless otherwise indicated, all rule references herein are to rules under the Act.
3
See
Alcentra Capital Corporation, et al. (File No. 812-14374) Investment Company
Act Rel. Nos. 31927 (December 4, 2015) (notice) and 31951 (December 30, 2015) (order).
4
The
term “
Regulated Funds
” means the Existing Regulated Funds and any future closed-end investment companies
that (a) are registered under the Act or have elected to be regulated as a business development company (“
BDC
”)
under the Act, (b) are (i) advised by an Alcentra/Dreyfus Adviser, as defined below, or (ii) advised by Stira Adviser and sub-advised
by an Alcentra/Dreyfus Adviser where the Alcentra/Dreyfus Adviser has discretionary authority to make investment decisions for
such Regulated Fund, and (c) that intend to participate in the Co-Investment Program. “
Alcentra/Dreyfus Adviser
”
means Alcentra NY, Dreyfus or an entity registered under the Investment Advisers Act of 1940 (“
Advisers Act
”)
that is controlling, controlled by, or under common control with The Bank of New York Mellon Corporation (“
BNY Mellon
”).
The term “
Adviser
” means an Alcentra/Dreyfus Adviser or Stira Adviser. Alcentra NY and Dreyfus are direct
or indirect wholly-owned subsidiaries of BNY Mellon. All references herein to the term “Adviser” include successors-in-interest
to the Adviser. A successor-in-interest is limited to any entity resulting from a reorganization of the Adviser into another jurisdiction
or a change in the type of business organization.
Regulated Funds (or a Wholly-Owned Investment
Sub) and/or one or more Co-Investment Affiliates
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to participate in the same investment opportunities through a proposed co-investment program (the “
Co-Investment
Program
”) where such participation would otherwise be prohibited by Sections 17(d) and 57(a)(4) and Rule 17d-1.
As used herein, “
Co-Investment Transaction
” means any transaction in which a Regulated Fund (or a Wholly-Owned
Investment Sub) participated together with one or more other Regulated Funds (or a Wholly-Owned Investment Sub) and/or one or
more Co-Investment Affiliates in reliance on the Order. “
Potential Co-Investment Transaction
” means
any investment opportunity in which a Regulated Fund (or a Wholly-Owned Investment Sub) could not participate together with one
or more other Regulated Funds (or a Wholly-Owned Investment Sub) and/or one or more Co-Investment Affiliates without obtaining
and relying on the Order.
“
Wholly-Owned Investment Sub
”
means an entity (i) that is wholly-owned by a Regulated Fund (with the Regulated Fund at all times holding, beneficially and of
record, 100% of the voting and economic interests); (ii) whose sole business purpose is to hold one or more investments on behalf
of the Regulated Fund (and, in the case of any SBIC Subsidiaries
6
(as defined below), to maintain a license under the SBA Act (as defined below) and issue debentures guaranteed by the SBA (as defined
below)); (iii) with respect to which the Board of a Regulated Fund
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has the sole authority to make all determinations with respect to the Wholly-Owned Investment Sub’s participation under the
conditions to this Application; and (iv) that would be an investment company but for Section 3(c)(1) or 3(c)(7) of the Act. The
Subsidiary is a Wholly-Owned Investment Sub, and any future subsidiaries of the Regulated Funds that participate in the Co-Investment
Program will be Wholly-Owned Investment Subs.
A Regulated Fund may, from time to time, form
one or more Wholly-Owned Investment Subs. Such a subsidiary would be prohibited from investing in a Co-Investment Transaction with
any Co-Investment Affiliate or another Regulated Fund because it would be a company
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The term “
Co-Investment Affiliates
” means the Existing Co-Investment Affiliate and any Future Co-Investment
Affiliate. “
Future Co-Investment Affiliate
” means any entity (i) whose investment adviser is an Alcentra/Dreyfus
Adviser, (ii) that would be an investment company but for Section 3(c)(1) or 3(c)(7) of the Act and (iii) that intends to participate
in the Co-Investment Program.
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The term “
SBIC Subsidiary
” means a Wholly-Owned Investment Sub that is licensed by the Small Business
Administration (the “
SBA
”) to operate under the Small Business Investment Act of 1958, as amended, the
(“
SBA Act
”) as a small business investment company (an “
SBIC
”).
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The term “
Board
” means, with respect to any Regulated Fund, the board of directors or trustees, as applicable,
of that Regulated Fund (including the “
Alcentra Board
” (as defined below), the “
Stira Alcentra
Board
” (as defined below) and the "
DCF Board
" (as defined below)).
controlled by the Regulated Fund for purposes
of Sections 17(d) and 57(a)(4) and Rule 17d-l. Applicants request that a Wholly-Owned Investment Sub be permitted to participate
in Co-Investment Transactions in lieu of the Regulated Fund that owns it and that the Wholly-Owned Investment Sub’s participation
in any such transaction be treated, for purposes of the Order, as though the Regulated Fund were participating directly. Applicants
represent that this treatment is justified because a Wholly-Owned Investment Sub would have no purpose other than serving as a
holding vehicle for the Regulated Fund’s investments and, therefore, no conflicts of interest could arise between the Regulated
Fund and the Wholly-Owned Investment Subs. The Board would make all relevant determinations under the conditions with regard to
a Wholly-Owned Investment Sub’s participation in a Co-Investment Transaction, and the Board would be informed of, and take
into consideration, any proposed use of a Wholly-Owned Investment Sub in the Regulated Fund’s place. If a Regulated Fund
proposes to participate in the same Co-Investment Transaction with any of its Wholly-Owned Investment Subs, the Board will also
be informed of, and take into consideration, the relative participation of the Regulated Fund and the Wholly-Owned Investment Sub.
All existing entities that currently intend
to rely on the Order have been named as Applicants. Any other existing or future entity that relies on the Order in the future
will comply with the terms and conditions of the Application.
The Company was organized as a corporation under
the General Corporate Laws of the State of Maryland on June 6, 2013 for the purpose of operating as an externally-managed, non-diversified,
closed-end management investment company that has elected to be regulated as a business development company (“
BDC
”)
under the Act.
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In connection with
its initial public offering of common stock (the “
IPO
”), on March 12, 2014, the Company filed a registration
statement on Form N-2, as subsequently amended and supplemented. On May 8, 2014, the Company filed a notice under Form N-54A to
be subject to Sections 55 through 65 of the Act and filed a registration statement on Form 8-A to register its common stock under
Section 12 of the Securities Exchange Act of 1934, as amended (the “
1934 Act
”). Accordingly, the Company
is subject to the periodic reporting requirements under Section 13(a) of the 1934 Act. In addition, on May 8, 2014, the SEC declared
the Company’s registration statement on Form N-2 effective. The Company’s common stock is listed on the NASDAQ Global
Select Market under the symbol “ABDC.” The Company’s principal place of business is 200 Park Avenue, 7th Floor,
New York, New York 10166.
The Subsidiary is a Wholly-Owned Investment Sub,
as defined above, the sole business purpose of which is to hold one or more investments on behalf of the Company. As a result,
the Subsidiary does not have a specific investment objective and strategy. Because the Subsidiary is
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Section 2(a)(48) defines a BDC to be any closed-end investment company that operates for the purpose of making investments in securities
described in Section 55(a)(1) through 55(a)(3) and makes available significant managerial assistance with respect to the issuers
of such securities.
a wholly owned, consolidated
subsidiary of the Company, and the Company’s investment adviser is Alcentra NY, Alcentra NY also manages the assets of the
Subsidiary. The Subsidiary is a Delaware limited liability company.
The Company intends to make an election to be
treated for tax purposes as a regulated investment company (“
RIC
”) under the Internal Revenue Code of
1986, as amended (the “
Code
”), and intends to continue to make such election in the future.
The Company’s investment objective is
to generate both current income and capital appreciation primarily by making direct investments in lower middle-market companies
in the form of subordinated debt and, to a lesser extent, senior debt and minority equity investments. Investment decisions for
the Company are made by Alcentra NY in accordance with the policies approved by the Board.
The Company’s business and affairs are
managed under the direction of a board of directors (the “
Alcentra Board
”). The Alcentra Board currently
consists of seven members, four of whom are not “interested persons” of the Company as defined in Section 2(a)(19)
(the “
Independent Directors
”).
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No Independent Director will have any direct or indirect financial interest in any Co-Investment Transaction or any interest in
any portfolio company, other than through an interest (if any) in the securities of the Company. Paul Hatfield serves as director
on the Alcentra Board and is an “interested person” of the Company as defined in Section 2(a)(19) of the Act because
he is an officer or employee of Alcentra NY. Mr. Hatfield serves as Global Chief Investment Officer of Alcentra NY.
The Company has entered into an investment advisory
agreement with Alcentra NY and an administrative agreement with State Street Bank and Trust Company.
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B.
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The Existing Co-Investment Affiliate
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Alcentra Middle Market Fund IV, L.P. was formed
as a Delaware limited partnership on September 16, 2014. The Existing Co-Investment Affiliate’s investment objective is to
generate both current income and capital appreciation primarily by making direct investments in lower middle-market companies in
the form of senior debt, unitranche debt, subordinated debt and minority equity investments. The Existing Co-Investment Affiliate
currently has no investments. The Existing Co-Investment Affiliate is managed by Alcentra NY.
In reliance on the exclusion from the definition
of “investment company” provided by Section 3(c)(1) or 3(c)(7) of the Act, none of the Co-Investment Affiliates will
be registered under the Act.
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The term “
Independent Directors
,” as used in this application, interchangeably refers to the directors
or trustees, as applicable, of a Regulated Fund who are not “interested persons” of the Regulated Fund as defined in
Section 2(a)(19) of the Act. No Independent Director of a Regulated Fund will have a financial interest in any Co-Investment Transaction,
other than indirectly through share ownership in one of the Regulated Funds.
Stira Alcentra was organized as a Delaware statutory
trust under the Delaware Statutory Trust Act on October 24, 2016. Stira Alcentra is a non-diversified, closed-end management investment
company registered under the Act. Stira Alcentra filed an initial registration statement on Form N-2 on November 3, 2016, which
was declared effective by the SEC on May 8, 2017. Stira Alcentra’s investment objective is to provide current income, and
capital preservation with the potential for capital appreciation. Stira Alcentra intends to pursue its investment objective by
providing customized financing solutions to lower middle-market and middle-market companies in the form of floating and fixed rate
senior secured loans, second lien loans and subordinated debt, which, under normal circumstances, will collectively represent at
least 80% of Stira Alcentra’s net assets (plus the amount of any borrowings for investment purposes). Stira Alcentra’s
common shares of beneficial interest will not be listed for trading on any securities exchange. Stira Alcentra’s principal
place of business is 18100 Von Karman Ave, Suite 500, Irvine, California 92612.
Stira Alcentra’s business and affairs
are managed under the direction of a board of trustees (the “
Stira Alcentra Board
”), which currently
consists of five members, three of whom are Independent Directors. No Independent Director will have any direct or indirect financial
interest in any Co-Investment Transaction or any interest in any portfolio company, other than through an interest (if any) in
the securities of Stira Alcentra. Stira Alcentra intends to make an election to be treated for tax purposes as a RIC under the
Code, and intends to continue to maintain such qualification in the future.
Stira Alcentra has entered into an investment
advisory agreement with Stira Adviser, and Stira Adviser has engaged Alcentra NY to serve as Stira Alcentra's sub-adviser.
DCF was incorporated under the General Corporate
Laws of the State of Maryland on December 11, 2014. DCF is a diversified, closed-end management investment company registered under
the Act that has a limited term of approximately seven years. DCF filed an initial registration statement on Form N-2 on December
16, 2014, which was declared effective by the SEC on October 26, 2017 in connection with the completion of DCF's initial public
offering. DCF's investment objectives are to seek high current income and to return at least $9.835 per common share (the public
offering price per common share after deducting a sales load of $0.165 per common share but before deducting offering costs of
$0.02 per common share) to holders of record of common shares on or about December 1, 2024 (subject to certain extensions described
in DCF's registration statement on Form N-2). Under normal market conditions, DCF will invest at least 80% of its managed assets
in credit instruments and other investments with similar economic characteristics. Such credit instruments include: first lien
secured floating rate loans, as well as investments in participations and assignments of such loans; second lien, senior unsecured,
mezzanine and other collateralized and uncollateralized subordinated loans; corporate debt obligations other than loans; and structured
products, including collateralized bond, loan and other debt obligations, structured notes and credit-linked notes. DCF's common
shares are listed on the New York Stock Exchange under the ticker symbol "DCF."
DCF's business and affairs are managed under
the direction of a board of directors (the "
DCF Board
"), which currently consists of six members, all of
whom are Independent Directors. No Independent Director will have any direct or indirect financial interest in any Co-Investment
Transaction or any interest in any portfolio company, other than through an interest (if any) in the securities of DCF. DCF intends
to make an election to be treated for tax purposes as a RIC under the Code, and intends to continue to maintain such qualification
in the future.
DCF has entered into a management agreement
with Dreyfus, and Dreyfus has engaged Alcentra NY to serve as DCF's sub-adviser.
Alcentra NY is organized as a limited liability
company under the laws of the state of Delaware. Alcentra NY is a subsidiary of the Alcentra Group, which is an indirect wholly-owned
subsidiary of BNY Mellon. Alcentra NY is registered with the Commission pursuant to Section 203 of the Advisers Act.
Alcentra NY serves as investment adviser to
the Company pursuant to an investment advisory agreement and also serves as investment adviser to the Existing Co-Investment Affiliate
and as the sub-adviser to Stira Alcentra, pursuant to an investment sub-advisory agreement with Stira Adviser. Alcentra NY also
serves as the sub-adviser to DCF pursuant to an investment sub-advisory agreement with Dreyfus. Alcentra NY reviews investments
with respect to the Company, the Existing Co-Investment Affiliate, Stira Alcentra and DCF, and determines whether or not each entity
should invest in a new portfolio company or other investment and, if so, to what extent.
Stira Adviser is organized as a limited liability
company under the laws of the State of Delaware and is wholly owned by Steadfast Investment Holdings, LLC, a Delaware limited liability
company. Stira Adviser is affiliated with Steadfast Companies, a group of integrated real estate investment, management and development
companies, which owns and/or manages over $5.0 billion in real estate assets and employs a staff of over 2,000 in the United States
and Mexico as of September 30, 2017. Stira Adviser is registered with the Commission pursuant to Section 203 of the Advisers Act
and currently serves as investment adviser to Stira Alcentra pursuant to an investment advisory agreement. Stira Adviser’s
principal place of business is 18100 Von Karman Ave, Suite 500, Irvine, California 92612.
Stira Adviser has delegated substantially all
of its portfolio-management obligations as set forth in the investment advisory agreement to Alcentra NY pursuant to an investment
sub-advisory agreement. Stira Adviser will have the right to attend all meetings of Alcentra NY’s investment committee and
will have general oversight over the investment process on behalf of Stira Alcentra. Stira Adviser will also have ultimate responsibility
for Alcentra NY’s performance under the terms of the investment sub-advisory agreement.
Dreyfus is a corporation organized under the
laws of the State of New York. Dreyfus is a wholly-owned subsidiary of BNY Mellon and is the primary mutual fund business of BNY
Mellon, a global financial services company focused on helping clients manage and service their financial assets, operating in
35 countries and serving more than 100 markets. BNY Mellon Investment Management is one of the world’s leading investment
management organizations, and one of the top U.S. wealth managers, encompassing BNY Mellon’s affiliated investment management
firms, which includes both Dreyfus and Alcentra, wealth management services and global distribution companies. Dreyfus is registered
as an investment adviser with the Commission pursuant to Section 203 of the Advisers Act. Dreyfus serves as the investment manager
to DCF pursuant to a management agreement.
As permitted under its management agreement
with DCF, Dreyfus has delegated substantially all of its portfolio-management obligations as set forth in the management agreement
to Alcentra NY pursuant to an investment sub-advisory agreement. Dreyfus is responsible for the overall management of DCF's portfolio
and for the supervision and ongoing monitoring of Alcentra NY, which provides day-to-day management of DCF's investments.
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II.
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RELIEF FOR PROPOSED CO-INVESTMENT TRANSACTIONS
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A.
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Co-Investment Transactions by the Regulated Funds
and the Co-Investment Affiliates
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1. Mechanics of the Co-Investment Program
As previously described, Stira Adviser serves
as Stira Alcentra’s investment adviser, and Alcentra NY serves as Stira Alcentra’s sub-adviser. Alcentra NY will also
continue to serve as the investment adviser to the Company, in the same manner as in the past. In these roles, Stira Adviser is
responsible for the overall management of Stira Alcentra’s activities, and Alcentra NY is responsible for the day-to-day
management of Stira Alcentra’s investment portfolio, in each case consistent with their respective fiduciary duties. Stira
Adviser will provide investment advisory services under an investment advisory agreement with Stira Alcentra. Alcentra NY will
provide investment advisory services under an investment sub-advisory agreement by and between Stira Adviser and Alcentra NY. The
investment process will be a collaborative effort between Stira Adviser and Alcentra NY. Importantly, the relationship between
Stira Adviser and Alcentra NY is arm’s length, and, beginning 24 months after the effective date of the investment advisory
agreement, each of Stira Adviser and Alcentra NY may withdraw from the investment sub-advisory agreement upon 60 days’ prior
written notice.
Alcentra NY is solely responsible for identifying
and recommending investments for Stira Alcentra and the Company. Prior to any investment by Stira Alcentra, Alcentra NY will hold
an investment committee meeting, with respect to which Stira Adviser has observer rights. Stira Adviser will participate in the
investment process with regard to Stira Alcentra through the exercise of its observer rights. Stira Adviser will not source any
Potential Co-Investment Transactions under the requested Order.
Pursuant to its investment sub-advisory agreement
with Dreyfus, Alcentra NY is responsible for the day-to-day management of DCF's investments, including the investment and
reinvestment
of DCF's assets. Dreyfus will not source any Potential Co-Investment Transactions under the requested Order.
Upon issuance of the requested Order, Alcentra
NY will manage the Company and the Existing Co-Investment Affiliate in the same manner that it has managed them in the past. In
addition, Alcentra NY will continue to serve as sub-adviser to Stira Alcentra and as sub-adviser to DCF, which is advised by Dreyfus.
Accordingly, each of the Regulated Funds and the Co-Investment Affiliates will be able to rely upon the Order to co-invest in the
Co-Investment Program rather than making separate investments.
In selecting investments for the Regulated
Funds, an Alcentra/Dreyfus Adviser will consider only the investment objective(s), investment policies, investment position, capital
available for investment, and other pertinent factors applicable to each Regulated Fund. Likewise, when selecting investments for
the Co-Investment Affiliates, an Alcentra/Dreyfus Adviser will select investments for the Co-Investment Affiliates, considering
only the investment objective, investment policies, investment position, capital available for investment, and other pertinent
factors applicable to each Co-Investment Affiliate. As described herein, each of the Co-Investment Affiliates has or will have
investment objectives and strategies that are similar to or overlap with the Objectives and Strategies
10
of each of the Regulated Funds. To the extent there is an investment that falls within the Objectives and Strategies of one or
more Regulated Funds and the investment objectives and strategies of one or more of the Co-Investment Affiliates, the applicable
Alcentra/Dreyfus Adviser would expect such Regulated Funds and Co-Investment Affiliates to co-invest with each other, with certain
exceptions based on available capital or diversification, as discussed below.
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Under the Co-Investment Program, each Co-Investment
Transaction would be allocated among the participating Regulated Funds and Co-Investment Affiliates. Each Potential Co-Investment
Transaction and the proposed allocation of each investment opportunity would be approved prior to the actual investment by the
Required Majority of each Regulated Fund.
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Alcentra NY has an investment committee (or,
for DCF, primary portfolio managers) through which it will carry out its obligation under condition 1 to make a determination as
to the appropriateness of the Potential Co-Investment Transaction for Stira Alcentra, DCF, or the Company. In the case of
a Potential Co-Investment Transaction, Alcentra NY would apply its
10
The term “
Objectives and Strategies
,
” with respect to each Regulated Fund, means the Regulated
Fund’s investment objectives and strategies, as described in the Regulated Fund’s registration statement on Form N-2,
other filings the Regulated Fund has made with the Commission under the 1933 Act, or under the Securities Exchange Act of 1934,
as amended, and the Regulated Fund’s reports to stockholders.
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The Regulated Funds, however, will not be obligated to invest, or co-invest, when investment opportunities are referred to them.
12
The term “
Required Majority
” has the meaning provided in Section 57(o) of the Act. The term “
Eligible
Directors
” means the directors or trustees, as applicable, who are eligible to vote under section 57(o). In the case
of a Regulated Fund that is a registered closed-end fund, the Board members that make up the Required Majority will be determined
as if the Regulated Fund were a BDC subject to section 57(o).
allocation policies and procedures in determining the proposed
allocation for Stira Alcentra or DCF consistent with the requirements of condition 2(a). We note that Alcentra NY, as a registered
investment adviser, has developed a robust allocation process as part of its overall compliance policies and procedures.
Alcentra NY’s allocation process is designed to allocate investment opportunities fairly and equitably among its clients
over time. While each Alcentra NY client may not participate in each investment opportunity because, for example, the client’s
allocation would be less than its minimum investment size, over time each Alcentra NY client would participate in investment opportunities
fairly and equitably.
To allow for an independent review of co-investment
activities, the Board of each Regulated Fund will receive, on a quarterly basis, a record of all investments made by the other
Regulated Funds and the Co-Investment Affiliates during the preceding quarter that: (1) were consistent with such Regulated
Fund’s then current Objectives and Strategies, but (2) were not made available to such Regulated Fund. This record
will include an explanation of why such investment opportunities were not offered to the Regulated Fund. Each Alcentra/Dreyfus
Adviser’s allocation process is capable of tracking all of the information required by condition 4, which will be presented
to the applicable Regulated Fund’s Board on a regular basis.
All subsequent activity, meaning either to:
(a) sell, exchange or otherwise dispose of an investment (collectively, a
“Disposition”
) or (b) complete
a Follow-On Investment,
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in respect
of an investment acquired in a Co-Investment Transaction will be made in accordance with the terms and conditions set forth in
this Application. With respect to the pro rata Dispositions and Follow-On Investments provided in conditions 7 and 8, a Regulated
Fund may participate in a pro rata Disposition or Follow-On Investment without obtaining prior approval of the Required Majority
if, among other things: (i) the proposed participation of each Co-Investment Affiliate and Regulated Fund in such Disposition or
Follow-On Investment is proportionate to its outstanding investments in the issuer immediately preceding the Disposition or Follow-On
Investment, as the case may be; and (ii) the Board of the Regulated Fund has approved that Regulated Fund’s participation
in pro rata Dispositions and Follow-On Investments as being in the best interests of the Regulated Fund. If the Board does not
so approve, any such Disposition or Follow-On Investment will be submitted to the Regulated Fund’s Eligible Directors. The
Board of any Regulated Fund may at any time rescind, suspend or qualify its approval of pro rata Dispositions and Follow-On Investments
with the result that all Dispositions and/or Follow-On Investments must be submitted to the Eligible Directors.
The Co-Investment Program stipulates that the
terms, conditions, price, class of securities, settlement date, and registration rights applicable to each Regulated Fund’s
and to each Co-Investment Affiliate’s purchase be the same.
The amount of each Regulated Fund’s capital
available for investment will be determined based on the amount of cash on hand, existing commitments and reserves, if any, the
targeted leverage level, targeted asset mix and other investment policies and restrictions set from time to
13
The term “
Follow-On Investment
” means any additional investment in an existing portfolio company, including
the exercise of warrants, conversion privileges or other similar rights to acquire additional securities of the portfolio company.
time by the Board of
the applicable Regulated Fund or imposed by applicable laws, rules, regulations or interpretations. Likewise, a Co-Investment Affiliate’s
capital available for investment is determined based on the amount of cash on hand, existing commitments and reserves, if any,
the targeted leverage level, targeted asset mix and other investment policies and restrictions set by the Co-Investment Affiliate’s
directors, general partners or adviser or imposed by applicable laws, rules, regulations or interpretations.
2. Reasons for Co-Investing
It is expected that co-investment in portfolio
companies by the Regulated Funds and the Co-Investment Affiliates will increase the number of favorable investment opportunities
for each Regulated Fund. The Co-Investment Program will be effected for a Regulated Fund only if it is approved by the Regulated
Fund’s Required Majority on the basis that it would be advantageous for the Regulated Fund to have the additional capital
from the Co-Investment Affiliates and/or other Regulated Funds available to meet the funding requirements of attractive investments
in portfolio companies. A Regulated Fund that makes investments of the type contemplated by the Regulated Funds typically limits
its participation in any one transaction to a specific dollar amount, which may be determined by legal or internally imposed prudential
limits on exposure in a single investment.
In view of the foregoing, in cases where an
Alcentra/Dreyfus Adviser identifies investment opportunities requiring larger capital commitments, the Alcentra/Dreyfus Adviser
must seek the participation of other entities with similar investment styles. The availability of the Co-Investment Affiliates
or additional Regulated Funds as investing partners of a Regulated Fund may alleviate some of that necessity in certain circumstances.
A Regulated Fund could lose some investment opportunities if its Alcentra/Dreyfus Adviser cannot provide “one-stop”
financing to a potential portfolio company. Portfolio companies may reject an offer of funding arranged by an Alcentra/Dreyfus
Adviser due to a Regulated Fund’s inability to commit the full amount of financing required by the portfolio company in a
timely manner (i.e., without the delay that typically would be associated with obtaining single-transaction exemptive relief from
the Commission). By reducing the number of occasions on which a Regulated Fund’s individual or aggregate investment limits
require the Adviser to arrange a syndication with unaffiliated entities, such Regulated Fund will likely be required to forego
fewer suitable investment opportunities. With the assets of the other Regulated Funds and the Co-Investment Affiliates available
for co-investment, there should be an increase in the number of opportunities accessible to each Regulated Fund.
The Advisers and the Board of each Regulated
Fund believe that it will be advantageous for each Regulated Fund to co-invest with one or more other Regulated Funds and/or one
or more Co-Investment Affiliates and that these co-investments would be consistent with the investment objectives, investment policies,
investment positions, investment strategies, investment restrictions, regulatory requirements and other pertinent factors applicable
to each Regulated Fund.
The Advisers also believe that co-investment
among the Regulated Funds and the Co-Investment Affiliates will afford each Regulated Fund the ability to achieve greater
diversification
and, together with the other Regulated Funds and the Co-Investment Affiliates, the opportunity to exercise greater influence on
the portfolio companies in which they co-invest.
1. Sections 17(d), 57(a)(4) and 57(i) of
the Act, and Rule 17d-1 thereunder
Section 17(d) of the Act generally prohibits
an affiliated person (as defined in Section 2(a)(3) of the Act), or an affiliated person of such affiliated person, of a registered
closed- end investment company acting as principal, from effecting any transaction in which the registered closed-end investment
company is a joint or a joint and several participant, in contravention of such rules as the Commission may prescribe for the purpose
of limiting or preventing participation by the registered closed-end investment company on a basis different from or less advantageous
than that of such other participant. Rule 17d-1 under the Act generally prohibits participation by a registered investment company
and an affiliated person (as defined in Section 2(a)(3) of the Act) or principal underwriter for that investment company, or an
affiliated person of such affiliated person or principal underwriter, in any “joint enterprise or other joint arrangement
or profit-sharing plan,” as defined in the rule, without prior approval by the Commission by order upon application.
Section 57(a)(4) makes it unlawful for any
person who is related to a BDC in a manner described in Section 57(b), acting as principal, knowingly to effect any transaction
in which the BDC is a joint or a joint and several participant with that person in contravention of rules and regulations as the
Commission may prescribe for the purpose of limiting or preventing participation by the BDC on a basis less advantageous than that
of the other participant. Although the Commission has not adopted any rules expressly under Section 57(a)(4), Section 57(i) provides
that the rules under Section 17(d) applicable to registered closed-end investment companies (
e.g.
, Rule 17d-1) are, in the
interim, deemed to apply to transactions subject to Section 57(a). Rule 17d-1, as made applicable to BDCs by Section 57(i), prohibits
any person who is related to a BDC in a manner described in Section 57(b), as modified by Rule 57b-1, acting as principal, from
participating in, or effecting any transaction in connection with, any joint enterprise or other joint arrangement or profit-sharing
plan in which the BDC is a participant, unless an application regarding the joint enterprise, arrangement, or profit-sharing plan
has been filed with the Commission and has been granted by an order entered prior to the submission of the plan or any modification
thereof to security holders for approval, or prior to its adoption or modification if not so submitted.
In passing upon applications under Rule 17d-1,
the Commission will consider whether the participation by the BDC in such joint transaction is consistent with the provisions,
policies, and purposes of the Act and the extent to which such participation is on a basis different from or less advantageous
than that of other participants.
2. Section 57(b) of the Act and Rule 57b-1
thereunder
Section 57(b), as modified by Rule 57b-1, specifies
the persons to whom the prohibitions of Section 57(a)(4) apply. These persons include the following: (1) any director, officer,
employee, or member of an advisory board of a BDC or any person (other than the BDC itself) who is, within the meaning of Section
2(a)(3)(C), an affiliated person of any such person; or (2) any investment adviser or promoter of, general partner in, principal
underwriter for, or person directly or indirectly either controlling, controlled by, or under common control with a BDC (except
the BDC itself and any person who, if it were not directly or indirectly controlled by the BDC, would not be directly or indirectly
under the control of a person who controls the BDC), or any person who is, within the meaning of Section 2(a)(3)(C) or (D), an
affiliated person of such person.
Rule 57b-1 under the Act exempts certain persons
otherwise related to a BDC in a manner described in Section 57(b)(2) of the Act from being subject to the prohibitions of Section
57(a). Specifically, this rule states that the provisions of Section 57(a) shall not apply to any person: (a) solely because that
person is directly or indirectly controlled by a BDC; or (b) solely because that person is directly or indirectly controlling,
controlled by, or under common control with, a person described in (a) of the rule or is an officer, director, partner, copartner,
or employee of a person described in (a) of the rule.
Section 2(a)(9) defines “control”
as the power to exercise a controlling influence over the management or policies of a company, unless such power is solely the
result of an official position with such company. The Act also provides that there shall be a presumption that any person who owns
beneficially, either directly or through one or more controlled companies, more than 25 percent of the voting securities of a company
shall be presumed to control such company; any person who does not so own more than 25 percent of the voting securities of a company
shall be presumed not to control such company; and a natural person shall be presumed not to be a controlled person.
Section 2(a)(3)(C) defines an “affiliated
person” of another person as “any person directly or indirectly controlling, controlled by, or under common control
with, such other person.”
Co-Investment Transactions may be prohibited
by Sections 17(d) and/or 57(a)(4) and Rule 17d-1 without a prior order of the Commission to the extent that the Co-Investment Affiliates
and the other Regulated Funds fall within the category of persons described by Section 17(d) or 57(b), as modified by Rule 57b-1
thereunder, vis-à-vis each Regulated Fund. Each of the other Regulated Funds and the Co-Investment Affiliates may be deemed
to be affiliated persons of a Regulated Fund within the meaning of Section 2(a)(3) by reason of common control because (i) Alcentra
NY advises and may be deemed to control the Existing Co-Investment Affiliate and any Future Co-Investment Affiliate will be advised
by and may be deemed to be controlled by an Alcentra/Dreyfus Adviser, (ii) Alcentra NY advises, or sub-advises, and may be deemed
to control the Existing Regulated Funds and any future Regulated Fund will be advised or sub-advised by and may be deemed to be
controlled by an Alcentra/Dreyfus Adviser because the Alcentra/Dreyfus Adviser has ultimate investment-making authority for such
Existing Regulated
Fund or future Regulated Fund, and (iii) the Alcentra/Dreyfus Advisers are controlled by the same persons. Thus,
each other Regulated Fund and Co-Investment Affiliate could be deemed to be a person related to a Regulated Fund in a manner described
by Section 57(b) and therefore prohibited by Sections 17(d) and 57(a)(4) and Rule 17d-1 from participating in Co-Investment Transactions
with each Regulated Fund.
Accordingly, Applicants respectfully request
an Order of the Commission, pursuant to Sections 17(d) and 57(i) and Rule 17d-1, permitting a Regulated Fund and one or more other
Regulated Funds and/or one or more Co-Investment Affiliates to participate in the same investment opportunities through the Co-Investment
Program.
The Commission has granted co-investment relief
on numerous occasions in recent years,
14
including relief to platforms that involve sub-advisers.
15
This
Application differs from the precedents involving sub-advisers because each of those involved a scenario in which the approval
of the investment adviser of the sub-advised fund was required prior to the sub-advised fund participating in a Co-Investment Transaction,
however, Applicants here believe that the procedures set forth as conditions for the relief requested herein are consistent with
the range of investor protection found in those orders. Applicants further submit that the involvement of a sub-adviser here does
not raise any legal or policy concerns that are different from those considered in the precedent applications because (i) Stira
Adviser will have observer rights to attend all meetings of Alcentra NY’s investment committee and (ii) both Stira Adviser
and Dreyfus will, along with Alcentra NY, have general oversight over the investment process on behalf of Stira Alcentra and DCF,
respectively, and the Stira Alcentra Board and the DCF Board, which will consist of a majority of Independent Directors, will be
required to approve each Co-Investment Transaction.
14
See e.g
., Medley Capital Corporation, et al. (File No. 812-14679) Investment Company Act Rel. Nos. 32520 (March 3, 2017)
(notice) and 32581 (March 29, 2017) (order); Golub Capital BDC, Inc., et al. (File No. 812-13764) Investment Company Act Rel. Nos.
32461 (January 31, 2017) (notice) and 32509 (February 27, 2017) (order); Owl Rock Capital Corporation, et al. (File No. 812-14568)
Investment Company Act Rel. Nos. 32422 (January 11, 2017) (notice) and 32469 (February 7, 2017) (order).
15
See, e.g.,
Altegris KKR Commitments Master Fund, et.al. (File No. 812-14410) Investment Company Act Rel. Nos. 32265 (September
19, 2016) (notice) and 32319 (October 17, 2016) (order); Carey Credit Income Fund, et al. (File No. 812-14426) Investment Company
Act Rel. Nos. 32138 (June 2, 2016) (notice) and 32164 (June 28, 2016) (order); Triloma EIG Global Energy Fund, et al. (File No.
812-14429) Investment Company Act Rel. Nos. 32106 (May 5, 2016) (notice) and 32132 (May 31, 2016) (order); Benefit Street Partners
BDC, Inc., et al. (File No. 812-14126), Investment Company Act Release No. 31651 (May 27, 2015) (notice) and 31686 (June 23, 2015)
(order).
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F.
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Applicants’ Legal Arguments
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Rule 17d-1 was promulgated by the Commission
pursuant to Section 17(d) and made applicable to BDCs by Section 57(i). Paragraph (a) of Rule 17d-1 permits an otherwise prohibited
person, acting as principal, to participate in, or effect a transaction in connection with, a joint enterprise or other joint arrangement
or profit-sharing plan in which a BDC is a participant if an application regarding the joint enterprise, arrangement, or profit-sharing
plan has been filed with the Commission and has been granted by an order issued prior to the submission of such plan or any modification
thereof to security holders for approval, or prior to its adoption or modification if not so submitted. Paragraph (b) of Rule 17d-1
states that in passing upon applications under that rule, the Commission will consider whether the participation by the investment
company in such joint enterprise, joint arrangement, or profit-sharing plan on the basis proposed is consistent with the provisions,
policies, and purposes of the Act and the extent to which such participation is on a basis different from or less advantageous
than that of other participants.
Applicants submit that the fact that the Required
Majority will approve each Co-Investment Transaction before the investment is made, as well as the fact that the other protective
conditions set forth in this Application have been established, ensure that the Regulated Funds will be treated fairly.
If an Adviser or its principal owners (the
“
Principals
”), or any person controlling, controlled by, or under common control with the Adviser or
the Principals, and the Co-Investment Affiliates (collectively, the “
Holders
”) own in the aggregate more
than 25 percent of the outstanding voting shares of a Regulated Fund (the “
Shares
”), then the Holders
will vote such Shares as required under condition 14.
Applicants believe that this condition
14 will ensure that the Independent Directors will act independently in evaluating the Co-Investment Program, because the ability
of an Adviser or the Principals to influence the Independent Directors by a suggestion, explicit or implied, that the Independent
Directors can be removed will be limited significantly. Pursuant to condition 14, the Independent Directors shall evaluate and
approve any
such independent third party
, taking into accounts its qualifications,
reputation for independence, cost to the Regulated Fund’s shareholders, and other factors that they deem relevant.
The conditions to which the requested relief
will be subject are designed to ensure that the Advisers or the principals of the Advisers would not be able to favor the Co-Investment
Affiliates over the Regulated Funds, or one Regulated Fund over another Regulated Fund, through the allocation of investment opportunities
among them. Because many attractive investment opportunities for a Regulated Fund will also be attractive investment opportunities
for one or more Co-Investment Affiliates and/or one or more other Regulated Funds, Applicants submit that the Co-Investment Program
presents an attractive alternative to the institution of some form of equitable allocation protocol for the allocation of 100%
of individual investment opportunities to one Regulated Fund or the Co-Investment Affiliates as opportunities arise.
Applicants submit that each Regulated Fund’s
participation in the Co-Investment Transactions will be consistent with the provisions, policies, and purposes of the Act and on
a basis that is not different from or less advantageous than that of other participants. Applicants
believe that the conditions
will ensure that the Advisers would not be able to favor the Co-Investment Affiliates over the Regulated Funds, or one Regulated
Fund over another Regulated Fund, through the allocation of investment opportunities among them.
After making the determinations required in
conditions 1 and 2(a), other than in the case of pro rata Dispositions and Follow-On Investments as provided for in conditions
7 and 8, the applicable Alcentra/Dreyfus Adviser will present each Potential Co-Investment Transaction and the proposed allocation
to the Eligible Directors, and the Required Majority will approve each Co-Investment Transaction prior to any investment by the
Regulated Fund.
Applicants believe that participation by the
Regulated Funds in pro rata Dispositions and Follow-On Investments, as provided in conditions 7 and 8, is consistent with the provisions,
policies and purposes of the Act and will not be made on a basis different from or less advantageous than that of other participants.
A formulaic approach, such as pro rata dispositions and Follow-On Investments, eliminates the discretionary ability to make allocation
determinations, and in turn eliminates the possibility for overreaching and promotes fairness.
Applicants agree that any Order of the Commission
granting the requested relief will be subject to the following conditions:
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1.
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Each time an Alcentra/Dreyfus Adviser considers a Potential Co-Investment Transaction for a Co-Investment Affiliate or another
Regulated Fund that falls within a Regulated Fund’s then-current Objectives and Strategies, the Regulated Fund’s Alcentra/Dreyfus
Adviser will make an independent determination of the appropriateness of the investment for the Regulated Fund in light of the
Regulated Fund’s then-current circumstances.
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2.
|
a. If the Alcentra/Dreyfus Adviser deems a Regulated Fund’s participation in any Potential Co-Investment Transaction
to be appropriate for the Regulated Fund, it will then determine an appropriate level of investment for the Regulated Fund.
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b. If the aggregate amount recommended by the Alcentra/Dreyfus
Adviser to be invested by the applicable Regulated Fund in the Potential Co-Investment Transaction, together with the amount proposed
to be invested by the other participating Regulated Funds and Co-Investment Affiliates, collectively, in the same transaction,
exceeds the amount of the investment opportunity, the amount proposed to be invested be each such party will be allocated among
them pro rata based on each participating party’s capital available for investment in the asset class being allocated, up
to the amount proposed to be invested by each. The applicable Alcentra/Dreyfus Adviser will provide the Eligible Directors of each
participating Regulated Fund with information concerning each participating party’s available capital to assist the Eligible
Directors with their review of the Regulated Fund’s investments for compliance with these allocation procedures.
c. After making the determinations required in conditions
1 and 2(a), the applicable Alcentra/Dreyfus Adviser will distribute written information concerning the Potential Co-Investment
Transaction, including the amount proposed to be invested by each Regulated Fund and each Co-Investment Affiliate to the Eligible
Directors of each participating Regulated Fund for their consideration. A Regulated Fund will co-invest with one or more other
Regulated Funds and/or one or more Co-Investment Affiliates only if, prior to the Regulated Fund’s participation in the Potential
Co-Investment Transaction, a Required Majority concludes that:
i. the
terms of the Potential Co-Investment Transaction, including the consideration to be paid, are reasonable and fair to the Regulated
Fund and its stockholders and do not involve overreaching in respect of the Regulated Fund or its stockholders on the part of any
person concerned;
ii. the Potential Co-Investment Transaction is consistent with:
A. the interests of the Regulated Fund’s stockholders; and
B. the Regulated Fund’s then-current Objectives and Strategies;
iii. the
investment by the other Regulated Funds or any Co-Investment Affiliates would not disadvantage the Regulated Fund, and participation
by the Regulated Fund would not be on a basis different from or less advantageous than that of any other Regulated Fund or Co-Investment
Affiliate; provided that, if any other Regulated Fund or Co-Investment Affiliate, but not the Regulated Fund itself, gains the
right to nominate a director for election to a portfolio company’s board of directors or the right to have a board observer
or any similar right to participate in the governance or management of the portfolio company, such event shall not be interpreted
to prohibit the Required Majority from reaching the conclusions required by this condition 2(c)(iii), if:
A. the Eligible Directors will have
the right to ratify the selection of such director or board observer, if any;
B. the applicable Alcentra/Dreyfus
Adviser agrees to, and does, provide periodic reports to the Board of the Regulated Fund with respect to the actions of such director
or the information received by such board observer or obtained through the exercise of any similar right to participate in the
governance or management of the portfolio company; and
C. any fees or other compensation
that any other Regulated Fund, or any Co-Investment Affiliate, or any affiliated person of either receives in connection with the
right of any other Regulated Fund or a Co-Investment Affiliate to nominate a director or appoint a board observer or otherwise
to participate in the governance or management of the portfolio company will
be shared proportionately among the participating
Co-Investment Affiliates (which each may, in turn, share its portion with its affiliated persons) and the participating Regulated
Funds in accordance with the amount of each party’s investment; and
iv. the
proposed investment by the Regulated Fund will not benefit the Advisers, the Co-Investment Affiliates, the other Regulated Funds
or any affiliated person of any of them (other than the parties to the Co-Investment Transaction), except (A) to the extent permitted
by condition 13, (B) to the extent permitted by Sections 17(e) or 57(k) of the Act, as applicable, (C) indirectly, as a result
of an interest in the securities issued by one of the parties to the Co-Investment Transaction, or (D) in the case of fees or other
compensation described in condition 2(c)(iii)(C).
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3.
|
Each Regulated Fund has the right to decline to participate in any Potential Co-Investment Transaction or to invest less than
the amount proposed.
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4.
|
The applicable Alcentra/Dreyfus Adviser will present to the Board of the applicable Regulated Fund, on a quarterly basis, a
record of all investments in Potential Co-Investment Transactions made by any of the other Regulated Funds and Co-Investment Affiliates
during the preceding quarter that fell within the Regulated Fund’s then-current Objectives and Strategies that were not made
available to the Regulated Fund, and an explanation of why the investment opportunities were not offered to the Regulated Fund.
All information presented to the Board pursuant to this condition will be kept for the life of the Regulated Fund and at least
two years thereafter, and will be subject to examination by the Commission and its staff.
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5.
|
Except for Follow-On Investments made in accordance with condition 8 below,
16
a Regulated Fund will not invest in reliance on the Order in any issuer in which another Regulated Fund, Co-Investment Affiliate,
or any affiliated person of another Regulated Fund or Co-Investment Affiliate is an existing investor.
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6.
|
A Regulated Fund will not participate in any Potential Co-Investment Transaction unless the terms, conditions, price, class
of securities to be purchased, settlement date, and registration rights will be the same for each participating Regulated Fund
and Co-Investment Affiliate. The grant to a Co-Investment Affiliate or another Regulated Fund, but not the Regulated Fund, of the
right to nominate a director for election to a portfolio company’s board of directors, the right to have an observer on the
board of directors or similar rights to participate in the governance or management of the portfolio company will not be interpreted
so as to violate this condition 6, if conditions 2(c)(iii)(A), (B) and (C) are met.
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16
This exception applies only to Follow-On Investments by a Regulated Fund in issuers in which that Regulated Fund already holds
investments.
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7.
|
a. If any Co-Investment Affiliate or any Regulated Fund elects to sell,
exchange or otherwise dispose of an interest in a security that was acquired in a Co-Investment Transaction, the
Alcentra/Dreyfus Adviser will:
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i. notify
each Regulated Fund that participated in the Co-Investment Transaction of the proposed Disposition at the earliest practical time;
and
ii. formulate
a recommendation as to participation by each Regulated Fund in the Disposition.
b. Each Regulated Fund will have the right to participate
in such Disposition on a proportionate basis, at the same price and on the same terms and conditions as those applicable to any
participating Co-Investment Affiliates and any other Regulated Funds.
c. A Regulated Fund may participate in such Disposition
without obtaining prior approval of the Required Majority if: (i) the proposed participation of each Co-Investment Affiliate and
Regulated Fund in such Disposition is proportionate to its outstanding investments in the issuer immediately preceding the Disposition;
(ii) the Board of the Regulated Fund has approved as being in the best interests of the Regulated Fund the ability to participate
in such Dispositions on a pro rata basis (as described in greater detail in this Application); and (iii) the Board of the Regulated
Fund is provided on a quarterly basis with a list of all Dispositions made in accordance with this condition. In all other cases,
the Alcentra/Dreyfus Adviser will provide its written recommendation as to the Regulated Fund’s participation to the Regulated
Fund’s Eligible Directors, and the Regulated Fund will participate in such Disposition solely to the extent that a Required
Majority determines that it is in the Regulated Fund’s best interests;
d. Each Co-Investment Affiliate and each Regulated Fund
will bear its own expenses in connection with any such Disposition.
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8.
|
a. If any Co-Investment Affiliate or any Regulated Fund desires to make a Follow-On Investment in a portfolio company whose
securities were acquired in a Co-Investment Transaction, the Alcentra/Dreyfus Adviser will:
|
i. notify
each Regulated Fund that participated in the Co-Investment Transaction of the proposed transaction at the earliest practical time;
and
ii. formulate
a recommendation as to the proposed participation, including the amount of the proposed Follow-On Investment, by each Regulated
Fund.
b. A Regulated Fund may participate in such Follow-On
Investment without obtaining prior approval of the Required Majority if: (i) the proposed participation
of each Co-Investment Affiliate
and each Regulated Fund in such investment is proportionate to its outstanding investments in the issuer immediately preceding
the Follow-On Investment; (ii) the Board of the Regulated Fund has approved as being in the best interests of the Regulated Fund
the ability to participate in Follow-On Investments on a pro rata basis (as described in greater detail in this Application); and
(iii) the Board of the Regulated Fund is provided on a quarterly basis with a list of all Follow-On Investments made in accordance
with this condition. In all other cases, the Alcentra/Dreyfus Adviser will provide its written recommendation as to the Regulated
Fund’s participation to the Eligible Directors, and the Regulated Fund will participate in such Follow-On Investment solely
to the extent that a Required Majority determines that it is in the Regulated Fund’s best interests.
c. If, with respect to any Follow-On
Investment:
i. the
amount of the Follow-On Investment is not based on the Co-Investment Affiliates’ and the Regulated Funds’ outstanding
investments immediately preceding the Follow-On Investment; and
ii. the
aggregate amount recommended by the Alcentra/Dreyfus Adviser to be invested by each Regulated Fund in the Follow-On Investment,
together with the amount proposed to be invested by the participating Co-Investment Affiliates in the same transaction, exceeds
the amount of the opportunity, then the amount to be invested by each such party will be allocated among them pro rata based on
each participating party’s capital available for investment in the asset class being allocated, up to the amount proposed
to be invested by each.
d. The acquisition of Follow-On Investments
as permitted by this condition will be considered a Co-Investment Transaction for all purposes and subject to the other conditions
set forth in this Application.
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9.
|
The Independent Directors of each Regulated Fund will be provided quarterly for review all information concerning Potential
Co-Investment Transactions and Co-Investment Transactions, including investments made by the Co-Investment Affiliates and the other
Regulated Funds that the Regulated Fund considered but declined to participate in, so that the Independent Directors may determine
whether all investments made during the preceding quarter, including those investments that the Regulated Fund considered but declined
to participate in, comply with the conditions of the Order. In addition, the Independent Directors will consider at least annually
the continued appropriateness for the Regulated Fund of participating in new and existing Co-Investment Transactions.
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10.
|
Each Regulated Fund will maintain the records required by Section 57(f)(3) of the Act as if each of the Regulated Funds were
a BDC and each of the investments
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permitted under these conditions were approved by the Required Majority under Section 57(f) of
the Act.
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11.
|
No Independent Director of a Regulated Fund will also be a director, general partner, managing member or principal, or otherwise
an “affiliated person” (as defined in the Act), of any Co-Investment Affiliate.
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12.
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The expenses, if any, associated with acquiring, holding or disposing of any securities acquired in a Co-Investment Transaction
(including, without limitation, the expenses of the distribution of any such securities registered for sale under the 1933 Act)
will, to the extent not payable by the Advisers under their respective advisory agreements with the Co-Investment Affiliates and
the Regulated Funds, be shared by the participating Co-Investment Affiliates and the participating Regulated Funds in proportion
to the relative amounts of the securities held or being acquired or disposed of, as the case may be.
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13.
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Any transaction fee
17
(including
break-up or commitment fees but excluding broker’s fees contemplated by Section 17(e) or 57(k) of the Act, as applicable)
received in connection with a Co-Investment Transaction will be distributed to the participating Co-Investment Affiliates and Regulated
Funds on a pro rata basis based on the amount they each invested or committed, as the case may be, in such Co-Investment Transaction.
If any transaction fee is to be held by an Adviser pending consummation of the transaction, the fee will be deposited into an account
maintained by the Adviser at a bank or banks having the qualifications prescribed in Section 26(a)(1) of the Act, and the account
will earn a competitive rate of interest that will also be divided pro rata among the participating Co-Investment Affiliates and
Regulated Funds based on the amount each invests in such Co-Investment Transaction. None of the Co-Investment Affiliates, the Regulated
Funds, the Advisers nor any affiliated person of the Regulated Funds or Co-Investment Affiliates will receive additional compensation
or remuneration of any kind as a result of or in connection with a Co-Investment Transaction (other than (a) in the case of the
Co-Investment Affiliates and the Regulated Funds, the pro rata transaction fees described above and fees or other compensation
described in condition 2(c)(iii)(C), and (b) in the case of the Advisers, investment advisory fees paid in accordance with their
respective investment advisory agreements with the Regulated Funds and Co-Investment Affiliates).
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14.
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If the Holders own in the aggregate more than 25 percent of the Shares of a Regulated Fund, then
the Holders will vote such Shares as directed by an independent third party when voting on (1) the election of directors; (2) the
removal of one or more directors; or (3)
all other matters under either the Act or applicable
State law affecting the Board’s composition, size or manner of election.
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17
Applicants are not requesting and the staff is not providing any relief for transaction fees received in connection with any Co-Investment
Transaction.
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15.
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Each Regulated Fund’s chief compliance officer, as defined in Rule 38a-1(a)(4), will prepare
an annual report for its Board that evaluates (and documents the basis of that evaluation) the Regulated Fund’s compliance
with the terms and conditions of the application and the procedures established to achieve such compliance.
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16.
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The Advisers to the Regulated Funds and Co-Investment Affiliates will maintain written policies and procedures reasonably designed
to ensure compliance with the foregoing conditions. These policies and procedures will require, among other things, that each of
the Advisers to each Regulated Fund will be notified of all Potential Co-Investment Transactions that fall within a Regulated Fund’s
then-current Objectives and Strategies and will be given sufficient information to make its independent determination and recommendations
under conditions 1, 2(a), 7 and 8.
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Please address all communications concerning this Application and
the Notice and Order to:
David P. Scopelliti
Alcentra Capital Corporation
President and Chief Executive Officer
200 Park Avenue, 7
th
Floor
New York, NY 10166
(212) 922-8240
Jeff S. Prusnofsky, Esq.
Dreyfus Alcentra
Global Credit Income 2024 Target Term Fund, Inc.
Vice President
200 Park Avenue
New York, New York 10166
(212) 922-6796
Christopher Hilbert
Stira Alcentra Global Credit Fund
Chief Executive Officer
18100 Von Karman Avenue, Suite 500
Irvine, CA 92612
(877) 567-7246
Please address any questions, and a copy of
any communications, concerning this Application, the Notice and Order to:
Steven B. Boehm, Esq.
Harry S. Pangas, Esq.
Anne G. Oberndorf, Esq.
Eversheds Sutherland (US) LLP
700 Sixth Street, N.W.
Washington, D.C. 20001
(202) 383-0100
David Stephens, Esq.
Nicole M. Runyan, Esq.
Proskauer Rose LLP
Eleven Times Square
New York, New York 10036
(212) 969-3000
Heath D. Linsky, Esq.
Lauren B. Prevost, Esq.
Owen J. Pinkerton, Esq.
Morris, Manning & Martin, LLP
1600 Atlanta Financial Center
3343 Peachtree Road, N.E.
Atlanta, Georgia 30326-1044
(404) 233-7000
Pursuant to Rule 0-2(c) under the Act, Applicants
hereby state that each Regulated Fund, by resolution duly adopted by each Board, in the case of the Company, on April 3, 2017 (attached
hereto as Exhibit B-1), in the case of Stira Alcentra, on March 20, 2017 (attached hereto as Exhibit B-2), and, in the case of
DCF, on October 25, 2017 (attached hereto as Exhibit B-3) has authorized to cause to be prepared and to execute and file with the
Commission this Application and any amendment thereto under Section 57(i) of the Act and Rule 17d-1 under the Act, for an order
pursuant to Section 57(i) of the Act, and Rule 17d-1 under the Act, permitting certain joint transactions otherwise prohibited
by Sections 17(d) and 57(a)(4) of such Act and Rule 17d-1. Each person executing the Application on behalf of the Applicants says
that he has duly executed the Application for and on behalf of the Applicants; that he is authorized to execute the Application
pursuant to the terms of an operating agreement, management agreement or otherwise; and that all actions by members, directors
or other bodies necessary to authorize each such deponent to execute and file the Application have been taken.
All requirements for the execution and filing
of this Application in the name and on behalf of each Applicant by the undersigned have been complied with and the undersigned
is fully authorized to do so and has duly executed this Application this 14
th
day of February, 2018.
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ALCENTRA CAPITAL CORPORATION
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By:
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/s/ David P. Scopelliti
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Name:
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David P. Scopelliti
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Title:
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President and Chief Executive Officer
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|
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|
Alcentra Middle Market Fund IV, L.P.
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|
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By:
|
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/s/ David P. Scopelliti
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|
Name:
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|
David P. Scopelliti
|
|
Title:
|
|
Authorized Person
|
|
|
|
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|
ALCENTRA NY, LLC
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|
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|
By:
|
|
/s/ David P. Scopelliti
|
|
Name:
|
|
David P. Scopelliti
|
|
Title:
|
|
Authorized Person
|
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Alcentra BDC EQUITY HOLDINGS, LLC
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By:
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|
Alcentra Capital Corporation,
as Sole Member
|
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|
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/s/ David P. Scopelliti
|
|
Name:
|
|
David P. Scopelliti
|
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Title:
|
|
President and Chief Executive Officer of Alcentra Capital Corporation
|
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THE DREYFUS CORPORATION
|
|
|
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By:
|
|
/s/ James Bitetto
|
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Name:
|
|
James Bitetto
|
|
Title:
|
|
Secretary
|
|
STIRA
INVESTMENT Adviser, LLC
|
|
|
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By:
|
|
/s/ Phillip D. Meserve
|
|
Name:
|
|
Phillip D. Meserve
|
|
Title:
|
|
President
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STIRA ALCENTRA GLOBAL CREDIT FUND
|
|
|
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By:
|
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/s/ Richard D. Gann
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|
Name:
|
|
Richard D. Gann
|
|
Title:
|
|
President
|
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DREYFUS ALCENTRA GLOBAL CREDIT INCOME 2024 TARGET TERM FUND, INC.
|
|
|
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By:
|
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/s/ James Bitetto
|
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Name:
|
|
James Bitetto
|
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Title:
|
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Vice President
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EXHIBIT A-1
VERIFICATION
The undersigned states that he has duly executed
the attached application, dated as of February 14, 2018, for and on behalf of Alcentra Capital Corporation, Alcentra Middle Market
Fund IV, L.P., Alcentra NY, LLC, and Alcentra BDC Equity Holdings, LLC, that he is the Chief Executive Officer of Alcentra Capital
Corporation and an authorized person of Alcentra Middle Market Fund IV, L.P., Alcentra NY, LLC, and Alcentra BDC Equity Holdings,
LLC; and that all action necessary to authorize the undersigned to execute and file such instrument has been taken. The undersigned
further states that he is familiar with such instrument, and the contents thereof, and that the facts set forth are true to the
best of his knowledge, information and belief.
|
/s/ David P. Scopelliti
|
|
Name:
|
|
David P. Scopelliti
|
|
Date:
|
|
February 14, 2018
|
EXHIBIT
A-2
VERIFICATION
The undersigned states that he has duly executed
the attached application, dated as of February 14, 2018, for and on behalf of Stira Investment Adviser, LLC; that he is the President
of Stira Investment Adviser, LLC; and that all action necessary to authorize the undersigned to execute and file such instrument
has been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the
facts set forth are true to the best of his knowledge, information and belief.
|
/s/ Phillip D. Meserve
|
|
Name:
|
Phillip D. Meserve
|
|
Date:
|
February 14, 2018
|
EXHIBIT
A-3
VERIFICATION
The undersigned states that he has duly executed
the attached application, dated as of February 14, 2018, for and on behalf of Stira Alcentra Global Credit; that he is the President
of Stira Alcentra Global Credit Fund; and that all action necessary to authorize the undersigned to execute and file such
instrument has been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and
that the facts set forth are true to the best of his knowledge, information and belief.
|
/s/ Richard D. Gann
|
|
Name:
|
Richard D. Gann
|
|
Date:
|
February 14, 2018
|
EXHIBIT
A-4
VERIFICATION
The undersigned states that he has duly executed
the attached application, dated as of February 14, 2018, for and on behalf of The Dreyfus Corporation; that he is the Secretary
of The Dreyfus Corporation; and that all action necessary to authorize the undersigned to execute and file such instrument
has been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the
facts set forth are true to the best of his knowledge, information and belief.
|
/s/ James Bitetto
|
|
Name:
|
James Bitetto
|
|
Date:
|
February 14, 2018
|
EXHIBIT
A-5
VERIFICATION
The undersigned states that he has duly executed
the attached application, dated as of February 14, 2018, for and on behalf of Dreyfus Alcentra Global Credit Income 2024 Target
Term Fund, Inc.; that he is a Vice President of Dreyfus Alcentra Global Credit Income 2024 Target Term Fund, Inc.; and that
all action necessary to authorize the undersigned to execute and file such instrument has been taken. The undersigned further states
that he is familiar with such instrument, and the contents thereof, and that the facts set forth are true to the best of his knowledge,
information and belief.
|
/s/ James Bitetto
|
|
Name:
|
James Bitetto
|
|
Date:
|
February 14, 2018
|
EXHIBIT B-1
Resolutions of the Board of Directors of
Alcentra Capital Corporation
WHEREAS
, the Board
of Directors has reviewed the Company’s Co-Investment Exemptive Application (the
“
Exemptive Application
”
),
a copy of which is attached hereto as
Exhibit A
, for an order of the U.S. Securities and Exchange Commission (the “
SEC
”)
pursuant to Sections 17(d) and 57(i) of the Investment Company Act of 1940, as amended (the “
1940 Act
”),
and Rule 17d-1 promulgated under the 1940 Act, permitting certain joint transactions that otherwise may be prohibited by Sections
17(d) and 57(a)(4) of the Act and Rule 17d-1 under the 1940 Act.
NOW,
THEREFORE, BE IT RESOLVED
, that the Officers, shall be, and each of them individually hereby is, authorized, empowered and
directed, in the name and on behalf of the Company, to cause to be executed, delivered and filed with the SEC the Exemptive Application,
in substantially the form attached hereto as
Exhibit A
;
and
FURTHER
RESOLVED
, that the Officers shall be, and each of them individually hereby is, authorized, empowered and directed, in the name
and on behalf of the Company, to cause to be made, executed, delivered and filed with the SEC any amendments to the Exemptive Application
and any additional applications for exemptive relief as are determined necessary, advisable or appropriate by any of the Officers
in order to effectuate the foregoing resolutions, such determination to be conclusively evidenced by the taking of any such action;
and
FURTHER RESOLVED
,
that all acts and things previously done by any of the Officers, on or prior to the date hereof, in the name and on behalf of the
Company in connection with the foregoing resolutions are in all respects authorized, ratified, approved, confirmed and adopted
as the acts and deeds by and on behalf of the Company;
and
FURTHER RESOLVED
,
that the Officers be, and each of them hereby is, authorized, empowered and directed to certify and deliver copies of these resolutions
to such governmental bodies, agencies, persons, firms or corporations as the Officers may deem necessary and to identify by his
or her signature or certificate, or in such form as may be required, the documents and instruments presented to and approved herein
and to furnish evidence of the approval, by an officer authorized to give such approval, of any document, instrument or provision
or any addition, deletion or change in any document or instrument.
(Approved by unanimous written consent of the
Board of Directors on April 3, 2017)
EXHIBIT B-2
Resolutions of the Board of Trustees of Stira
Alcentra Global Credit Fund
WHEREAS
, the Board
of Trustees of Stira Alcentra Global Credit Fund (the “
Fund
”) has reviewed the Fund’s Co-Investment
Exemptive Application (the
“
Exemptive Application
”
), a copy of which is attached hereto as
Exhibit
A
, for an order of the U.S. Securities and Exchange Commission (the “
SEC
”) pursuant to Sections 17(d)
of the Investment Company Act of 1940, as amended (the “
1940 Act
”), and Rule 17d-1 promulgated under
the 1940 Act, permitting certain joint transactions that otherwise may be prohibited by Section 17(d) of the Act.
NOW,
THEREFORE, BE IT RESOLVED
, that the Fund’s officers (an “
Authorized Officer
” and, collectively,
the “
Authorized Officers
”) shall be, and each of them individually hereby is, authorized, empowered and
directed, in the name and on behalf of the Fund, to cause to be executed, delivered and filed with the SEC the Exemptive Application,
in substantially the form attached hereto as
Exhibit A
;
and
FURTHER
RESOLVED
, that the Authorized Officers shall be, and each of them individually hereby is, authorized, empowered and directed,
in the name and on behalf of the Fund, to cause to be made, executed, delivered and filed with the SEC any amendments to the Exemptive
Application and any additional applications for exemptive relief as are determined necessary, advisable or appropriate by any of
the Authorized Officers in order to effectuate the foregoing resolutions, such determination to be conclusively evidenced by the
taking of any such action;
and
FURTHER RESOLVED
,
that all acts and things previously done by any of the Authorized Officers, on or prior to the date hereof, in the name and on
behalf of the Fund in connection with the foregoing resolutions are in all respects authorized, ratified, approved, confirmed and
adopted as the acts and deeds by and on behalf of the Fund;
and
FURTHER RESOLVED
,
that the Authorized Officers be, and each of them hereby is, authorized, empowered and directed to certify and deliver copies of
these resolutions to such governmental bodies, agencies, persons, firms or corporations as the Authorized Officers may deem necessary
and to identify by his or her signature or certificate, or in such form as may be required, the documents and instruments presented
to and approved herein and to furnish evidence of the approval, by an officer authorized to give such approval, of any document,
instrument or provision or any addition, deletion or change in any document or instrument.
(Approved by unanimous written consent of the
Board of Trustees on March 20, 2017)
EXHIBIT B-3
Resolutions of the Board of Directors of
Dreyfus Alcentra Global Credit Income 2024 Target Term Fund, Inc.
RESOLVED
, that the
officers and agents (each, an "
Authorized Officer
" and, collectively, the "
Authorized Officers
")
of Dreyfus Alcentra Global Credit Income 2024 Target Term Fund, Inc. (the "
Fund
") shall be, and each of
them individually hereby is, authorized, empowered and directed, in the name and on behalf of the Fund, to cause to be executed,
delivered and filed with the Securities and Exchange Commission (the "
Commission
") the Fund's Co-Investment
Exemptive Application (the "
Exemptive Application
"), in substantially the form attached hereto as
Exhibit
A
; and it was further
RESOLVED
, that the
Authorized Officers shall be, and each of them individually hereby is, authorized, empowered and directed, in the name and on behalf
of the Fund, to cause to be made, executed, delivered and filed with the SEC any amendments to the Exemptive Application and any
additional applications for exemptive relief as are determined necessary, advisable or appropriate by any of the Authorized Officers
in order to effectuate the foregoing resolutions, such determination to be conclusively evidenced by the taking of any such action;
and it was further
RESOLVED
, that all
acts and things previously done by any of the Authorized Officers, on or prior to the date hereof, in the name and on behalf of
the Fund in connection with the foregoing resolutions are in all respects authorized, ratified, approved, confirmed and adopted
as the acts and deeds by and on behalf of the Fund; and it was further
RESOLVED
, that the
Authorized Officers be, and each of them hereby is, authorized, empowered and directed to certify and deliver copies of these resolutions
to such governmental bodies, agencies, persons, firms or corporations as the Authorized Officers may deem necessary and to identify
by his or her signature or certificate, or in such form as may be required, the documents and instruments presented to and approved
herein and to furnish evidence of the approval, by an officer authorized to give such approval, of any document, instrument or
provision or any addition, deletion or change in any document or instrument.
(Approved at a meeting of the Board of Directors
on October 25, 2017)
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