Item 13.
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Certain Relationships and Related Transactions, and Director Independence
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Certain Relationships and Transactions
We have entered into the Advisory
Agreement with Solar Capital Partners. Mr. Gross, our Chairman, Chief Executive Officer and President, and Mr. Spohler, our Chief Operating Officer and board member, are managing members and senior investment professionals of, and have
financial and controlling interests in, Solar Capital Partners. In addition, Mr. Peteka, our Chief Financial Officer, Treasurer and Secretary, serves as the Chief Financial Officer for Solar Capital Partners.
Solar Capital Partners and its affiliates may also manage other funds in the future that may have investment mandates that are similar,
in whole and in part, with ours. For example, Solar Capital Partners presently serves as investment adviser to Solar Senior Capital Ltd., a publicly traded BDC, which focuses on investing primarily in senior secured loans, including first lien and
second lien debt instruments. In addition, Michael S. Gross, our Chairman and Chief Executive Officer, Bruce Spohler, our Chief Operating Officer, and Richard L. Peteka, our Chief Financial Officer, serve in similar capacities for Solar Senior
Capital Ltd.
Solar Capital Partners and certain investment advisory affiliates may determine that an investment is
appropriate for us and for one or more of those other funds. In such event, depending on the availability of such investment and other appropriate factors, Solar Capital Partners or its affiliates may determine that we should invest
side-by-side
with one or more other funds. Any such investments will be made only to the extent permitted by applicable law and interpretive positions of the SEC and its
staff, and consistent with Solar Capital Partners allocation procedures.
Related party transactions may occur among
Solar Capital Ltd., Crystal Financial LLC, Senior Secured Unitranche Loan Program LLC,
SSLP 2016-1,
LLC, Senior Secured Unitranche Loan Program II LLC, SSLP
II 2016-1, LLC
and NEF Holdings LLC. These transactions may occur in the normal course of business. No administrative fees are paid to Solar Capital Partners by Crystal Financial LLC, Senior Secured
Unitranche Loan Program LLC, Senior Secured Unitranche Loan Program II LLC or NEF Holdings LLC.
In addition, we have adopted
a formal code of ethics that governs the conduct of our officers and directors. Our officers and directors also remain subject to the duties imposed by both the 1940 Act and the Maryland General Corporation Law.
Regulatory restrictions limit our ability to invest in any portfolio company in which any affiliate currently has an investment. The
Company obtained an exemptive order from the SEC on July 28, 2014 (the Exemptive Order). The Exemptive Order permitted us to participate in negotiated
co-investment
transactions with certain
affiliates, each of whose investment adviser is Solar Capital Partners, in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors, and
pursuant to the conditions to the Exemptive Order. On June 13, 2017, the Company, Solar Senior Capital Ltd., and Solar Capital Partners received an exemptive order that supersedes the Exemptive Order (the New Exemptive Order) and
extends the relief granted in the Exemptive Order such that it no longer applies to certain affiliates only if their respective investment adviser is Solar Capital Partners, but also applies to certain affiliates whose investment adviser is an
investment adviser that controls, is controlled by or is under common control with Solar Capital Partners and is registered as an investment adviser under the Investment Advisers Act of 1940, as amended. The terms and conditions of the New Exemptive
Order are otherwise substantially similar to the Exemptive Order. We believe that it will be advantageous for us to
co-invest
with funds managed by Solar Capital Partners where such investment is consistent
with the investment objectives, investment positions, investment policies, investment strategy, investment restrictions, regulatory requirements and other pertinent factors applicable to us.
We have entered into a license agreement with Solar Capital Partners, pursuant to which Solar Capital Partners has agreed to grant us a
non-exclusive,
royalty-free license to use the name Solar Capital. In addition,
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